Chapter Four

Defining the Project

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 Where We Are Now

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 Learning Objectives
1. Identify key elements of a project scope statement and
understand why a complete scope statement is crucial to
project success
2. Understand why it is important to establish project
priorities in terms of cost, time, and performance
3. Demonstrate the importance of a work breakdown
structure (WBS) to the management of projects and how
it serves as a data base for planning and control
4. Demonstrate how the organization breakdown structure
(OBS) establishes accountability to organizational units
5. Describe a process breakdown structure (PBS) and
when to use it
6. Create responsibility matrices for small projects
7. Create a communication plan for a project
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 Chapter Outline

4.1 Step 1: Defining the Project Scope

4.2 Step 2: Establishing Project Priorities
4.3 Step 3: Creating the Work Breakdown
Structure
4.4 Step 4: Integrating the WBS with the
Organization
4.5 Step 5: Coding the WBS for the Information
System
4.6 Process Breakdown Structure
4.7 Responsibility Matrices
4.8 Project Communication Plan
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 Defining the Project

The five generic steps described provide a structured

approach for collecting the project information
necessary for developing a work breakdown
structure.
Step 1: Defining the Project Scope
Step 2: Establishing Project Priorities
Step 3: Creating the Work Breakdown Structure
Step 4: Integrating the WBS with the Organization
Step 5: Coding the WBS for the Information System

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 Step 1: Defining the Project Scope

Scope or mission is the most frequently

mentioned barrier to project success.
• Project Scope
– A definition of the result or mission of the project—a
product or service for the client/customer
• Purposes of the Project Scope Statement
– To clearly define the deliverable(s) for the end user.
– To focus the project on successful completion
of its goals.
– To be used by the project owner and participants
as a planning tool and for measuring project success
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 Project Scope Checklist

1. Project objective: the first step

of project scope definition is to
define the overall objective to meet
your customer’s need(s)
2. Deliverables: the expected,
measurable outputs over the
project’s life.
3. Justification. Project team
members and stakeholders must
know why management authorized
the project.
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 Project Scope Checklist

4. Milestone: The milestone

schedule shows only major work
segments; it represents first, rough-cut
estimates of time, cost, and resources
for the project. The milestone schedule
is built using the deliverables as a
platform to identify major segments of
work and an end date.

5.Technical requirements
typically clarify the deliverables or
define the performance specifications.

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 Project Scope Checklist

6. Limits and exclusions: The

limits of scope should be defined.
Failure to do so can lead to false
expectations and expending resources
and time on the wrong problem.

7. Review with the

customer
Acceptance criteria are conditions that
must be met before the deliverables are
accepted.

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 Project Scope: Terms and Definitions
• Scope Statements
– Also called statements of work (SOW)
• Project Charter
– Can contain an expanded version of the scope statement.
– A document authorizing the project manager to initiate and lead
the project
• Scope Creep
– Managers suffer from scope creep, which is the tendency for
the project scope to expand over time—usually by changing
requirements, specifications, and priorities. Scope creep can
positively or negatively affect the project,
– But in most cases, scope creep means added costs and
possible project delays.

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 Step 2: Establishing Project Priorities

• Causes of Project Trade-offs

– Shifts in the relative importance of criteria related
to cost, time, and performance parameters
• Budget–Cost
• Schedule–Time
• Performance–Scope

• Managing the Priorities of Project Trade-offs

• One technique that is useful for this purpose is completing a priority matrix for
the project to identify which criterion is constrained, which should be
enhanced, and which can be accepted:
– Constrain: The project must meet the completion date, specifications,
and scope of the project or budget.
– Enhance: optimizing a standard over others. enhancing means
adding value to the project.
– Accept: reducing (or not meeting) a standard requirement
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 Project Management Trade-offs

The primary job of a project manager is to manage

the trade-offs between time, cost, and performance.
To do so, project managers must define and
understand the nature of the priorities of the project.
FIGURE 4.1

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 Project Priority Matrix

FIGURE 4.2

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 Learning-by-doing activity

You are in charge of organizing a dinner-dance concert for

a local charity. You have reserved a hall that will seat 30
couples and have hired a jazz combo.
a) Develop a scope statement for this project that
contains examples of all the elements. Assume that
the event will occur in 4 weeks and provide your best
guess estimate of the dates for milestones.
b) What would the priorities likely be for this project?

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 Step 3: Creating the Work
Breakdown Structure

• Work Breakdown Structure (WBS)

Use of a WBS helps to assure project managers that all products and
work elements are identified, to integrate the project with the current
organization, and to establish a basis for control. Basically, the WBS is
an outline of the project with different levels of detail.
– A hierarchical outline (map) that identifies the products and work
elements involved in a project
– Defines the relationship of the final deliverable
(the project) to its subdeliverables and in turn,
their relationships to work packages.
– Best suited for designing and building projects that have
tangible outcomes rather than process-oriented projects

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 Hierarchical
Breakdown of the
WBS

* This breakdown groups work

packages by type of work
within a deliverable and allows
assignment of responsibility to
an organizational unit. This
extra step facilitates a system
for monitoring project progress
(discussed in Chapter 13).

