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Spring 2017

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Table of Contents












Chapter 12 Ethics in Project Management



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Introduction to Project Management

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Introduction to Project Management
The word project, as is stated in the Oxford Dictionary, comes from the Latin word projectum and
from the Latin verb proicere, "to throw something forward" which in turn comes from pro, which
denotes something that precedes the action of the next part of the word in time (paralleling the
Greek ) and iacere, "to throw". The word "project" thus actually originally meant "something
that comes before anything else happens". And by later usage it became something which is
undertaken to achieve a certain something in a finite time. When the English language initially
adopted the word, it referred to a plan of something, not to the act of carrying this plan. Something
performed in accordance with a project became known as an "object".

A modern project is defined as a team function, which involves a specific goal and objective. A
project requires a certain amount of background research and a modus operandi, a design that
adumbrates how the project would transform. Projects are different from operations; in that in a
project there is an end date involved whereas operations are the fuel on which the company
survives. A project can hence be defined as a temporary rather than permanent task that is worked
on by teams within or across organizations to realize a goal in a specific time.

Attributes of a Project
Unique - Every project undertaken must have a certain attribute or objective which defines it as
different from any other project. Otherwise similar projects must be combined to let them be
worked upon by a single team to lessen the ambiguity.

Time based - A project has a set time frame; it has a beginning and an end. Also, there are certain
time deadlines that need to be taken care of to maintain the constraints of the project. (Constraints
would be discussed later)

Requires multi-dimensional resources across organization - A project may be seen as a modular

operation with an organization but with set time limits. So, a project would require resources in
terms of people, technologies, software and all different assets throughout the organization.

Sponsor and Customer - A project must have a backer most likely from the upper echelons of
management because it is from there that all the funding and the go ahead comes from and a project
must be intended for the service of a customer base or even a part within the organization.

New Delhi, India hosted 2010 Commonwealth Games (formerly British Empire Games) with an
estimated initial cost of US$323.19 million which escalated to US$11.97 billion which shows a
lack of planning and vision on part of the management undertaking such a huge project of
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organizing the games. This incident further explains the importance of better project management
and the triple constraints that involve a project namely cost, scope and time management. In the
above case scope was an almost immovable constraint and time most definitely was. So, the cost
constraint was the one to be compromised. But an almost three hundred percent increase in cost is
some project management mishap. (Guardian, London UK, September 22, 2010)

A Broad Perspective
Even though a project is of a finite duration, the time of each project varies. It is said that the
construction of the Great Wall of China began in the 7th century BC and the project was completed
by the 16th century AD; roughly 2,300 years. (one of the longer projects as we may say). Even the
project which shall make US federal deposits library online which has a collective official data
and record of one hundred and fifty years can take some time. Fortunately, not all projects will be
this long and yet it requires planning beforehand, and a certain amount of management to drive
the project during its build up. So, the proper application of the data, knowledge, resources that
are involved in a project in a way that the three constraints of cost, scope and time can be managed
efficiently is called project management.

Let us go through these constraints one by one:

Scope - This constraint deals with the basic work and the highest achievable outcome that is
possible from this work. The wall of China would not have had this constraint as a major blockage
as the major project sponsor, the Qin dynasty and dynasties subsequent, took a great interest in the
project throughout the two thousand years. If there was anything like a scope constraint in the
building of the wall, we must take a moment and think what must be the highest possible result
that they wanted out of this project.

Cost - Any project involves money to carry it forward and how much, where, and how to spend
it are some relevant questions that any project manager must answer and plan for. This is one of
the backbone of any project the cost constraint, many project have been shelved and shall be in the
future because no matter how good and useful they were they could not fit into the cost that a
company was willing to part with for it. The major chunk of the cost spent is on the human resource
and labor aspect. Though it must be said that the Great Wall project managers never had to worry
about this too.

Time - This was one constraint in front of which the project managers of the Great Wall of China
had to bow down to. This constraint determines how long the project would take to end and the
outcome of the project whatever it may be if it would still be relevant after the outcome of the

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project. The builders of The Wall of China believed so much in their endeavor that they never took
in account the time constraint.

By now we understand the definition of a project and why is it necessary to manage projects
effectively, the attributes of a project, and the constraints that are involved. Project management
is a complex task because a project involves a lot of people. People who work in the different
aspects of it, project team, the support staff, higher management, and customers even the people
who are involved in the project partially. All these people are called Project Stakeholders.

As is evident, project stakeholders have very different needs and aspirations and it is the job of the
project manager to fulfill those needs or at least cater to their interests partially. To be a successful
project manager you need to have a good rapport with all these stakeholders. Along with the hard-
technical skills, the soft skills that involve good communication and exemplary leadership qualities
are required to be a good manager and handle all stakeholders including you.

Project Management, a Story

Waldorf Astoria
Probably considered by some as one of the most famous hotels in the world, the Waldorf Astoria
Hotel has its roots steeped in catering to the social elite of New York City. The history of the
Waldorf Astoria is interesting in that its first incarnation on 5th avenue and 33rd street was a two-
tower structure, with the first 13-story building built by William Waldorf Astor in 1893 and later
connected via a tunnel to a 17-story tower constructed by his cousin John Jacob Astor IV in 1897.
As the largest hotel in the world at the time, the Waldorf Astoria would be the first to transform
the meaning of a hotel into a place to be seen by the social elite of the time. Eventually, this first
structure was demolished in 1929 to make place for the Empire State building and a second
incarnation of the Waldorf Astoria was erected 15 blocks away in 1931 continuing its legacy as
the tallest hotel in the world and maintaining its reputation in hospitality innovation.

Throughout its history, the Waldorf Astoria has always had in mind its end customer and
incorporated the most advanced technology and innovative services that built its reputation as we
know it today.

As visionaries, the drivers behind the project spared no expense to build the most opulent hotel of
its time. Considering it was the height of the Great Depression, to ensure its success the project
leaders behind the Waldorf Astoria were very calculating in envisioning a top-notch product aimed
at its target market.

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From an execution point of view, the construction project was a great success. Despite the poor
economic climate, the hotel maintained its prestige and popularity. For project managers and
business visionaries alike, the Waldorf Astorias success can be attributed to the people behind its
success and their very deep understanding of the customers and market they serve.

By the late 1940s, the hotel was purchased by Conrad Hilton and the Waldorf Astoria brand
continued to be associated with the rich and powerful. Some notable residences included President
Herbert Hoover, many U.S. Army Generals, the notorious mobster Bugsy Siegel, and the famous
musician Cole Porter.

In more recent years, Hilton hotels (in 2006) decided to leverage the brand and build many
exclusive Waldorf Astorias in Beverly Hills, Orlando and Chicago. For over 110 years, the
Waldorf Astoria has been successful in maintaining its reputation of offering the best product in
the hospitality industry aimed at its exclusive market. This alone is a testament that the recipient
and benefactors of a project can have a long-lasting impact on a projects success. (PM Box-
Famous Stories)

History of Project Management and Why It Is Important

History of Project Management
Although project management theory and practice seem to be established only a few decades ago,
the applications of the basic project management principles can be found dating back to ancient
times, such as projects of building the Great Wall of China and the Egyptian pyramids, where
people and raw materials were assembled and scheduled temporarily to perform specific tasks and
achieve common goals (Young-Hoon Kwak 2005).

As commerce boomed and became more complex in the 19th Century, businesspeople began to
realize the advantages and benefits of organizing work and resources for the project. Project
management concepts became increasingly important for large-scale projects which usually
involved making crucial decisions and organizing unprecedented quantities of resources. For
example, the Transcontinental Railroad project was the first large government project requiring
project management (Young-Hoon Kwak 2005). In the 1950s, organizations began to
systematically implement project management techniques and tools for projects (Young-Hoon
Kwak 2005).

In the early twentieth century, people thought the only way to make work more productive was
through harder working and longer working hours. However, after systematic study and research,
Frederick Taylor, the father of the scientific management, found a scientific way to improve
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productivity, which was through working efficiently (A Quick History of Project Management).
His associate, Henry Gantt, made the study further on the order of work operations to see how that
could improve productivity. Henry then established the famous Gantt Chart, an analytical
management tool that can list the task sequence and duration, which made him as the father of
project management tools (Project Management: History and Evolution).

In the mid twentieth century, military and government projects became even more complex, and
previous techniques and tools could not satisfy the project requirements. To deal with this
situation, PERT Chart (Program Evaluation and Review Technique) was established and Critical
Path Method, a mathematical technique, was applied so that managers had more control over the
projects in fast-changing organizational structures (Project Management: History and Evolution).
More business leaders realized the importance of applying project management techniques to
improve productivity and bring more benefits. Soon, these management techniques were adopted
by business leaders in all kinds of industries. In 1969, the Project Management Institute was
founded to modernize and standardize project management techniques and tools.

Nowadays, with globalization, projects tend to be bigger, more challenging and difficult to
manage. For example, an IT project may need to be accomplished by team members located in
different regions, time zones and with different culture backgrounds. Project management
continues to evolve to accommodate this trend. Currently, two popular methods adopted by many
project managers are bottom-up planning and top-down planning and reviewing (A Quick History
of Project Management).

Why Project Management Is Important

Project management involves planning, coordinating and managing organizational resources by
performing temporary endeavors to achieve a goal. Project management is crucial for projects
because it provides strategies and guiding system to keep the project on track and to meet the
stakeholders requirements. It can minimize the risks of project failure and ensure the project
execution to meet the corporates strategies.

Without proper and strategic management, projects are vulnerable to many potential threats.
According to the CHAOS report, in 2009, only 32% of software projects succeeded, while others
were either challenged or failed (Jorge Dominguez, 2009). Many factors may challenge the project
to be completed successfully, such as lack of user involvement, scope creep, or lack of top
management support. To best handle these factors and reduce the negative impact generated from
them, project management knowledge and skills should be applied for projects. Project
management provides comprehensive management principles including time, cost, scope, quality,
human resource, procurement, communication, risk and integration management. These nine
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management areas cover all concerned aspects for a project. Therefore, understanding these
principles and proper implementation of them can make the project process more controllable and
ensure the project execution correctly. Moreover, project management principles can be learned
through experience, not only through your own experience, but the experience from project
management community.

