(BQ) Part 2 book “Project management” has contents: Network scheduling techniques, project graphics, pricing and estimating, cost control, trade-off analysis in a project environment, risk management, learning curves, contract management,… and other contents.
c12.qxd 1/21/09 3:17 PM Page 493 Network Scheduling Techniques 12 Related Case Studies (from Kerzner/Project Management Case Studies, 3rd Edition) Related Workbook Exercises (from Kerzner/Project Management Workbook and PMP ®/CAPM ® Exam Study Guide, 10th Edition) PMBOK® Guide, 4th Edition, Reference Section for the PMPđ Certification Exam Crosby Manufacturing • Corporation* • • • • • Time Management Crashing the Effort Multiple Choice Exam Crossword Puzzle on Time (Schedule) Management 12.0 INTRODUCTION PMBOK® Guide, 4th Edition Chapter Project Time Management PMBOK® Guide, 4th Edition Management is continually seeking new and better control techniques to cope with the complexities, masses of data, and tight deadlines that are characteristic of highly competitive industries Managers also want better methods for presenting technical and cost data to customers Scheduling techniques help achieve these goals The most common techniques are: 6.1.3.3 Milestone Lists ● Gantt or bar charts *Case Study also appears at end of chapter 493 c12.qxd 1/21/09 3:17 PM Page 494 494 NETWORK SCHEDULING TECHNIQUES ● ● ● Milestone charts Line of balance1 6.2 Activity Sequencing Networks ● Program Evaluation and Review Technique (PERT) ● Arrow Diagram Method (ADM) [Sometimes called the Critical Path Method (CPM)] ● Precedence Diagram Method (PDM) ● Graphical Evaluation and Review Technique (GERT) PMBOK® Guide, 4th Edition Advantages of network scheduling techniques include: ● ● ● ● ● ● ● ● ● ● They form the basis for all planning and predicting and help management decide how to use its resources to achieve time and cost goals They provide visibility and enable management to control “one-of-a-kind” programs They help management evaluate alternatives by answering such questions as how time delays will influence project completion, where slack exists between elements, and what elements are crucial to meet the completion date They provide a basis for obtaining facts for decision-making They utilize a so-called time network analysis as the basic method to determine manpower, material, and capital requirements, as well as to provide a means for checking progress They provide the basic structure for reporting information They reveal interdependencies of activities They facilitate “what if ” exercises They identify the longest path or critical paths They aid in scheduling risk analysis PERT was originally developed in 1958 and 1959 to meet the needs of the “age of massive engineering” where the techniques of Taylor and Gantt were inapplicable The Special Projects Office of the U.S Navy, concerned with performance trends on large military development programs, introduced PERT on its Polaris Weapon System in 1958, after the technique had been developed with the aid of the management consulting firm of Booz, Allen, and Hamilton Since that time, PERT has spread rapidly throughout almost all industries At about the same time, the DuPont Company initiated a similar technique known as the critical path method (CPM), which also has spread widely, and is particularly concentrated in the construction and process industries In the early 1960s, the basic requirements of PERT/time as established by the Navy were as follows: ● ● All of the individual tasks to complete a program must be clear enough to be put down in a network, which comprises events and activities; i.e., follow the work breakdown structure Events and activities must be sequenced on the network under a highly logical set of ground rules that allow the determination of critical and subcritical paths Networks may have more than one hundred events, but not fewer than ten Line of balance is more applicable to manufacturing operations for production line activities However, it can be used for project management activities where a finite number of deliverables must be produced in a given time period The reader need only refer to the multitude of texts on production management for more information on this technique The text uses the term CPM instead of ADM The reader should understand that they are interchangeable c12.qxd 1/21/09 3:17 PM Page 495 Introduction ● ● 495 Time estimates must be made for each activity on a three-way basis Optimistic, most likely, and pessimistic elapsed-time figures are estimated by the person(s) most familiar with the activity Critical path and slack times are computed The critical path is that sequence of activities and events whose accomplishment will require the greatest time A big advantage of PERT lies in its extensive planning Network development and critical path analysis reveal interdependencies and problems that are not obvious with other planning methods PERT therefore determines where the greatest effort should be made to keep a project on schedule The second advantage of PERT is that one can determine the probability of meeting deadlines by development of alternative plans If the decision maker is statistically sophisticated, he can examine the standard deviations and the probability of accomplishment data If there exists a minimum of uncertainty, one may use the single-time approach, of course, while retaining the advantage of network analysis A third advantage is the ability to evaluate the effect of changes in the program For example, PERT can evaluate the effect of a contemplated shift of resources from the less critical activities to the activities identified as probable bottlenecks PERT can also evaluate the effect of a deviation in the actual time required for an activity from what had been predicted Finally, PERT allows a large amount of sophisticated data to be presented in a well-organized diagram from which contractors and customers can make joint decisions PERT, unfortunately, is not without disadvantages The complexity of PERT adds to implementation problems There exist