Project Management in Practice

Seventh Edition

Chapter 1

The World of Project

Management

Copyright © 2020 John Wiley & Sons, Inc.

 Why the Emphasis on Project
Management?
• Many tasks do not fit neatly into business-
claerly, fairly

as-usual
• Organizations need to assign responsibility
and authority for the achievement of their
goals

1-2
 Characteristics of Projects
• Unique
Projeler normal devam eden is sureclerinden farklidir.

• Specific deliverables
• Specific due date

1-3
 Formal Definition of a Project
ugras

A project is a “temporary endeavor

undertaken to create a unique product, service,
or result.”

Project Management Institute, 2013

1-4
 Formal Definition of Project
Management
“The application of knowledge, skills, tools,
and techniques to meet project requirements.”

Project Management Institute, 2013

1-5
 Examples of Projects
• Projects vary widely in size and type.
– Writing a book
– The reorganization of P&G into a global
enterprise
– Organization of “Cat-in-the-Hat Day” to
celebrate Dr. Seuss’ birthday for a third year
class
–…

1-6
 Other Common Characteristics of
Projects
• Multidisciplinary
– Require input from people with different kinds
of knowledge and expertise
• Complex
• Often involve conflicts
• Part of programs
– Projects to develop a new engine and an
improved suspension system are parts of the
program to develop a new automobile. 1-7
• The overall activity is called a program.

• Projects are subdivisions of the programs.

• Projects are composed of tasks which can

be divided into subtasks (and further if
desired).

1-8
 Trends in Project Management
• Achieving strategic goals
– Major projects are screened to make sure that
their objectives support the organization’s
strategy and mission.
• Agile Project Management
• Project Management Offices (PMOs) for
improving project effectiveness
• Virtual projects
– Different time zones, different countries, … 1-9
Comparison of Project Management
and General Management

1-10
 Project Manager (PM)
• Special skills in conflict resolution
• Creative
• Flexible
• Have ability to adjust rapidly to changes

For PM, almost everything is an exception.

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 Project Budgets
• Project budgeting differs from standard budgeting
in the way budgets are constructed
• Budgets for non-projects are primarily
modifications of budgets for the same activity in
the previous period
• Project budgets are newly created for each project
and often cover several “budget periods” in the
future

1-12
 Project Schedules
• In manufacturing, the sequence of activities
is set when production line designed
– Sequence is not altered when new models are
produced
• Each project has a schedule of its own
– Previous projects with deliverables similar to
current one may provide a rough template
– However, specifics unique to project at hand

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 Project Organizational Structure
• Routine work of organizations takes place within a
well-defined structure
– The divisions, departments, sections, and similar
subdivisions of the total unit
• Typical project cannot thrive in this structure
• The need for technical knowledge, information,
and special skills requires that departmental lines
be crossed
– Another way of describing the multidisciplinary
character of projects

1-14
 Globalization
• When large firms establish manufacturing plants
or distribution centers in different countries, a
management team is established on site
• For projects, globalization has a different meaning
• Members of project teams may be spread across
countries and speak different languages
• Some project team members may never have a
face-to-face meeting

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 Negotiation
• With little authority to command the
required resources from the functional
departments, the project manager depends
on negotiation skills to gain the cooperation
of departments in the organization
• Those departments have their own
objectives, priorities, and personnel
• The project is not their responsibility and
the project tends to get the leftovers
1-16
 Three Different Types of
Negotiation
1. Win-win
• Required for successful project management
2. Win-lose
• When you negotiate the purchase of a car or a
home
• The less you pay, the less profit the seller makes
3. Lose-lose

1-17
 Agile Project Management
• Traditional approach to project management
referred to as Waterfall Approach
• Agile Project Management developed to
lower costs, improve project outcomes, and
reduce project completion times

1-18
 Manifesto for Agile Software
Development

We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:

Individuals and interactions over processes and tools

Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan

1-19
12 Agile Principles

1-20
12 Agile Principles continued

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 General Characteristics of Agile
Approaches
• Project divided into sprints
• Emphasis on simplicity
• Self-managing project teams
• Progress measured in terms of working
functionality

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 Scrum
• Most popular Agile approach
• Project completed in sprints
• Three team roles (product owner,
developers, scrum master)
• Specific artifacts (documents)

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 Benefits of Agile
• Higher customer satisfaction
• Increased flexibility
• Less waste on nonproductive work
• Faster delivery of products
• Higher quality
• Higher team morale
• Enhanced performance visibility
• Improved predictability of key project outcomes
1-24
Three Goals of Project Management

1. Scope
2. Cost
3. Time

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 Scope, Cost, and Time
Project Performance Targets

Figure 1-1
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 Uncertainty
• All projects are always carried out under
conditions of uncertainty
– Projects are all about uncertainty
• Effective project management requires an ability
to deal with uncertainty
• Projects are complex and include interfaces,
interdependencies, and assumptions, which may
turn out to be wrong
– People add to the uncertainty

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 Second Major Role of Project
Manager
• One primary role of the project manager is
to effectively manage the trade-offs
between cost, time, and scope
• Because projects are about uncertainty, we
adopt the view that managing uncertainty is
a second major role of the project manager