Definition of a Project and Project Management

What is a Project?
The PMI (Project Management Institute) defines a project as a temporary endeavor which has been
undertaken by a group of individuals to create a unique product, service, or result. The term
temporary is used here as the project is required to have an end date. This helps in defining the
required scope and assigning available resources to appropriate tasks in the allocated timelines. A
project consumes resources in the form of manpower, raw materials, and time. Apart from that, it
has funding limits as well. These factors together decide the degree of success which can be
achieved through the project. The end of such an effort is associated with the event or situation
where all set objectives which were set during the beginning of project, have been met. A project
can range from being small and simple to being large and complex. Generally, the larger the project
is, the more time and resources are associated with it.

One should not confuse a project with an operation. An operation is just the basic work done to
sustain businesses. One can say that successful completion of an operation can contribute towards
the success of project. In Non-IT sense, this can be as basic as supplying raw material to the
manufactures, or maintenance of payroll aspects in an organization. All projects must be expertly
managed for timely delivery by an efficient leader called the Project manager. With his or her
help, the organization should be able to integrate their needs in a coherent manner. This way the
result delivery will be well within the budget restrictions and the project members will be presented
with valuable learning opportunities.

Example of a project: A small project can be installing anti-virus software on all the computer
laboratories of a specific department in a university. This can involve taking backups, scanning
systems, loading new software and providing training to the personnel involved. On the other hand,
a larger project will deal in cross functional aspects like selection of an ERP tool or vendor
followed by its company wide application. The reason its a complex task is, because it involves
participation from different departments in the same organization like HR, Sales, Production,
Accounting and so on.

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Project Management
Project management is the application of knowledge, skills, tools and techniques to project
activities to meet project objects in an effective and efficient manner (PMBOK Guide). It has
always been practiced informally for a long time, but it began to emerge as a unique and critical
profession in the mid-20th century. Organizations worldwide use this as a strategic competency to
correlate project results to business goals and objectives. A better selection of project management
techniques help them compete in their markets in a better way.

The associated activities can be anything ranging from organizing the tasks and components for
development of a new product line, launch of a new website or an e-campaign. Project
management processes can be categorized into following five groups:

Initiating/Definition: It consists of definition of the project and user expectations. Apart

from a list of project deliverables and the results of activities performed, it involves
working with the business sponsor and other stakeholders. Stakeholders are the people who
have invested in the project and are affected by the outcome of project. Some of the primary
outputs from the definition process are project scope and requirements. These outlines what
the product of the project should include and what it should do, and just as importantly,
what it does not include.
Planning: This consists of coming up with all project activities/tasks, their cost, timelines
and resource needs. For example, an important activity can be an instance where a project
manager sets milestones. Milestones are dates by which important aspects of the project
need to be completed. We will talk in detail about milestones in later chapters. The project
manager identifies the resources and expenses involved in the project, as well as any other
necessary requirements for completing the project. Another important aspect of his job in
this phase is to identify risks and constraints of the project. Constraints can be related to
schedule, resources, budget, and scope which typically depend a lot on each other. For
example, a budget constraint may limit the number of hired employees for the project,
resulting in a resource constraint.
Executing: This is where actual work begins by allocation of resources and budgets to tasks.
Monitoring and Controlling: Progress is monitored for lags and inefficiency. A product
such as Microsoft Project is extremely useful in facilitating the administrative activities
associated with this process.
Closure: Handling all deliverables to stakeholders and termination of all activities and
analysis of the outcome.

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Apart from these processes, there are ten Project management knowledge areas which fall under
2 broad categories; Core Functions and Facilitating functions. Core Functions deal with main
project objectives whereas facilitating functions provide means for achieving those objectives.

Core Functions

Scope Management
Time Management
Cost Management
Quality Management

Facilitating functions

HR Management
Communication Management
Risk Management
Procurement Management

These 2 types of functions are related by two common functional units: Stakeholder Management
and Project Integration Management.

Project management brings along the much needed attention to detail attitude and focus towards
goals, resources and schedules associated with of each of these nine areas. This can pay rich
dividends in the form of rapid and universal growth of the project. Keeping above activities in
mind, the role of the project manager has great responsibility attached to it. It is the project
manager's job to direct, supervise and control the project from its inception to closure. It may not
involve any specific project task, but managing these activities alone is a tedious task. Some of the
prominent activities undertaken by him are scope definition, motivation of employees,
communication with stakeholders, risk management, and change management. This may require
skills like leadership, people management, effective communication, negotiation, conflict
management, planning, problem solving, critical thinking and time management.

Many aspects can go wrong in project management with some possible barriers like poor
communication, disagreement, misunderstandings, union strikes, personality conflicts, poor
management; and poorly defined goals and objectives. There can be instances when project team
includes people who usually dont work together or do not share a great camaraderie. They may

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also belong to different departments present at distant locations. So coordinating these activities
can be a tedious task.

A good project management discipline will provide standard processes and procedures to deal with
these challenges. It will believe more in prevention rather than elimination of all risks, issues and
surprises. Some of the prominent bottlenecks faced are:

Projects finish late.

Crossing budget limits or failure to meet customer expectations.
Inconsistency between the processes and procedures used by projects managers, leading to
some aspects being favored more than the deserving ones.
High stress levels, loss of goodwill and achievement of success only through overtime.
Unforeseen internal and external events impacting the project.

IT Project Managers
Job Description
IT Project Managers have a critical role in every organization and every project. Most people have
an idea of what a project manager does; however, Paul Gaddis explained the differences between
a traditional project manager and information technology project manager in his article, The
Project Manager. Gaddis points out that teams managed by modern project managers are made
up of professionals (Gaddis 90). This team dynamic requires that project managers be able to
describe the purpose of certain tasks so team members can have a greater respect for what is asked
of them.

In addition, project managers must be able to balance the triple constraint- scope, budget, and time
(Gaddis 92). As discussed earlier, projects have a definite life; however, a project managers work
is infinite. This may seem contradictory; however, Gaddis says project teams exist only when there
are projects. Project managers must believe that company executives will continue to supply work
(Gaddis 91). The importance of the relationship between top executives and team members is
elaborated later in the discussion of project manager characteristics.

As we move more and more toward a technology-driven society, the need for IT project managers
has increased dramatically. The high demand for professionals is shown with competitive and
attractive salaries and a constant growth rate. In 2009, CNN Money ranked IT Project Manager as
the fifth best job in America (number one going to system engineers).

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While the study lists disadvantage to the profession such as, a lot of time spent in meetings and
pressure to stay on schedule, the salaries reflect adequate compensation for the minor
inconveniences. The median salary for project managers in 2009 was $98,700 and a top pay of
$140,000 (Best Jobs in America).

CNN Money also predicted a 10-year job growth of 16%. This perpetuates the idea that if
technology industries continue to expand, the demand for IT project managers will continue to

There are certain traits that every IT project manager must have to be successful. Most effective
project managers contain the following characteristics:

A strong understanding the business and technical aspects of a project

IT project managers must be able to translate technical issues into a language that is
meaningful to business executives (Four Must Have Traits for Project Managers). Their
ability to transition from business meetings to the laboratory is critical to the continued
success and recognition of team projects (Gaddis 94).

Comfortable with change

Project managers are expected to remain on schedule despite unforeseen requirements
(Four Must Have Traits for Project Managers). A successful project manager is able to
handle the unexpected, and manages project changes effectively.

Desire to challenge and improve

When the only thing that remains constant is change, project managers must be devoted to
continuous development (Gaddis 95). A commitment to growth enables project managers
to streamline processes and increase team member loyalty (Four Must Have Traits for
Project Managers).

Project Management Institute

Project managers can improve their skills with the help of the Project Management Institute (PMI).
PMI offers training and certifications for project managers, which in turn benefit their employers.
A study in 2010 revealed that 80% of high-performing projects use a credentialed project
manager (What Are PMI Certifications?). Project management certifications add value to not
only the individual, but their team and organization as a whole.

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When to Apply Project Management Techniques
It may seem from the preceding examples that project management is a flawless approach for
managing any kind of work activity, but that is not necessarily the case. Project management
activities do add some work overhead to a project but this is usually offset by completing the
project more efficiently and within its constraints. Large projects accentuate this efficiency,
making project management activities worthwhile. Small projects, however, may not overcome
this overhead, causing project management activities to actually make the project less efficient.

Thats not to say that project management activities shouldnt be used all, but just to a lesser extent.
The general initiating, planning, executing, monitoring, and closing phases of a small project may
still exist, but the management of those phases may not be done to the same level of detail, or
maybe done in a less formal manner. For example, instead of drafting a formal, multi-page project
charter that would be created for a large project, the charter may only be an email or a single page

Benefits of Project Management

The benefits of implementing project management techniques in a project serve everyone involved
in the project. The sponsors and the clients who initiated the project in the first place get a refined,
polished product, the project manager who oversees the project has an easy time managing
resources and most importantly it also eases the life of the production team members who actually
build the project. This provides a roadmap that is easily followed and leads to project completion. Once
project manager understands how and where to avoid bumps, project execution will not be harder and
longer. By implementing fundamental project management strategies, you will narrow your focus,
reach desired goals and achieve those goals within specific time and cost perimeters. Whenever you
get a project done on time and under budget, the client walks away happy. And a happy client is one youll
see again. The result is that everyone comes out a winner - which just may be project management's
best benefit of all.

Although it is the most overlooked factor, quality of a product defines the X-Factor for a company.
Organization should keep quality in mind while designing and planning the product/project.
Organizations are willing to spend extra bucks for a quality product than getting sloppy product.

Today, organization follows strict process standards to ensure delivery of quality product and
project management plays a big role in adhering to the standards. Project quality management
process needs to be followed which encompass quality planning, quality assurance and quality
control processes. It is a project manager responsibility to ensure these processes are defined
during project planning phase. Quality activities and process help in certifying whether a product has
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passed the defined quality process. Project or product will be released in market only when quality
control team approves the release. There are numerous quality control process tools are available
such as Pareto analysis and Six Sigma. Chapter 6, project quality control, captures the detailed
process of quality control in project management and it also features the case study of GE, which
uses Six Sigma approaches to ensure quality control of any product, to showcase benefits of quality
control in an organization.