more data requirements for a PERT-organized reporting system than for most others PERT, therefore, becomes expensive to maintain and is utilized most often on large, complex programs Many companies have taken a hard look at the usefulness of PERT on small projects The result has been the development of PERT/LOB procedures, which can the following: ● ● ● ● ● ● Cut project costs and time Coordinate and expedite planning Eliminate idle time Provide better scheduling and control of subcontractor activities Develop better troubleshooting procedures Cut the time required for routine decisions, but allow more time for decision-making Even with these advantages, many companies should ask whether they actually need PERT because incorporating it may be difficult and costly, even with canned software packages Criticism of PERT includes: ● ● ● ● ● ● Time and labor intensive Decision-making ability reduced Lacks functional ownership in estimates Lacks historical data for time–cost estimates Assumes unlimited resources Requires too much detail An in-depth study of PERT would require a course or two by itself The intent of this chapter is to familiarize the reader with the terminology, capability, and applications of networks c12.qxd 1/21/09 3:17 PM Page 496 496 NETWORK SCHEDULING TECHNIQUES 12.1 NETWORK FUNDAMENTALS The major discrepancy with Gantt, milestone, or bubble charts is the inability to show the interdependencies between events and activities 6.2 Activity Sequencing These interdependencies must be identified so that a master plan can be 6.2.2 Activity Sequencing Tools developed that provides an up-to-date picture of operations at all times and Techniques Interdependencies are shown through the construction of networks Network analysis can provide valuable information for planning, integration of plans, time studies, scheduling, and resource management The primary purpose of network planning is to eliminate the need for crisis management by providing a pictorial representation of the total program The following management information can be obtained from such a representation: PMBOK® Guide, 4th Edition ● ● ● ● ● ● ● ● ● Interdependencies of activities Project completion time Impact of late starts Impact of early starts Trade-offs between resources and time “What if” exercises Cost of a crash program Slippages in planning/performance Evaluation of performance Networks are composed of events and activities The following terms are helpful in understanding networks: ● ● ● ● ● Event: Equivalent to a milestone indicating when an activity starts or finishes Activity: The element of work that must be accomplished Duration: The total time required to complete the activity Effort: The amount of work that is actually performed within the duration For example, the duration of an activity could be one month but the effort could be just a two-week period within the duration Critical Path: This is the longest path through the network and determines the duration of the project It is also the shortest amount of time necessary to accomplish the project Figure 12–1 shows the standard nomenclature for PERT networks The circles represent events, and arrows represent activities The numbers in the circles signify the specific events or accomplishments The number over the arrow specifies the time needed (hours, days, months), to go from event to event The events need not be numbered in any specific order However, event must take place before event can be completed (or begun) In Figure 12–2A, event 26 must take place prior to events 7, 18, and 31 In Figure 12–2B, the opposite holds true, and events 7, 18, and 31 must take place prior to event 26 Figure 12–2B is similar to “and gates” used in logic diagrams.3 PERT diagrams can, in fact, be considered as logic diagrams Many of the symbols used in PERT have been adapted from logic flow nomenclature c12.qxd 1/21/09 3:17 PM Page 497 497 Network Fundamentals WEEKS COMPLETE TESTING COMPLETE FINAL REPORT LEGEND EVENT ACTIVITY FIGURE 12–1 Standard PERT nomenclature In this chapter’s introduction we have summarized the advantages and disadvantages of Gantt and milestone charts These charts, however, can be used to develop the PERT network, as shown in Figure 12–3 The bar chart in Figure 12–3A can be converted to the milestone chart in Figure 12–3B By then defining the relationship between the events on different bars in the milestone chart, we can construct the PERT chart in Figure 12–3C PERT is basically a management planning and control tool It can be considered as a road map for a particular program or project in which all of the major elements (events) PMBOK® Guide, 4th Edition 31 6.2.2.2 Dependency Determination 26 18 (A) BURST POINT 31 26 18 (B) SINK FIGURE 12–2 PERT sources (burst points) and sinks c12.qxd 1/21/09 3:17 PM Page 498 498 NETWORK SCHEDULING TECHNIQUES PMBOK® Guide, 4th Edition 6.2 Activity Sequencing (A) GANTT CHART TIME (B) MILESTONE CHART TIME 2 (C) PERT CHART 1 FIGURE 12–3 Conversion from bar chart to PERT chart have been completely identified, together with their corresponding interrelations.4 PERT charts are often constructed from back to front because, for many projects, the end date is fixed and the contractor has front-end flexibility One of the purposes of constructing the PERT chart is to determine how much time is needed to complete the project PERT, therefore, uses time as a common denominator to analyze those elements that directly influence the success of the project, namely, time, cost, and performance The construction of the network requires two inputs First, events represent the start or the completion of an activity? Event completions are generally preferred The next step is to define the sequence of events, as shown in Table 12–1, These events in the PERT charts should be broken down to at least the same reporting levels as defined in the work breakdown structure c12.qxd 1/21/09 3:17 PM Page 499 499 Network Fundamentals TABLE 12–1 SEQUENCE OF EVENTS Activity Title Immediate Predecessors Activity Time, Weeks 1–2 2–3 2–4 3–5 3–7 4–5 4–8 5–6 6–7 7–8 