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Ahead of schedule
incurred. Because actual dollars spent do not guarantee project progress, this index is favored by many project managers when there is a high level of confidence in the original budget estimates. The second index views percent complete in terms of actual dollars spent to accomplish the work to date and the actual expected dollars for the completed project (EAC). The application of this view is written as Percent complete index (PCI-C) = ACWPtEAC =.321154 = 0.21 (21%) This percent complete indicates 21 percent of the project is completed, when viewed from the actual dollars spent to complete the work to date and the revised actual expected costs to complete the project. Some managers favor this index because it contains actual and revised estimates that include newer, more complete information. These two views of percent complete present different views of the "real" percent complete. Management must be careful to use all input sources to have a full grasp of the progress of the project. Technical Performance Measurement
Measuring technical performance is as important as measuring schedule and cost performance. Although technical performance is often assumed, the opposite can be true. The ramifications of poor technical performance frequently are more profoundsomething works or it doesn't if technical specifications are not adhered to. Assessing technical performance of a system, facility, or product is often accomplished by examining the documents found in the scope statement andor work package documentation. These documents should specify criteria and tolerance limits against which performance can be measured. For example, the technical performance of a software project suffered because the feature of "drag and drop" was deleted in the final product. Conversely, the prototype of an experimental car exceeded the miles per gallon technical specification and, thus, its technical performance. It is very difficult to specify how to measure technical performance because it depends on the nature of the project. Suffice it to say, measuring technical performance must be done. Project managers must be creative in finding ways to control this very important area. Software for Project CosWSchedule Systems
Software developers have created sophisticated schedulelcost systems for projects that track and report budget, actual, earned, committed, and index values. These values can be labor hours, materials, andor dollars. This information supports cost and schedule progress, performance measurements, and cash flow management. Recall from Chapter 3 that budget, actual, and.cornmitted dollars usually run in different time frames (see Figure 3-9). A typical computer-generated status report includes the following information outputs:
1. 2. 3. 4. 5. 6. 7. 8.
Revised costs at completion (EAC). New forecast costs at completion (FAC). Actual paid this period (ACWP). Cumulative total paid to date (ACWP). Schedule variance (BCWPBCWS) by cost account and WBS and OBS. Cost variance (BCWPIACWP) by cost account and WBS and OBS. Indexes--cost, schedule, total percent complete. Paid and unpaid commitments.
CHAPTER 12: PROGRESS AND PERFORMANCE MEASUREMENT AND RlALUATlON
The variety of software packages, with their features and constant updating, is too extensive for inclusion in this text. Software developers and vendors have done a superb job of providing software to meet the information needs of most project managers. Differences among software in the last decade have centered on improving "friendliness" and output that is clear and easy to understand. Anyone who understands the concepts and tools presented in Chapters 3 through 7 and Chapter 12 should have little trouble understanding the output of any of the popular project management software packages. FORECASTING FINAL PROJECT COST
Early questions raised by management are: Are we on budget? What will the final project cost be? J.f the project is small or moderate in size, and a good look-ahead system for revising cost estimates exists, the EAC procedure suggested earlier in the chapter is probably adequate to estimate final costs. However, if the project is a large one, revised cost estimates far into the future are less reliable or nonexistent. One method that has gained acceptance and proven to be accurate and reliable in forecasting final project costs uses the CPI performance index (CPI = BCWPIACWP). The equation for this forecasting model (FAC) is as follows: ETC =
Work remaining - BAC - BCWP CPI - BCWPIACWP
FAC = ETC + ACWP where ETC = estimated cost to complete. CPI = cumulative cost performance index to date. BCWP = cumulative budgeted cost of work completed to date. ACWP = cumulative actual cost of work completed to date. BAC = total budget of the baseline. FAC = forecasted total cost at completion. For example, if we assume the following information is available, the forecast cost at completion (FAC) is computed as follows: Total baseline budget (BAC) for the project
Cumulative earned value (BCWP) to date
Cumulative actual cost (ACWP) to date
The final project cost forecast is $6,250. Research data5 indicate that on large projects that are more than 20 percent complete, the model performs well with an error of less than 10 percent. This model can also be used for WBS and OBS cost accounts that have been used to forecast remaining and total costs. It is important to note that this model assumes conditions will not change, the cost database is reliable, BCWP and ACWP are cumulative, and past project progress is representative of future progress. This objective forecast represents a good starting point or benchmark that management can use to compare other forecasts that include other conditions and subjective judgments.
OTHER CONTROL ISSUES The Costs and Problems of Data Acquisition
The accompanying Snapshot from Practice captures some of the frequent issues surrounding resistance to data collection of percent complete for earned value systems. Similar pseudo-percent complete systems have been used by others.6 Such pseudopercent complete approaches appear to work well in multiproject environments that include several small and medium-sized projects. Assuming a one-week reporting period, care needs to be taken to develop work packages with a duration of about one week long so problems are identified quickly. For large projects, there is no substitute for using a percent complete system that depends on data collected through observation at clearly defined monitoring points. Baseline Changes
Changes during the life cycle of projects are inevitable and will occur. Some changes can be very beneficial to project outcomes; changes having a negative impact are the ones we wish to avoid. Careful project definition can minimize the need for changes. The price for poor project definition can be changes that result in cost overruns, late schedules, low morale, and loss of control. Change comes from external sources or from within. Externally, for example, the customer may request changes that were not included in the original scope statement and that will require significant changes to the project and thus to the baseline. Or the government may render requirements that were not a part of the original plan and that require a revision of the project scope. Internally, stakeholders may identify unforeseen problems or improvements that change the scope of the project. In rare cases scope changes can come from several sources. For example, the Denver International Airport automatic baggage handling system was an afterthought supported by several project stakeholders that included the Denver city government, consultants, and at least one airline customer. The additional $2 billion in costs were staggering, and the airport opening was delayed 16 months. If this automatic baggage scope change had been in the original plan, costs would have been only a fraction of the overrun costs, and delays would have been reduced significantly. Generally, project managers should resist baseline changes. Baseline changes should be allowed only if it can be proven the project will fail without the change or the project will be improved significantly with the change. This statement is an exaggeration, but it sets the tone for approaching baseline changes. In the field, if the change results in a significant effect on the project and requires a scope change, the baseline can be changed. The effect of the change on the scope and baseline should be accepted and signed off by the project customer. Figure 12-14 depicts the cost impact of a scope change on the baseline at a point in time-"today." Line A represents a scope change that results in an increase in cost. Line B represents a scope change that decreases cost. Quickly recording scope changes to the baseline keeps the computed earned values valid. Failure to do so results in misleading cost and schedule variances. Care should be taken to not use baseline changes to disguise poor performance on past or current work. A common signal of this type of baseline change is a constantly revised baseline that seems to match results. Practitioners call this a "rubber baseline" because it stretches to match results. Most changes will not result in serious scope changes and should be absorbed as positive or negative variances. Retroactive changes for work already accomplished should not be allowed. Transfer of money among cost accounts should not be allowed after the work is complete. Unforeseen changes can be handled through the contingency reserve. The project manager typically makes this decision. In some large projects, a partnering "change review team," made up of members of the project and customer teams, makes all decisions on project changes.
A PSEUDO-EARNED VALUE PERCENT COMPLETE APPROACH
A consult^tnt for the U.S. 1 Foresl: Service s~~ggestedtli e use of E?arnedvalue to monitl3r the 50plus t i m b!r~sale projc?cts taking place concurrently inI the distric:t. As projects were clompleted, , new ones were srartea. tarnea value wa:s tried for approximately nine rrionths. After a ninemonth trial, the process was to be reviewed by a task 1force. The t ask force concluded the earned i g and fort?casting prioject progress; howvalue system provided good information for monitori~ ever, the costs and problems of collecting timely perc:ent complt?te data wt?reunaccel3table because there were no funds available to collect such data. .. ... - .satisfied the problem. The disThe lev,el of detail dilemma was discuss^ed, but no :~uggesuur~s I control, while excessive reporting requires cussion re'cognized that too little data fail tcI offer good paperwork: and people, which are costly. -The task fclrce concluded progress and performance -.. . "I.L ------. t^i^u. .u, A~ uIue ~neasuredusing a pseudo-versior~ p a r ~ a rcomplete ~t while not giving up much accuracy for tt-le total pro ject. This rnodified ar)preach to percent cc~mpleterequired that very large work pack;ages (aboi~t 3 to 5 pt?rcent of alI work packages in a project) be divided into smaller work pacC:ages for c:loser contl,ol and identification of problems sooner. It was declided work . . . -. . , pacKages ot about a week's durat~onwould be ideal. I ne pseudo-version required only a relei percent c phone call and "yeslrlo'' answers to one of the followi ng questior
tias work on the work package started?
a,. ., .:.- . . . vvorKlrig or1 rrie pacna!~ e ?
Yes = 5C
Is the work package c ompleted?
Yes = 1C
L L -
Data for the pseudo-earned value, percent complete system was collected for all 50-plus pro]ects by an intern working fewer than eight hours each week.
Plans seldom materialize in every detail as estimated. Because perfect planning doesn't exist, some contingency funds should be agreed upon before the project commences to cover the unexpected. The size of the contingency reserve should be related to the uncertainty and risk of schedule and cost estimate inaccuracies. For example, if the project represents little that is new to the project team, the contingency reserve
FIGURE 12-1 4 Scope Changes to a Baseline
might be 1 to 2 percent of the total cost of the project. Conversely, if the project represents something that is new to all team members, the reserve might be 5 to 20 percent of the total cost. A rule of thumb used by a construction management firm centers around the percent of design complete when the project begins. For example, if 30 percent of design is completed when the project begins, a contingency reserve of 25 percent is included as a hedge against uncertainty; if 60 percent of design is complete, the reserve is 15 percent; if design is 95 percent complete, a 10 percent reserve is included. Contingency reserve funds represent flexibility for the project manager so he or she can move the project fonvard. Contingency reserve is not a free lunch for all who come. Reserve funds should only be released by the project manager on a very formal and documented basis. Recall that budget reserve contingency funds are not for scope changes. Scope changes are covered by management reserve funds. Chapter 5 provides a detailed description of budget and management contingency reserves. The trend today is to allow all stakeholders to know the size of the contingency reserve (even subcontractors). This approach is built on trust, openness, and the self-discipline of the project stakeholders who are all focused on one set of goals.
Large changes in scope are easily identified. It is the "minor refinements" that eventually build to be major scope changes that can cause problems. These small refinements are know in the field as scope creep. For example, the customer of a software developer requested small changes in the development of a custom accounting software package. After several minor refinements, it became apparent the changes represented a significant enlargement of the original project scope. The result was an unhappy customer and a development firm that lost money and reputation. Although scope changes are usually viewed negatively, there are situations when scope changes result in positive rewards. Scope changes can represent significant opportunities. In product development environments, adding a small feature to a product can result in a huge competitive advantage. A small change in the production process may get the product to market one month early or reduce product cost. Scope creep is common early in projects--especially in new-product development
projects.7 Customer requirements for additional features, new technology, poor design assumptions, etc., all manifest pressures for scope changes. Frequently these changes are small and go unnoticed until time delays or cost overruns are observed. Scope creep affects the organization, project team, and project suppliers. Scope changes alter the organization's cash flow requirements in the form of fewer or additional resources, which may also affect other projects. Frequent changes eventually wear down team motivation and cohesiveness. Clear team goals are altered, become less focused, and cease being the focal point for team action. Starting over again is annoying and demoralizing to the project team because it disrupts project rhythm and lowers productivity. Project suppliers resent frequent changes because they represent higher costs and have the same effect on their team as on the project team. The key to managing scope creep is change control. (Chapter 5 discusses the process. See Figure 5-5 to review key variables to document in project changes.) First, the original baseline must be well defined and agreed upon with the project customer. Before the project begins, it is imperative that clear procedures be in place for authorizing and documenting scope changes by the customer or project team. If a scope change is necessary, the impact on the baseline should be clearly documented-for example, cost, time, dependencies, specifications, responsibilities, etc. Finally, the scope change must be quickly added to the original baseline to reflect the change in budget and schedule; these changes and their impacts need to be communicated to all project stakeholders. SUMMARY
The best information system does not result in good control. Control requires the project manager to use information to steer the project through rough waters. Control and Gantt charts are useful vehicles for monitoring time performance. The cost/schedule system allows the manager to have a positive influence on cost and schedule in a timely manner. The ability to influence cost decreases with time; therefore, timely reports identifying adverse cost trends can greatly assist the project manager in getting back on budget and schedule. The integrated cost/schedule model provides the project manager and other stakeholders with a snapshot of the current and future status of the project. The benefits of the cost/schedule model are as follows:
1. Measures accomplishments against plan and deliverables. 2. Provides a method for tracking directly to a problem work package and organization unit responsible. 3. Alerts all stakeholders to early identification of problems, and allows for quick, proactive corrective action. 4. Improves communication because all stakeholders are using the same database. 5. Keeps customer informed of progress, and encourages customer confidence that the money spent is resulting in the expected progress. 6. Provides for accountability over individual portions of the overall budget for each organizational unit. R M E W QUESTIONS
1. How does earned value give a clearer picture of project schedule and cost status than a simple plan versus actual system? 2. How does a baseline facilitate integrating the planning and controlling of projects? 3. Why is it important for project managers to resist changes to the project baseline? Under what conditions would a project manager make changes to a baseline? When would a project manager not allow changes to a baseline?
4. How does a project rollup help identify project cost and schedule problems? 5. Costs can be aggregated or disaggregated horizontally and vertically. What are the advantages of this system? 6. What are the differences among BAC, EAC, and FAC? EXERCISES
1. Given the following information for the latest period (5), answer the questions below: Actual costs to date are $550. The original budget through period 5 was $350. The revised costs for the project at completion (EAC) are $9,000. The sum of the earned values to date is $400. The total original budget (BAC) for the project was $7,000. The resedcontingency fund has not been used. a. What is the schedule variance at the end of period 5? b. What is the cost variance at the end of period 5? c. Given the current information, will the project finish on schedule and on budget? Justify your answer. 2. Fiberoptik Ltd. is installing fiber-optic lines into two identical ENTEL production facilities in different counties in the United Kingdom. Both projects have cost estimates of £50,000 per week and are scheduled to be completed in 30 weeks. The following actual and earned value data (in thousands of pounds) have been collected for each project for eight weeks: Week
Project 1 actual
Project 1 earned value
Project 2 actual
Project 2 earned value
Compare the schedule and cost variance for each project at the end of week 8. Compute the cost and percent complete index. What can you say about the performance for each project? Note: For the following earned-value exercises 3 through 6,make the following assumptions: 1. Assign costs linearly when percent complete rule 3 is used in baselines and status reports. 2. Assume if work is in process, actual direct costs are being incurred each period. 3. Use the earned-value rules below for all exercises: a. 100% of budget when complete. b. 50% when started and 50% when finished. c. Observed percent complete in dollars. 4. All EAC figures are revised estimates, not forecasted. FAC is only used in computer outputs. 3. Given the following information, develop a project baseline and prepare a status report for period 7. From your status report, determine if the project is ahead or behind schedule. How
many time periods? How much is the project under or over budget? What is the forecasted completion date? Cost? Explain in detail to the project manager what the information means. Additional infonnation at the end of period 7: Activity 3 has been observed to be 50 percent complete in dollars. Activities 1 and 2 are complete. Activities 3 and 4 are in process with revised cost and duration information. Activities 5,6,7, 8, and 9 have not started. Activities 5 and 8 have revised cost information.