Similar to other business activities, ethics is an important aspect of project management. There are
many opportunities for project managers to act in unethical ways, such as artificially or dishonestly
inflating time and cost estimates. Dealing with stakeholders presents its own set of ethical
dilemmas. Project managers may be put in situations where they are bribed by influential
stakeholders to support their interests in a project. Other times, project managers may feel
compelled to lie to stakeholders or give false information for their own personal or organizational
gain. Its important to remember that all activities in project management, from initiation to
closing, should be done in a responsible, fair, honest manner, while treating others with respect.

Procurement refers to the aspects of project management related to obtaining goods and services
from outside companies. It does not refer to other internal organizations within your own company.
While procurement is an area into which a project manager will give input, in many, and perhaps
most companies, it's an area that the project manager doesn't own. The project manager usually
does not have the authority to enter contracts on behalf of the company, and he/she is usually not
asked to administer the contracts once they're in place.

The six processes identified within the project procurement management knowledge areas are as

1. Plan purchases and acquisition

2. Plan contracting
3. Request seller responses
4. Select sellers
5. Contract administration
6. Contract closure
The bottom line is that in most organizations the project manager should understand the basics of
procurement management, but it's usually a responsibility he or she shares with the Procurement
Department. The project manager should provide requirements to the procurement specialist to

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make sure the correct vendor is chosen, and the procurement specialist in turn provides guidance
to the project manager on managing the vendor relationship successfully.

Risk Management
The process of identifying, analyzing, and responding to risk is known as risk management. While
risk is an unavoidable aspect of undertaking a project, actions can be taken to minimize its
consequences or likelihood. Risk management may be viewed as a secondary activity to the
development of project deliverables, but it should be considered a first-class activity in project
management due to its ability to reduce the chance of project failure. According to KPMG, 55
percent of runaway projects did no risk management at all.

It is important that the risk management process be developed in an objective manner, so as to

minimize the effect of opinions or gut feelings. An example of this would be developing a
decision tree when selecting a project, considering the probability of a risk occurring and the
impact of that risk happening. While risk is usually associated with negatives events or
consequences, positive risks exist that should be accounted for if possible. An example would be
the risk of a project coming in under budget. While something that wasnt planned for, its a good
thing coming in under budget because it presents the opportunity of using the unused resources

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Chapter 1
Management Information Systems


If you choose information systems, you will open doors for your future and have a distinct
competitive advantage over your peers. Jonathan Landon, Deloitte Consulting

Information is useless when one does not know how to manage it. In this chapter, you will learn about the
necessary skills needed to be a competent project manager. You will also learn about how to break down
the project in units and the various risks involved with different project portfolio management.

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Chapter 1
Management Information Systems
Management Information Systems (MIS)

MIS is defined as management of information systems in such a way that it can provide efficiency
and effectiveness in strategic decision makings. The main purpose of MIS is to give managers
feedback about their own performance. The feedback can be in the form of reports, charts,
presentations, web portal or any form which can display the resultant product of the analysis and
be understood by the concerned stakeholders. The data can be computer generated, keyed in
periodically or manipulated from outside the organization. This data undergoes the Information
supply chain to provide meaningful results. However, the major challenge is to standardize the
input and process it. In the past, managers used to get wait for days or months to process data to
take strategic decisions but this has changed in recent times because of availability of high end
information systems. MIS provides correct and timely information for managers to use in the
decision making and management of an organization. Engaging past trends with current processes,
the future can be forecasted and thus assist the organization to derive the future course of action.

A MIS can collect any sort of data or information that manager requires. For example, they can
see the financial data such as expenses or daily revenue and find the bottlenecks or performance
KPI or indicators that tell project managers which areas need improvement. A management
information system can facilitate, collaborate or communicate well. People can edit or share the
important documents on anticipated developments across the organization.

Management Information System (MIS) is the discipline, which focuses on the management
of information and communications technology elements within business organizations.

Advantages of Management Information System in an Organization

1) Improvement in production, marketing or profit margins: MIS provides information which

helps in improving the qualitative or quantitative improvements in production and give
better ways to do marketing techniques such as advertising or sales promotion.
2) Less prone to errors: Since it is a computer based system so integrity of data is maintained.
3) It allows decision making to be faster: Decisions can be made by top level and low level
managers which can be helpful to organization.

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4) Increase Competitiveness: MIS systems can help manager to analyze information and
market strategy which in turns can help managers to understand competitors strategy and
comes up with better strategy.
5) It also enables Managers to compare results to established company goals and identify
problem areas as well as opportunities for improvements.

Trends which impact Management Information Systems

In the era where technology changes very frequently, it is necessary to be aware of the trends which
impact a particular system. Having MIS is not enough. It is important that it is upgraded to be
compatible with the new technology and support decision making in the environment which wants
to adapt to whats current in the industry. Although, it is never easy to change/revamp all systems,
the organization should put conscious efforts towards upgrading their MIS systems from time-to
time to be ahead in the competition and generate value from the system which it wants from the
system at that instance. Following are the trends which affect any MIS systems:

1. Data Collection Automation: Surveys show that systems should be able to automate data
collection as early as 2020. Increasingly, it has become necessary to find out ways to collect
information online and in real time. The need of the hour is to respond to emerging market
opportunities and threats faster than the competitors.

2. Information Analysis Automation: With Big data came market saw a higher need for
real time data analysis. Surveys say that systems need automated data analysis processes
to be implemented by 2020 as Market researchers have suggested that big data will have a
large impact of market intelligence activities.

3. Cross Functional Integration: All the information collection and analysis processes have
to be integrated along with the organizational functions in the future. Information
management systems should be able to support the sharing of views or movement of data
from other systems, regardless of the level of integration selected.

Types of Management Information System

The basic objective of MIS is to enhance communication among employees, record available
information and provide strategic decisions based on pertinent information. There are 4 types of
Management Information System which caters to the objectives of MIS:

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a) Transaction Processing Systems
These systems are designed to handle a large volume of routine, recurring transactions.
They were first introduced in the 1960s with the advent of mainframe computers.
Transaction processing systems are used widely today. Banks use them to record deposits
and payments into accounts. Supermarkets use them to record sales and track inventory.
Most managers use these systems to deal with tasks such as payroll, customer billing and
payments to suppliers.

b) Operations Information Systems

These systems were introduced after transaction processing systems. An operations
information system gathers comprehensive data, organizes it and summarizes it in a form
that is useful for managers. Most of these systems access data from a transaction processing
system and organize it into a form usable by managers. Managers use operations
information systems to obtain sales, inventory, accounting and other performance-related

c) Decision Support Systems (DSS)

A DSS is an interactive computer system that can be used by managers without help from
computer specialists. A DSS provides managers with the necessary information to make
intelligent decisions. A DSS has three fundamental components:
1) Database management system (DBMS): Stores large amounts of data relevant to
problems the DSS has been designed to tackle.
2) Model-based management system (MBMS): Transforms data from the DBMS into
information that is useful in decision making.
3) Dialog generation and management system (DGMS): Provides a user-friendly interface
between the system and the managers who do not have extensive computer training.

d) Expert Systems and Artificial Intelligence

These systems use human knowledge captured in a computer to solve problems that
ordinarily need human expertise. Mimicking human expertise and intelligence requires that
the computer (1) recognize, formulate and solve a problem; (2) explain solutions and (3)
learn from experience. These systems explain the logic of their advice to the user; hence,
in addition to solving problems they can also serve as a teacher. They use flexible thinking
processes and can accommodate new knowledge.

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Having a in depth idea of Management Information systems, let us consider a few challenges which
any such system faces and what is it that is required for any project manager to handle such
projects. After this, the chapter will cover a brief on Work breakdown structure and Project
Portfolio Management.

The Necessary Skills for Project Managers

Project managers are people in high demand as technology progresses forward. As IT projects
become more prevalent, it is that much more important that capable individuals are leading the
projects. A project manager ultimately needs to have the combination of someone with the
necessary technical skills, management skills, coping skills, as well as the necessary interpersonal
skills to lead a team of diverse individuals who may not always see eye to eye on many issues.

Technical skills are important because a project manager may not be able to lead a project if he/she
is not able to understand the core implications of the decisions that need to be made. However, a
project manager may not have to be as technically proficient as a junior manager he is managing.
Being a project manager really comes down to being a project leader, and part of leadership is
being able to delegate the right people into the right positions to best get the job finished. Generally
speaking, for large and very complex projects, the technological acumen may be too great for a
single person to master. In this case, the project manager should get training in general and wide
sense, rather than trying to delve deep into someone technological aspect of the project. For
smaller and less complex projects, it may be a good idea for the project manager to get training
from a more experienced individual who could catch the project manager up on the important
aspects of the technological aspect- and knowing more in-depth aspects of this technological issue
would be a good use of time and energy.

Management skills are also vital to a project manager. This is more about the business aspect of
the project. Unlike typical IT workers, project managers need to have a good business sense about
them as well as a good technical sense about them. These business aspects range from; expertise
in areas of the organization, finance, human resources, and communication. An important
management skill for project managers is managing change in an organization. Organizations are
big places, and change happens frequently and non-stop. Even though it is important about
whether or not the correct technology was selected in a project, projects generally do not fail for
this reason. They fail because of the soft science portions of the project. This can also be called
the human factor in the project. Change within an organization, especially big change, could throw
off or unsettle some members of the project team. It is vital that a project manager can mitigate
this heightened stress level because of change, and keep the project on task so that activities do
not slip and milestones can be reached.
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Coping skills are also extremely important for project managers to have. This means that the
project manager can cope with a myriad of changes that may come when situations change in the
project. This means coping with uncertainty, doubt, and possible conflicts. A project manager
with good coping skills usually can anticipate potential problems, and is therefore not easily
surprised when the project needs to deviate from the original plan. Because the project manager
could anticipate the change, he or she is not only able to have a contingency plan in place, but they
would not be so perplexed by the change that they would not be able to think clearly about what
needed to get done. Part of the coping skills also requires a project manager to be able to absorb
lots of information from multiple sources without being overwhelmed. A project manager will
constantly be bombarded by information from every side for most/ all phases of the project, and
he should be able to handle that in an efficient manner so that the project can run smoothly.
Thinking outside of the box and being creative is also a big part of a project managers ability to
cope. Sometimes, a project may call for a proven protocol, but a better way may be obvious, and
a good project manager should be wise enough to see if this new method would be more efficient.