8–9 A B C D E F G H I J K — A A B B C C D,F H E,I G,J 2 2 3 which relates each event to its immediate predecessor Large projects can easily be converted into PERT networks once the following questions are answered: ● ● ● What job immediately precedes this job? What job immediately follows this job? What jobs can be run concurrently? Figure 12–4 shows a typical PERT network The bold line in Figure 12–4 represents the critical path, which is established by the longest time span through the total system of events The critical path is composed of events 1–2–3–5–6–7–8–9 The critical path is vital for successful control of the project because it tells management two things: ● ● Because there is no slack time in any of the events on this path, any slippage will cause a corresponding slippage in the end date of the program unless this slippage can be recovered during any of the downstream events (on the critical path) Because the events on this path are the most critical for the success of the project, management must take a hard look at these events in order to improve the total program Using PERT we can now identify the earliest possible dates on which we can expect an event to occur, or an activity to start or end There is nothing overly mysterious about this type of calculation, but without a network analysis the information might be hard to obtain PERT charts can be managed from either the events or the activities For levels 1–3 of the Work Breakdown Structure (WBS), the project manager’s prime concerns are the milestones, and therefore, the events are of prime importance For levels 4–6 of the WBS, the project manager’s concerns are the activities The principles that we have discussed thus far also apply to CPM The nomenclature is the same and both techniques are often referred to as arrow diagramming methods, or activity-on-arrow networks The differences between PERT and CPM are: ● PERT uses three time estimates (optimistic, most likely, and pessimistic as shown in Section 12.7) to derive an expected time CPM uses one time estimate that represents the normal time (i.e., better estimate accuracy with CPM) c12.qxd 1/21/09 3:17 PM Page 500 500 NETWORK SCHEDULING TECHNIQUES PMBOK® Guide, 4th Edition 6.2 Activity Sequencing 1 2 2 EVENT CODE TIME ϭ WEEKS LEGEND CONTRACT NEGOTIATED (START) CONTRACT SIGNED EVENT LONG LEAD PROCUREMENT ACTIVITY MANUFACTURING SCHEDULES BILL OF MATERIALS SHORT LEAD PROCUREMENT MANUFACTURING PLANS MATERIAL SPECIFICATION START- UP ACTIVITY CRITICAL PATH FIGURE 12–4 ● ● ● ● Simplified PERT network PERT is probabilistic in nature, based on a beta distribution for each activity time and a normal distribution for expected time duration (see Section 12.7) This allows us to calculate the “risk” in completing a project CPM is based on a single time estimate and is deterministic in nature Both PERT and CPM permit the use of dummy activities in order to develop the logic PERT is used for R&D projects where the risks in calculating time durations have a high variability CPM is used for construction projects that are resource dependent and based on accurate time estimates PERT is used on those projects, such as R&D, where percent complete is almost impossible to determine except at completed milestones CPM is used for those projects, such as construction, where percent complete can be determined with reasonable accuracy and customer billing can be accomplished based on percent complete 12.2 GRAPHICAL EVALUATION AND REVIEW TECHNIQUE (GERT) PMBOK® Guide, 4th Edition 6.5.2 Schedule Network Analysis Graphical evaluation and review techniques are similar to PERT but have the distinct advantages of allowing for looping, branching, and multiple project end results With PERT one cannot easily show that if a test fails, c12.qxd 1/21/09 3:17 PM Page 501 501 Dependencies we may have to repeat the test several times With PERT, we cannot show that, based upon the results of a test, we can select one of several different branches to continue the project These problems are easily overcome using GERT [For additional information on the GERT technique, see Jack R Meredith and Samuel J Mantel, Jr., Project Management, 3rd ed (New York: Wiley; 1995); pp 364–367.] 12.3 DEPENDENCIES PMBOK® Guide, 4th Edition 6.2 Activity Sequencing 6.2.2.2 Dependency Determination ● ● There are three basic types of interrelationships or dependencies: ● Mandatory dependencies (i.e., hard logic): These are dependencies that cannot change, such as erecting the walls of a house before putting up the roof Discretionary dependencies (i.e., soft logic): These are dependencies that may be at the discretion of the project manager or may simply change from project to project As an example, one does not need to complete the entire bill of materials prior to beginning procurement External dependencies: These are dependencies that may be beyond the control of the project manager such as having contractors sit on your critical path Sometimes, it is impossible to draw network dependencies without including dummy activities Dummy activities are artificial activities, represented by a dotted line, and not consume resources or require time They are added into the network simply to complete the logic In Figure 12–5, activity C is preceded by activity B only Now, let’s assume that there exists an activity D that is preceded by both activities A and B Without drawing a dummy activity (i.e., the dashed line), there is no way to show that activity D is preceded by both activities A and B Using two dummy activities, one from activity A to activity D and another one from activity B to activity D, could also accomplish this representation Software programs insert the minimum number of dummy activities, and the direction of the arrowhead is important In Figure 12–5, the arrowhead must be pointed upward O PMBOK® Guide, 4th Edition 6.2.2.1 Arrow Diagramming Method D O A O DUMMY B C O FIGURE 12–5 Dummy activity O c12.qxd 1/21/09 3:17 PM Page 502 502 NETWORK SCHEDULING TECHNIQUES 12.4 SLACK TIME Since there exists only one path through the network that is the