The Tools of Project Management

1. The Tools of Project Management Presentation By Professor S. Kim Sokoya Middle Tennessee State University USA European Summer University Cherbourg, France July 4, 2006

2. Outline of Presentation • The Nature of Project Management • Fundamentals of Project Management • Project Management and Innovation • Project Management in a Global Environment

3. Nature of Project Management • What is Project Management • The History of PM • Recent development in PM

4. What is Project Management • A project is defined as a temporary endeavor undertaken to create a unique product or service. • Projects tend to be specific and finite tasks characterized by the following: • Importance • Performance • Life Cycle with a finite due date • Interdependencies • Uniqueness • Limited Resources • Conflict.

5. What is Project Management contd. • Project management is the application of knowledge skill tools and techniques to project activities in order to meet stakeholder needs and expectations from a project. • Emphasis is on balancing stakeholders needs and expectations with Scope, Time, Cost and Quality demands

6. What is Project Management contd. • While various business models evolved during this period, they all shared a common underlying structure (especially for larger businesses): that the project is managed by a project manager, who puts together a team and ensures the integration and communication of the workflow horizontally across different departments.

7. The History of Project Management • Project management, in its modern form, began to take root only a few decades ago. Starting in the early 1960s, businesses and other organizations began to see the benefit of organizing work around projects and to understand the critical need to communicate and integrate work across multiple departments and professions. http://www2.sims.berkeley.edu/courses/is208/s02/History-of-PM.htm

8. The History of Project Management • Early 20th Century Efforts • Near the turn of the century, Frederick Taylor (1856?1915) began his detailed studies of work. He applied scientific reasoning to work by showing that labor can be analyzed and improved by focusing on its elementary parts. He applied his thinking to tasks found in steel mills, such as shoveling sand and lifting and moving parts

9. The History of Project Management • Taylor's associate, Henry Gantt (1861?1919), studied in great detail the order of operations in work. His studies of management focused on Navy ship construction during WWI. His Gantt charts, complete with task bars and milestone markers, outline the sequence and duration of all tasks in a process.

10. The History of Project Management • Mid-20th Century Efforts After WWII, the complexities of projects and a shrinking war-time labor supply demanded new organizational structures. Complex network diagrams called PERT charts and the critical path method (CPM) were introduced, giving managers greater control over massively engineered and extremely complex projects (such as military weapon systems with their huge variety of tasks and numerous interactions at many points in time). The military establishment deserves the credit for developing the techniques and practices of project management. Now establishments in both public and private sector are reaping the benefits of these techniques and improving on past practices.

11. Recent Development in Project Management • Project management has continued to gain popularity for a number of reasons. They include • (a) the dispersion of knowledge and intellectual capital, • (b) the demand for complex and sophisticated customized goods and services, • (c) and a very competitive global market. (Meredith and Mandel 2006)

12. Recent Development in Project Management contd. • These reasons have become a formidable source for the increase in complexity of goods and services, and complexity of the processes used to produce them. • However the multidimensional objectives of project management remains time, cost and performance and lately “client satisfaction”

13. Recent Development in Project Management contd. • The Complexity of the issues faced by project managers, and the increasing number of project-oriented organizations has contributed to the professionalization of PM. • The Project Management Institute was formed in 1969, and by recent count the institute has close to 160000 members representing many industries and the academia. • The Institute has been responsible for publishing journals and magazines for project management professionals. The PMI published “Project Management Body of Knowledge (PMBOK) has served to be the ultimate reference manual for PM professionals.

14. Fundamentals of Project Management • The fundamentals of project management will be discussed looking at both the codification as presented by Project Management Institute in PMBOK, and a managerial approach that approximately follows the project life cycle. • According to PMBOK the fundamentals of project management include 5 basic process groups and 9 knowledge areas. • The following slides represent brief descriptions of the process groups and knowledge areas.

15. Fundamentals of Project Management contd. • The Five (5) basic process groups include 1 Initiating-- Committing the organization to begin the next phase of the project. 2. Planning --Includes core planning process which includes scope planning scope definition, activity definition and sequencing, cost estimation and budgeting, quality planning and organization, risk identification and quantification, staff acquisition and procurement planning.