Interpersonal skills, or people skills, are the last, and definitely the most important tools a project
manager has at their disposal. Generally, it goes without saying that once a person is project
manager, they have the technical skills necessary to lead the project; however, people skills are the
difference between success and failure on most projects.

All project managers are managing people more so than a project. A more accurate name for
project managers may be People Managers! A good understanding of ones project team is vital;
knowing what motivates and encourages a team could vastly increase a teams productivity.
Almost 100 percent of the time, members of a project team see things differently, and even if they
do not have a problem with the project manager- they may have a problem with an individual team
member. The project manager is ultimately responsible for the completion of the project, and so
the project manager should be able to mitigate team dysfunctionality and keep the project going.
There are many ways a project manager can lead his team. He can either be subtle or obtuse about
it. A good strategy for project managers is to manage by example. Team members are always
watching the project manager to see his work ethic. If it is slacking, then the team members will
most likely follow suit. A good project manager knows how to keep his team motivated and on
task, and a project manager who exudes this- the team will catch that enthusiasm and work better
for it. It is also important for a project manager to be kind. People are highly emotional beings,
and even if one does not show their emotion on the outside, a positive feeling towards a project
manager will reap a higher caliber of work than if a team member has animosity towards their
project manager because the manager has disrespected him in some way. People are people, and
a good project manager needs to know that compassion, character, and competence are essential

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to being a leader of people. They are essential to being a project manager and they are essential
to being a manager of people.

Characteristics of a Good Project Manager

Project managers hold a key position of power in an organization and have a disproportionately
large impact on the outcome of a project. How they handle project resources, communicate with
stakeholders and plan the entire project can make the difference between a project being successful
or a failure. Therefore, it is imperative that the right managers are chosen to ensure the success of
a project. But, how do you evaluate a good manager? and who should be the person evaluating the
project manager?

It is necessary to define a good leader to get at the essence of a project manager, as leadership is
one of the most key attributes of a Project manager. Primarily, it is necessary to understand that
there is a difference between a good leader and a boss or manager. The latter holds the role however
it is the former that can contribute to the success of his team members and his project. According
to Rosenbach and Taylor (1993), leadership is a process of getting individuals to co-operate forth
success of something which would not be possible without the leaders influence.

This leads to the role of a project manager, who facilitates this kind of cooperation for the success
of a project, she should balance a myriad of tasks varying from the supervising to facilitating
discussions. However, Leadership is not the only function of a Project manager, she also performs
a myriad of tasks varying from gathering requirements, planning, communicating with
stakeholders, provide technical advice based on experience to manage human and project resource.

A project manager is integral from the start of the process, she coordinates with the sponsor and
talks with the client to kick off the project and facilitates Business Analysis and requirement
gathering. Once the requirements are set she spearheads the planning process. She is further
responsible for setting up communication channels for the team to interact with all the stakeholders
to ensure that the requirements are translated correctly and to appraise the performance of the
project. She must also be technically knowledgeable to help with any issues that a team member
might have. And above all this she is expected to handle and manage the human and other project
resources such as budget etc.

Managing people effectively is an art on its own, with each person requiring a different form of
managing. Some are more pliable to hands off approach while others require constant monitoring
and feedback. This brings with it personality traits and conflicts between different personalities in

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the project, which means that the project manager must be well versed at conflict management as

In short, a project manager dons many hats, Hats that never seem to end in variety and function.
There naturally arises a question on which factors should she be evaluated on, should leadership
be weighed higher than planning or should conflict management get a higher preference? Again,
the question of who decides arises.

When evaluating Project Management from the top down, it becomes difficult to isolate the
characteristics that attributed to the projects success or failure. The Sponsor or supervisor can see
the outcome of the project but not the key factors that helped achieve that outcome. It is therefore
a better idea to evaluate project managers by proposing team members to list and rate their
respective managers. Team members are usually a good judge of the project managers they work
under, and they are also very intuitive on the status of the project and how a manager can handle
the day to day challenges of managing a project.

However, it is important to keep in mind that team members bring their own bias and opinions
about their project managers and therefore the selection of the team members must be done
carefully to account for such biases. This can be done by choosing from a variety of organizations,
in different types of projects which cover both successful and failed projects to get a good
representation of all types of project managers.

So far, we have seen what leadership styles and competencies might contribute to project success
and project leader effectiveness. A review of existing literature also gives us an idea about how a
project leader should be. But it doesnt give us an idea about how project members at the lowest
level perceive and experience project leadership. It doesnt detail how different leadership styles
affect team members day-to-day work. The success of a project is not only determined by good
planning and execution but also by project member satisfaction. Hence Alicia Medina, Associate
Professor in Management at Ume University in Sweden and Alison J. Francis, a senior
Organizational Development Manager at Sony Mobile Communications, based in Sweden
conducted research to answer the below two questions.

What characteristics do software development project team members associate with the
project manager role?
Which of these characteristics are seen as associated with good project management by
the software project team members?

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The aim of their study was to investigate the views of software development project team members
based on their personal experiences. To conduct the study, the authors used repertory grid
technique. According to Kelly (1963), a repertory grid is an interview method that provides
a visual representation in the form of a matrix about the interviewees views regarding a specific
topic. This representation is what he called the construct system. The topic is the subject being
analyzed and the goal is to find out the perceptions of the participants about the topic. The
constructs are nothing but the personal views of the participants without external influences. The
constructs are made up of two opposite views of the topic i.e. they are bipolar.

The authors interviewed 15 project team members from the software development section at Sony
Mobile in Sweden. The participants were aged between 27 and 46 and consisted of 14 men and 1
woman. Each of them had worked on several projects.

Data was collected using multiple structured interviews. The authors then analyzed the content
and divided it into 18 categories which are explained below. Relevant constructs are provided as

1. Handling and understanding people.

The participants rated it the highest. It basically reflects how much invested the project manager
is in the interests of the team members. The constructs of the participants were like Dont treat
you like a machinejust treat you like a resource or Had a first meeting to get to know each
otherdont try to get to know the project members.

2. Technical Subject Matter Knowledge and Experience.

This category highlights the importance of having knowledge and/or experience about the business
or technical processes. The constructs were like - Can see the pros and cons of the problem at
handThey dont understand the problem

3. Communication and Information Handling

This category deals with effective communication of relevant information. The constructs were
like - Give continual feedback/updates on statusDont give necessary information or Ensures
that everyone understands the division of tasks into subtasksSometimes divide tasks into
subtasks without clearly communicating what the subtasks are.

4. Structuring and organizing the work

Efficient issue handling, time management, resourcefulness. Structural mindset with project topic
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5. Allowing participation and collaborating
Overall democratic nature of the appearance and decision making. Presenting an opportunity for
team members to express opinions and trust, respect towards the sentiment in the discussion.

6. Calm versus stressful behavior

Making stress a positive encouragement to motivate people towards their goals rather than
intimidating them with the deadlines. Project managers just trickling down the stress are creating
unhealthy environment in a long-term perspective.

7. Handling external demands and internal/external communication

Project managers has to guide developers in their journey within the organization. Many a times
they have to protect their team members from organizational restructuring and insecurity which
might distract them from the project work.

8. Feedback and appreciation

Team members expect qualitative feedback and improvement suggestions from managers to excel
in their profile. This provides a sense of growth to team members which acts as catalyst to work

9. Flexibility and openness to change

Project managers should be open to adaptive processes where rigid structure might prove
ineffective. Amazing product ideas and workarounds are possible if they are assured of immunity
from the backlash.

10. Taking active responsibility

Responsibility of the decisions and their consequences tend to be the important factor while
building a sense of leadership in the project team. Otherwise, teammates might develop fearful
attitude towards decision making to avoid the accountability.

11. Presence and confidence in the role

People should be able to believe in project managers decisions. Managers without respect in the
organization without reputation of competence would not be able to gain the confidence of the
team mates to encourage them towards the delivery.

12. Availability/visibility

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Team mates need an accessible source of issue resolution. This ranges from project issues to other
organizational, career specific issues faced by team mates. Project managers visible presence
develops sense of ownership and persistent delivery.

13. Following up
Consistent review of project plan and current status helps to keep tab on the progress of the project.
This results into early detection of problematic component or team member in the team.

14. Reliability
Managers with unpredictable behavior and often changing decision pattern would demotivate
teammates from acting on directives decisively.

15. Genuineness and sincerity

People like to be real when it comes to professional knowhow and future prospects. Managers with
hidden agendas would lose the trust of teammates eventually.

16. Positive and constructive leadership

Positive relations helping project members finding their path towards overall growth and sense of
fulfillment create constructive leadership by the project managers. This might encourage
teammates to go extra mile and deliver on the tasks.

17. Conflict handling

Project managers should be able to handle the conflict effectively resulting in a positive result for
the project. Managers avoiding the conflict might create patterns of chaos which would deteriorate
the intra-team relations.

Challenges for MIS Projects

MIS Project Management is usually associated with many unforeseen challenges. Project
Management processes involve some ways of predicting and preparing to address these challenges
through Risk Management methods. However, new scenarios keep bumping up creating
challenges for the stakeholders. Some of the common challenges are discussed below.

1. Major business process change: The project requires all the users to adapt to the changes.
Initial adjustment will take good amount of time and effort and lower the performance for
some time. Proper training methodologies will be followed to sensitize the stakeholders
about the process changes.