longest, the other paths must be either equal in length to or shorter than that path 6.5.2 Schedule Development Therefore, there must exist events and activities that can be completed 6.5.2.2 Critical Path Method before the time when they are actually needed The time differential between the scheduled completion date and the required date to meet critical path is referred to as the slack time In Figure 12–4, event is not on the crucial path To go from event to event on the critical path requires seven weeks taking the route 2–3–5 If route 2–4–5 is taken, only four weeks are required Therefore, event 4, which requires two weeks for completion, should begin anywhere from zero to three weeks after event is complete During these three weeks, management might find another use for the resources of people, money, equipment, and facilities required to complete event The critical path is vital for resource scheduling and allocation because the project manager, with coordination from the functional manager, can reschedule those events not on the critical path for accomplishment during other time periods when maximum utilization of resources can be achieved, provided that the critical path time is not extended This type of rescheduling through the use of slack times provides for a better balance of resources throughout the company, and may possibly reduce project costs by eliminating idle or waiting time Slack can be defined as the difference between the latest allowable date and the earliest expected date based on the nomenclature below: PMBOK® Guide, 4th Edition TE ϭ the earliest time (date) on which an event can be expected to take place TL ϭ the latest date on which an event can take place without extending the completion date of the project Slack time ϭ TL Ϫ TE The calculation for slack time is performed for each event in the network, as shown in Figure 12–6, by identifying the earliest expected date and the latest starting date For event 1, TL Ϫ TE ϭ Event serves as the reference point for the network and could just as easily have been defined as a calendar date As before, the critical path is represented as a bold line The events on the critical path have no slack (i.e., TL ϭ TE) and provide the boundaries for the noncritical path events.5 Since event is critical, TL ϭ TE ϭ ϩ ϭ 10 for event Event terminates the critical path with a completion time of fifteen weeks The earliest time for event 3, which is not on the critical path, would be two weeks (TE ϭ ϩ ϭ 2), assuming that it started as early as possible The latest allowable date is obtained by subtracting the time required to complete the activity from events to from the latest starting date of event Therefore, TL (for event 3) ϭ 10 Ϫ ϭ weeks Event can now occur anywhere between weeks and without interfering with the scheduled completion date of the project This same procedure can be applied to event 4, in which case TE ϭ and TL ϭ There are special situations where the critical path may include some slack These cases are not considered here bindsub.qxd 1/21/09 5:27 PM Page 1082 1082 SUBJECT INDEX Personnel, see Staffing PERT, see Program Evaluation and Review Technique Peterson, Kenneth, 989 Peter’s Prognosis, 248 PEV (planned earned value), 662 PFISs (performance failure information systems), 960–961 Phaseouts, project, 453–454 Physical exhaustion, 291 Physiological needs, 195 P&L (profit and loss), 50 Planned earned value (PEV), 662 Planning: authority for, 465 capacity, 967–968 and configuration management, 475–476 consequences of poor, 412 cycle of, 449–450 definition of, 412 detailed schedules/charts, use of, 454–457 elements of, 464 failure of, 451–452 and fast-tracking, 474–475 and focusing on target, 417–418 general, 415–418 and identification of specifications, 431–433 in ISO 9000, 886 and life cycle phases, 418–421 and management control, 469–472 master production schedule, use of, 457–458 and milestone schedules, 433–434 and organizational level, 416 participants in, 424 as phase, 415–418 for phaseouts/transfers, 453–454 project charter, use of, 465, 466, 468–469 by project manager, 19–20, 151–152, 159 project plan, use of, 459–464 quality plan, 889–890 questions to ask when, 437 reasons for, 414 risk, 753–754 role of executive in, 444–450 role of project manager in, 412 and statement of work, 426–431 and stopped projects, 452–453 subdivided work descriptions, use of, 450–451 tools/techniques for, 424–426 validation of assumptions in, 414–415 and work breakdown, 434–444 Planning failure, 63, 65 Planning phase (project life cycle), 68–69, 418–421, 465–468 PMBOK, see Project Management Institute Guide to the Body of Knowledge PMMM (project management maturity model), 928–932 PMOs, see Project management offices POs, see Project offices Poka-yoke, 914 Policy: communications, 241 conflict-resolution, 300–301 management, 249–251 personnel, 143 quality, 887 Political erosion, law of, 248 Political risks, 621 Position power, 208 Posner, Barry Z., 219–220 Power, 206–209 Precedence networks, 523–526 Preferred suppliers, 346 Prekickoff meeting, 423 bindsub.qxd 1/21/09 5:27 PM Page 1083 1083 Subject Index Price-based award strategy, 847 Price ceiling, 851 Price variances (PV), 676, 677 Pricing, 571–572 and backup costs, 595–598 developing strategies for, 572–573 and labor distributions, 580–584 and learning curve, 832–835 and low-bidder dilemma, 599 and manpower requirements, 590–592 and materials/support costs, 586–589 organizational input needed for, 578–580 and overhead rates, 584–586 pitfalls with, 600–601 process of, 576–578 reports, pricing, 589–590 review procedure, 592–594 in smaller companies, 338 special problems with, 599–600 steps in, 589 systems, 594–595 Primary success factors, 60–62 Priorities: among risks, 793–795 conflict resolution and establishment of, 299–300 project, 946 and project success, 370 Probability distributions, 772–775 Problems, 744–745 Problem-solving: by management, 226 in matrix organizations, 107 project management and, systems approach to, 82–85 Procedural documentation, 932–936 Procedures, management, 249–251 