BCWP totals Cumulative BCWP total
Cost variance Schedule variance
4. Given the information provided, complete a baseline and status report for the end of period 5. Your status report should include the SV, CV, CPI, SPI, PCI(B), PCI(C), a cost summary report, and a project cost graph. What is the forecasted completion date? Cost? Using your well-labeled project graph, explain to the project owner what the current and future expected status of the project are at the end of period 5. Additional information at the end of period 5: Activities 1, 2,3,4, and 5 are complete. Activities 1 , 2 , 3 and 9 have revised time durations. Activities 6 and 7 are in process with revised cost information. Activities 8 and 9 have not started. Activities 8 and 9 have revised cost information.
Schedule information Earned- Activity1 value work Duration rule package
0 0 0 0 0 0 0 0
Baseline budget needs Total
20 8 10 15 16
Total BCWS by period Cumulative BCWS by period
CHAPTER 12: PROGRESS AND PERFORMANCE MEASUREMENT AND EVALUATION
Project Cost Summary Report D.
,ctivity/ work xkage
Earned budget value , (BCWP)
Actual cost (ACWP
. r m l r . .* ..,- , . Total cost at completlo
OriginalI cost budget (BCWS 1
Latest expected act ual (EE\C)
5. Given the following information, develop a project baseline and prepare a status report for period 5. Is the project ahead or behind schedule? How many time periods? How much is the project under or over budget? What is the forecasted completion date? Cost? Compute the project ratios. Explain in detail to the project manager what the managerial implications of your reports are. Additional information at the end of period 5: Activities 1 and 2 are complete. Activities 2, 3, and 4 have revised durations. Activities 3 and 4 are in process. Activities 5 , 6 , and 7 have not started. Activities 3,4,5, and 6 have revised cost information.
Cumulative BCWP total
CHAPTER 12: PROGRESS AND PERFORMANCE MEASUREMENT AND EVALUATION
6. Given the information provided, complete a baseline and status report for the end of period 7. Your status report should include the SV, CV, CPI, SPI, PCI(B), PCI(C), a cost summary report, and a project cost graph. What is the forecasted completion date? Cost? Use your project graph to explain to the project owner what the current and future expected status of the project are at the end of period 7. Additional information at the end of period 7: Activities 1 and 2 are finished and "actuals" missed budget. Activities 3,4, and 6 are in process. Activity 3 has been observed to be 60 percent complete in dollars. Activity 6 has been observed to be 75 percent complete in dollars, and cost to complete has been revised. Activities 5 and 7 have not started. Activities 4,5, and 6 have revised cost information.
Schedule information Earned- Activity1 value work Duration rule package
Baseline budget needs Total
0 0 8 @
S1ackBcwS~ 1 28
Total BCWS by period Cumulative BCWS by period
Project Cost Summary Report ! Actual cost (ACWP)
Cost overlunc run
al cost at completion t
CHAPTER 12: PROGRESS AND PERFORMANCE MEASUREMENT AND EVALUATION
1. Frederick P. Brooks, The Mythical Man-Month (Reading, MA: Addison-Wesley, anniversary ed., 1997), p. 153. 2. There are many publications on the system. A good discussion is found in CostBchedule Control Systems Criteria: Joint Implementation Guide (Departments of the Air Force, the Army, the Navy, and the Defense Logistics Agency), published by the U.S Department of Defense, Washington, DC, 1987. Also see Performance Measurement for Selected Acquisition, Department of Defense instruction no. 500.2, part 11, section B, attachment 2 (Washington, DC: U.S. Department of Defense, 1991). 3. For a good description of types and timing of costs, see David H. Hamburger, "Three Perceptions of Cost--Cost Is More Than a Four Letter Word," Project Management Journal (June 1986), pp. 51-58. 4. Fleming W. Quentin and Joel M. Koppelman, "The Earned Value Concept: Back to Basics,'' PM Network, vol. 8, no. 1 (January 1994), pp. 27-29. See also Fleming W. Quentin and Joel M. Koppelman, "Forecasting the Final Cost and Schedule Results," PM Network, vol. 10, no. 1 (January 1996), pp. 13-19; Fleming W. Quentin and Joel M. Koppelman, "The Earned Value Body of Knowledge," pmNetwork, vol. 11, no. 5 (May 1996), pp. 11-15; and David S. Christensen, "Using Performance Indexes to Evaluate the Estimate at Completion:' Journal of Cost Analysis (Spring 1994), p. 19. 5. Zbid. 6. Daniel M. Brandon, Jr., "Implementing Earned Value Easily and Effectively," Project Management Journal, vol. 29, no. 2 (June 1998), pp. 11-18. 7. S. Craig Keifer, "Scope Creep . . . Not Necessarily a Bad Thing," pmNerwork, vol. 10, no. 5.(May 1996), pp. 33-35.
Scanner Project You have been serving as Electroscan's project manager and are now well along in the project. Develop a narrative status report for the board of directors of the chain store that discusses the status of the project to date and at completion. Be as specific as you can using numbers given and those you might develop. Remember, your audience is not familiar with the jargon used by project managers and computer software personnel; therefore, some explanation may be necessary. Your report will be evaluated on your detailed use of the data, your total perspective of the current status and future status of the project, and your recommended changes (if any).
SOFTECH, Ltd.--Part A Softech, Ltd., has contracted with a transportation company (Kypros Transport, ASA) to develop two custom computer programs for monitoring, tracking, and scheduling their ship (project 1) and truck (project 2) fleets. Fundamentally, both projects are nearly identical in structure and can be implemented concurrently; each should take about three years to complete. Kypros Transport will buy the necessary equipment when the programs are tested and accepted. There is a potential followup contract to develop a similar software program for the cargo planes (project 3). The follow-up project (project 3) cannot start until projects 1 and 2 are up and running and accepted by Kypros Transport. The basic idea is simple. At any point in time, Kypros Transport wishes to know the exact location; cargo by type, weight, size, and customer details; schedule; etc. Satellites, global positioning system (GPS) locators, and electronic transfer of information will be used and are available to Softech already. These projects are major and will consume about 50 percent of Softech's people resources. It is expected that successful management of time and budget will result in banner profits and award of the cargo plane program (project 3). Softech is now six months into projects 1 and 2 (July 1). Problems seem to be appearing on the horizon. Project managers from projects 1 and 2 are reporting to senior management. Each project manager reports problems with swapping resources between the two projects. Each project manager reports they are pretty sure they are on schedule and budget because actual costs appear to be running ahead of budget for each project. Kypros is complaining to senior management that there has been little contact with the project managers. Softech's senior management is apprehensive and somewhat alarmed. Coordination between projects seems nearly nonexistent. Are they ahead of schedule or over cost and behind schedule? When will the projects be finished? Will the projects be under or over budget? The future of Softech, Ltd., depends on the success of these two major projects for survival, and they should ensure the award of the followup contract, which will be pure gravy because of its similarity to the truck and ship projects. Their womes are further intensified by a request from the El-Hahzar Bank financing Softech's projects for a status and progress report next month. Senior management has asked the managers of projects 1 and 2 to get together and come up with a verifiable, total integrated system that coordinates both projects and measures progress of each project. The two project managers have hired you as a consultant to help with their problem. They need a quick overview action proposal from you now so they can spend the weekend coming up with changes they may need to make to get the projects under control. (You will be asked later to develop a complete proposal after input from their weekend meetings.) Be as specific and detailed as you can in the time and space allotted. Good luck on your new assignment!
One change since July is the development of an earned-value format for the Softech projects. The first computer reports for the two projects are attached. You are free to develop any other numerical information you feel appropriate and rearrange the information given in any form you wish for your appendix. Develop a narrative status report for the board of directors of Kypros Transport and the El-Hahzar Bank that discusses the status of the two projects to date and at completion. Be as specific as you can using numbers given and those you might develop. Remember, your audience is not familiar with the jargon used by project managers and computer software personnel; therefore, some explanation may be necessary. Your report will be evaluated on your detailed use of the data, your total perspective of the current status and future status of the project, and your recommended changes.
Computer-Controlled Conveyor Belt Project PART 4
1. Develop a financial requirements schedule over the life of the project-the BCWS. 2. Print out the total costs for each activitylwork package (and each deliverable, if possible). 3. Print out the total financial schedule for each month.
Remember, your financial schedule should follow your resource schedule (Chapter 7), not the original network. Because the project has not started yet all of your variances, schedule, cost, earned value (BCWP), and actual cost (ACWP) should be zero. Once you are confident that you have the final schedule, save the file as a baseline. (Hint: Save a backup file just in case without baseline!) PART 5
Prepare status reports for each of the first four quarters of the project given the information provided here. This requires saving your resource schedule as a baseline and inserting the appropriate status report date in the program. Assume that no work has been completed on the day of the status report. First Quarter, April 1
Table A12-1 summarizes the information regarding activities accomplished to date.
APRIL 1, YEAR 1
3/1 O/y 1
Note: The manager of the external development team that was hired to perform routine utilities reported that due to commitments to other projects they would be able to start on that activity 4116lyl.
1. Print out a status report for the first quarter in table form that shows the BCWS, BCWP, ACWP, BAC, EAC, SV, and CV for each work package, deliverable, and the whole project (the WBS).
How is the project progressing in terms of cost and schedule? What activities have gone well? What activities have not gone well? What is the forecasted cost at completion (FAC)? What is the budgeted cost for the work remaining?
2. Compute the performance indexes (PCI-S and PCI-C). Be sure to save your file after each quarterly report and use it to build the next report! Second Quarter, July 1
Table A12-2 summarizes the information regarding activities accomplished since the last report.
JULY 1, YEAR 1
Activity Hardware design Hardware
Documentation Disk drivers
6/l /y 1
Note: On April 1 top management reassigned one of the design teams to another higher priority project which caused the utilities documentation activity to be delayed until 6/17/yl.
3. Print out a status report for the second quarter in table form that shows the BCWS, BCWP, ACWP, BAC, EAC, SV, and CV for each work package, deliverable, and the whole project (the WBS). Questions
How is the project progressing in terms of cost and schedule? What activities have gone well? What activities have not gone well? What is the present and future impact of having only one design team? What is the forecasted cost at completion (FAC)? What is the budgeted cost for the work remaining?
4. Compute the performance indexes (PCI-S and PCI-C). Third Quarter, October 1
Table A12-3 summarizes the information regarding activities accomplished since the last report.
OCTOBER 1, YEAR 1 Activity
Integration first phase
Serial I/O drivers
5. Print out a status report for the third quarter in table form that shows the BCWS, BCWP, ACWP, BAC, EAC, SV, and CV for each work package, deliverable, and the whole project (the WBS). Questions
How is the project progressing in terms of cost and schedule? What activities have gone well? What activities have not gone well? What is the forecasted cost at completion (FAC)? What is the budgeted cost for the work remaining?
6. Compute the performance indexes (PCI-S and PCI-C). Fourth Quarter, January 1, Year 2
Table A 1 2 4 summarizes the information regarding activities accomplished since the last report.
JANUARY 1, YEAR 2 Activity
Prototypes Serial I/O drivers
7. Print put a status report for the fourth quarter in table form that shows the BCWS, BCWP, ACWP, BAC, EAC, SV, and CV for each work package, deliverable, and the whole project (the WBS). Questions
How is the project progressing in terms of cost and schedule? What activities have gone well? What activities have not gone well? What is the forecasted cost at completion (FAC)? What is the budgeted cost for the work remaining?
8. Compute the performance indexes (PCI-S and PCI-C).
You have received revised estimates for the remaining activities at the end of the fourth quarter: Serial 110 drivers will be completed on 1191~2. System hardwarelsoftwaretests will start on 1110ly2 and take 25 days. Order circuit boards will start on 2141~2and take 3 days. Assemble preproduction model will begin on 3121~2and take 35 days. Project documentation is expected to start on 2141~2and will take 65 days. Network interface is expected to start on 2141~2and will take 85 days. Shell is expected to start on 2141~2and will take 75 days. Integrated acceptance test is expected to start on 41291~2and will take 65 days.
1. What is the new EAC for the project? How long should the project take given these revised estimates? 2. Management is insisting that the project be done no later than June 13 or else. They are willing to add additional manpower to development teams to speed up completion of the project. The cost will be an additional $50 per hour for each development team. You have forecasted that the impact of adding development manpower on the remaining activities: System hardwarelsoftware tests will start on 1171~2and take 15 days. Assemble preproduction model will begin on 3121~2and take 25 days. Project documentation will take 55 days. Network interface will take 80 days. Shell will take 65 days. Integrated acceptance test will take 50 days. 3. Decide which activities you would add the additional development manpower to (at a cost of +$50 an hour) in order to meet the June 13 deadline. (Note: A development team would be added to the assembly team in order to expedite the system hardwarelsoftware tests.) What would the EAC be for the revised schedule? Can the project be completed by June 13? How soon can it be completed? 4. You are asked to explain the actual and estimated future performance of your project to top management. Past experience has taught you that they are not impressed with reams of computer output of tables and graphs. They prefer a twoto four-page written summary of present and forecasted status of the project and the managerial implications of problems identified. You may wish to use presentation software for your meeting.