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2. Timeline: Sticking to the project timeline is important, all the phases are connected to each
other, and delay at one phase will delay the subsequent release. Project timelines are
continuously evaluated and all the activities on critical path are monitored carefully. Any
failures to meet the timelines on critical path should be addressed with additional resources
and backup plans.
3. Adequate User Involvement: End user involvement is important, as the accurate design
depends on the user's input. The lack of involvement by the users will cause design
challenges. User involvement in the initial stages of project is very important to avoid
major modifications at the later stage. Users are usually expected to participate, provide
inputs and signoff all the project deliverables. Proper feedback methodologies should be
put in place in order to escalate and address the situation.
4. Project Management: Good project management experience itself is a major challenge
and it is a prerequisite to drive the project efficiently. Lack of experience is a risk. Project
Management should be periodically evaluated by the Program Managers.
5. Level of Complexity: Level of complexity of the individual project modules tend to
change as the project proceeds. The more complex the reporting and process requirements
the more training the staff would be needed. All the modules in WBS should be assigned
with a complexity and as the project proceeds, if the complexities change, the effects
should be estimated and resource allocation has to be modified accordingly.
6. Failure to manage risk: A project plan initially anticipates some risks but unless the risk
actually arises the risk management procedures are not revised during the project lifetime.
Best practice would be to continually carry the risk anticipation and devise the handling
7. Lack of Training: The training of users is important and such processes if not in place
pose a major challenge to the project. However robust the product may be, if the users are
not trained adequately, users might end-up limit themselves to basic functionalities and
doubt the capabilities of the product. Training needs of all the projects should be initially
informed and training sessions must be planned accordingly.

Scope Creep in IT Projects

Project Scope Management is a very common challenge in IT Project Management. Usually
referred as The Scope Creep, scope changes come across as an unmanageable task for the Project
Managers. Scope changes have to be handled by a predefined and agreed upon processes. Any
changes to the overall scope should be complemented with proportionate cost, resources and time.
Additional changes should not affect the original purpose and quality of the initially agreed upon
project requirements. Businesses analysts have be associated with the projects for support
throughout the project implementation and assist in scope changes and impact on the overall
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implementation. Reasons for scope creep can be attributed to flaws during the initial analysis, poor
change control processing, lack of understanding of the project requirements, poor communication
between different stakeholders, lack of user involvement or modifications to the user requirements.

Importance of Change Control in IT Projects

Change controls are processed for any changes to the initially agreed upon project requirements.
Depending upon the amount of changes involved, change controls are associated with additional
budget. Change control process initiates with a Request for Change (RFC) from client followed
by the analysis to categorize as an issue or a change control. Once classified as a change control,
impact analysis on scope, cost and time is performed. Change controls by themselves can be
viewed as mini-projects as they involve all the processes of a complete project like analysis,
development, testing and implementation. Major change controls may also affect the actual project
timelines. For example, if there is a major scope change during the project implementation, it is
processed as a change control but the overall project due dates might have to be adjusted in-order
to accommodate the changes.

Configuration Management is associated with change controls because once the project baselines
are changed, different versions have to be individually tracked and all the stakeholders must be
well informed about the changes to the initial version.

Work Breakdown Structure

A work breakdown structure is a very useful approach to divide the big tasks in a project to smaller
details. This way the work could be divided between the teams and the managers could track the
project progress. The big activities in the project can be broken down into various phases and
deliverables and these deliverables could be further broken down into activities that build them.
But an important thing to be noted is that WBS is not a final schedule.

Important steps for WBS:

1. Use WBS Dictionary: When the projects are large, it becomes difficult to keep a track of
important terms, making a WBS Dictionary for reference is a good practice. It is good to
add all the detailed information in the WBS dictionary and this information could be later
used for reference. Whenever there is a change in the activities it should be noted in the
WBS Dictionary so that all the team members are aware of the change.
2. Detail is Good: The more detailed the work breakdown structure would be the better it is,
this will allow the project managers to better allocate resource and assign responsibilities
individually. The level of details should be written down carefully, the managers should

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know how to make the level of details appropriately, few details does not serve the purpose
of a good work breakdown structure break down and too many details make it too crowded.
The tasks which have duration between few weeks to months are appropriate. This way the
project managers can keep a track of the tasks being performed on a regular basis.
3. Display is important: Work breakdown structure could be displayed in several forms. A
tabular way help to number the activities, the listed activates can be performed sequentially.
Another good way of listing the activities is using the graphical way. The project
milestones make the nodes and the sub tasks follow the nodes. This way the project team
has a good idea of the activities that are dependent and independent of each other.
4. Accountability: Using a WBS structure makes the team accountable towards the task they
are performing. Each task is assigned to an individual in the WBS. Thus this individual
alone is responsible for the accomplishment of the task. This way the project managers can
have a track of how the team is performing.

Unclear Requirements for Projects

It becomes disastrous for the projects when the requirements are not clear. Such cases lead to
situations where the teams are working towards a goal which is not clear. It is very important to
understand what the customer wants. A lot of times project managers overlook the minute details
which assessing the requirements, the small amount of time saved in skipping accurate requirement
gathering leads to a big black hole in future. Once the team start working on the deliverables, even
after knowing that they are heading in a direction which is not clear, it becomes very difficult to
take a U turn. This causes a lot of financial strain on the projects and demotivates the team
members working on the project. The unclear requirements lead to a lose-lose situation for both
the vendor and the customer, the customer loses money and time due to the delay in the delivery
of the deliverables and visiting the sites of the vendor again and again. The vendor is at a loss
because the extra time taken by him to deliver the project impacts its reputation. The resources
held on the project for a long time become a constraint to other projects which require the resources
after the due date of the creepy project is over. While gathering the requirements of the project,
the team should adapt the SMART approach. This means that the requirements should be specific,
they should be achievable, they could be measured, they should be realistic and they should be
timely completed. The business analyst plan an important role in understanding the requirements,
they are the first interaction to the client and understand both the business and the technical aspects.
They should take care of the details in such a way that the development team does not go direction
less. A good practice is to hold a requirement validation meeting once the requirements are
gathered from all the line of businesses.

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Why IT Projects Delay
IT projects often go off track and behind schedule for a number of reasons, most of which can be
prevented by planning well in advance. Spending too much time on specific details that are not
important, inadequate allocation of time for quality assurance during the initial phases resulting in
spending a lot of time and effort solving issues towards the end of the project, teams working on
multiple projects at the same time reducing efficiency and not doing justice to even one project are
some common reasons cited for project delays. Let's discuss some of these reasons in detail:

1. Scope Creep
A lot of times the business adds requirements after the development for the project has
started. This causes the developers to change the code flow mid-way and do a lot of rework.
This lead to a delay in the final project. A good practice is to have a date decided in the
beginning after which the requirements are not amended.
2. Gold plating
Gold plating is a phenomenon where programmers and designers try to add addition
features to the software or make the design too elaborate. Much time and effort is spent
improving details, even though the improvements were not requested by the customer or
client. The details often add little value to the desired result. Gold plating must not be done
unless and until the customer requests for it or there is adequate time for including the
features without a compromise on budget.
3. Neglecting quality control
Time pressure can sometimes cause programmers or project teams to be tempted to skip
the testing process. This frequently causes more delays than it prevents. The time that
elapses before an error is discovered in the software is associated with an exponential
increase in the time that is needed to repair it. A best practice is to start the testing phase in
increments in parallel to the development process. In this way defects are found early on
and rework is minimal for the developers as they have not completed their phase.
4. Over optimistic schedules
Schedules that are over ambitious place considerable pressure on the project team. The
team will initially attempt to reach the (unrealistic) deadlines. These attempts lead to sloppy
work and more errors, which cause further delays.
In this regard, it is important to be particularly wary of the schedules that are imposed on
a team. The desire to complete a project (more) quickly sometimes arises for primarily
strategic reasons; if it is not feasible, however, it should not be attempted. The project will
not proceed as intended and the product will ultimately suffer.
5. Working on multiple projects at the same time

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Dividing work across many different projects (or other tasks) causes waiting times that
lead to delays in projects. From an employee standpoint context switching between projects
leads to decreased productivity, employee burnout, and dissatisfaction resulting in less
motivation to perform. Assigning dedicated resources to projects helps in improving
employee performance while delivering quality results.
6. Poor design
The absence (or poor realization) of designs leads to delays, as it requires many revisions
at later stages. A poor design leads to incorrect estimates and lack of business support. A
good practice is to allocate ample time for the design phase, conducting multiple reviews
and brainstorming alternative methods before freezing the plan. This will not only give
clarity on the project but will also catch any flaws in the requirements during the initial
days of the project.
7. The one-solution-fits-all syndrome
Using the right software for a project is important. Some software platforms are more suited
to particular applications than others are. Thinking that the use of a particular software will
greatly improve productivity, however, is also a trap. A thorough analysis of the relevant
software tools available in the market by making a list of the pros and cons during the
planning phase helps reduce surprises later on in the project.
8. Research-oriented projects
Projects in which software must be delivered and research must be conducted are difficult
to manage. Research is accompanied by high levels of uncertainty. When or if progress
will be achieved in research is unclear. When software development is dependent upon the
results of research, the former frequently comes to a standstill. In such projects it is
important to decide how much research is right and the maximum time that can be spent
for it.
9. Mediocre personnel
Insufficiently qualified personnel can cause project delays. Technically substantive
knowledge of the subject of the project plays a huge role, as do knowledge and skills in
working together to play the game of the project. Necessary training for employees and
encouragement in the form of rewards and recognition solves this problem to a certain
extent. Another way to handle this issue is proper allocation of people to tasks based on
their knowledge and performance.
10. Customers fail to fulfill agreements
Customers are not always aware that they are expected to make a considerable contribution
to the realization of a project. When customers do not react in a timely manner to
discussions and reviews in which they must be involved, projects can come to a standstill.

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Worse yet, the team may proceed further without consulting the customer, which can lead
to conflicts at a later stage.
11. Tension between customers and developers
The tension that can arise between customers and developers (e.g. because the project is
not proceeding quickly enough) can cause additional delays, as it disturbs the necessary
base of trust and the working atmosphere. A healthy environment simulates performance
and trust resulting in achieving the desired goals.