Process approach (risk identification), 759–760 Process capability (Cp), 910–912 Process proofing, 786 Procurement, 840–842 conducting, 845–851 planning for, 842–845 Procurement staff, resistance to change by, 78 Produceability, 947 Production point, 851 Production risk, 755 Productivity, Product management, project management vs., 57–58 Product stakeholders, Professionalism, 342 Professional needs, 197 Professional resistance, 77–79 Profit and loss (P&L), 50 Profit ceiling, 851 Profit floor, 851 Programs: definitions of, 55 as subsystems, 55 Program Evaluation and Review Technique (PERT), 494–500, 503–516, 519, 521–523 activity time, estimation of, 512–513 advantages of, 495 alternatives to, 522–523 conversion of bar charts to, 497, 498, 559 CPM vs., 499–500 crash times in, 516–517 critical path in, 499 development of, 494–495 disadvantages of, 495 GERT vs., 499–500 problem areas in, 519, 521–522 replanning techniques with, 508–512 slack time in, 503–508 bindsub.qxd 1/21/09 5:27 PM Page 1084 1084 SUBJECT INDEX Program Evaluation and Review Technique (PERT) (continued) standard nomenclature in, 496–497 steps in, 514–516 total project time, estimation of, 513–514 Program metrics, 788 Progress reviews, 969 Project(s): breakthrough, 354–355 categories of, 56 classification of, 26 defining success of, definition of, 2, 55 evaluation of, 1020 as “good business,” 25 internal vs external, 46 labor-intensive, 120 long-term, mega, 338–339 organizational chart for, 175–178 procurement strategy for, 840–841 scope of, 426 short-term, terminated, 369, 452–454 Project audits, 479 Project-based organizations, 22 Project champions, 20–21 Project charter, 466, 468–469 Project charter authority, 206 Project closure, 74 Project commitments, 15 Project-driven organizations, 22–24, 143 career paths leading to executive management in, 29 marketing in, 24–25 resource trade-offs in, 738–739 Project financing, 620–621 Projectized (pure product) organizations, 103–105 Project leaders, 99–100 Project management: benchmarking, 963–964 benefits of, 43, 48, 49 as business process, xxi controlling function of, 193 corporate commitment to, 7–8 definition of, 4, 56 differing views of, 29–30 directing function of, 193–198 downside of, 21 driving forces leading to recognition of need for, 46–47 excellence in, failure of, 369 formal vs informal, 41 history of, 38–54 hybrid, 51 industry classification by utilization of, 50 informal, 26 and integration of company efforts, 120–121 matrix management vs., 106 new processes supporting, 52 obstacles to successful, and organizational expansion, 43–44 pictorial representation of, potential benefits from, 3–4 as problem-solving approach, process groups in, product management vs., 57–58 and project authority, 198–206 relationship of product and, 57 risk management linked to, 745 in small and medium-sized companies, 125–128 successful, 3, 17–18, 143 Project management information systems, 959–961 Project Management Institute Guide to the Body of Knowledge bindsub.qxd 1/21/09 5:27 PM Page 1085 1085 Subject Index (PMBOK), 3, 38, 648, 888–889, 1055–1059 Project Management Knowledge Base, 342 Project management maturity model (PMMM), 928–932 Project management methodologies, 74–76, 936–937, 946–947 Project management offices (PMOs), 955 See also Project offices networking, 959 virtual, 53 Project manager(s): administrative skills of, 152–153 attitude of, availability of, 155 as business leaders, 8–9 and communications policy, 241 communication traps between line managers and, 245 and conflict resolution, 298–299 conflict resolution skills of, 150–151 duties of, 159–163 and employee evaluations, 320–323 entrepreneurial skills of, 152 executives as, 154 expectations of, 371–372 integrative responsibilities of, 12, 13, 44–45 leadership skills of, 149–150, 209, 220–221, 225–227 and line managers, 8–12, 164, 229–230, 345–346, 472–474 in line-staff organizations, 102–103 location of, within organization, 27–28 management support-building skills of, 153 in matrix organizations, 107–108, 121–122 maturity of, 154–155 multiple projects under single, 154 need for, 9–10 next generation of, 158–159 organizational skills of, 152 part-time, 154 performance measurement for, 330–331 personal attributes of, 143–144, 146–147 and planning, 412 as planning agent, 19–20 planning skills of, 151–152 and problems with employees, 227–230 professional responsibilities of, 342–345 project champions vs., 20–21 in project selection process, 448 in pure product organizations, 104 qualifications of, 159–163 resource allocation skills of, 153 responsibilities of, 4, 145–146, 159–163, 342–345 and risk, 229 role of, 12–14 selection of, 144–148, 154–157 skill requirements for, 148–153 and stress, 290–292 team-building skills of, 149 technical expertise of, 144, 151, 155–156 time management by, 289–290 training of, 148, 157 use of interpersonal influences by, 206–209 viewpoints of line managers vs., 210 Project milestone schedules, 433–434 Project offices (POs), 165–166, 169–174, 337, 955–969 benchmarking by, 963–964 business case development by, 964–965 bindsub.qxd 1/21/09 5:27 PM Page 1086 1086 SUBJECT INDEX Project offices (POs) (continued) capacity planning by, 967–968 communications bottleneck in, 243–244 and continuous improvement, 967 customized training by, 965–966 dissemination of information from, 961–962 implementation risks with, 957–958 information systems for, 959–962 mentoring by, 962 networking, 959 present-day, 956–957 and pricing, 592 and project management information systems, 959–961 risks of using, 968–969 scheduling by, 454–455 stakeholder management by, 966–967 standards and templates developed by, 963 training, 965–966 types of, 958–959 Project opportunities, 25 Project plans, 459–464 benefits of, 459 development of, 459 distribution of, 462 structure of, 461–462 Project pricing model, 595 Project review meetings, 242–243 Project risk, 602–606, 755 Project selection process, 448 Project specifications, 431–433 Project sponsors, 384–393 committees as, 390–391 and decentralization of project sponsorship, 392 