Project Material Price and Usage Variance Project material variances arise when the price and/or usage of a material item differ from what was budgeted. When materials are a major cost, the cost variance (CV) can be separated into price and usage variance to trace to causes. Project materials cost variance is a combination of both price and usage variance. Price variance (PV) occurs when the budgeted price of material items differs from the actual price. The formula is expressed as follows: PV = (Budgeted price - Actual price) x Actual quantity used
Price variances arise for reasons such as poor price estimates, changes in prices, expediting arrival of materials, etc. Usage variance ( W ) occurs when the quantity of a material item consumed differs from the quantity budgeted. Usage variance is computed as follows:
W = (Budgeted quantity -Actual quantity used) x Budgeted price Usage variance occurs when more or fewer materials are needed than budgeted andlor when schedules are ahead or behind. To illustrate project price and usage materials variance and how they are related, suppose a consultant has found the data provided here: Cost variance (CV)
Budgeted price per unit of material
Actual price paid per unit used
Actual units used
Budgeted quantity to date
From the data, it is clear that less was paid for each unit than was planned. What is the impact of this price change? PV = (Budgeted price -Actual price) x Actual quantity used = ($520 - $500) x 250 = $20 x 250 = $5,000 The data also indicate more units were used than planned to date: W = (Budgeted quantity - Actual qu; = (200 - 250) x $520 = (-50) x $520 = (-$26,000)
d) x Budgeted price
Thus, price accounted for a $5,000 favorable influence on the cost variance, while usage accounted for an unfavorable variance of -$26,000. Together, the resultant cost variance at report date for this material is an unfavorable variance of -$21,000 [(-26,000) + (+5,000)].
ie Project Audit Pn .o A..a:t aLeport .eject Clo: am, Team
Those who cannot remember the past are condemned tofuljill it. -George Santayana, 1863-1952
Mistakes are made; the unexpected happens; conditions change. In organizations that have several projects going on concurrently, it is prudent to have periodic reality checks on current and recently completed projects and their role in the organization's future. The post-project audit includes three major tasks:
1. Evaluate if the project delivered the expected benefits to all stakeholders. Was the project managed well? Was the customer satisfied? 2. Assess what was done wrong and what contributed to successes. 3. Identify changes to improve the delivery of future projects. The project audit and report are instruments for supporting continuous improvement and organization learning. Unfortunately, it is estimated that about 90 percent of all projects are not seriously reviewed or audited. In addition, lessons learned are not recorded for improving management of future projects. Failure to consistently audit projects and report findings is an opportunity lost. We have observed that the 10 percent of projects that are seriously audited appear to be done by extremely well-managed organizations which are vigorously committed to continuous improvement and organization learning. Project audits are more than the status reports suggested in Chapter 12, which check on project performance. Status reports are analogous to viewing the project through a telescope. Audits are analogous to viewing the project through field glasses-a wide-angle view of the project in its bigger organizational environment. Project audits do use performance measures and forecast data. But project audits are more inclusive. Project audits review why the project was selected. Project audits include a reassessment of the project's role in the organization's priorities. Project audits include a check on the organizational culture to ensure it facilitates the type of project being implemented. Project audits assess if the project team is functioning well and is appropriately staffed. Audits of projects in process should include a check on external factors that might change where the project is heading or its importance-for example, technology, government laws, competitive products. Project audits include a review of all factors relevant to the project and to managing future projects.
Project audits can be performed while a project is in process and after a project is completed. There are only a few minor differences between these audits.
In-process project audits. Project audits early in projects allow for corrective changes if they are needed on the audited project or others in progress. In-process project audits concentrate on project progress and performance and check if conditions have changed. For example, have priorities changed? Is the project mission still relevant? In rare cases, the audit report may recommend closure of a project that is in process. Post-project audits. These audits tend to include more detail and depth than inprocess project audits. Project audits of completed projects emphasize improving the management of future projects. These audits are more long-term oriented than in-process audits. Post-project audits do check on project performance, but the audit represents a broader view of the project's role in the organization; for example, were the strategic benefits claimed actually delivered? The depth and detail of the project audit depend on many factors. Some are listed in Table 13-1. Because audits cost time and money, they should include no more time or resources than are necessary and sufficient. Early in-process project audits tend to be perfunctory unless serious problems or concerns are identified. Then, of course, the audit would be carried out in more detail. Because in-process project audits can be worrisome and destructive to the project team, care needs to be taken to protect project team morale. The audit should be carried out quickly, and the report should be as positive and constructive as possible. Post-project audits are more detailed and inclusive and contain more project team input. In summary, plan the audit, and limit the time for the audit. For example, in postproject audits, for all but very large projects, a one-week limit is a good benchmark. Beyond this time, the marginal return of additional information diminishes quickly. Small projects may require only one or two days and one or two people to conduct an audit. The priority team functions well in selecting projects and monitoring performance-cost and time. However, reviewing and evaluating projects and the process of managing projects is usually delegated to independent audit groups.l Each audit group is charged with evaluating and reviewing all factors relevant to the project and to managing future projects. The outcome of the project audit is a report. The process for conducting the project audit and preparing the written report are discussed in the first two sections of this chapter. Conditions and approaches for
FACTORS INFLUENCING AUDIT DEPTH AND DETAIL
Organization size Project importance Project type Project risk Project size Project problems
CHAPTER 13: PROJECT AUDIT AND CLOSURE
project closure of in-process and completed projects are discussed in the third section of the chapter. The final section discusses evaluations of the team, its members, and the project manager. THE PROJECT AUDIT PROCESS initiation and Staffing
Initiation of the audit process depends primarily on organization size and project size along with other factors. However, every effort should be made to make the project audit a normal process rather than a surprise notice. In small organizations and projects where face-to-face contact at all levels is prevalent, an audit may be informal and only represent another staff meeting. But even in these environments the content of a formal project audit should be examined and covered with notes made of the lessons learned. In medium-sized organizations that have several projects occurring simultaneously, initiation can come from a formal project review group, from the project priority team, or be automatic. For example, in the latter case, all projects are audited at specific stages in the project life cycle-perhaps when a project is 10 to 20 percent complete in time or money, 50 percent complete, and after completion. The automatic process works well because it removes the perceptions that a project has been singled out for evaluation and that someone might be on a witch hunt. In large projects, the audit may be planned for major milestones. There are rare circumstances that require an unplanned project audit, but they should be few and far between. For example, in a project that involved the development of a very large computer accounting system for multiple locations, one major consulting firm (of many) gave notice of withdrawal from the project, with no apparent reason. The project customer became alarmed that perhaps there was a serious fundamental problem in the project that caused the large consulting firm to drop out. A project audit identified the problem. The problem was one of sexual harassment by members of a small consulting firm toward members of the larger consulting firm. The small consulting firm engagement was terminated and replaced with a firm of similar expertise. The larger firm agreed to remain with the project. There are many other avenues to identify and solve such problems, but this example occurred as reported. Other circumstances, internal and external to the project, can cause an unplanned audit-for example, large cost or time overruns, change in project managers, or coverups. Regardless, unplanned audits should be avoided except in unusual circumstances. A major tenant of the project audit is that the outcome must represent an independent, outside view of the project. Maintaining independence and an objective view is difficult, given that audits are frequently viewed as negative by project stakeholders. Careers and reputations can be tarnished even in organizations that tolerate mistakes. In less forgiving organizations, mistakes can lead to termination or exile to less significant regions of an organization. Of course, if the result of an audit is favorable, careers and reputations can be enhanced. Given that project audits are susceptible to internal politics, some organizations rely on outside consulting firms to conduct the audits. Regardless, it is imperative the audit leader possess the following characteristics:
1. No direct involvement or direct interest in the project. 2. Respect (perceived as impartial and fair) of senior management and other project stakeholders.
3. Willingness to listen. 4. Independence and authority to report audit results without fear of recriminations from special interests. 5. Perceived as having the best interests of the organization in making decisions. 6. Broad-based experience in the organization or industry. Other audit members should have similar characteristics even if they are selected for their special expertise. Some project team members will need to be included in the audit evaluation. Post-project audits have a stronger representation of project team members than in-process project audits because of the slightly different orientation. The concern that team members will come to the audit with strong biases is usually overstated. In general, project team members are genuinely interested in improving the future project management process; they make every attempt to be objective. Thus, when project audits are planned there is time to carefully select the audit staff. The size of the audit group depends on the organization size, project size, and project importance. An audit report recording the lessons learned can have dramatic results in improving future projects. After an organization has determined when to conduct audits and who will conduct them, it can charge the audit team with gathering information and analyzing it. Information and Data Collection and Analysis
The traditional content model for a project audit presents two perspectives. One evaluates the project from the view of the organization. The second perspective represents the project team's evaluative view. The organization perspective is developed by a small group primarily made up of persons not having a direct interest in the project. The project team perspective is developed by a group composed primarily of team members along with persons independent of the project to ensure the evaluation is objective. Each organization and project is unique. Therefore, many factors need to be considered. For example, the industry, project size, newness of technology, and project experience can influence the nature of the audit. However, information and data are gathered to answer questions similar to those suggested next.
Organization View 1. Was the organizational culture supportive and correct for this type of project? Why? Why not? 2. Was senior management's support adequate? 3. Did the project accomplish its intended purpose? a. Is there a clear link to organizational strategy and objectives? b. Does the priority system reflect importance to the future of the organization? c. Has the environment (internal or external) changed the need for the project's completion (if project is still in process)? 4. Were the risks for the project appropriately identified and assessed? Were contingency plans used? Were they realistic? Have risk events occurred that have an impact greater than anticipated? 5. Were the right people and talents assigned to this project? 6. If the project was completed, have staff been fairly assigned to new projects? 7. What does evaluation from outside contractors suggest? 8. Did the technology required overextend current technological competencies? 9. Were the project startup and hand-off successful? Why? Is the customer satisfied?
Project Team View
1. Were the project planning and control systems appropriate for this type of project? Should all similar size and type of projects use these systems? Whylwhy not? 2. Did the project conform to plan? Is the project over or under budget and schedule? Why? 3. were interfaces with project stakeholders adequate and effective? 4. If the project is completed, have staff been fairly assigned to new projects? 5. Did the team have adequate access to organizational resources-people, budget, support groups, equipment? Were there resource conflicts with other ongoing projects? Was the team managed well? 6. What does evaluation from outside contractors suggest? The audit group should not be limited to these questions.2 The audit group should include other questions related to their organization and project type-e.g., research and development, marketing, information systems, construction, facilities. The generic questions above, although overlapping, represent a good starting point and will go a long way towatd identifying project problem and success patterns. Guldellnes for Conducting a Project Audit
The following guidelines should improve chances for a successful audit:
1. First and fore&6st, the philosophy must be that the project audit is not a witchhunt. 2. Comments about individuals or groups participating in the project are no-no's. Keep to project issues, not what happened or by whom. 3. Audit activities should be intensely sensitive to human emotions and reactions. The inherent threat to those being evaluated should be reduced as much as possible. 4. The project manager should be notified of the impending audit. 5. Accuracy of data should be verifiable or noted as subjective, judgmental, or hearsay. 6. Senior management should announce support for the project audit and see that the audit group has access to all information, project participants, and (in most cases) project customer. 7. The attitude toward a project audit and its aftermath depend on the modus operandi of the audit leadership and group. The objective is not to prosecute. The objective is to learn and conserve valuable organization resources where mistakes have been made. Friendliness, empathy, and objectivity encourage cooperation and reduce anxiety. 8. The audit should be completed as quickly as is reasonable. 9. The audit leader should be given access to senior management above the project manager. THE AUDIT REPORT General Requirements
The major goal of the audit report is to improve the way future projects are managed. Succinctly, the report attempts to capture needed changes and lessons learned from a current or finished project. The report serves as a training instrument for project managers of future projects. Audit reports need to be tailored to the specific project and organizational environ-
3 Michael Mc
,, ,d took 52 Americans hostage. C,, e ,r 4, 1979, a ,, , , , ,,, ,, a,, stor,, LGu Ll "., , ,,, , , , After six months of failed negot~ation,the decision was made to execute Opc?ration Eagl e Claw, a joint military effort to free the U.S. hostages. The plan called for eight Navy RH-53D kielicopters to fly 600 miles to a remote site: in Iran, A - .!.-- L^I:___ A^..^ ... ^..,A J .L. . I/,111s rlellLupiers WUUIU be refueleo u y nbcode named Desert One. Under the cover of uartvless, 30 tankers. The helicopters w ould ~ then fl)/ the assault force to a spot near the outskirts of l already in the country. The agents would ehran whet.e they would meet u~) with spec ~ aagents ?adthem tc) a safe house to awai t the assauIt on the embassy the next night. Upon rescuing the stages, the assault team would escort the hostages to a nearby airfield that had been secured y a seconc1 attack team where they would be flown to safety. What acitually happened was far different from what was plann ed them The helic:opter pilots were ordered to fly at or below 200 feet to avoid radal to run into "haboobs" or dust storms. Two hellcopters malfunctioned and turned back. The remainder battled the dust storms and arr~vedat Desert One an hour late. The rescue attempt was dealt its final blow whc?nit was dlscovered that a third helicopter had a hydraulic leak and was ino~erable.Onlv flve alrcraft were serviceable and six were needed. so the mlsslon was aborted. I I Thlngs got worse, though, when cIne of the h ellcopters rnoved into position to refuel and coll~ded ;oldiers d ~de and dozens were wlth a KC-130 plane Both aircraft burst into flames All afterward, making any further ~njuredThe lran~ansscattered the hostage: ; around th I rescue attempts ~mpossible 1 The Arm(sd Services, routinely c onduct audits of everyr exerclse and operat~onG~venthe gravlty LL..
of the situation, a spec1al six-meml381 comm~ss~on was appointed bjq the Joint Chiefs of Staff to investigate thc? failed operation. They discovered a numbeIr of Issues that contrrbuted to the failure. . . . . . One Issue was the select~onot air crew. Navy and Marine pilots wltn little experience ln long-range Air Force PIoverland navigatron or refueling wc?re selectec though more than a hundred q~~alrf~ed l From lots were available. Another issue LI/as the lack of a comprehensive mission rehe:~ s aprogram. it vvas compalZmentalized by serI the beglnnlng, tra~nrngwas not corlducted in 2itruly joint manner; nr-nn +h, I + - r Th- l i rni+*A v n h n o , I llkcu ,, ,Garsalsthat were convice and held in scattered locations maLIUJ3 16United SthLcJ. I dlucted assessed only portions of the total mission. Also at issue \was the nu1mber of helicopters !rs should klave been launched i used. The cc~mmissionconcl~dedthat 10 and perhaps 12 helicopt~ ct J guarantee!the minimbm six requ~redfor completion of the mission. Finally, the hopscotch method . . ., . ; orx arourlu refuelina was critic~zed.If the olanners nad chosen to use erlruuie alr fueling, the entire )esert One scenario cc~ u l dhave b een avoided. The frnal report of tlhe commission contained sev; a tragedy from occurring again.3 ral importa~ nt recommcmdations d esigned to prevent such
CHAPTER 13: PROJECT AUDIT AND CLOSURE
ment. Nevertheless, a generic format for all audits facilitates development of an audit database and a common outline for those who prepare audit reports and the managers who read and act on their content. A very general outline common to those found in practice is as follows:
1. 2. 3. 4. 5.
Classification of project. Analysis of information gathered. Recommendations. Lessons learned. Appendix.
Classification Each project audit is categorized because there are differences in the way projects with different characteristics are managed and handled in an organization. A prospective project manager of a software coding project will have little interest in the construction of a clean room or recycling of inkjet reservoirs for printers. A prospective project manager of a small project will not be as interested in a computer project planning and control system as a project manager who is going to manage a very large project. The classification of projects by characteristics allows prospective readers and project managers to be selective in the use of the report content. Typical classification categories include the following: Project type--e.g., development, marketing, systems, construction. Size-monetary. Number of staff. Technology level-low, medium, high, new. Strategic or support. Other classifications relevant to the organization should be included.
Analysis The analysis section includes succinct, factual review statements of the project. For example, Project mission and objectives. Procedures and systems used. Organization resources used.
Recommendations Usually audit recommendations represent major corrective actions that should take place. However, it is equally important to recommend positive successes that should be continued and used in future projects. Post-project audits may be the place to give credit to the project team for an outstanding contribution.