FIGURE 4.3

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 How WBS Helps the Project Manager

• WBS
– Facilitates evaluation of cost, time, and technical
performance of the organization on a project.
– Provides management with information appropriate
to each organizational level.
– Helps in the development of the organization
breakdown structure (OBS), which assigns project
responsibilities to organizational units and individuals
– Helps manage plan, schedule, and budget.
– Defines communication channels and assists
in coordinating the various project elements.

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 Work Breakdown Structure

FIGURE 4.4

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 Work Packages

• A work package is the lowest level of the

WBS.
• WBS is called a work package. Work packages
are short-duration tasks with a definite start and
stop point, consume resources, and represent
cost.
• Each work package is a control point.
• A work package manager is responsible for
seeing that the package is completed on time,
within budget, and according to technical
specifications.
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 Work Packages

• A work package is the lowest level of the

WBS.
– It is output-oriented in that it:
1. Defines work (what).
2. Identifies time to complete a work package (how long).
3. Identifies a time-phased budget to complete
a work package (cost).
4. Identifies resources needed to complete
a work package (how much).
5. Identifies a person responsible for units of work (who).
6. Identifies monitoring points for measuring success (how
well).

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 Step 4: Integrating the WBS
with the Organization

• Organizational Breakdown Structure

(OBS)
• The purposes of the OBS are to provide a
framework to summarize organization unit work
performance,
• identify the organization units responsible for
work packages, and tie the organization unit to
cost control accounts.
• Recall that cost accounts group similar work
packages (usually under the purview of a
department).
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 Step 4: Integrating the WBS
with the Organization

• Organizational Breakdown Structure

(OBS)
• The OBS defines the organization’s
subdeliverables in a hierarchical pattern in
successively smaller and smaller units.
• Frequently the traditional organization structure
can be used. Even if the project is completely
performed by a team,
• it is necessary to break down the team structure
for assigning responsibility for budgets, time,
and technical performance.
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 Step 4: Integrating the WBS
with the Organization

• Organizational Breakdown Structure

(OBS)
– Depicts how the firm is organized to discharge its
work responsibility for a project.
• Provides a framework to summarize
organization unit work performance.
• Identifies organization units responsible
for work packages.
• Ties organizational units to cost control
accounts.
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 Integration of
WBS and OBS

FIGURE 4.5
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 Step 5: Coding the WBS for
the Information System
• WBS Coding System
– Defines:
• Levels and elements of the WBS
• Organization elements
• Work packages
• Budget and cost information
– Allows reports to be consolidated at
any level in the organization structure
• WBS Dictionary
– Provides detailed information about
each element in the WBS.
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 Coding
the WBS

EXHIBIT 4.1
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 Process Breakdown Structure (PBS) for
Software Development Project

FIGURE 4.6

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 Responsibility Matrices

• Responsibility Matrix (RM)

– Also called a linear responsibility chart
– Summarizes the tasks to be accomplished and
who is responsible for what on the project.
• Lists project activities and participants responsible for
each activity.
• Clarifies critical interfaces between units
and individuals that need coordination.
• Provide a means for all participants to view their
responsibilities and agree on their assignments.
• Clarifies the extent or type of authority that
can be exercised by each participant.

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 Responsibility Matrix for a Market Research Project

FIGURE 4.7

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 Responsibility Matrix for the Conveyor Belt Project

FIGURE 4.8

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 Project Communication Plan

• What information needs to be collected

and when?
• Who will receive the information?
• What methods will be used to gather
and store information?
• What are the limits, if any, on who has access
to certain kinds of information?
• When will the information be communicated?
• How will it be communicated?

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 Developing a Communication Plan

Developing a communication plan that answers

these questions usually entails the following basic
steps:
1. Stakeholder analysis
2. Information needs
3. Sources of information
4. Dissemination modes
5. Responsibility and timing

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 Stakeholder Communications

FIGURE 4.9

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 Information Needs

• Project status reports

• Deliverable issues
• Changes in scope
• Team status meetings
• Gating decisions
• Accepted request changes
• Action items
• Milestone reports

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 Information Needs

• The project scope definition, priorities, and work

breakdown structure are the keys to nearly
every project management aspect.
• The scope definition focuses on and
emphasizes the project's end item(s).
• Establishing project priorities allows managers
to make appropriate trade-off decisions.

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 Information Needs

• The WBS structure helps identify all project

tasks and provides two views of the project—
one on deliverables and one on organization
responsibility.
• The WBS avoids having the project driven by
organization function or by a finance system.
• Use of the structure provides a powerful
framework for project control that identifies
deviations from the plan, identifies responsibility,
and spots areas for improved performance.

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 Information Needs

• The WBS, OBS, and cost account codes

provide this discipline.
• The WBS serves as the database for developing
the project network and establishing the timing
of work, people, equipment, and costs.
• The PBS is often used for process-based
projects with ill-defined deliverables.
• In small projects, responsibility matrices may be
used to clarify individual responsibility.

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 Shale Oil Research Project Communication Plan

FIGURE 4.10
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 Key Terms
Cost account
Milestone
Organization breakdown structure (OBS)
Priority matrix
Process breakdown structure (PBS)
Project charter
Responsibility matrix
Scope creep
Scope statement
WBS dictionary
Work breakdown structure (WBS)
Work package
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