16. Fundamentals of Project Management contd. 3. Executing– Putting into place the core and facilitating processes of the planning phase. 4. Controlling – Measuring project performance to identify significant variances and adjustments are made accordingly in the respected knowledge area. 5.Closing – Administrative and Contractual closure of project

17. The 9 Knowledge areas of PM • Project Integration management This include the processes required to make sure that all the different elements of a project are well coordinated. Tradeoffs among different objectives and alternatives are considered to make for an integrative whole. This also includes the process of making sure that the work of the project is integrated with other functions of the organization.

18. 2. Project Scope Management • This area focuses on how to define and control what is included and not included a in a particular project. • Knowledge is required in writing a scope statement, defining project deliverables, and the formalization of scope acceptance by all stakeholders.

19. 3. Project Time Management • These are the processes involved in ensuring the timely completion of a project. • Time management involves activity definition, sequencing of activities, estimating the time that it will take to perform them, and schedule control. • This knowledge area involves the use of mathematical techniques that we will discuss later.

20. 4. Project Cost Management • These are the processes involved with cost containment within budget guidelines. • This knowledge area focuses on resource planning, cost budgeting and cost control and increasingly on such financial considerations such ROI, Discounted Cash Flow and payback analysis.

21. 5. Project Quality Management • The processes involved include quality planning, assurance, and control. Quality management should of necessity focus on both the management of the project and the deliverables of the project. • The PMBOK discussion on quality is very compatible to ISO 9000 and 10000 series of standards and guidelines, the philosophy of quality experts like Deming, Juran and Crosby, TQM and Continuous Improvement.

22. 6. Project Human Resource Management • This will include processes that are concerned with organizational structure. staff acquisition and retention, and team development for effective project performance. • Some will argue that this is increasingly becoming the holy grail of project management. Building competencies in both the individual and the team is indispensable. • We will further explore this issue later in the presentation.

23. 7. Project Communications Management • These are the processes required to ensure the generation, collection, storage and dissemination of project information. • Sending and receiving the right information about the project is critical to successful completion of the project. • Projects that involve cross national partnership have unique implications for project communications.

24. 8. Project Risk Management • These are processes concerned with identifying, analyzing, and responding to project risk. The intent is to minimize the consequences of adverse events during the life of the project. • Risk management also involves balancing the uncertainties of the environment with stakeholder concerns and desires, given the time and cost constraints.

25. 9. Project Procurement Management • This knowledge area is concerned with the processes involved in acquiring the goods and services that are needed to perform the project tasks. • This will include soliciting sources, selecting sources, managing the interaction with selected sources and finalizing contracts with suppliers/vendors.

26. The 9 Knowledge areas of PM • Please note that the processes involved in the nine knowledge areas interact with each other and are not separate. In fact the input of some of the knowledge areas are output of the other knowledge areas. • The success of project management presupposes the interaction and the overlap of these processes.

27. Managerial Approach to the PM Body of Knowledge • Projects must be considered in light of the overall strategic direction of the organization. • Project management is not and should not be seen as a separate endeavor, but as a means of getting to organizational goals and using managerial tools and techniques. The emphasis should be on “project management maturity”, i.e. the development of project and multi-project management expertise. (Meredith and Mantel 2006)

28. Three Phases of Project Management Life Cycle • 1. Project Initiation • 2. Project Implementation • 3. Project Termination

29. Project Initiation • The first phase of project management will of necessity focus on the following issues: • Project selection, deciding which project to embark on and in case of multiple options deciding which selection models and criteria to use in deciding which project to pursue. In the face of limited resources, and environmental uncertainty organizations have to make a choice of investment projects, and this may have an impact on the long term survival of the firm. There is no one perfect selection model, they all have advantages and disadvantages.

30. Project Initiation • Project Manager. • The project manager is very instrumental in the PM process and has very different roles from functional managers. Must have technical, political and administrative skills • PM has responsibility for managing physical and personnel resources, dealing with problems and being a liaison with all the different stakeholders. • The increasing global nature of project management has resulted in additional demands on the PM and we will discuss this later.

31. Project Initiation • Project Organization • Creating an organizational structure that will enhance and facilitate PM effectiveness and efficiency. • Different forms of organizational structure and the increasing appeal of “project organization” • The desired form of organizational structure will depend on desired outcomes, the key tasks involved and the grouping of those tasks • Dealing with potential conflicts among different parts of the structure.

32. Project Initiation • Project Planning • Detailed planning of the project is essential as input for staff selection, budgeting, scheduling and control. • In project planning the PM should review issues such as project objectives, contractual requirements, budgets, cost control and evaluation mechanisms • The relevance and importance of Work Breakdown Structure (WBS) and linear responsibility chart to identify needed resources and the coordination of tasks as necessary.