Lessons Learned These do not have to be in the form of recommendations. Lessons learned serve as reminders of mistakes easily avoided and actions easily taken to ensure success. In practice, new project teams reviewing audits of past projects similar to the one they are about to start have found audit reports very useful. Team members will frequently remark later, "The recommendations were good, but the 'lessons learned' section really helped us avoid many pitfalls and made our project implementation smoother." In the accompanying Snapshot from Practice, this Bell Canada project involved a business transformation process of bringing more than 500 independent projects under one generic project management process umbrella. This project was especially challenging because most managers had little project management experience. The lessons learned demonstrate some of the difficulties and insights gained by the implementation team trying to integrate project management into the culture of the organization.
LESSONS LEARNED: BELL CANADA BUSlNES
Managing the team's e)cpectations; of the plalining procc ~cial.Team members needed . . . , ln "t,..A "*-.,-l:~ -4 ....,I.. ,, " r ,I"..";c-c to understand that frust,.r-,t;,-.nr I13C3, a lU I C L , ~ G I 19 I ~ VVCI c a formal part,..:.vt p a l II 111 19. ning is hard work, and Inore effort spent In plann~ngwould Improve the success factor. The teams were oftc2n scattere d alona funct~onallines. This made re~ortinaand ~ dntifying e roles and responsibllit~e !s very difflcult for the project manager. Project team structure was also . challenged by the geograpny, cross-functional membership, and two organizations (Bell Canaaa and Bell Sygma) playing equal roles. The understanding and use of organization structure played a key role in the planning and implementation of the project. The level of coaching requ~redby the project manager once the project plan was implemented was more than anticipated. Understanding and using the processes for day-by-day project management were challenging when team members returned to their work environments. Not all consultants hlred were successful. Some consultants would offer recommendations too quickly after their arrival. As a result, most of these early recommendations were not applicable to our project. Sublsequently, the senlor consultant or a member of the tc?am accorr~panied all new consultants for 1the first fevJ days to fs~miliar~ze them with the project a1nd our spelcific areas of concern. -..A ,,ll-.#,I, f e , ,n,,, I th-.t thh h, uppualLc ".,,,te!r and start s them off in the trenches. This way they c firsthand t kc?y project rnanagemeli t tools an(j concepts
CAREER PATHS IN PROJECT MANAGEMENT
There is no set career path for becoming a project manager. Career avenues vary from industry to industry, organization to organization, and from profession to profession. What can be said is that advancement occurs incrementally. You don't simply graduate and become a project manager. As in other careers you have to work your way up to the position. For example, in project-based organizations such as construction firms, you may begin by working on several projects as an assistant engineer, then take an assignment as a project analyst. From there you are promoted to principal engineer, advance to assistant project manager, assume the role of project manager over a small project, and then continue to bigger, riskier projects. In other organizations, project management careers run parallel with functional advancement with many crossovers. For example, at Intel a management information systems (MIS) specialist might start his career as a designer, then take an assignment as a project specialist, later work as a project manager, and then return to a functional position as head of a department or a product manager. Other people find that their project management responsibilities expand as they move up the organization's hierarchy. For example, a former marketing student began her career as an assistant buyer for a large retail company. She then became area sales manager at a specific store and became involved on a part-time basis in a series of projects acting as a facilitator of focus groups. She was promoted to buyer and eventually became a store manager. In her current position she coordinates a variety of projects ranging from improving the sales acumen of her salesforce to altering the physical layout of the store. Although the title of project manager does not appear in her job description, more than 50 percent of her work involves managing projects. One aspect of project managing that is unique is the temporary nature of assignments. With line appointments, promotions are for the most part permanent and there is a natural, hierarchical progression to positions with greater authority and responsibility. In the example of the former marketing student, she progressed from assistant buyer to sales manager to buyer to store manager. Only under very unusual circum-
CHAPTER 15: ;HE PROCESS OF PROJECT MANAGEMENT AND THE FUTURE
stances would she regress to being a buyer. Conversely, tenure is rarely granted to project managers. Once the project is completed, the manager may return to his previous department, even to a lesser position. Or, depending on the projects available, he may be assigned to manage a more or less significant project. Future work depends on what projects are available at the time the individual is available and how well the last project went. A promising career can be derailed by one unsuccessful project. If you are considering pursuing a career in project management, you should first find out what specific project job opportunities exist in your company. You should talk to people in project management positions and find out how they got to where they are and what advice they can give you. Because career paths, as noted earlier, vary from organization to organization, you need to be attuned to the unique pathways within your company. For example, retail companies naturally assign marketing managers to projects. Once you have concluded that you wish to pursue a career in project management, or see project management as an avenue for advancement, you need to share your aspirations with your immediate superior. Your superior can champion your ambitions, sanction additional training in project management, and assign immediate work that will contribute to your project skill base. Most project managers have never received formal training in project management. They mastered the job through on-the-job training, buttressed by occasional workshops on specific project topics such as project scheduling or negotiating contracts. It wasn't until recently that universities started offering courses on project management outside of schools of engineering; to date there are only a handful of degree programs in project management. Regardless of your level of training you will likely need to supplement your education. Many large companies have in-house training programs on project management. For example, Hewlett-Packard has more than 32 training modules in its project management curriculum, which is organized around five levels of experience: project team, new project manager, project manager, experienced project manager, and manager of project managers. Take advantage of professional workshops, which can cover a range of specific project management tools and topics. Continued education should not be restricted to project management. Many technical professionals return to universities to complete an MBA or take night classes in management to expand their general business background. Many professionals find it beneficial to join the Project Management Institute (PMI).8 Membership entitles you to subscriptions to PMI publications including the academic Project Management Journal and the PM Network, a trade magazine. PMI sponsors workshops and national forums on project management. When you join PMI you also become a member of one of the more than 200 local chapters across North America. These chapters meet on a monthly basis and provide project managers with opportunities to network and leam from each other. In addition, PMI, as part of its effort to advance the profession, certifies mastery of project manager competency through a formal examination that covers the entire body of knowledge of project management. Passing the exam and being certified as a "Project Management Professional" is a clearly visible way to signal your competence and interest. As you accumulate knowledge and techniques, you need to apply them to your immediate job situation. Most people's jobs entail some form of project, whether realizing a mandated objective or simply figuring out ways to improve the quality of performance. Gantt charts, responsibility matrices, CPM networks, and other project management tools can be used to plan and implement these endeavors. It may also be wise to look outside the workplace for opportunities to develop project management
skills. Active involvement in your local community can provide numerous opportunities to manage projects. Organizing a local soccer tournament, managing a charitable fund-raising event, or coordinating the renovation of the neighborhood park can allow you to practice project management. Furthermore, given the volunteer nature of most of these projects, they can provide you with an excellent training ground to sharpen your ability to exercise influence without formal authority. Regardless of how competent and worthy you are, your project management skills must be visible to others for them to be recognized. Many project managers' careers began by volunteering for task forces and small projects. Ideally you should select task forces and projects that allow you access to higher-ups and other departments within your organization, providing you with opportunities to develop contacts. Even in a subordinate position you can take advantage of project review meetings to demonstrate to your bosses and peers that you have the necessary skills for project planning and control. In pursuing your ambition you should continually be on the lookout for a mentor. Most fast-track managers acknowledge that mentors played a significant role in their advancement.9 Mentors are typically superiors who take a special interest in you and your career. They use their clout to champion your ambitions and act as a personal coach, teaching you "the ropes to skip and the ropes to know." This special treatment does not come without a price. Mentors typically require fervent loyalty and superior performance; after all, the mentor's reputation rests on your performance. How do you find a mentor? Most people say it just happens. But it doesn't happen to everyone. Mentors typically seek A+ workers, not C workers, and you must make your abilities known to others. Many organizations have instituted formal mentoring programs in which experienced project managers are assigned to promising young managers. Although the relationship may not evolve to the personal level experienced with an informal mentor, designated mentors play a very similar role in coaching and championing one's professional progress. You should take advantage of this opportunity to learn as much as you can from these seasoned veterans. Ultimately your goal is to accumulate a portfolio of project management experiences that broaden your skill base and reputation. Early on you should choose, when possible, projects with the greatest learning opportunities. Pick projects more for the quality of the people working on them than for the scope of the projects. There is no better way to learn how to be an effective project manager than by watching one at work. Keep a diary of your observations and review and refine lessons learned. Later, as your confidence and competency grow, you should try to get involved in projects that will enhance your reputation within the firm. Remember the comments about customer satisfaction. You want to exceed your superiors' expectations. Avoid run-of-themill projects or assignments. Seek high-profile projects that have some risks and tangible payoffs.lOAt the same time, be careful to be involved in projects commensurate with your abilities. Finally, despite your efforts you may find that you are not making satisfactory progress toward your career goals. If this is your appraisal, you may wish to seriously consider moving to a different company or even a different industry that might provide more project management opportunities. Hopefully you have managed to accumulate sufficient project management experience to aid in your job search. One advantage of project work over general management is that it is typically easier to highlight and "sell" your accomp1ishments.l~
CHAPTER 15: THE PROCESS OF PROJECT MANAGEMENT AND THE FUTURE
By studying this text you have been exposed to the major elements of the process of managing projects. When you apply these ideas and techniques to real project situations, we offer three suggestions.
1. Maintain a sense of the big picture. Engage regularly in what some have called "helicopter management," which means expand your perspective beyond immediate concerns and assess how the project fits in the larger scheme of things. Project managers need to constantly assess how the project fulfills the mission and strategy of the firm,how the project is affecting the rest of the organization, whether the expectations of stakeholders are changing, and what key project interfaces have to be managed. 2. Remember that successful project management is essentially a balancing act. Project managers need to balance the soft (people) side of project management with the hard (technical) side, the demands of top management with the needs of team members, short-term gain with long-term need, and so forth. 3. Project management is the wave of the future. Change produces career opportunities that are often not available during normal times. We encourage you to take advantage of these opportunities by developing your project management skills and knowledge. It is not too late to catch the first wave.
The twenty-first century should be the Golden Age for project management. Not only will there be an increased demand for project management skills and know-how, but organizations will evolve and change to support more effective project management. Instead 'of trying to get projects done despite everything else, the organization's culture, structure, reward system, and administrative systems will be reengineered to support successful project management. Mastery of the process of managing projects will be critical to business growth and survival. The project manager of the new millennium will be a businessperson with responsibilities that encompass the total organization. The past 30 years have seen the transition from a technically oriented project manager to one skilltd in all aspects of business. Worldwide competition will direct projects toward technology transfer, infrastructure, consumer goods, environment/ecological, defense, and fundamental needs. The future project manager will be comfortable in foreign or domestic settings and will understand the needs of people in all social settings. The project-driven organization will recognize the project manager as an agent of change and, from their ranks, select the senior managers of tomorrow. , Twenty years from now career paths in project management should be more clearly defined. Until then people wishing to pursue a career in project management should take advantage of the transition and improvise within the constraints of their situation to develop their project management skills. They should volunteer to work on task forces, take advantage of training opportunities, and apply project management tools and techniques to their work. They should signal to their superiors their interest in project management and garner project assignments. Over time they should accumulate a portfolio of project management experiences that establishes their skill base and reputation as someone who gets things done quickly and done right.
1. Paul C. Dinsmore, "Toward a Corporate Project Management Culture: Fast Tracking into the Future," Proceedings of the Project Management Institute 28th Annual Seminars and Symposium (Newton Square, PA: Project Management Institute, 1997), p. 450. 2. See Lawrence C. Rhyne, "The Relationship of Strategic Planning to Financial Performance," Strategic Management Journal, vol. 7 (SeptemberIOctober 1986), pp. 423-36; Richard B. Robinson, Jr., "The Importance of 'Outsiders' in Small Firm Strategic Planning," Academy of Management Journal, vol. 25, no. 1 (March 1982), pp. 80-93; Jonathan B. Welch, "Strategic Planning Could Improve Your Price Share:' Long Range Planning (April 1984), pp. 144-47; J. S. Bracker and J. N. Pearson, "Planning and Financial Performance of Small Manufacturing Firms," Strategic Management Journal (November1 December, 1986), pp. 503-22; and Donald W. Beard and Gregory G. Dess, "Corporate Business Strategy, Business Level Strategy, and Firm Performance," Academy of Management Journal, vol. 24, no. 4 (December 1981), pp. 663-88. 3. These predictions are contained in Paul C. Dinsmore, reference cited, pp. 447-51. 4. William Gradante and Donald Gardner, "Managing Projects from the Future, Not from the Past," Proceedings of the 29th Annual Project Management Institute 1998 Seminars and Symposium (Newtown Square, PA: Project Management Institute, 1998), pp. 289-94; and Thomas R. Block and J. Davidson Frame, The Project Ofice-A Key to Managing Projects Effectively (Menlo Park, CA: Crisp Publications, 1998). 5. Michael A. Tavema, "Europe Advances ATV Development for ISS," Aviation Week and Space Technology (November 30,1998), p. 29. 6. This leadership style has been popularized by the television show, "Star Trek: The Next Generation," which is the subject of Robert Wess and Bill Ross, Make It So: Leadership Lessons Fmm Star Trek-Next Generation (New York: Pocket Books, 1995). 7. Rick Saia, "Harvesting Project Leaders," Computerworld, vol. 31, no. 29 (July 21, 1997), p. 1. 8. You can contact PMI at Project Management Institute, Four Campus Blvd., Newtown Square, PA 19073 or at their Web site: www.pmi.org. . 9. For some useful advice on how to find a mentor, see Harvey Mackay, Dig Your Well Before You're Thirsty (New York: Doubleday, 1997). For information on the mentoring process, see Kathy E. Kram, Mentoring at Work: Developmental Relationships in Organizational Life (Glenview, IL:Scott, Foresman & Co., 1985). 10. Bennet P. Lientz and Kathryn P. Rea, Project Management for the 21st Century (San Diego Academic Press, 1995), p. 296. 11. MacKay, reference cited.
activity Task(s) of the project that consumes time while peoplelequipment either work or wait. activity duration Estimate of time (hours, days, weeks, months, etc.) necessary to complete a project task. actual cost of the work performed (ACWP) Actual cost of the work performed in a given time period. The sum of the costs incurred in accomplishing work. AOA Activity-on-arrow method for drawing project networks. The activity is shown as an arrow. AON Activity-on-node method for drawing project networks. The activity is on the node (rectangle). backward pass The method used to compute the late start and finish times for each activity in the project network. balanced scorecard method Model that measures the long-run results of major program activities in four areas--customer, internal, innovation and learning, and financial. balanced matrix A matrix structure in which the project manager and functional managers share roughly equal authority over the project. The project manager decides what needs to be done; functional managers are concerned with how it will be accomplished. bar chart A graphic presentation of project activities depicted as a time-scaled bar line (also called a Gantt chart). baseline A concrete document and commitment; it represents the first real plan with cost, schedule, and resource allocation. The planned cost and schedule performance are used to measure actual cost and schedule performance. Serves as an anchor point for measuring performance. brainstorming Generating as many ideas/solutionsas possible without critical judgment. budget at completion (BAC) Bndgeted cost at completion. The total budgeted cost of the baseline or project cost accounts. budgeted cost of the work performed (BCWP) The value for completed work measured in terms of the planned budget for the work. The earned value or original budgeted cost for work actually completed. budget reserve Reserves set up to cover identified risks that may occur and influence baseline tasks or costs. These reserves are typically controlled by the project manager and the project team. See management reserves. burst activity An activity that has more than one activity immediately following it.