Project Portfolio Management

Often, project managers continually find themselves frustrated in situations instigated by a lack of
resources or by other companies or organizations stealing their resources. The problem is not a
lack of resources, but in fact not enough resources is rooted typically in too many projects. Thus,
the frustrations are merely a result of an unbalanced project portfolio. What do these project
managers need? They need Project Portfolio Management (PPM). PPM is a management process
designed to help an organization acquire and view information about all of its projects, and then
sort and prioritize each project according to certain criteria.

A project portfolio is an organization's group of projects and the business processes in which they
are selected and managed. The ratios of different types of projects in a organization's project
portfolio can be manipulated strategically to advance the organizational goals. According to the
Project Management Institute a portfolio of projects do not have to be related or interdependent,
simply manages as a group to achieve a goal.

In a nutshell, Project Portfolio Management aligns the project portfolio with organizational
strategies by balancing the many conflicting demands between programs and projects. Project
Portfolio Management is critical to an organization's overall performance as it can directly affect
the organization's bottom line. Through correct Project Portfolio Management an organization can
be confident that the financial support it has allocated to projects is being spent in a way that
benefits their goals the most.

Applying project portfolio management to the information technology sector allows the executives
to get a bird's-eye view of projects. This overarching view allows them to spot areas where the
resources are over allocated, redundant, or not receiving enough funds. By doing so, this enables
enterprise wide resource allocation and planning.

The key capabilities of project portfolio management are:

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Pipeline Management - This enables the company to make decisions regarding future
investments into project. This helps in strategic resource alignment to ensure completion
of set of projects with finite development resources in specified time. This can be very
helpful in planning where and how should company invest.
Resource management- Project portfolio management helps in managing a range of
resources including technical skills, financial, human, inventory and production. The
emphasis is on most efficient allocation and utilization of resources.
Change Control- Change portfolio helps to keep track of the change requests which can
be new requirements or modification in the existing functionalities. It also includes impact
on the application, people and project as a whole. It important because a lot of changes take
place in the duration of the project so it becomes necessary to track them so as to avoid any
change collision and also to look for change potential.
Financial management can improve the accuracy for budget estimation. The value of
the project can be known which can help to prioritize the project and also it gives the
opportunity to access the progress of the project using the earned value technique.
Risk management This allows the team to be aware of the various risks present in the
project. This will help to draft the project plan accordingly, have the contingency plan in
place and the uncertainties would be tackled proactively.

There are four objectives of PPM and normally parallel those of managing a financial portfolio.
The first is to become aware of and familiar with each of the items in the portfolio. Next, it is
important to create an overall picture to understand the portfolio as a whole. Third, it is a goal to
enable rational organization of items from the collection based on alignment with long term goals
and strategies, costs, and benefits. Lastly the portfolio owner reaps benefits from the resources
invest by getting the most out of what they put in. PPM implementation cannot be done overnight
and takes active involvement by multiple managers and their support in order to educate the
organization about PPM.

Outsourcing is contracting with another company or person to do a particular function that your
organization choose not to do for itself. As long as specialization has been around, outsourcing has
been an option. However, it has become a recent trend to outsource, especially with the
advancements of the internet. Outsourcing is appropriate when the company believes another
organization or person can produce it for less than the outsourcing firm. This is typically efficient
so that firms can focus on their core activities, but they can encounter problems when they
outsource a core competency. Companies who do this tend to run into issues because when they
give their competitive advantage to another company to perform, they lose what makes them
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unique. Outsourcing can help in reducing overhead as well as increase cost and efficiency savings.
It can also increase staffing flexibility in that employees can be used in more efficient ways.

Virtual Teams for IT Projects

With the turn of the century paired with the rise and exponential increase in use of the internet, a
new channel of communication has offered endless opportunities for putting together team
members from any location. Virtual teams, or teams whose members are not all in the same
location, have become a vital strategy of companies to allow for collaboration for a specific period
of time with project goals. Technology has enhanced the opportunities to geographically scatter
employees working on projects together. When firms capitalize on their employees correctly,
virtual projects can be more efficient because they can put employees in positions that allow them
to flourish with their specific strengths. In creating virtual projects, the first step is clearly to pick
the right type of people and to develop and prepare those members for the task at hand.

As with everything, projects must overcome obstacles to become successful. These can include:
lack of accountability, false consensus, conflict that is averted, avoidance of closure, and forgetting
about the customer. Although all teams, not just virtual, can encounter these issues, the problems
tend to be heightened in virtual teams because of the lack of face-to-face contact. One way to
combat this is setting up open chat rooms, an email list, desktop conferencing, and setting up goals
paired with mandatory weekly communication across the team. Building trust is the first step of a
team. One way to encourage this is to have an initial meeting with everyone on the team in one
specified location. This way, the group can begin the project by having already met the other
members, even though they may be in different geographic areas. Regardless, virtual teams have
been utilized worldwide and have allowed for massive globalization.

Risks with IT Projects

No project manager wants to have an unsuccessful project. To prevent failures, project managers
must think of every possible event that could go wrong. Risks represent any predicted or
unpredicted change in the project that is not on the original plan. In reality, not everything can be
predicted, but managers can prepare the best they can to prevent, detect, and fix risks when
necessary. The number one reason for project failure is user involvement. If the potential future
users are not involved intimately in the project planning, the project can have cost increases or
time delays as a result of the lack of preparation. Executive support is also vital because they can
make information known throughout an organization and have influence for significant capital
decisions and control. Another issue that can be easily overlooked is unrealistic expectations.
Effective projects must have goals that are specific, measurable, adaptable, reliable, and timely.
Included in this is the opportunity to think outside the box, but project managers must not get

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carried away or else the project will result in any of the following outcomes: unsatisfied customers,
unsatisfied employees, delayed projects, and/or increased unplanned costs.

Managing Risks with PPM

Managing risk is the most important factor for a successful project portfolio management as
projects can be a success or a failure because of this and thus is discussed in detail. Project
nowadays have various types of risks namely white space risks and Integration risks. These risks
are hard to predict and can have unforeseen implications. Risk reward ratio in PPM is the
probability and impact of each project in PPM. The main idea of PPM is to balance the low
risk/high benefit projects with high risk/ low benefits so maintain a smooth cash flow from
projects. This in turn balances the risk-reward across entire portfolio.

There are 2 major tools to manage, analyze and balance the risks within project portfolio.

Monte Carlo Simulation

This method uses the computer software to identify the set of potential cases and varied
combinations of the potential outcomes. It uses different factors to showcase the outcomes which
can be positive and negative, which can thus help in project decisions.

Decision Tree Analysis

This can measure the success and failure of each project running in the organization. And, thus it
can help in decision making and to know which all projects can be invested in.

How is Project Portfolio Management different from Project Management?

Project management focuses on managing a single project and making sure that the project is
completed, meets its objectives and is in line with the needs of the customers. Project portfolio
management is more about all the current and potential projects in the organization and their
motive to meet the overall business goals. Project portfolio management forms the foundation for
the project management to function correctly.

Key differences between project management and project portfolio management are:

Characteristics Project Management Project Portfolio Management

Scope Manage the scope of a project to ensure Manage the scope of all the
it is in line with the requirements of the projects to ensure that all the
customer for that project. projects meet the overall business
goals of the organization.
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Time Manage the timelines of the project so Manage the timelines of all the
that it meets the milestones and the projects to ensure that the projects
project is delivered on time. are in line with the long term and
the short term goals.
Resources Manage the resources for the project Manage all the resources of the
efficiently. organization to meet its goal.
Change impact Manage the changes of a particular Manage the changes across all the
project. projects.

Project Portfolio Management life cycle

PPM is a funnel-shaped process as shown in the figure above. The process begins with identifying
the organizations key strategy and translating them into clear objectives and goals. During this
process, the team must ensure that the strategies are not kept at a very high level and that they are
well prioritized. Upon completion, the next step is to identify the projects/programs or ideas by
analyzing the current portfolio of projects and establish a link between these and the organizations
strategies and goals identified in the previous step. It is also essential to understand the progress
of the current projects and validate the information about the initiatives. Some initiatives may
overlap but aim to achieve the same result while some other initiatives may have no link to the
organizations strategies. These can be handled by analyzing the current projects and identifying
the ones that must be cancelled, put on hold or combined. Although this is a difficult process as it
involves analysis of all the current projects and affects many small projects, this provides the firm
with an opportunity to get quick wins and make substantial savings. Once the current projects are
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analyzed, the next step is to create a PPM plan to ensure the organization has the right resources
to deliver the project. It includes detailed understanding of human, financial, knowledge and
physical resources. Finally, the firm needs to define the portfolio structure and governance
framework. One can create a single portfolio for all the projects but it is generally more effective
to have multiple portfolios or cluster of portfolios based on strategic objectives or a common group
of stakeholders/funding based on the organization needs.

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Chapter 2
Project Integration Management


Integration management is a collection of processes required to ensure that the various elements of the
projects are properly coordinated. It involves making trade-offs among competing objectives and
alternatives to meet or exceed stakeholder needs and expectations. Comprised of: Project planning, project
execution and project monitoring and controlling.
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Chapter 2
Project Integration Management
Project Integration Management
Project Integration Management is an essential phase is Project Management which coordinates
all the aspects of the project. Project integration, when rightly performed ensures that all the phases
or process in the project run smoothly and correctly. Since Project Integration Management affects
or gets affected by all the other knowledge areas, it has become an essential part of Project
Project Integration Management process has seven steps. They are:
Develop the project charter
Develop the preliminary project scope statement
Develop the project management plan
Direct and manage project execution
Monitor and control the project work
Perform integrated change control
Close the project

Initiation Planning Execution Monitoring Closing

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Development of the Project Charter
This is the first process in Project Integration Management. The project charter is the one that
creates or initiates the project. A project charter is the document that describes what a project is
and how you will approach it, and it lists the names of all stakeholders who are involved. It is a
critical component of the project management initiation and planning phases, and you'll refer to it
throughout the life of the project.

The project charter is that starting point of what needs to be accomplished and decide how the
project is going to proceed. The project charter lays the entire foundation of the project. It includes
a statement of the company business's needs. What is the history that has led to the need? How
was it recognized, and why is it planned now?