33. Project Implementation • The Second Phase of Project Life Cycle is the implementation phase. The focus here is on issues such as Budgeting and Cost Estimation, Scheduling, Resource Allocation, Monitoring Information Systems and Control.

34. Project Implementation • Budgeting and Cost Estimation • The intent of the budget is make known the firms goals and priorities. • Different approaches to budgeting, top-down vs. bottom up approach • Costing for both short term and long term strategic goals • Impact of the learning curve on cost estimates • Planning for uncertainties and changes in the environment that can effect on projected cost.

35. Project Implementation • Scheduling • This is particularly important in complex coordinating problems. • The network approach is the most common form of project scheduling

36. Project Implementation • Use of Program Evaluation Review Technique (developed by Navy), the use of probabilistic activity time estimates to aid in determining the probability that a project will be completed by a given date. • According to new PMI guidelines this is now called Arrow Diagram Method/PERT

37. Project Implementation • CPM (developed by DuPont Inc) the use of deterministic activity time estimates to control both the time and cost aspects of a project. According to new PMI guidelines this is now called Precedence Diagram Method/CPM

38. Project Implementation • Gantt Chart which shows the planned and actual progress for tasks displayed on a horizontal time scale • Graphical Evaluation Review Technique another probabilistic network that is more sophisticated than PERT/CPM • The development of very user friendly software like Microsoft Project, Crystal Ball and Excel had made it easier to implement the different types of scheduling networks.

39. Project Implementation • Resource Allocation is concerned with determining the best trade-offs between available resources (money, personnel, time) for the duration of the project. • The use of Heuristic models and Optimizations methods are the two approaches to solving resource allocation problems • Mathematical programming models are needed for solving these constrained optimization problems.

40. Project Implementation • Monitoring and information Systems • Good information system is essential to monitoring the project. • The first task is to identify key factors to be monitored and develop standards for them • Importance of results, i.e. outcomes rather than activities in the monitoring process. • Collection of different types of monitoring data, with routine, exception and special analysis reports.

41. Project Implementation • Proper dissemination of reports, and timing of reports • Use of computerized software to manage Project Management Information Systems

42. Project Implementation • Project Control The control process is directed at performance cost and time. The control process should ensure the achievement of desired results while optimizing the use of physical, human and financial assets of the organization.

43. Project Implementation • The control system should be motivating and at the same time be cost effective and not overdone. Meredith and Mandel 2006) • The control process should focus on one or more of these approaches, process review, personnel change, control of input resources. • Change is difficult!

44. Project Termination • This is the last phase in the Project Life Cycle and the focus here is on evaluation and bringing closure to the project. • The evaluation of the project is also referred to as audit. The audit has multiple purposes which include, outcome measurement for stated goals and ancillary goals. The audit should help in creating a learning organization.

45. Project Termination • The audit should include current and future status of the project, risk assessment, and limitations of the audit data. • A balance scorecard approach to audit report. • Depth and timing of audit very important.

46. Project Termination • Project can be terminated in one of four ways, extinction, addition, integration and starvation. • Project termination can be very difficult. • Reasons for project failures. • The importance of Project Final report in improving organizational performance in the future.

47. Project Management and Innovation • Innovation as a Core Competence • Strategic Project Management as a vehicle for radical and incremental change in organizations.

48. Project Management in a Global Environment Why Global Projects? • Work in modern companies is worldwide. Projects are global for a variety of reasons, including: • Products and services are used in many countries. • Companies have employees all over the world. • Global staffing can lower project expenses. • Projects may need skills or knowledge available in different locations. • Alliances and partnerships exist across international boundaries. • New international markets are being opened.

49. Project Management in a Global Environment • There are also challenges: • Global team communication is hard, involves multiple languages, and can be expensive. • Time differences are inconvenient. • Work styles and cultural variations can lead to difficulties and misunderstandings. • Confusion and conflict may be frequent. • Effort for global teams is nearly always higher, compared to a co-located team with similar capabilities. • When global teams do get together, it is time consuming and expensive

50. Project Management in a Global Environment • There are many potential benefits of global teams: • Access to skills not otherwise available • 24-hour coverage using only people who work a normal shift • Lower project cost • Knowledge of users in many localities • The leadership skills of the project manager is essential to gain the benefits of a global team