chart of accounts A hierarchical numbering system used to identify tasks, deliverables, and organizational responsibility in the work breakdown structure. concurrent engineering or simultaneous engineering Cross-functional teamwork in newproduct development projects that provides product design, quality engineering, and manufacturing process engineering all at the same time. consensus decision making Reaching a decision that all involved parties basically agree with and support. contingency plan A plan that covers possible identified project risks that may materialize over the life of the project. contingency reserves Usually an amount of money or time set aside to cover identified and unforeseen project risks. contract A formal agreement between two parties wherein one party (the contractor) obligates itself to perform a service and the other party (the client) obligates itself to do something in return, usually in the form of a payment to the contractor. cost account A control point of one or more work packages used to plan, schedule, and control the project. The sum of all the project cost accounts represents the total cost of the project. cost performance index (CPI) The ratio of budgeted costs to actual costs (BCWF'IACWF'). cost-plus contract A contract in which the contractor is reimbursed for all direct allowable costs (materials, labor, travel) plus an additional fee to cover overhead and profit. cost variance (CV) The difference between BCWP and ACWP (CV = BCWP - ACWP). Tells if the work accomplished cost more or less than was planned at any point over the life of the project. crash time The shortest time an activity can be completed (assuming a reasonable level of resources). critical path The longest activity path(s) through the network. The critical path can be distinguished by identifying the collection of activities that all have the same minimum slack. critical path method (CPM) A scheduling method based on the estimates of time required to complete activities on the critical path. The method computes early, late, and slack times for each activity in the network. It establishes a planned project duration, if one is not imposed on the project. culture shock A natural psychological disorientation that most people suffer when they move to a culture different from their own. dedicated project team An organizational structure in which all of the resources needed to accomplish a project are assigned full-time to the project. duration @UR) The time needed to complete an activity, a path, or a project. dummy activity An activity that does not consume time; it is represented on the AOA network as a dashed line. A dummy activity is used to ensure a unique identification number for parallel activities and used to maintain dependencies among activities on the project network. dysfunctional contlict Disagreement that does not improve project performance. early start The earliest an activity can start. It is the largest early finish of all its immediate predecessors (ES = EF - DUR). early finish The earliest an activity can finish if all its preceding activities are finished by their early finish times (EF = ES + DUR). escalation A control mechanism for resolving problems in which people at the lowest appropriate level attempt to resolve a problem within a set time limit or the problem is "escalated" to the next level of management. estimated cost at completion (EAC) The sum of actual costs to-date plus revised estimated costs for the work remaining in the WBS. event A point in time when an activity(s) is started or completed. It does not consume time. fixed-price or 'lump-sum" contract A contract in which the contractor agrees to perform all the work specified in the contract at a predetermined, fixed price.
forecast at completion (FAC) The forecasted cost at completion-using forecast equation. float See slack. forward pass The method for determining the early start and finish times for each activity in the project network. free slack The maximum amount of time an activity can be delayed from its early start (ES) without affecting the early start (ES) of any activity immediately following it. functional conflict Disagreement that contributes to the objectives of the project. functional matrix A matrix structure in which functional managers have primary control over project activities and the project manager coordinates project work. functional organization A hierarchical organizational structure in which departments represent individual disciplines such as engineering, marketing, purchasing. Gantt chart See bar chart. going native Adopting the customs, values, and prerogatives of a foreign culture. Golden Rule Do unto others as you would wish them to do unto you. groupthink A tendency of members in highly cohesive groups to lose their critical evaluative capabilities. hammock activity A special-purpose, aggregate activity that identifies the use of fixed resources or costs over a segment of the project--e.g., a consultant. Derives its duration from the time span between other activities. implementation gap The lack of consensus between the goals set by top management and those independently set by lower levels of management. This lack of consensus leads to confusion and poor allocation of organization resources. infrastructure Basic services (i.e., communication, transportation, power) needed to support project completion. insensitive network A network in which the critical path is likely to remain stable during the life of the project. lag The amount of time between the end of one activity and the start of another. A duration assigned to the activity dependency. The minimum amount of time a dependent activity must be delayed to begin or end. lag relationship The relationship between the start and/or finish of a project activity and the start and/or finish of another activity. The most common lag relationships are (1) finish-tostart, (2) finish-to-finish, (3) start-to-start, and (4) start-to-finish. late finish The latest an activity can finish and not delay a following activity (LF = LS + DUR). late start The latest an activity can start and not delay a following activity. It is the largest late finish (LF) of all activities immediately preceding it (LS = LF - DUR). law of reciprocity People are obligated to grant a favor comparable to the one they received. level of effort (LOE) Work packages that represent time-related activities. These activities, such as administrative support, computer support, legal, public relations, etc. exist for a segment or the duration of the project. LOE work packages have no measurable outputs. management by walking around (MBWA) A management style in which managers spend majority of their time outside their offices interacting with key people. management reserve A percentage of the total project budget reserved for contingencies. The fund exists to cover unforeseen, new problems-not unnecessary overruns. The reserve is designed to reduce the risk of project delays. Management reserves are typically controlled by the project owner or project manager. See budget reserves. matrix Any organizational structure in which the project manager shares responsibility with the functional managers for assigning priorities and for directing the work of individuals assigned to the project. mentor Typically a more experienced manager who acts as a personal coach and champions a person's ambitions. merge activity An activity that has more than one activity immediately preceding it. met expectations model Customer satisfaction is a function of the extent to which perceived performance exceeds expectations.
milestone An event that represents significant, identifiable accomplishment toward the project's completion. Monte Carlo simulation A method of simulating project activity durations using probabilities. The method identifies the percentage of times activities and paths are critical over thousands of simulations. net present value (NPV) A minimum desired rate of return discount (e.g., 15 percent) is used to compute present value of all future cash inflows and outflows. negative reinforcement A motivational technique in which negative stimuli are removed once desired behavior is exhibited. network A logic diagram arranged in a prescribed format (e.g., AOA or AON) consisting of activities, sequences, interrelationships, and dependencies. objective An end you seek to create or acquire. Should be specific, measurable, realistic, assignable, and include a time frame for accomplishment. organization breakdown structure (OBS) A structure used to assign responsibility for work packages. organizational culture A system of shared norms, beliefs, values, and assumptions held by an organization's members. organizational politics Actions by individuals or groups of individuals to acquire, develop, and use power and other resources to obtain preferred outcomes when there is uncertainty or disagreement over choices. parallel activity One or more activities that can be carried on concurrently or simultaneously. partnering See project partnering. path A sequence of connected activities. payback method The time it takes to pay back the project investment (Investmentlnet annual savings). The method does not consider the time value of money or the life of the investment. precedence diagram method A method used to construct a project network that uses nodes (e.g., a rectangle) to represent activities and connecting arrows to indicate dependencies. priority system The process used to select projects. The system uses selected criteria for evaluating and selecting projects that are strongly linked to higher-level strategies and objectives. principle of negotiation A process of negotiation that aims to achieve winlwin results. project A complex, nonroutine, one-time effort to create a product or service limited by time, budget, and specifications. project interfaces The intersections between a project and other groups of people both within and outside the organization. project kick-off meeting 'TLpically the first meeting of the project team. project life cycle The stages found in all projects4efinition, planning, execution, and delivery. project management office (PMO) A centralized unit within an organization or department that oversees and improves the management of projects. project partnering A non-binding method of transforming contractual relationships into a cohesive, cooperative project team with a single set of goals and established procedures for resolving disputes in a timely manner. project matrix A matrix structure in which the project manager has primary control over project activities and functional managers support project work. project sponsor mically a high-ranking manager who champions and supports a project. project vision An image of what the project will accomplish. projectitis A social phenomenon in which project members exhibit inappropriately intense loyalty to the project. projectized organization An organizational structure in which core work is accomplished by project teams. positive synergy A characteristic of high-performance teams in which group performance is greater than the sum of individual contributions.
risk The chance that an undesirable project event will occur and the consequences of all its possible outcomes. resource Any person, groups, skill, equipment or material used to accomplish a task, work package, or activity. resource-constrained project A project that assumes resources are limited (fixed) and therefore time is variable. responsibility matrix A matrix whose intersection point shows the relationship between an activity (work package) and the personlgroup responsible for its completion. "sacred cow" A project that is a favorite of a powerful management figure who is usually the champion for the project. slack Time an activity can be delayed before it becomes critical. schedule variance (SV) The difference between the planned dollar value of the work actually completed and the value of the work scheduled to be completed at a given point in time (SV = BCWP - BCWS). Schedule variance contains no critical path information. schedule performance index (SPI) The ratio of the work performed to work scheduled (BCWPIBCWS). scope statement A definition of the end result or mission of a project. Scope statements typically includes project objectives, deliverables, milestones, specifications, and limits and exclusions. splitting A scheduling technique in which work is interrupted on one activity and the resource is assigned to another activity for a period of time, then reassigned to work on the original activity. systems thinking A holistic approach to viewing problems that emphasizes understanding the interactions among different problem factors. task See activity. team-building A process designed to improve the performance of a team. time-constrained project A project that assumes time is fixed and, if resources are needed, they will be added. Total slack The amount of time an activity can be delayed and not affect the project duration (TS = LS - ES or LF - EF). 360-degree feedback A multirater appraisal system based on performance information that is gathered from multiple sources (superiors, peers, subordinates, customers). virtual project team Spatially separated project team whose members are unable to communicate face to face. Communication is usually by electronic means. variance at completion (VAC) Indicates expected actual cost over- or undermn at completion (VAC = BAC - EAC). work breakdown structure (WBS) A hierarchical method that successively subdivides the work of the project into smaller detail. work package A segment of work within a cost account. It includes cost, time, technical specifications, and a list of tasks that need to be accomplished.
Budget at completion
Budgeted cost of work performed
IFB LF LS MBWA NIH
Budgeted cost of work scheduled
Critical chain approach to project planning and management
Organization breakdown structure
Percent complete index
Cost performance index
Percent complete index-budget costs
Critical path method
Percent complete index-actual costs
Precedence diagram method
Project evaluation review technique
Estimate at completion (with revised cost estimates)
Project management office
Estimate to complete
Schedule performance index
Forecast at completion
Forecast at completion (formula)
Variance at completion
Keep it simple, stupid
Work breakdown structure
Actual cost of work performed
Activity on arrow
Activity on node
Invitation to bid
Net present value
Late finish Late start Management by wandering around Not invented here
BCWP (PCI - B) = BAC
ACWP ACWP (PCZ- C ) = -or EAC FAC