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Uncertainties Encountered in Project
Management
• Time required to complete a project
• Availability and cost of key resources
• Timing of solutions to technological
problems
• Macroeconomic variables
• The whims of clients
Kapris

• Actions taken by competitors

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 Can Uncertainty be Eliminated?
• No, uncertainty cannot be eliminated
• However, if managed properly, it can be
minimized

1-30
 Managing Risk
• The first step in managing risk is to identify
potentially uncertain events and likelihood of
occurrence
– Called risk analysis
• Different organizations approach this differently
• The essence of risk analysis is to make
assumptions about key risk parameters and to use
models to evaluate the desirability of certain
managerial decisions

1-31
 Modeling Risk
• Estimates or assumptions made about the
probability distributions associated with key
parameters and variables
• Mathematical model of situation
constructed that models relationship
between variables and outcomes of interest
• Model used to generate distribution of
outcomes of interest to decision maker
1-32
 The Life Cycle of Projects
• All organisms have a life cycle, they are born,
grow, wane, and die
– So do projects
• Some projects follow an S-shaped curve
– They start slowly, develop momentum, and then finish
slowly
• Ex: house building project
• Other project follow a J-shaped curve
– They start slowly , proceed slowly, and then finish
rapidly
• Ex: process of baking cake 1-33
 The Project Life Cycle

S-shaped curve
Figure 1-2
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 An Alternate Project Life Cycle

J-shaped curve
Figure 1-3
1-35
 Selecting Projects To Meet
Organizational Objectives
• Project selection is process of evaluating projects
and choosing them so firm objectives are met
• Ensure that several conditions are considered
1. Is the project potentially profitable?
2. Is the project required by law or the rules of industrial
association
3. Does firm have the skills to complete the project
4. Does the project involve building strategic
competencies
5. Does it have capacity to carry out the project
6. Can project be economically successful
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 Selection Methods
• There are many different methods for
selecting projects
• They may be grouped into two
fundamental types
1. Nonnumeric: does not use numbers for
evaluation
2. Numeric: uses numbers for evaluation

1-37
 Nonnumeric Selection Methods
KUTSAL INEK

• The Sacred Cow: a pet project advocated by a

senior executive of the firm.
– The suggestion starts with “You know, I was thinking
that we might … ” and concludes with “… Take a look
at it and see if it looks sensible. If not, we’ll drop the
whole thing.”
EXCECUTIVE IN ISTEDIGI PROJE

1-38
 Nonnumeric Selection Methods
• The operating/competitive necessity
– Ex: General Electric: decided to sell a facility that
manufactured the large mercury vapor light bulbs used
for streetlights and lighting large parking lots
– Excess capacity in market resulting in depressed prices
– GE felt that if they dropped these bulbs from their line
of lighting products, they might lose a significant
portion of all light bulb sales to municipalities
– The profits from such sales were far in excess of the
losses on the mercury vapor bulbs

1-39
 Nonnumeric Selection Methods
• Comparative benefits
– Rank-ordering a small number of projects is not
difficult
– When the number of projects exceeds 15 or 20, the
difficulty of ordering the group rises rapidly
– A Q-sort is a convenient way to handle the task
– Separate projects into three subsets: good, fair, poor
– If more than seven or eight members in any one classification, divide the
group into two subsets (ex: good-plus good-minus)
– Continue subdividing until no set has more than seven or eight members
– Rank-order the items in each subset
– Arrange the subsets in order of rank
– The committee can make composite ranking from the individual lists
1-40
Q-sort Method

1-41
 Numeric Selection Methods
• Financial assessment methods
1. Payback period
2. Discounted cash flow
3. Financial options and opportunity costs
• Scoring methods
1. Unweighted 0-1 factor method
2. Weighted factor scoring method

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 Payback Period

Initial Fixed Investment

Annual Net Cash Inflows

1-43
 Discounted Cash Flow
n
Ft
NPV (project)  I 0  
t 1 (1  k )
t

where
I0 = The initial investment
Ft = The net cash flow in period t
k = The required rate of return or hurdle rate
n = number of periods in life of project
1-44
 The Weighted Scoring Model
Projelerin kriterlerine göre puanların toplami

n
Si   sij w j
j 1
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

1-45
 Categories of Projects
• Derivative projects: those that are only
incrementally different from existing offerings
aşamalı olarak

• Platform projects: major departures from

existing offerings
– The next generation
• Breakthrough projects: involving a newer
technology
– Possibly a “disruptive” technology
• R&D projects: “blue sky” or visionary endeavors

1-46
 Example Aggregate Project Plan

Figure 1-5
1-47
 The Materials in This Text
• Chapter 2 focuses on the behavioral and structural
aspects of projects and their management
• Chapter 3 covers the process of planning and
launching the project, construction of the WBS,
and responsibility charts
• Chapter 4 discusses the construction of a project
budget and illustrates use of risk management for
budgeting

1-48
The Materials in This Text Continued
• Chapter 5 covers scheduling, PERT, CPM,
and Gantt charts
• Chapter 6 covers resource allocation
• Chapter 7 covers monitoring and controlling
projects
• Chapter 8 deals with evaluating, auditing,
and closing down projects

1-49
 Copyright
Copyright © 2020 John Wiley & Sons, Inc.

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use of the information herein.

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