Firstly, you must stipulate the project's purpose. How can you reach your goals? What deliverables
can you promise? What are the risks involved in doing that? You must identify your project
resources and technologies, and reflect on task dependencies. It's also important to define your
indicators of success, and critical points which needs extra attention.
Secondly, you must tie into all the roles and responsibilities of your project team. You must define
resources--both human and material--and specify who or what will fill them. The charter forms a
contract with all stakeholders involved in the project.
The project charter is a single, consolidated source of information about the project in terms of
initiation and planning. Basically, the project charter is the one that defines the boundaries of the
project, no matter what type of project management methodology you are using. It is much more
than an effective planning tool. It serves both as anchor, holding you to your objectives, and as
navigator, guiding you through the milestones that will mark your progress.
The original project charter will not change throughout your project's life cycle. Once it is
approved by the stakeholders, you cannot modify or change the original charter without agreement
by all parties involved. With a well-designed project charter you will realize benefits such as
improved client partnerships and other customer relationships. Communication with project
owners and external stakeholders will prosper, and your sponsors will buy in to your project more

Development of the Preliminary Scope Statement

The scope statement defines what is and what is not a part of the project. Well-defined scope
statements will list all and only the work involved with a specific project. It doesn't include minute
details, but should cover what is known about the project: why it's being undertaken, expected
work, the players, what is within and outside the project's scope and deliverables. The preliminary

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scope statement will evolve as expectations are hammered down and the statement becomes
formalized. As the project evolves, the preliminary scope statement will be revised into a much
more detailed one. Some of the contents listed in preliminary project scope statement are:

Project objectives
Product or service requirements and characteristics
Project boundaries
Product acceptance criteria
Project assumptions and constraints
Organizational structure for the project
Initial list of defined risks
Summary of schedule milestones
Rough order of magnitude cost estimate
Configuration management requirements
Description of approval requirements
Some of the techniques that aid in development of preliminary scope statement are Project
Management Methodology, Project Management Information Systems, and Expert Judgment.

Project Planning
A project management plan is a comprehensive document that coordinates all planning efforts
in one complete, coherent file. Project success may rely heavily on how thorough and well-
developed the project management plan is due to its all-encompassing nature.

According to the Project Management Body of Knowledge, a project plan is

"...a formal, approved document used to guide both project execution and project control.
The primary uses of the project plan are to document planning assumptions and decisions,
facilitate communication among stakeholders, and document approved scope, cost, and
schedule baselines. A project plan may be summarized or detailed."

The creation of the project management plan immediately follows the development of the project
charter as well as the project scope statement and is derived primarily from those documents.
The figure below indicates the flow of information in developing the project management plan.

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Project Charter
Scope Statement
Inputs Environmental Factors
Organizational Process Assets

Tools & Expert Judgment

Techniques Previous Experience

Outputs Management

The project manager works together with the project team, management, and various stakeholders
to develop the project management plan. The project plan sets up a baseline, or a basic set of
guidelines that is accepted by stakeholders and requires a formal change process to alter.
Additionally, progressive elaboration should be considered in project planning. Progressive
Elaboration involves the process of taking a project from concept to detailed design.

As previously stated, a project management plan is a comprehensive plan that incorporates

multiple other project aspects and their associated plan and perhaps baseline:

Project Charter
The project charter is a statement of scope, objectives, and participants in a project; it
defines roles and responsibilities, primary and secondary objectives, as well as key

The budget is the financial plan of all anticipated revenues and expenses.

Cost Management Plan

A cost management plan can take on many different forms: formal or informal, high level
or detailed. However, the cost management plan should identify management and

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stakeholder requirements, all resources required from both technical and human resource
standpoints, reserves, as well as any costs associated with procedures such as cost of using,
maintenance, and support.

Cost Performance Baseline

The aggregate numerical estimation of the cost management plan becomes the cost
performance baseline.

The following are two common types of project schedules:
Gantt Chart:

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PERT Diagram:

Schedule Management Plan

The schedule management plan is a result of the analysis of project requirements against
given resources to establish a timeline of start dates, checkpoint dates, and end dates for

Schedule Baseline
The initial planned dates of checkpoints that establish the schedule baseline.

Work Breakdown Structure

A work breakdown structure, usually referred to as a WBS, is a visual representation of
a project broken into smaller, more manageable components. This can be done in the
form of a tree hierarchy or a table.

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Requirement Management Plan
The requirement management plan closely follows the scope statement
management in that it defines requirements, but it also analyzes them and assesses
priority and feasibility. It is a constant process that is updated throughout the
Human Resource Plan
Managing human resources relies on having the right people in the right place at
the right time. It is the duty of recruiters and managers assigned to team selection
to get employees to the right project. Additionally, it is important that teams are
monitored and cared for throughout the project so as to maintain harmony among
members and continue productivity.

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Procurement Management Plan
A procurement management plan can begin with the release of a request for
proposals (RFP) or a solicitation for goods. Any bids or vendor contacts received
should be evaluated for fit, quality, value, and other various factors before decided

Scope Statement
Scope Management Plan
A scope management plan helps guard against scope creep, which is the tendency
of a project scope to increase as more and more requirements are added. Having a
plan allows management to measure and control any influences on scope.
Scope Baseline
The agreed upon project plan and scope statement prior to project initiation is
known as the scope baseline.

Risk Management Plan
A risk management plan identifies risks, prioritizes risks, and analyzes them for
potential consequences, sources, triggers, solutions, and responsibilities. A risk
management plan would consist of efforts made to foresee, identify, and correct
any project risks in effort to mitigate the effects of those risks.
Below is an example of a risk probability/impact matrix:

Failure to
estimate Cost overruns

Market fails to

Quality Management Plan
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Quality management is an effort to assure that products are being produced
consistently meeting product standards. This can be assessed in many various ways
including benchmarking, cost-benefit analysis, statistical analysis, Six Sigma, and
Pareto Analysis.

As the project management plan becomes set, the project execution stage is ready to begin. It
usually commences with a kick-off meeting with all stakeholders; the meeting is used to
communicate the baselines and assign responsibilities of key stakeholders.

Project Execution
The third phase of the project life cycle is called the project execution phase. Out of the entire
duration of the project, this is usually when the most time is spent and the most resources are
applied. Execution bases its work off the templates, schedules, plans, and procedures that were
created during previous processes of initiation and planning.

This is generally the phase of the project where the most things can go wrong. Even with all the
planning already in place, during this time it is easy for the project to begin to run over time, exceed
the planned budget, undergo a lot of changes, and encounter risks. Communication is crucial for
the project manager to lead his team well through this phase.

Gantt Charts:

To keep the project on time, project managers will often use a Gantt chart, created in Microsoft
Project or some other program. A tracking Gantt chart is especially useful when the project
manager needs to review progress, milestones, and the critical path. In Microsoft Project, red bars
represent critical tasks, which are tasks that will cause a delay in the projects finish date if they
are not completed on time. The dark gray bars are the baseline for the project. Black diamonds
are milestones, and the letters are the initials of the person who is responsible for that task being

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To make sure spending stays in control, project managers frequently compare actual spending to
the budgeted amount. The difference between these two numbers is referred to as variance. Project
estimates are generally divided into three segments: costs, contingencies, and profit. Costs are
those that are estimated during the project planning stage and then later compared to what is spent.
Project managers analyze the variability in these numbers to track where money could be better
managed. Contingencies include negotiations with suppliers, allowances given by the design team,
and even inevitable aspects like weather, especially for outdoor or construction projects. Some
costs are easier to estimate than others, depending on the market they are purchased in. Any profit
looked to be made on the project is then added in addition to the costs and contingencies. The best
way to ensure a project meets its budget is to make sure it stays on schedule. Though it wont
necessarily guarantee it, it does significantly increase chances of staying on budget, as well as
managing scope creep.1

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It is crucial to include the user during project planning, and even more so during project execution.
Whether through prototyping or stage development, user feedback is key to preventing scope creep
and creating a project that meets the users needs. The project hardly ever finishes exactly as it
began though, and that is why change management procedures are so important. Change
management can be thought of as the formal process for making changes to the projects scope. It
involves redefining or updating existing objectives and deliverables, as well as identifying new
ones. A common process for changes prioritizes changes based on a predetermined set of standards
or criteria. This priority ranking can be as simple or complex as decided by the project manager
based on the project needs and opportunities for changes.2

One final aspect of this stage is risk management. The project planning phase identifies risks,
assesses the likelihood of them taking place, and establishes procedures for mitigating or resolving
them should they take place. During the actual project execution phase, a project manager must
be prepared with contingency plans to refer to in order to keep the project on track despite any
risks that may take place. Communication, strong leadership, and problem-solving skills are
especially important in this aspect of a project managers job.

Once the project is completed, it moves on to the monitoring and closing stages to formally wrap
it up and close it out.

Project Monitoring and Controlling

Project monitoring and controlling is a continual activity that starts from the beginning phases of
project development. Project monitoring involves periodic reviews of the system in development
on various parameters set as a part of the project agreement and scope. Project control is the process
of taking corrective action for any issues encountered during the monitoring process. Project
monitoring is a crucial step in the development activity as it measures the performance and stability
of the system on parameters laid down in the project management plan and tries to stick by them.
Continuous monitoring and control helps in avoiding or reducing rework in the later phases of the
development cycle.

Project monitoring and control activities include various steps such as the ones listed below:

Keeping constant measures of the ongoing project activities to track the current position of
the project.
Weighing the project phases and stages on the project parameters such as Scope, Cost and

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Identifying issues in the initial phases of the development causing less damage with respect
to Cost, Time and Scope.
Formulating and implementing corrective strategies to counter the inconsistencies in the
system observed during the monitoring phase.
Analyses of the various changes proposed and formulate a plan to decide which changes
to be incorporated and the ones to be avoided.
Provide feedback between multiple phase projects for preventive and corrective actions to
be taken to adhere to the project plan.
Inputs to the project monitoring and control process are:

Project plan document as a benchmark of the requirements and standards to achieve.