CV = BCWP - ACWP
SV = BCWP - BCWS
BCWP CPZ = ACWP
BCWP SPI = BCWS
BAC - BCWP) (BCWP\
VAC = BAC - FAC or BAC - EAC +
Abdel-Hamid, T.,18511 Abrahams, Jeffrey, 258n Accept, 65 Accounting software installation project, case, 350-351 Ackoff, Russel L., 433,456n Acronyms, 480 Activities, 92 in activity-on-node method, 93-97 ambassador, 273 burst activity, 93,95 determining shortening of, 174-178 guard, 273 level of detail, 104-106 normal time for, 174-175 overestimating durations, 205 parallel, 94, 95 predecessor, 94 safety time, 204-205 in strategic management process, 25 successor, 94 task coordinator, 273 Activity numbering, 106 Activity-on-arrow method, 93, 125-134 backward pass, 131-133 compared to activity-on-node method, 133-134
Activity-on-arrow method-Cont. design of project network, 127-131 forward pass, 128-131 Activity-on-node method, 93 compared to activity-on-arrow method, 133-134 fundamentals, 93-97 hammock activities, 113-114 laddering, 109-110 lags, 110-113 loose ends, 106-109 network computation process, 98-104 Activity orientation, 442 Activity time estimates; see also Project time reduction . activity-on-arrow method, 128-133 backward pass, 101-102 calendar dates, 108-109 determining slacklfloat, 102-103 feedback, 103-104 forwardlbackward pass information, 104 forward pass, 98-100 lags, 110-113 and PERT, 16&164 and PERT simulation, 164-165 true 50150 estimates, 205
Actual cost of work perfomed, 365, 368-369,373,379 A m , see Actual cost of work performed Adams, Chris E., 352n Adams, John R., 322n Adams, Laura L., 322n Adaptation, 451 Ad hoc project team, 4674 Adjourning stage, 295 Adler, Nancy J., 457n Administrative support groups, 264 Airbus A300B, 146 Alaska fly-fishing expedition, case, 157-160 Albrecht, Karl, 353n Allen, Roger E., 83n Allen, Stephen D., 83n Allen, Thomas J., 234, 245n Alternatives, 312-313 ALTO computer project, 32 Ambassador activity, 273 Ambition, 298 Amex Petroleum, case, 457-459 Analysis of variance, 367-369 Ancona, Deborah G., 273,28511 Apocalypse Now, 437 Apple Computer, 226 Apple Macintosh, 226,228 Arafat, Yassir, 256
Arbitration, 315 Archibald, Russell D., 43011 Arms, Phillip B., 456n Armstrong, J. S., 29 Army Corps of Engineers, 355 Arnold, Gary, 470 Arrow, Kenneth J., 216n Arrows, 94 Arthur Andersen Consulting, 25-26 Ashley, David B., 83n, 430n, 623 Asian cultures, 443 Assessment matrix, 439 AT&T, 8,26,221,428 Audit leader, 4 13-414 Audit report analysis section, 417 appendix, 418 classification of projects, 417 general requirements, 415-418 lessons learned, 417 recommendations, 417 summary booklet, 418 Audits; see also Project audits depth and detail of, 412 in-process, 412 performance evaluation, 423-428 post-project, 41 1-412 purpose, 41 1-413 Audit summary, 418-419 Availability for team membership, 298
Backward pass, 101-102 activity-on-arrow method, 131-133 information from, 104 lag relationships, 112-113 Badaracco, J. L., Jr., 285n Baker, Stephen, 19n Baker, W. E., 285n Balance, 281 Balanced matrix, 230,232 Balanced scorecard method, 41 Balanchandra, R., 429n Barakat, R., 357n Bar charts, 107-108,361-363 Bard, Jonathan E, 28511 Bartering, 436-437 Baseline changes, 380
Baseline development, 371 Baseline plan, 360 Baselines costs in, 366-367 and cost/schedule system, 365-369 rules for placing costs in, 367 BATNA (best alternative to a negotiated agreement), 347 Baxter, Jerry B., 18511 Bay of Pigs invasion, 318 BCWP; see Budgeted cost of work performed BCWS; see Budgeted cost of work scheduled Beard, Donald W., 29,49n, 474n Bechtel, Inc., 23, 333 Beck, Robert, 286n Beemon, D. R., 49n Bell Canada, 417,418 Bennis, Warren, 286n Benson, Suzyn, 323n Berry, Leonard L., 353n Best-case schedule, 144 Beta distribution, 161 Beveridge, Jim M., 357n Beyer, Janice M., 245n,246n, 258n Block, Thomas R., 474n Bolman, Lee G., 322n Bonneville Lock project, 355 Booz Allen and Hamilton, 160 Bottom-up approach to strategy, 24 Bottom-up estimates, 76-77 Bowen, H. Kent, 245n,246n, 322n Boyer, LeRoy T., 156n Bracker, J. S., 29,474n Bradford, David L., 266-267,28511 Brandon, Daniel M., 399n Breadshears, David, 148 Breitbarth, Robert, 41 Brooks, Frederick P., Jr., 173, 18511, 359,399n Brooks' law, 173 Brown, Scott, 353n Brunies, R., 84n Budgeted cost at completion, 368 Budgeted cost of work performed, 360,365,368,369,373,379 Budgeted cost of work scheduled, 365,366,368,369,373,379
Budget reserve contingency funds, 382 Budget reserves, 152 Budgets, 65 final cost forecasts, 150 final project cost, 379 time-phased, 79-80,366 Buell, C. K., 429n Bureaucratic bypass syndrome, 318 Burgess, A. R., 216n Burst activity, 93,95 Business perspective, 281
C. C. Meyers, Inc., 170-171 Cabanis, Jeannette, 28511 Cable News Network, 23 Caldwell, David E, 24611,273,2851 Calendar dates, 108-109 California Department bf Transportation, 170-171 Canon, 335 Career paths, 470472 Carlton, Jim, 245n Carlzon, Jan, 30 Cash bonuses, 307 Cash flow decisions, 150 Cause-and-effect worksheet, 35 Cavendish, P., 357n Center for Project Management, 470 Centralized project scheduling, 210-211 Central project priority system, 33-36 Change categories of, 154 minimizing need for, 380 in priorities, 420421 Change control management, 153-155 Change decisions, 301 Change review team, 380 Channel Tunnel, 331 Chaparral Steel, 235, 243 Character traits, 278-279 Charles Schwab Company, 11 Charnes, A., 216n Chatman, J., 246n Chicago Bulls, 293-294 Chilious, Sandra E., 49n China, 447-448
Christensen, David S., 399n Chrysler Corporation, 231 Citibank, 464 Clark, Kim B., 49n, 245n,246n, 322n Cleland, David I., 7, 19n,49n,322n Climate, 436 Closed economies, 10 Closure decision, 421 Coburn, Broughton, 156n Coding system, 73-74 Cohen, A. R.,266267,28511 Cohen, Herb, 353n Collins, James C., 246n Co-location, 303-304 Combinations of lags, 112 Commerce Business Daily, 354 Commitment to project priority system, 33-36 Communication skills, 281 in virtual project teams, 317-318 Compadre system, 444 Company folklore, 239-240 Company mission, 255 Compaq Computer, 242,254 Competence, 279 Competitive benchmarking, 28 Compressed product life cycle, 7-9, 461-462 Computed forecasted costs at completion, 368 Computer-aided design, 7 Computer-aided manufacturing, 7 Computer project, 85-97 Computers, for project network, 106-108 Computer solutions, 179 Concurrent engineering, 231 Concurrentlparallel activities, 94 Conflict management, 313-315 Conflict tolerance, 237 Confucius, 447 Conrad, Joseph, 437 Consistency, 278 Constraint, 65 Construction Industry Institute, 332 Consultants, 315-316 Contingencies, 82-83 Contingency funds, 151
Contingency plans, 146-15 1 for cost risks, 149-151 for golno-go situations, 147-149 schedule risks, 149 technical risks, 151 unplanned events, 147-149 Contingency reserve, 151-153, 381-382 Continuing project closure, 421 Continuous improvement, 339,341 Continuous improvement incentives, 171 Contract change control system, 356 Contract management contract change control system, 356 cost-plus contracts, 355-356 fixed-price contracts, 353-355 incentive clauses, 355 redetermination contracts, 354-355 Contracts, 353 Control, 237 of conflict, 315 Control chart, 362-363 Control process, 359-361 steps, 360-361 Cooper, W. W., 216n Cooperation, 276 Coppola, Francis Ford, 437 Cost accounts, 66,7676 Cost efficiency index, 377 Cost estimates kinds of costs, 77-78 methods, 78-79 in partner relationship, 342 Cost per unit of time, 174-175 Cost-plus contracts, 355-356 Cost risks, 149-151 cash flow decisions, 150 final cost forecast, 150 price protection, 151 timelcost dependency link, 150 Costs of contingency reserve, 381-382 of data acquisition, 380,381 estimating guidelines for, 81-83 of failing to consider resources, 192 included in baselines, 366-367
Costs-Cont. placed in baselines, 367I product materials and usage variance, 400-409 Costlschedule system, 36: earned-value system, 3t glossary for, 368 methods of variance anidysis, 367-369 outline for, 364-365 project baselines, 3654 software, 378-379 Cost-sharing ratio, 355 Cost variance, 367-368,3408-409 Coutu, Diane L., 323n Covey, Stephen R.,278,285n,286n, 345,353n Cowan, Charles, 352n, 35 Crane, David B., 286n Crash cost, 174 Crashing, 174 timing of, 179 Crash time, 174, 178-179 Credibility, 298 Crime, 435-436 CHON Systems, case, 24 Crisis, reactions to, 256 Critical chain, 205 Critical chain method, 204-205 Critical path, 89.92 and resource management, 104 Critical path method and PERT,161 significance of, 103 Critical success factors, 3 9 4 0 Critical thinking, whitewash of, 318 Cross-border projects, 463464 Cross-cultural considerations. 442 case, 457459 culture shock, 450-453 foreigners in United S& 448-449 in partnerships, 341 working in China, 447on working in different societies, 449450 working in France, 445-446 working in Mexico, 444-445 working in Saudi Arabia, 446-447
Cross-cultural projects, 463-464 Cross-cultural training, 453455 Culture, 438-439 concept of, 440 cross-cultural factors, 440452 Culture shock, 450453 coping with, 451-452 stress-related, 451 Currencies, 266-267 inspiration-related, 268-269 personal-related, 269 position-related, 268 relationship-related, 269 task-related, 267-268 Customer focus, 10 Customer involvement, 349 Customer relations, 347-349 Customer reviews, 63 Customers, 266 Customer satisfaction, metexpectations model, 347-347 Customs officials, 450 Cusumano, Michael A., 363-369
Daggat, W. R., 456n Daimler-Chrysler,467 Dandridge, T. C., 258n Dangler paths, 109 Data acquisition costs, 380, 381 David, Fred, 26,48n Davies, Stanley M., 246n Daw, Catherine, 43011 Deal, Terrence E., 246n, 258n, 322n Decision analysis, 311 Decision-making process choosing an approach, 308-312 group decisions, 312-313 Decision process flow chart, 310-311 Decision trees, 143 Dedicated project teams, 221 Dedicated teams, 226227,236236 Definition state of projects, 5-6 Deliverables, 62-63 Delivery stage of projects, 5-6 DeMarie, Samuel, 323n Denver International Auport, 380 Department of Agriculture, 206
Department of Defense, 363 Dependencies, 269-271 managing, 264-266 Desert One mission, 416 Dess, Gregory G., 29,49n, 474n Developing countries, 10 Developing Products in Half the Erne (Smith & Reinertsen), 151 Deviants, removal of, 257 DiDonato, S. Leonard, 352n Digital Equipment Corporation, 242, 304-305 Digital Video Disc, 146 Dinsmore, Paul C., 23,48n, 43011, 462,474n Direct costs, 77, 172-173 for crash times, 174 Direct pressure, 318 Disney World, 307 DiStefano, Joseph J., 456n Domestic projects, 433 Dominant critical path, 181 Doran, George T., 26,49n Downey, J., 357n Downsizing, 9, 24 Drexler, John A., Jr., 325, 352n Dummy activity, 127-128 Dunbar, Edward, 457n Du Pont, 428 Duration dates, imposed, 149 Dworatschek, C. Gray, 245n Dyer, William G., 322n, 352n Dysfunctional conflict, 313-315
E. Schwab, 11 Eager, David, 84n Early project closure, 421 Earned value, 367 Earned-value rule, 364,373 Eastman Kodak, 28,243, 306,335 Eccles, Robert G., 322n E-commerce, 11 Economic factors in foreign environment, 436-437 Economy, Peter, 353n Edward, Katherine A., 352n Effective priority system, 33-36 Electronic Data Services, 23,363
Elmes, Michael, 246n Energy, 298 Englehart, John E., 285n Enhance, 65 Entrepreneur's disease, 319 Equipment, 194 Errors, estimation of, 83 Estimated costs at completion, 368, 369,373 Estimating errors, 83 Ethical dilemmas, 441 Ethics in project management, 277 of project managers, 276-277 E-Trade, 11 European Space Agency, 467 Evaluation and feedback survey, 426 Evaluation system, 465 Event, 93 Execution stage of projects, 5-6 External analysis, 28
Faerman, Sue R., 352n Failed projects, 420 Federal Reserve Bank of St. Louis, 470 Feedback, 103-104,426,428 Fendly, L. G., 217n Feng shiu, 443 50150 rule, 367 Film prioritization, case, 52-55 Final cost forecasts, 150 Final project cost, 379 Financial Accounting Standards Board, 346 Financial project selection criteria, 36-37 Fincher, Anita, 19n Finesse, 281 Finish-to-finish relationship, 112 Finish-to-start relationships, 110 Fisher, Roger, 343-344,346-347, 352n, 353n Five-stage team development model, 294-295 Fixed-price contracts, 353-355 Flegg, J. P., 456n Flemming, Quentin W., 157n
Flexibility, 280,308 Float, 102-103 Floyd, Steven W., 49n Followup of decision, 313 Food and Drug Administration, 266 Ford Mustang, 32 Forecasting final project cost, 379 Foreign environment cross-cultural issues, 440452 culture, 438439 economic factors, 436-437 geographytclirnate, 436 infrastructure, 437438 legal/political factors, 435436 Foreign projects, 433 Forming stage, 294 Fortune, 3 Fortune 500 companies, 31 Forward pass, 98-100 activity-on-mow method, 128-131 information from, 104 lag relationships, 112-113 Frame, J. David, 303,322n, 474n France, 445-446 Franklin Equipment, Ltd., case, 325-328 Fraser, J., 357n French, J. R. P., Jr., 430n Fuji, 28,306, 335 Functional conflict, 313-314 Functional managers, 264-265 Functional matrix, 230,231-232 Functional structure, 221,234-235 project management, 222-224 recruiting team members, 298-299 FunSaver camera, 306 Fusco, Joseph C., 49n, 425,43011 Fusefield, Alan R., 49n
Gabarro, John L., 285n, 322n Gales, Bill,363 Gantt chart, 107-108,361-363,465 Gardner, Donald, 474n General and administrative overhead costs, 77-78 General Electric, 428 General Motors, 428
Generating alternatives, 312-313 Generic selection and priority system, 3 6 4 0 Geographic factors, 436 Gersick, Connie J., 296, 321n Giangreco, D. M., 429n Gibson, G. E., 355,357n Gilbert, P., 357n Gilbert, R., 357n Global competition, 9,462 impact on businesses, 23-24 Global project office, 464 Global projects, 433 Globerson, Shlomo, 285n Glossary, 476-479 Goals, 24-25 Gobeli, David H., 49n, 84n, 234, 245n,246n, 421,430n, 623 Going native, 319,450 Goldberg, Aaron, 228 Goldratt, Eliyahu, 204-205,217n Gotno-go situations, 147-149 Good guyhad guy stereotypes, 318 Goodwill costs, 171 Gould, David, 323n Government agencies, 265-266 Gradante, William, 474n Gradual adjustment, 451 Gray, Clifford F., 157n, 352n Griffen, T. J., 456n Griswold, Terry A., 429n Ground rules, 300-302 Group decision making, 312-313 Groupthink, 318 Guanxi (connections), 447 Guard activities, 273 Gump, Alan M., 49n
Hall, Edward T., 456n Hamburger, David H., 84n, 157n, 399n Hamel, Gary, 29 Hammock activities, 113-114 Hands offthands on behavior, 280 Harris, Phillip R., 456n Harris Semiconductor, 205 Hartman, Frances, 322n