handling disagreements with, 393–394 invisible, 389–390 multiple, 370 projects without, 386–387 role of, 384–393 termination of project by, 67 Project sponsorship, 19 Project termination, 369 Promotional communication style, 240, 242 Proposals, 863–867 Prospect theory, 744 Prototyping, 786 Proverbs, management, 245–248 Pudder’s law, 248 Pure product (projectized) organizations, 103–105 Putin, Vladimir, 975 Putt’s law, 248 PV, see Price variances Qualitative risk analysis, 761, 766–771 Quality audits, 479 Quality circles, 916–917 Quality management and control, 873–923 acceptance sampling, 912 audits, quality, 889 cause-and-effect analysis, 895–899 and changing views of quality, 874 control charts, 901–910 costs of, 606–608, 890–893 as customer-driven process, 874–875 data tables/arrays, 894–895 and definition of quality, 875–877 ISO 9000, 885–886 and just-in-time manufacturing, 917–919 leadership, quality, 915–916 Malcolm Baldrige National Quality Award, 884–886 bindsub.qxd 1/21/09 5:27 PM Page 1087 1087 Subject Index objectives, quality, 888 Pareto analysis, 897–899 pioneers in, 880–881 policy, quality, 887 process capability, 910–912 quality assurance, 888 quality control, 888–889 quality plan, 889–890 responsibility for, 916 scatter diagrams, 899–901 Six Sigma, 912–913 Taguchi approach, 881–884 tools for, 893–910 trend analysis, 901 Quality manufacturing process risk, 792 Quality movement, 877–880 Quantitative risk analysis, 761, 771–772 Quantitative tools, 12 RAM, see Responsibility assignment matrix Ratio risk scales, 766–767 Raytheon Corp., 1001 R&D, see Research and development Reassignment, job, 164 Recession, 51 “Recognition seeker” (employee role), 181–182 Recruitment, 167 Redesign, product, 826 Red flag, 391 Re-engineering, 52 Referent power, 207 Reliability, 875 Reluctant Workers (case study), 294 Replanning, network, 508–512 Reports/reporting: customer, 556 pricing, 589–590 by project managers, 27–28 software for, 531 Requests for information (RFIs), 847 Requests for proposals (RFPs), 579–580, 847 Requests for quotation (RFQs), 847 Requirements (in systems approach), 83 Requirements approach (risk identification), 760 Research and development (R&D): project management, 47, 57, 122, 123, 156, 298, 608–612 resistance to change by staff of, 78 Resentfulness, 291–292 Resistance (to change), 76–81 Resource(s): company, trade-off of, see Trade-off analysis Resources Input and Review meeting, 423 Resource allocation, program managers and, 153 Responsibilities: to company/stakeholders, 344–345 during crises, 986 and organizational structure, 94, 95 professional, 342–345 Responsibility assignment matrix (RAM), 200, 202 Restructuring, organizational, 42, 968 Results-focused teams, 219 Reviews, 592–594, 786 Review meetings, 947 Review of Ground Rules meeting, 423 Rewards: financial, 341–342 for project teams, 333–336 Reward power, 206–208 RFIs (requests for information), 847 RFPs, see Requests for proposals bindsub.qxd 1/21/09 5:27 PM Page 1088 1088 SUBJECT INDEX RFQs (requests for quotation), 847 Richardson, John, 1008–1010, 1017 Risk(s), 741–746 acceptance of, 784 analysis of, 761–765 avoidance of, 784, 785 categories of, 758–759 causes of, 742 and concurrent engineering, 801–804 control of, 784, 785 and decision-making, 747–752 definition of, 743–745 dependencies between, 793–797 design, 790–791 and experience, 790 identification of, 753, 755–761 in Iridium Project, 995–996 and lessons learned, 790–793 levels of, 763 life testing, 791 manufacturing, 792 measuring, 514 monitoring, 753 personnel, 792–793 prioritization of, 793–795 procurement, 844–845 in project financing, 621 and project offices, 957–958, 968–969 quality manufacturing, 792 response options for, 784–787 sources for identification of, 755–757 tolerance for, 745–746, 798 and training, 793 transfer of, 784, 786–787 Risk acceptance, 784 Risk analysis, 618–619 cost evaluation, 762 schedule evaluation, 762 technical evaluation, 762 tools for, 762–763 Risk assessment, 812–814 Risk avoidance, 785 Risk control, 784–786 Risk handling, 782 Risk identification: approaches to, 759–760 bias in, 757–758 Risk management, 75, 743 and change management, 796–797 considerations for implementation of, 788–789 and decision-making, 747–752 definition of, 746–747 and executives, 392 as failure component, 65 impact of risk handling measures, 798–801 monitoring and control of risk, 788 Monte Carlo process for, 775–782 overinvestment/underinvestment in, 799 process of, 753 and project management, skills, 158 response mechanisms, risk, 782–787 training in, 754 uses of, 798 Risk management information systems (RMISs), 960 Risk Management Plan (RMP), 754, 783, 788–789 Risk mapping matrices, 767–768 Risk monitoring, 753 Risk neutral position, 745 Risk planning, 753–754 Risk ratings, 763–765 Risk response strategy, 743 Risk scales (templates), 766–767 Risk transfer, 786–787 Ritz-Carlton, 885 RMISs (risk management information systems), 960 bindsub.qxd 1/21/09 5:27 PM Page 1089 1089 Subject Index RMP, see Risk Management Plan Robust design, 786 Rogers Cantel Mobile Communications, 1006 Role conflicts, with project teams, 211 Royer, Isabelle, 395, 997–998 Salability, 874 Sales staff, resistance to change by, 77 Savage criterion, 750 SBUs (strategic business units), 128–129 Scalar chain of command, 239 Scatter diagrams, 899–901 Schedules: compression of, 528–529 master production, 457–458 preparation of, 454–457 Schedule conflicts, 298 Schedule evaluation, 762 Schedule performance index (SPl), 650–652, 665–666 Schedule performance monitoring, 788 Schedule variance (SV), 648–649 Scheduling: activity, 454–455 network, see Network scheduling techniques Schematic models, 564, 566 Scope changes, 7, 946, 949–954 business need for, 953 downstream effect of, 950 radical, 952 rationale for not approving, 954 reasons for, 951–952 timing of, 952–953 Scope change control, 75 Scope creep, 392–393 Scope statement, 426 Secondary success factors, 60–62 Secretive communication style, 242 Self-actualization, 196 Self-concept, 231 Self-esteem, 196 Sensitivity analysis, 618–619 