Chapter 1

The World of Project Management

WHAT IS A PROJECT?

MEM 612 Project Management

Why the emphasis on project management?

Many tasks do not fit neatly into businessas-usual. Need to assign responsibility and authority for achievement of organizational goals.

MEM 612 Project Management

Characteristics of Projects
Unique Specific Deliverable Specific Due Date

MEM 612 Project Management

Other Common Characteristics of Projects

Multidisciplinary Complex Conflict Part of Programs

MEM 612 Project Management

PMI Definition
A temporary endeavor undertaken to create a unique product or service
Project Management Institute, 2000

MEM 612 Project Management

PROJECT MANAGEMENT VS. GENERAL MANAGEMENT

MEM 612 Project Management

Skill Requirements for Effective Project Management

Conflict Resolution Creativity and Flexibility Ability to Adjust to Change Good Planning Negotiation
win-win versus win-lose

MEM 612 Project Management

WHAT IS MANAGED? THE THREE GOALS OF A PROJECT

MEM 612 Project Management

Figure 1-1: Performance, Cost, and Time Project Targets

MEM 612 Project Management

THE LIFE CYCLES OF PROJECTS

MEM 612 Project Management

Figure 1-2 The Project Life Cycle

MEM 612 Project Management

Figure 1-3 An Alternate Project Life Cycle

MEM 612 Project Management

SELECTING PROJECTS

MEM 612 Project Management

Nonnumeric Selection Methods

The Sacred Cow The Operating/Competitive Necessity Comparative Benefits

MEM 612 Project Management

Figure 1-4 The Q-Sort Method

MEM 612 Project Management

Numeric Selection Methods

Financial Assessment Methods
payback period discounted cash flow

Scoring Methods
unweighted 0-1 factor method weighted factor scoring method

MEM 612 Project Management

Payback Period

Initial Fixed Investment Annual Net Cash Inflows

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Discounted Cash Flow

Ft NPV (project) - I 0 t t 1 (1 k )
where I0 = the initial investment
Ft = the net cash flow in period t k = the required rate of return or hurdle rate
MEM 612 Project Management

The Weighted Scoring Model

Si sij w j
j 1 n

where
Si = the total score of the ith project sij = the score of the ith project on the jth criterion wj = the weight or importance of the jth criterion

MEM 612 Project Management

Confronting Uncertainty The Management of Risk

MEM 612 Project Management

What uncertainties are encountered in project management?

Time required to complete a project Availability of key resources Cost of resources Timing of solutions to technological problems Actions taken by competitors

MEM 612 Project Management

Can uncertainty surrounding projects ever be eliminated?

No, but it can be managed

MEM 612 Project Management

Risk Analysis
Estimate probabilities or distributions associated with key parameters Develop analytic or simulation model Analyze distribution of outcomes generated by model

MEM 612 Project Management

Risk Analysis with Crystal Ball

Assumption Cells Distribution Gallery Forecast Cells

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THE PROJECT PORTFOLIO PROCESS

MEM 612 Project Management

The Project Portfolio Process

Step 1: Establish a Project Council Step 2: Identify Project Categories and Criteria Step 3: Collect Project Data Step 4: Assess Resource Availability Step 5: Reduce the Project and Criteria Set Step 6: Prioritize the Projects within Categories Step 7: Select the Projects to be Funded and Held in Reserve Step 8: Implement the Process

MEM 612 Project Management

The Aggregate Project Plan

MEM 612 Project Management

Figure 1-12 An Example Aggregate Project Plan

MEM 612 Project Management