Harvard Negotiation Projera 343-344 Heart of Darkness (Coma( Hector Gaminglo, case, 51 Hellwig, S. A., 456n Hendrickson, Anthony R., Hesse, Daniel, 8 Heuristic models, 143 Heuristics, 198 Hewlett-Packard, 23,221,256,271, 316317,428,465,471 Hierarchical structure of WBS, 66, 68 High-performanceproject teams building, 297-316 conditions for developing, 295 norms, 302 Hill, Linda A., 284n Hoffman, Robert, 430n Hofstede, Geert, 246n, 45Gu Holloway, Charles A., 245n, 246n, 322n Homans, George C., 321n Honeymoon stage, 450 Hong Kong, 443 Hostility stage, 450452 House, H. H., 43011 Hulett, David T., 157n Human resources, 193-194 Hurowicz, L., 216n Hwa, Chuah B., 322n Hybrid risk analysis approaches, 143
Iacocca, Lee, 32 IBM, 226,257 PC project team, 243 System1360 software project, 173 Identification code, 106 Illusion of invulnerability, 318 Immigration, 448 Incentive clauses, 355 Incentive contracts, 171 Incentive system for partnering, 342 Independence of tasks, 82 Indexes of performance, 377-379 Indirect project costs, 172 Indonesia, 436 Influence as exchange, 266269
Infrastructure, 437-438 In-house training programs, 471 Initiative, 298 In-process audits, 412 Insensitive project network, 181 Inspiration-related currencies, 268-269 Integrated cost/schedule system, 363-369 Integrated project planning and control system, 61 Integrative approach, 13-16 Intel Corporation, 331,470 Internal analysis, 28 International capital, case, 185 International Journal of Project Management, 3 International project managers cross-cultural issues, 440-452 culture shock, 450-452 and foreign environments, 434-439 selection and training, 453-455 International projects case, 457-459 and foreign environments, 434-439 motivation for, 434 partnering for, 467 site selection, 4 3 9 4 0 International space station project, 466-467 Interview questionnaire, 34,58 Into Thin Air (Krakauer), 148 Invitation to bid, 335,354 Iran hostage situation, 416 Irritability stage, 450-452 IS0 9000 certification, 9,354
Jago, Arthur G., 308,3 10,312,322n Janis, Irving L., 318,323n Jarvis Communication Corporation, case, 50-51 Jaselskis, Edward J., 43011 Javacom LAN project, case, 159-160 Jensen, M. C., 321n Jet Propulsion Laboratory Mars Exploration Project, 300
Job assignment reward, 308 Jobs, Steven, 228 Johansen, Robert, 323n Johnson, Kelly, 243 Johnson, Roy E., 49n Jordan, Michael, 257,293-294
Kangari, Roozbeh, 156n Kanter, Rosabeth Moss, 49n,285n, 331,352n Kaplan, Robert S., 49n, 284n Kapur, Gopal, 470 Katz, Ralph, 49n, 304-305,322n Katzenbach, Jon R., 322n Kaufman and Broad Home Corporation, 255 Kay, E. A., 430n Keifer, S. Craig, 399n Kellebrew, J. B., 216n Kelly, James, 122n Kennedy, A. A., 246n.258n Kepner, Charles H., 43,4%,156n Kerr, Jeffrey, 258n Kerzner, Harold, 246n, 357n Kerzner Office Equipment, case, 323-325 Kezsbom, Deborah S., 352n Kharbanda, Om P., 19n, 4% Kidder, Tracy, 322n Kiema, Arto, 8 King, Jonathan B., 25811,28511 King, William R., 49n Kleiner, Art, 322n Kluckhohn, E, 442,456n Knoepfel, H., 245n Knowledge explosion, 9 Knowledgeltechnology explosion, 462 Knutson, Joan, 49n Kodak Orion project, 335 Koppelman, Joel M., 157n, 399n Kostner, Jaclyn, 322n Kotter, John P., 284n, 28511 Kouzes, James M., 28% Krakauer, Jon, 148,156n Kram, Kathy E., 474n Kras, E., 456n Krupp, Goran, 148
Labor budget rollup, 73 Laddering, 109-110 Lags, 110-113 combinations, 112 finish-to-finish, 112 finish-to-start relationships, 110 with forward or backward pass, 112-113 start-to-finish, 112 start-to-start, 110-111 Lambreth, C., 357n Lane, Henry W., 456n Larson, Erik W., 84n, 234,24511, 246n, 258n,285n,352n, 421, 4 3 h , 623 Latham, Gary P., 430n Lawrence, Paul R., 245n,246n Leach, Lawrence P., 217n Leading by example, 275-277 versus managing, 261-262 Leavitt, Harold J., 319,323n Legallpolitical factors, 435-436 Lepore, Dawn, 11 Letters of commendation, 308 Leveling technique, 195-198 Level of detail, 80-81 Level-of effort costs, 366 Levin, Ginger, 19n Levine, Harvey A., 156n Levi Strauss and Company, 363 Lewicki, Roy J., 353n Lientz, Bennet P., 321n, 474n Likert, Rensis, 321n Limits and exclusions, 63 Linearity assumption, 179 Linear responsibility chart, 207 Lipman-Blumen, Jean, 319,323n Litterer, Joseph A., 353n Lockheed Corporation, 243 LOE; see Level of effect costs Logic constraints, 192 Long-range goals/objectives, 26-27 Looping, 106 Lorsch, Jay W., 24511 Low-priority projects, 309 Lucas, Elmer, 456n Lucas, George, 437
Lump-sum cash bonuses, 307 Lurie, Clive S., 43011
Mackay, Harvey, 474n Mackey, James, 217n Madnick, S., 18% Maier, N. R. F., 322n Malaysia, 436 Malkin, Martin F., 280,28511 Management by wandering around, 271-272 Management focus, 237 Management reserve, 152-153 Management reserve funds, 382 Managing versus leading, 261-262 low-priority projects, 309 of project interfaces, 262-266 Managing Martians (Shirley & Morton), 300 Mafiana syndrome, 444 Manchester United Soccer Club, case, 84-85 Manpower, additional, 173 Mantel, Samuel J., Jr., 24511, 28511, 430n Mapping dependencies, 269-271 Market-imposed project duration date, 169 Marketing manager, 6 Martin, Alexia, 323n Martin, M., 357n Materials, as resource constraint, 194 Matrix structure, 221, 227-233, 234-235 case, 246-249 concurrent engineering, 231 at DEC, 242 differing forms, 230-233 division of responsibilities, 230 institutionalizationof, 463 recruiting team members, 298 strengths and weaknesses, 232-233 Maximum megahertz project, case, 430-431 McGrath, Michael R., 353n McWilliams, G., 246n
Means-versus-ends orientation, 237 Measurement of technical performance, 378 of time performance, 360 Mediation, 314-315 Member identity, 237 Menard, P., 84n Mendenhall, Mark E., 457n Mentoring programs, 472 Merck, Sharp, and Dohme Research Laboratories, 280 Meredith, Jack R., 245n.430n Merge activity, 92 Merge time buffer, 205 Met-expectations model of customer satisfaction, 347-347 Mexico, 444-445 Micro-managing, 264 Microsoft Corporation, 254,331,363 Microsoft Project, 302 Milestone plan, 91 Milestone rule, 367 Milestones, 63, 362 Miller, Bruce, 49n Miller, William J., 428 Milosevic, Dragan Z., 19n.456n Minolta, 335 Minton, John W., 353n Mission statement, 26 Mimnan, Robert, 323n Mobil Oil, 428 Moder, J. J., 122n Monitoring time performance, 361-363 Monte Carlo technique, 164 Moran, Robert T., 456n Morigeau, Stuart, 157-160 Moms, Peter W. G., 19n Morton, Danelle, 300 Moss and McAdams Accounting, case, 246-249 Most likely cost, 342 Mount Everest, 148 Multinational companies, partnering by, 335 Multiple programs, 109 Multiple projects, 33 Multiple starts, 109 Multi-project environment, 10
Multiproject resource sche 209-211 Multitasking scheduling te 202-204 Murphy's Law, 144 Myere, H. H., 43011
Nabisco, 428 National Basketball Association, 174 Nature, attitudes toward, 4 NCR Corporation, 363 Negative stereotypes, 318 Negative synergy, 293-29) Negotiating, 342-347 BATNA tactic, 347 dealing with unreasonable people, 346-347 focus on interests, 344-345 options for mutual gain, 345-346 principle negotiation, 343-347 using objective criteria, 346 Net present value analysis, 143 Net present value model of project selection, 36-37 Network computation process, 98-104 backward pass, 101-10: determining slack/float, feedback, 103-104 forward pass, 98-100 Network logic errors, 106 Neuijen, B., 246n Newbold, Robert C., 21711 New-product teams, 273 Nightingale project, case, 122-125 Nike Corporation, 257 Node, 93-94 Nofziner, Brian, 28511 Nokia Corporation, 8 Nonquantitative scenario analysis, 142 Noreen, Eric, 217n Normal conditions, 82 Normal project closure, 41 Normal time, 174 Norming stage, 295 Norms of project teams, 38 Noms, Peter G., 3 '
Northridge, Calif., earthquake, 170-171 Norton, David P., 4% Not-invented-here culture, 297 Not-to-exceed cost, 342 Nukalapti, J. Reddy, 50n
Objectives, 24-25 characteristics of, 26 linkage to projects, 27 long-range, 26-27 ranking, 4 2 4 3 weighting, 4 3 4 Occupational Safety and Health Administration, 266 Oddou, Gary R., 457n Ohayv, D. D., 246n Olsen, Kenneth V., 242 Olympia, Washington, 206 Olympic Site Selection Committee, 441 Openness, 278 Open-systems focus, 237 Operation Eagle Claw, 416 Opportunities, 28 Optimist, 282 O'Reilly, Brian, 430n O'Reilly, C. A., 246n Organizational competence, 279 Organizational culture, 221 creation and communication of, 253-258 identifying characteristics, 238-240 impact of global competition, 23 implications for organizing projects, 240-243 nature of, 236-238 and organizational learning, 463 and project management, 13 Organizational learning, 463 Organizational mission, 25-26 Organizational politics, 31-32 Organization breakdown structure, 71-73 Organizations allocation of awards and status, 256 effective priority system, 33-36
Organizations--Con?. folklore about, 239-240 integrating WBS with, 71-73 internallexternal analysis, 28 not-invented-here culture, 297 physical characteristics, 238-239 project-driven, 461462 reactions to crisis, 256 recruitment process, 254 removal of deviants, 257 rituals, stories, and symbols, 256-257 top-management behavior, 255 Orion camera project, 335 Outdoor experience, 316 Outsourcing, 211,331 Overall project slippage, 209 Overhead costs, 171,367 Overseas projects, 433 Ownership, 316
Parallel activities, 92,95 Parasuraman,A., 353n Partnering, 105-106 advantages of, 333 and art of negotiation, 341-347 case, 350-351 contract management, 353-357 definition, 331,332 evaluation of, 340 incentive system, 342 for international projects, 467 key practices, 334 managing customer relations, 347-349 by multinational companies, 335 overview, 332-334 preproject activities, 335-337 project completion, 339 project implementation continuous improvement, 339 joint evaluation, 339 persistent leadership, 339 problem resolution, 337-339 in public sector, 355 reasons for success or failure, 339-341 to share risk, 146 team-building, 336-337
Partnering framework, 334 Partner selection, 335-336 Pascoe, T. L., 217n Path, 92 Patterson, J. H., 217n Paulus, P. B., 321n Payback model of project selection, 36-37 Peace Corps, 453 Pearce, John A., II,26,48n Pearson, J. N., 29,474n Peer performance reviews, 465 Percent complete index, 377-378 Percent complete rule, 367 Performance evaluation, 423424 case, 399 feedback, 426,428 project manager, 426427 project team, 425-426 team members, 426-427 Performance indexes, 377 Performance of new-product teams, 273 Performance reviews, 427428 Performance specifications, 65 Performing stage, 295 Perpetual projects, 419420 Personal integrity, 281 Personal-related currencies, 269 Personal relationships, 442 PERT, 143,160-164 PERT simulation, 143,164-165 Peters, James F., 430n Peters, Thomas J., 28511,293, 321n, 322n Pettegrew, A. M., 246n Pfeffer, Jeffrey, 49n Phillips, C. R., 122n Pinto, Jeffrey K., I%, 4911, 83n, 28511,43011,623 Pippett, Donald D., 430n Planning decisions, 301 Planning stage of projects, 5-6 Plans, periodic monitoring, 360 PM Network, 471 Political connections, 298 Political stability, 435 Poltruck, David, 11 Pondy, L. R., 258n Porras, Jerry I., 246n
Porter, R. E., 456n Position-related currencies,268 Positive synergy, 293-294 Posner, Barry Z., 84n,285n,623 Post-it stickers,97 Post-project audit, 411,412 Powell, Casey, 272 Power Train, Ltd., case, 217-218 Prahalad, C.K.,29 Precedence diagram method, 93 Predecessor activities, 94 Premature project closure, 419 Preproject partnering activities,
335-337 Price, L. P., 43011 Price protection risks, 151 Price variance, 408409 Primavera software, 302 Principle negotiation, 343-347 Priority team, 38-39;see also Project priorities Probability analysis, 143 PERT, 160-164 PERT simulation, 164-165 Problem identification, 312 Problem resolution, 337-339 Problem solving, 276 Problem solving ability, 298 Product development, time to market,
9 Production manager, 6-7 Product life cycle, compression of,
7-9,461-462 Profit, cost-sharing ratio, 355 Project audits guidelines, 415 informationldatacollection and analysis, 414-415 initiation and staffing, 413-414 in management system, 465 objectives, 414 organizational view, 414 project team view, 415 unplanned, 413 Project closure conditions for, 419-421 continuing or early, 421 decision, 421 process, 421423 Project completion, 339
Project constraints physical constraints, 193 resource constraints, 193-194 technical or logic constraints, 192 Project control chart, 362-363 Project costs direct, 172-173 indirect, 172 Project cost-time graph determining activities to shorten,
174-178 major steps in constructing, 174 Project-driven firms, 13,461462 Project duration, market-imposed date, 169 Project implementation, in partner relationships, 337-339 Project interfaces, managing,
262-266,467 Projectitis, 227,228,318 Projectized form of organization,
226 Project leaders, 470 Project life cycle, 5-6 Project management as alliance versus contest, 342 career paths, 470-472 changes since 1960,461 critical path method, 103 ethics in, 276-277 extended techniques hammock activities, 113-114 laddering, 109-110 lags, 110-113 future positive trends, 462468 in global industries, 434 importance of, 7-12 integrative approach, 13-16 low-priority projects, 309 managing dependencies, 264-266 partnering, 105-106,146,467 in project-driven firms, 13 responsibility matrix, 207-209 reward and evaluation, 465 scope of, 3 4 small projects, 104-105 sociocultural side, 15-16 technical side, 14-15 tool acquisition, 481 unresolved issues, 468469
Project management information systems, 465 Project Management Institute, 4,12 Code of Ethics, 277,289-291 membership in, 471 Project Management Journal, 471 Project management officers, 463 Project management program office,
464 Project management software,
106-108,465 Project management systems ad hoc use, 12 formal application of, 12-13 Project management structures cases, 246-253 dedicated teams, 224-2- in functional organizatil
222-224 kinds of, 221 matrix arrangement, 227-233 and organizational culture,
236-240 purpose, 221-222 relative effectiveness, 2 selection of, 234-236 Project managers,6,264 building trust, 278-279 case, 286-289 as coordinators, 263 cross-cultural issues, 44042 decision-making process, 308-313 estimating time, costs, and resources, 81-83 evaluation and control of responsibilities, 359 influence as exchange, 266-269 job of, 261-262 level of detail, 80-81 managing conflict, 313-315 managing customer relations,
348-349 need to understand straltegic management, 24 organizational currencies, LOO-~o9 in partner team building, 336 performance evaluation, 426-427 qualities for effectiveness, 279-282 role in creating teams, 297-299 social network building, 269-277