Shared accountability, 15, 16 Sharing arrangement/formula, 851 Shewhart techniques, 877 Short-term projects, 5, 655 Shosteck, Herschel, 1011 Simulation, 786 Simultaneous engineering, see Concurrent engineering Situational Leadership® Model, 222–223 Six Sigma, 53 implementing, 912–913 lean, 914 Skills, people vs task, 232 Slack time, 502–508 Slope (of learning curve), 822, 827–828 Small companies, effective project management in, 125–128, 336–338 SMART rule, 296–297 SMEs (subject matter experts), 444 Smoothing (in conflict resolution), 305 Snyder, N T., 353–354 Social acceptability, 875 Social groups, 79 Social needs, 195 Software, project management, 530–534 classification of, 532–533 features of, 530–531 implementation of, 533–534 Software deliverables, Software reuse, 786 Solicitation package, 846 SOOs (Statements of Objectives), 843 SOW, see Statement of work Space program, 39 Space Shuttle Challenger explosion, 981–982 bindsub.qxd 1/21/09 5:27 PM Page 1090 1090 SUBJECT INDEX Space Shuttle Columbia disaster, 982–983 SPCs, see Statistical process controls Special projects, 56 Special-project meetings, 238 Specifications, project, 431–433 SPI, see Schedule performance index Spinetta, Jean-Cyril, 974 Sponsorship, project, 19, 386 Sporadic problems, 880 Staffing, See also specific job titles, e.g.: Project manager(s) and directing, 193 and employee “roles,” 181–183 environment for, 142–144 as insurable risk, 758 overstaffing, 110 process of, 163–169 risk factors with, 792–793 special problems with, 178–180 of teams, 211, 213 understaffing, 286 Staff projects, 56 Stage-gate process, 66–67 Staiano, Edward, 1003, 1006, 1008, 1017, 1019–1020 Stakeholders, 6–7 balancing interests of, 342–343 and crisis management, 986 interacting with, 343 managing, 966–967 responsibilities to, 344–345 Standards, development of, 963 Standard items, 786 Standardization, product, 826 Standard Practice Manuals, 340–341 “Star” employees, 175 Statements of Objectives (SOOs), 843 Statement of work (SOW), 153, 425–431 and contract statement of work, 426–427 and contract work breakdown structure, 426–431 misinterpretation of, 427 preparation of, 426–431 and requirement cycle, 843 specifications in, 431–433 Statistical process controls (SPCs), 878, 893 Status, 678–685 Status reporting, 678–685 Stonewalling, 18 Stopped projects, 452–453 Strategic business units (SBUs), 128–129 Strategic partnerships, 347 Strategic POs, 958 Strategic project pricing model, 595 “Strawman” rating definitions, 763 Stress, 290–292 manifestations of, 290–292 positive aspects of, 292 in project management, 290–292 Strong matrix structures, 117 Subdivided work descriptions (SWDs), 450–451 Subjective sources (risk), 755 Subject matter experts (SMEs), 444 Subsystems, 38, 55 Success, project, 60–63, 365–373 definitions of, 60–62 and effectiveness of project management, 370–371 and expectations, 371–372 predicting, 366–371 Sunk cost fallacy, 1018–1019 Supervising, 193 Suppliers, 346 Support costs, 586–589 bindsub.qxd 1/21/09 5:27 PM Page 1091 1091 Subject Index Support risk, 755 Survival, 47 SV (schedule variance), 648–649 Swagelok Company, 937–940 SWDs (subdivided work descriptions), 450–451 “Swing” design (communication analogy), 233 Synthesis phase (systems approach), 83 System(s): definition of, 54–55 extended, 55 open vs closed, 54 Systems approach, 82–85 Systems engineering, 745 Systems management, 38 Systems pricing, 594–595 Systems theory, 38, 192 TAAF (test-analyze-and-fix), 786 Taguchi method, 881–884 Target cost, 851 Target profit, 851 Task forces, 100–101 Task skills, people skills vs., 232 Teams, project, 143, 169, 174–175 anxiety in, 212, 214–216 barriers to development of, 209–214 communication within, 212, 215 conflicts within, 209, 211 decision making by, 215 dysfunctions of, 217–220 effective vs ineffective, 216 expectations of/about, 412 IPTs, 350–352 leadership of, 209, 213 management of newly formed, 212, 214–216 ongoing process of building, 216–217 performance measurement for, 331 and project manager, 149, 165 rewarding, 333–336 support of senior management for, 212, 214 virtual, 53, 352–354 Team members, interacting with, 351 Technical evaluation, 762 Technical expertise, 123, 144, 151, 155–156 Technical performance measurement (TPM), 788 Technical risks, 755, 759 Technical risk dependencies, 795–796 Technology: forecasting, 39 project managers’ understanding of, in pure product organizations, 105 shifts in, in traditional organizational structure, 95–96 Technology maturation efforts, 786 Teledesic Project, 1013, 1022 Teloxy Engineering (case study), 815 Telstar International (case study), 312–313 Template development, 963 Temporary assignments, 142 10 percent solution, 606–608 Terminated projects, 452–454 Termination, project, 369 Test-analyze-and-fix (TAAF), 786 Testing phase (project life cycle), 69 Texas Instruments (TI), 834 Thamhain, Hans, Theory of Constraints, 534, 535 Theory X, 194 Theory Y, 194–195 Theory Z, 195 Threat risk, 755 TI (Texas Instruments), 834 bindsub.qxd 1/21/09 5:27 PM Page 1092 1092 SUBJECT INDEX Time management, 232, 285–292 activity times, estimation of, 512–513 barriers to effective, 286–288 forms for, 288–289 identification of, as problem area, 286 and stress/burnout, 290–292 techniques for effective, 289–290 Time value of money, 615–616 Tip-of-the-iceberg syndrome, 23–24 Tired, being, 291 “To do” pad, 288 Tooling, 832 Top-down estimate, 574 “Top down” risk management, 789 “Topic jumper” (employee role), 181 Total project time, estimation of, 513–514 Total quality management (TQM), 51, 74, 875, 919–923 Toyota Production System (TPS), 914 TPM (technical performance measurement), 788 TPS (Toyota Production System), 914 TQM, see Total quality management Trade-off analysis, 715–739 alternative courses of action, list of, 721–722 conflict, recognition/understanding of, 718–720 corrective actions, 732–733 environment and status, review of project, 720–721 graphic analysis, 723–730 and industry preferences, 736–739 management approval, obtaining, 735 methodology for, 718–735 objectives, review of project, 720 and project constraints, 715–718 ranking of alternatives, 732 and type of contract, 735–736 Trade-off phase (systems approach), 83 Trade studies, 786 Traditional (classical) organizational structure, 95–98 advantages of, 95–97 disadvantages of, 97–98 Traffic light reporting system, 391 Training, 348–350 customized, 965–966 and directing, 193 for key initiatives/practices, 348–349 of new employees, 178–179 of project manager, 157 and risk, 793 risk management, 754 Transfers, project, 453–454 Translation phase (systems approach), 83 Tree diagrams, 751–752 Trends in project management, 927–947 capacity planning, 942–943 competency models, 943–945 continuous improvement, 937–941 do-it-yourself methodologies, 937 end-of-phase review meetings, 947 multiple projects, management of, 946–947 procedural documentation, development of, 932–936 project management maturity model, 928–932 Trend analysis, 901 Trophy Project (case study), 264–266 Trouble in Paradise (case study), 711–713 Truman’s law, 248 Trust, 95, 130, 164, 217–218, 244 Tversky, Amos, 744 Tylenol poisonings, 971, 976–979, 983 bindsub.qxd 1/21/09 5:27 PM Page 1093 1093 Subject Index Unallocated budget, 645 Uncertainty, decision-making under, 748–752 Uncooperativeness (in conflict resolution), 306 Understaffing, 286 Undistributed budget, 645 Unhappy, being, 291 Unified Project Management Methodology (UPMM™), 477–479 United Auto Workers, 844 U.S Air Force, 55 Unit hours, 822 Unit one, 822 UPMM™ (Unified Project Management Methodology), 477–479 Usage variances (UV), 676, 677 Uzdelewicz, Wojtek, 1022 VAC, see Variance at completion Validation of assumptions, 414–415 Values, personal, 228–229 Value-added costs, 819 Variance analysis, 647–666 causes of variances, 661 cost variance, 648–649 and development of cost/schedule reporting system, 650–652 and earned value concept, 655–658 50/50 rule, 656 government subcontractors, 654 issues addressed in, 655 organization-level analysis, 664–665 parameters for, 659 price variances, 676, 677 program team analysis, 665–666 schedule variance, 648–649 thresholds, variance, 650 usage variances, 676, 677 Variance at completion (VAC), 659, 666 Vertical work flow, Very large projects, 338–339 Vested interest in projects, 392 Virtual project management offices, 53 Virtual project teams, 53, 352–354 Visibility, 370–371 Visual aids, 238 Von Braun’s law of gravity, 248 Wage and salary administration, 80 Wald criterion, 750 Walkthroughs, 786 War rooms, 457 Wastes, seven, 919 “Watch lists,” 765 WBS, see Work breakdown structure Weak matrix structures, 117 Weekly meetings, 238 Welch, Jack, 913 Westinghouse, 885 What-if analysis, 531 Williams, Jim, 989–990 Williams Machine Tool Company (case study), 35–36 Windolph, John, 1004, 1017 “Withdrawer” (employee role), 182 Withdrawing (in conflict resolution), 306 Work breakdown structure (WBS), 434–444, 468, 946 and cost control, 640–641 decomposition problems, 440–444 for large projects, 437, 439 levels of, 434–436 preparation of, 437–440 and pricing, 576, 578 purpose of, 434–435 bindsub.qxd 1/21/09 5:27 PM Page 1094 1094 SUBJECT INDEX Work breakdown structure (WBS) (continued) and risk identification, 759–760 setting up tasks in, 437 Work flow, 4, 94–95, 98 Workforce stability, 824 Work habits, 79 Work specialization, 825 Worthlessness, feelings of, 291 “Wrap-up” insurance, 758 Written communications, 238 Written media, 238 Xerox, 347, 885 Yellow flag, 391 0/100 rule, 656 Zero-based budgeting, 633 Zielinski, D., 333–336 bindsub.qxd 1/21/09 5:27 PM Page 1095 KERZNER Project Management From the intricate framework of organizational behavior and structure that can determine project success to the planning, scheduling, and controlling processes vital to effective project management, the new edition thoroughly covers every key component of the subject This Tenth Edition features: ■ More than twenty-five case studies, including a new case on the Iridium Project covering all aspects of project management ■ 400 discussion questions ■ More than 125 multiple-choice questions Other powerful tools by Harold Kerzner: Project Management Workbook and PMP®/CAPM® Exam Study Guide, Tenth Edition (978-0-470-27872-7) Director for Project, Program and Portfolio Management at International Institute of Learning, Inc (IIL), a global learning solutions company that conducts training for leading corporations throughout the world A S YS T E M S A P P R OAC H TO P L A N N I N G, S C H E D U L I N G, New sections on scope changes, exiting a project, collective belief, and managing virtual teams PH D., is Senior Executive A N D CO N T R O L L I N G ■ HAROLD KERZNER, PROJECT N ow in a Tenth Edition, this industry-leading project management “bible” aligns its streamlined approach to the latest release of the Project Management Institute’s Project Management Body of Knowledge (PMI’s PMBOK® Guide), the new mandatory source of training for the Project Management Professional (PMP®) Certification Exam This outstanding edition gives students and professionals a profound understanding of project management with insights from one of the best-known and respected authorities on the subject M A NAGEMENT THE LANDMARK PRO JECT MANAGEMENT REFERENCE, NOW I N A NEW EDITION T E N T H E D I T I O N PROJECT MANAGEMENT A S YS T E M S A P P R OAC H TO P L A N N I N G, S C H E D U L I N G, A N D CO N T R O L L I N G Project Management Case Studies, Third Edition (978-0-470-27871-0) T E N T H E D I T I O N HAROLD KERZNER, P H.D ... [20 , 26 ] ᎏ [24 , 30] [30, 36] ᎏ [25 , 31] Situation a Situation b PMBOK® Guide, 4th Edition 6 .2. 2 Activity Sequencing F( ( 5, 22 15 ) ,2 2) C (6, 11) I (18, 21 ) (0, 6) (14, 19) (19, 22 ) G (1 ( 2, ... FOR DEPARTMENT D 28 43 26 41 3 34 FIGURE 12 14 49 53 A F c 12. qxd 10 G 51 Master PERT chart breakdown by department G c 12. qxd 1 /21 /09 3:17 PM Page 5 12 5 12 NETWORK SCHEDULING TECHNIQUES project. .. FIGURE 12 19 Determining project duration 4;10 0;4 A.4 4;10 10; 12 15;17 B.6 D .2 30 12 0;4 17 ;23 F.6 10 17 ;23 20 E.7 C .2 C .2 4;6 8;10 10;17 10;17 40 LEGEND EARLY 10; 12 D .2 LATE FINISH EARLY START