Project managers-Cont. team-building sessions, 315-316 and work breakdown structure, 66-69 Project material price and usage variance, 400-409 Project material variances, 408409 Project matrix, 230,232 Project meeting effective use of, 303 first, 299-300 ground rules, 300-302 subsequent to first, 302-303 Project network activity-on-arrow method, 125-134 activity-on-node fundamentals, 93-97 basic rules for developing, 93 cases, 122-125 computer use, 106-108 constructing, 92-93 development, 89-90 forwardhackward pass information, 104 insensitive, 181 level of detail for activities, 104-106 loose ends activity numbering, 106 calendar dates, 108-109 multiple projects, 109 multiple starts, 109 network logic errors, 106 methods, 93 network computation process, 98-104 sensitivity of, 179-180 start and finish computations, 98 terminologies, 92-93 time buffers, 205 work packages, 90-92 Project objectives, 62 Project overhead costs, 77 Project partnering; see Partnering Project priorities, 45,276 changes in, 420421 establishing, 63-66 Project priority analysis, 44 Project priority evaluation form, 56
Project priority matrix, 64-65 Project priority system, 464465 balanced scorecard method, 41 cases, 50-55 case studies, 41-47 commitment to, 33-36 effective, 33-36 generic, 36-40 key players, 57 Project proposals, 38 Project queue system, 210 Project reward systems, 307-308 Project risk; see Risk Project rollup, 70,7676 Projects barriers to success, 422 change control management, 153-155 changes during, 380 contribution to strategic plan, 23 cross-border, 463-464 cross-cultural, 463464 developing status report, 369-377 domestic, foreign, or global, 433 with high levels of uncertainty, 469 impact of organizational culture, 240-243 indexes of performance, 377-379 kinds of costs, 77-78 lack of priority system, 29-33 linkage to strategy and objectives, 27 low-priority, 309 managing versus leading, 261-272 multiple, 33 nature of, 4-7 rearranging logic of, 173-174 resource-constrained, 194-195, 198-202 scope creep, 382-383 small, 10-12 strategy implementation gap, 29-31 strategy implementation through, 28-29 systematic selection, 464465 time-constrained, 195-198 traditional versus matrix, 221 with unstable scopes, 469
Project schedules, compressed, 149 Project scope, 61-63 Project scope checklist, 62-63 Project scope reduction, 174 Project scope statement, 64 Project screening matrix, 40 Project screening process, 39 Project selection criteria, 3 9 4 0 net present value model, 36-37 and organizational politics, 31-32 payback model, 36-37 Project selection process, 3 7 4 0 generic and priority system, 36-40 priority team role, 38-39 project proposals, 38 selection criteria, 3 9 4 0 Project selection system impact definitions and weight, 44-45 project priority, 44 ranking objectives, 4 2 4 3 risk analysis, 45 weighting objectives, 4 3 4 Project sponsors, 265 Project start time, 98-99 Project status reports, 363,364-377 Project team name, 304 Project team pitfalls bureaucratic bypass syndrome, 318 entrepreneur's disease, 319 going native, 319 groupthink, 318 team infatuation, 319 Project team rituals, 304-305 Project teams, 264 ad hoc, 467468 conducting meetings, 299-303 creating a shared vision, 305-306 establishing team identity, 303-305 five-stage development model, 294-295 high-performance, 297-316 managing conflict within, 313-315 orchestrating decision making, 308-313 performance evaluation, 425426 punctuated equilibrium development model, 296
Project teams-Cont. recruiting project members, 297-299 situational development factors, 295-297 team-building sessions, 315-316 transition points, 296 view of audit, 415 virtual, 316-318 Project time buffer, 205 Project time-cost graph, 181 Project time reduction cases, 185-188 practical considerations bottom line on, 179-181 computer solution, 179 crash times, 178-179 linearity assumption, 179 timing crashing activities, 179 project cost-time graph, 174-178 rationale for, 169-171 true 50150 time estimates, 205 Project time reduction procedures explanation of physical costs, 172-173 shortening project time, 173-174 Project Web site, 465 Prototype experimentation, 147-149 Pseudo-earned value approach Public recognition, 308 Public sector partnering, 355 Punctuality, 441 Punctuated equilibrium model of team development, 296
Quentin, Fleming W., 399n Quinn, Robert E., 352n
Raelin, A. J., 429n Ranking objectives, 4 2 4 3 Ratio cost estimating methods, 78 Ratiolrange analysis, 142-143 Ratiu, I., 456n Rea, Kathryn P., 321n, 474n Recruitment process, 254 Redetermination contracts, 354-355 Reiman, Robert, 157n
Reinertsen, Donald G., 151, 157n, 245n,246n, 321n, 322n Relationship decisions, 301 Relationship-related currencies, 269 Religion, 428 Resource allocation, 28 assumptions, 195 with multiple projects, 33 outsourcing solution, 211 time-constrained projects, 195-198 Resource bottlenecks, 209 Resource-constrained projects, 194-195, 198-202 impact of, 202 resource allocation for, 198-202 Resource-constrained scheduling, 192 Resource constraints, 192-193 equipment, 194 materials, 194 people, 193-194 working capital, 194 Resource leveling, 192, 195-198 Resources availability, 45 estimating guidelines for, 81-83 Resource scheduling assigning project work, 207-209 benefits of, 206-207 case, 217-218 classification of problem, 194-195 critical chain approach, 204-205 impact of resource-constrained projects, 202 multiproject, 209-211 nature of problem, 191-192 resource allocation methods, 198-202 responsibility work, 207-209 splittinglmultitasking,202-204 for time-constrained projects, 195-198 types of project constraints, 192-193 types of resource constraints, 193-194 Resource time buffer, 205 Resource utilization, 195 inefficient, 209
Responsibility in matrix structure, 230 for risk, 153 for work packages Responsibility matrix, 207-209 Return on investment, 3 9 4 0 Reward criteria, 237 Reward system, 256,307-308,465 Rhodes, Richard, 28511 Rhyne, Lawrence C., 29,474n Risk, 139 change control managen 153-155 and contingency planning, 146151 establishing contingency reserves, 151-153 in project time reduction, 179-181 responsibility for, 153 scheduling, 149 unplanned events, 147-149 Risk analysis, 44,141-145 hybrid approaches, 143 PERT, 160-164 PERT simulation, 164-165 probability analysis, 143 ratiolrange techniques, 142-143 scenario analysis, 142 semiquantitative scenario analysis, 143-145 sensitivity analysis, 145 Risk assessment matrix, 1L Risk assignment, 153 Risk identification, 139-14 Risk management case, 157-160 change control management, 153-155 contingency planning, 146-15 1 contingency reserve, 151-153 definition, 139 major components, 140 Risk reduction, 145 Risk response reducing or retaining risk, 145 sharing risk, 146 transferring risk, 145-1L Risk response matrix, 147 Risk retention, 145 Risk-sharing, 146
Risk tolerance, 237 Risk transference, 145-146 Ritti, Richard R., 307,322n Rituals, 256-257 Robb, David J., 28511 Roberts, Charlotte, 322n Roberts, Edward B., 49n Robins, Stephen P., 322n Robinson, Richard B., Jr., 29,474n Rogers, W., 258n Rollup of network plans, 90 Romanoff, K. E., 43011 Rose Garden stadium, Portland, Ore., 174 Ross, Bill, 474n Ross, Jerry, 430n Ross, Richard B., 322n Rudelius, William, 49n Ruggles, William S., 19n Russian Mafia, 435436
Sacred cows, 32 Safety time, 204-205 Saffo, Paul, 323n Saia, Rick, 474n Salancik, Gerald R., 321n Samovar, L. A., 456n Sanders, D., 246n Sassoon, Gideon, 11 Saudi Arabia, 446-447 Saunders, David M., 35311 Sayles, Leonard R., 284n, 28% Scandinavian Airlines turnaround, 30 Scanner project, case, 399 Scenario analysis nonquantitative, 142 semiquantitative, 143-145 Schedule risk compression of project schedules, 149 imposed duration dates, 149 use of slack, 149 Schedule slippage, 362-363 Schedule variance, 365-368 Scheduling efficiency index, 377 Scheduling see Resource scheduling Schein, Edgar H., 246n, 258n, 321n Schilling, Donald L., 352n Schkade, J., 321n
Schlesinger, Leonard A., 322n Schmeidawind, J., 49n Schmidt, K. D., 456n Schneier, E., 430n Scholtes, Peter M., 322n Schonfeld, Erick, 11 Schuler, John R., 157n Scope creep, 382-383 Scouts, 273 Scown, Michael J., 456n Sculley, John, 228,24511 S-curve, 143,150 Semiquantitative scenario analysis, 143-145 Senge, Peter M., 286n, 322n Sense of purpose, 278 Sensitivity of project network, 179-180 Sequence Martian rover, 300 Sequent Corporation, 256257,272 Seven Habits of Highly Effective People (Covey), 278 Shanahan, Sean, 217n Shared vision, 305-306 Sharkey, T. W., 49n Sheen, Martin, 437 Shenhar, Aaron J., 28511 Sherif, M., 321n Shirley, Donna, 300 Shtub, Avraham, 285n Sibbet, David, 323n Sills, Suzanne, 430n Silver Fiddle Construction, case, 158-159 Simister, Steve J., 156n Site selection, 439-440 Skillful politician, 282 Skow, L., 456n Skunk Works, 243 Slack, 102-103 reduction, 180 use of, 149 Slevin, Dennis P., 83n, 285n, 430n, 623 Slocum, John W., 258n Slush factor, 110 Smallest increase in cost per unit of time, 174 Small projects, 10-12, 104-105 Smith, Bryan J., 322n
Smith, Debra, 217n Smith, Douglas K., 304-305,322n Smith, M. A., 62,83n Smith, Preston G., 151, 157n, 2 4 5 , 246n, 322n Smither, J., 430n Social network-building leading by example, 275-277 management by wandering around, 271-272 managing upward relations, 272-275 mapping dependencies, 269-271 Social order, 238 Softech, Ltd., case, 401404 Software for cost/schedule systems, 378-379 Software projects, 17 Soul of a New Machine (Kidder), 307 South American Adventures Unlimited, case, 20 Special Office of the Navy, 160 Splitting scheduling technique, 202-204 Stability, 279 Stability zones, 453 Stakeholders, 33-36,336-337 Standards of behavior, 238 Standards of performance, 276 Standish Group International, 17 Start-to-finish relationship, 112 Start-to-start relationship, 110-111 Status report, 363, 369-377 Staw, Barry M., 321~1,43011 Stewart, Thomas A., 3, 19n Stories, 256-257 Storming stage, 294-295 Strategic management process activities, 25 analyze and formulate strategies, 27-28 defining mission, 25-26 effective priority system, 33-36 implementing projects through, 28-29 long-range goals/objectives, 26-27 overview of, 24-29 and performance, 29 project manager's need to understand, 24
Strategic plan integration of project with, 14 linkage to projects, 23-24 Strategy lack of priority system, 29-33 linkage to projects, 27 Strategy formulation, 24,27-28 Strategy implementation, 24 Strategy implementation gap, 29-31 Stress, high-tolerance of, 281 Stress-related culture shock, 451 Strodtbeck, E L., 442,456n Stuckenbruck, Linn C., 24% Subcontracting, 173 Subcontractors, 265 Subcultures, 238 Subdeliverables, 66, 70 Successor activities, 94 Suris, O., 24511 Survey of current projects, 34 SWOT analysis, 28 Symbols, 256-257 Synergy, 293-294 System freezing, 147-149 Systems thinker, 281
Talbot, B. F., 217n Tallahassee Democrat, 304 Target cost, 342 Task coordinator activity, 273 Task-related currencies, 267-268 Tavema, Michael A., 474n Teagarden, C., 357n Team building in partnering with project managers, 336 with stakeholders, 336-337 Team-building sessions, 315-316 Team emphasis, 237 Team evaluation, 425-426 Team identity, 303-305 Team infatuation, 319 Teaming with contractors, 105-106 Team member evaluation, 426-427 Team members co-location of, 303-304 qualifications,298 recruiting, 297-299 Team rituals, 304-305
Team versus organizational loyalties, 280 Technical constraints, 192 Technical performance, 378 Technical requirements, 63 Technical risks, 151 Technological expertise, 298 Tektronics, 363 Telecommunications systems, 468-469 Texas Instruments, 8 Thailand, 436 Thambain, Hans J., 322n, 357n Third World economies, 10 Thompson, Michael P., 352n Thoms, Peg, 322n Threats, 28 360-degree feedback, 246,428,465 3M Corporation, 3940,241,463 Time and materials contract, 356 Time buffers, 205 Time-constrained projects, 195-198 Timelcost dependency link, 150 Time management, 282 Time orientation in Mexico, 444 in other cultures, 442 in Saudi Arabia, 446 T i e performance estimating guidelines for, 81-83 measuring, 360 monitoring, 361-363 Tie-phased budgets, 79-80,366 Time-phased costs, 367 Time to market, 9, 65 T i e units, 82 Top-down approach to strategy, 24 Top-down estimates, 76-77 Top management, 265 behavior of, 255 need for vision, 463 support of, 272-275 Torbiom, Ingemar, 456n Total direct costs, 174 Total quality management, 268 Total slack, 102 Townsend, Anthony M., 323n Tracking decisions, 301 Tregoe, Benjamin B., 43,4911, 156n Trice, Harrison M., 245n,246n, 258n
True 50150 time estimates, Trust, 278-279 Tuchman, B. W., 321n Tucker, R. L., 62,83n Tung, Rosalie L., 456n, 45 Turnaround, 30 Turner, Rodney, 3 M l e , Quentin C.
Underwriter Laboratories, Unforeseen delays, 171 Union Carbide, 333 United States, foreigners working in, 44849 United States Forest Service, 206, 381 Unit integration, 237 Unplanned risk events, 14' Upward relations, 272-27: Urgency, 276 Ury, William, 343-344,34 352n, 353n Usage variance, 409
Variance at completion, 368,369 Velton, J. I., 357n Verma, Vijay K., 245n, 284n Versatic, 240 Videoconferencing,317 Vietnam, 435 \ r i a l project management, 468469 V i a l project teams, 316-318 Vision-building meetings, 306 Vroom, Victor H., 185n, 308,310, 312,322n
Walker, Morgan R., 122n Wall, James A., 353n Wallace, Jerry, 428 Wall Street Jouml, 3 Walt Disney Company, 363 Walton, Richard E., 284n Ware, James, 322n Watson, Thomas,Sr., 257 WBS; see Work breakdown structure Webb, A. P., 28511
Web-based stock trading, 11 Weighted multiple criteria models, 39-40 Weighting objectives, 43-44 Welch, Jonathan B., 29,474n Wess, Robert, 47411 Western Oceanography Institute, case, 286-289 Weston, D. C., 355,35711 Wexley, K. N., 43011 Wheelwright, Steven C., 49n, 2451-1, 24611,32211 Whitbread World Sailboat race, case, 185-188 Wiest, J. D., 216n Wilemon, David L., 246n,322n Willie, C. J., 216n Windows Office 2000 project, 147 Wireless Telecom, case, 430-431 Woodworth, Bruce M., 216n, 217n Wooldridge, Bill, 4911 Work breakdown structure, 61 aid to project manager, 66-69
Work breakdown structure-Cont. in building project network, 90-92 cases, 84-87 coded for information system, 73-74 costlschedule systems, 364-365 development of, 69-70 identifying changes, 154 integrated with organization, 71-73 level of detail, 80-81 major groupings, 66 risk identification, 141 for small projects, 104-105 top-down versus bottom-up estimates, 76-77 Working capital, 194 Work packages, 66,70,74-76 and budgets, 366 estimates for time, costs, and resources, 81-83 in project networks, 90-92 responsibility for, 81-82
Worst-case scenario, 144 Wysocki, Bernard, 19n Wysocki, Robert K., 28611
Xerox Corporation, 32,240
YafTe, L. E., 45611 Year 2000 Olympic Games, 67-68 Yetton, Phillip W., 308,322n Yeung, Irene Y. M., 45611 Youker, Robert, 245n Y2K projects, 38
Zander, A., 321n Zaphiropoulos, Renn, 240 Zeithaml, Valerie A., 35311 Zernke, Ron, 353n 01100 percent rule, 367