Project performance report.
Organizational capabilities and assets available for the project.
External and enterprise environment factors affecting the project.
Expert guidance and experience can yield the following output for the monitoring and control

Revised project management plan

Revised project documentation.
Requests for incorporating changes.
Change management and request tracking plan.
Change Management

Change is an inevitable part of the application development. Changes can be requested because of
multiple reasons such as poorly designed system plan, improper time and cost estimation, poor
project plan, incorrectly understood user requirements, changing user needs, wrongly chosen team,
shifting scope of the project, over ambitious estimation of time and cost are a few. Understanding
and documenting the change request and the analysis of the impact the change would make to the
entire system as a whole is the process of change management. Change management also deals
with a change management comity that decide which change request to incorporate and which
should not. Change management committee includes members from the client side and the
development team. Ones the changes have been finalized; a review is performed to check the
consistency of the initial and final goals of the project, after which integration testing to check if
the system as a whole works fine and finally revised project plan and documentation is prepared
with proper track of the changes incorporated to the system.

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Project closing is the final phase of the project development cycle. Being the final phase of the
development cycle it involves lot with focusing on the end product delivery with the required
documentation and details required for the client of the team that would take care of the product
maintenance and control in the future.

Tasks that come into consideration for this final stage are:

Project Analysis: During the end of the project cycle, the project team can build an analysis
on the initial or customer defined scope and requirement details and the final end product
scope. Analysis can also be performed on the projects security level, ease of flexibility,
and maintainability.
Resource re-structure: After the project development is complete, there is a resource
restructure required to maintain to manage the application or project. These resources have
different qualification and thus a complete re-structured team is formed.
Document Finalization: One of the most important parts of closing the project is to hand
over a complete set of documentation of the entire application to the new team for
reference. Without which managing and maintaining the product becomes extremely
Closing the contract: Finally, we need to develop a contract closure documentation
detailing the contractual agreement between the clients and the development team and
taking a final signoff.

In this chapter, we understand project integration management and its various steps in detail. The
various steps in project integration management are Project Initiation, Project Planning, Project
Execution, Project Control/Monitoring and Project Closing.

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Chapter 3
Project Scope Management


Project scope is the part of project planning that involves determining and documenting a list of specific
project goals, deliverables, tasks, costs and deadlines.

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Chapter 3
Project Scope Management
Every person has determined a scope at some point in time. Most people do not necessarily
recognize that they are determining a scope. It could be as simple as determining how long one
wants to go work out one day, where he or she wants to go work out, who he or she wants to work
out with, and what he or she is going to do while at the gym. Whether one recognizes it, a scope
determines what is going to be done. In the context of project management this means determining
what the project entails. The scope statement clarifies what work is going to be done and how that
work is going to be done. The scope serves as a foundation for planning the rest of the project and
is arguably the single most important aspect of project management. In addition, the scope can be
used to identify processes that are not part of the project or product. This is important in preventing
scope creep, which will be discussed at a later point in this chapter.

In addition to outlining what is going to be done, a scope statement might also determine what
deliverables are going to be delivered during the project. A deliverable is a document that is
produced as part of a project. It is the outcome of certain process whether that is planning,
implementation, or evaluation. Examples of a deliverable include the work breakdown structure,
quality assessment plan, and different types of budgets.

In project management, it is very important to be able to master the scope management process. If
there is a change to scope, there will inevitably be an additional change in the budget, time
estimate, and/ or resource estimate. For example, lets look at a project for building a road through
a pasture, which was determined to only need to be two lanes during the first draft of the scope. In
accordance with this scope, the project management team estimated the amount of time that the
road would take to be built and the budget needed to build the road. In addition, the resources such
as the amount of concrete, human resources, and land were also estimated. Two months into the
project, it was determined that the road really needed to be a four-lane road. This change in scope
will increase the amount of concrete, human resources, and land that is needed to construct the
road. In addition, these changes in resources will increase the budget significantly. Also, unless
additional human resources are hired, the time estimate to complete the project will also be
increased. As demonstrated the scope is the single most important element of project planning,
because of the impact that it has on all other areas of project management; therefore, being able to
effectively manage the scope of any project is critical.

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The scope management plan is a deliverable that includes an explanation of how the scope
statement will be prepared, how the WBS will be created, and how the project management team
will be able to verify that a project deliverable is completed. In addition, the scope management
plan also details how change requests will be handled in relation to changes to the scope. Once
again, this process is extremely important because of the impact that a single change in the scope
may have on other areas of project management. Also, it is inevitable that there will be a change
in the scope at some point during the project. For this reason, it is customary to write a preliminary
scope statement and then update the scope statement when there is additional information to
finalize what needs to be done during the project. There are several key contributions that are
included in the scope management plan including the project charter, preliminary scope statement,
and project management plan.

In mastering the scope, there are several stages that one will need to know about. The scope
management process has five distinct stages, which will be covered in this chapter. These stages
are as follows:

Scope planning
Scope definition
Creating the WBS
Scope verification
Scope Control

Project Scope Definition

Project scope definition is a core project planning process which deals with developing a clear
picture about the work that needs to be carried out to reach the intended goals of the project. It
makes sure that the project team clearly understands what is expected from them and apt
management controls are set to make sure we strive to achieve only what was initially agreed. The
level of detail in work is very critical here because too much unrealistic detail can lead to project
creep. Being the initial step in a project planning process, it sets the path for the remaining process.
Hence making sure that a good job is done in the project scope definition stage is important for the
subsequent processes of project execution to be carried out smoothly.

Various important aspects need to be considered during this phase. The requirements of the project,
product and processes must be clearly defined and revised properly before finalizing it. This makes
it easier when the Work breakdown structure is being formulated. Even the number of levels in a
WBS is not set in stone, a clear understanding of the number levels required needs to be discussed.
The scope is defined at a high level and a low level. The High-level scope is normally defined in
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the project charter whereas the low-level scope is defined while the business requirements are
documented. Clearly stating the boundaries of the project and making sure the participating parties
have formally agreed upon it through contracts is very important. This makes sure we dont run
into problems of scope creep. In the process of defining scope, we will need to make assumptions.
It is impossible to have a clear picture of everything to clearly define the scope; hence assumptions
are needed, but it is important these assumptions are properly documented. It should be later
checked to make sure we are in line with our assumptions and sometimes we realize that our
assumptions were not accurate and some adjustments are required.

Project Scope Statement

A project managers capability to make the right decisions initially in the project executions phase
depends on a lot how well the initial project scope statement was developed. It gives a clear idea
about what is required, what is to be done, the problems that can be faced and what is considered
out of scope for the project. The project scope statement also establishes a mutual understanding
and agreement between the project team and the clients about what is required and delivered at the
end of project. Both the parties understand how any issues would be dealt and how the deliverables
will be received by the clients with proper measurable metrics.

For creating the project scope statement, the availability of the preliminary scope statement, project
charter, process assets and change requests is crucial. At the end of the day, a project scope
statement must have a proper justification of what is done and why it done for the parties involved
in the project. Along with the objectives, details of the product or the final service delivered must
be clearly articulated. The various inevitable obstacles must be also accounted for along with the
assumptions of the project. Various measurements for accepting the final product must also be
clearly mentioned.

Even though trying to articulate what exactly happens in the project life cycle is a tedious task, a
comprehensive project scope statement helps us to make decision from the standpoint of what is
known as of today, and what is expected to happen during the project life cycle. Now changes are
bound to happen, and one should analyze the effect of such changes and we should be able to
propose the apt changes. The people responsible in the project have the option to accept the
changes and move on with the project, but sometimes the hard decision to kill the project may be
required if it is understood that more time, workforce or capital of the project would only end in

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Work Breakdown Structure
Work breakdown structure is an important deliverable that organizes the overall work into smaller
chunks of work sections. As per the Project Management Body of Knowledge (PMBOK) , WBS
is defined as a deliverable oriented hierarchical decomposition of the work to be executed by the
project team. It can be represented as a hierarchical tree or even in a tabular list. It is also
represented in the task list in the Gantt chart used in the MS project software.

Besides defining and organizing the project work a WBS is useful the budget can be allocated at
the higher levels of the WBS and subsequent departmental budgets can be easily formulated.
Moreover, specific sections can be analyzed to identify project cost performance and identify
issues in the processes involved in the project. WBS helps us also cite potential risks in the project.
By integrating the work breakdown structure with an organization breakdown structure,
communication points can be identified enabling a smooth communication path across the
hierarchy. Moreover if a project is falling short of goals, WBS can give us an idea as to what areas
of the project will be affected and helps us take corrective measures.

While creating a WBS one must make sure that highest levels represent the final deliverables and
the lower sub level represents work assigned to a particular department. Each work package must
account for the time, expenditure and very clear list of tasks; and each work package must be
independent of each other. Each work package is unique and should not be duplicated in the overall
hierarchy of the WBS.

Approaches to Developing Work Breakdown Structures

There are several approaches you can use to develop a work breakdown structure. These
approaches include:

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Using Guidelines

The analogy approach

The top-down approach

The bottom-up approach

The mind-mapping approach

Using Guidelines

If guidelines for developing a WBS exist, it is very important to follow them. Many companies are
using guidelines and templates for developing WBSs, as well as examples of WBSs from past
projects. Providing guidelines help company to compare the contractors provided cost whether it
over cost or not. In this textbook, it mentions two examples such as U.S. Department of Defense
(DOD) prescribe the form and content for WBSs for particular projects and a large automation
project for the U.S. Air Force.

At the request of many of its members, the Project Management Institute recently developed a
WBS Practice Standard to provide guidance for developing and applying the WBS to project
management. This document includes sample WBSs for a wide variety of projects in various
industries, including projects for Web design, telecom, service industry outsourcing, and software

Project managers and team members should review information to fully understand and develop
their own project.

The Analogy Approach

In the analogy approach, you use a similar projects WBS as a starting point. Some organizations
keep a repository of WBSs and other project documentation on file to assist people working on
projects. Some software tools such as Project 2010, Visio, etc. help to create Gantt chart and WBS.
Comparing others projects WBS assist you to understand different ways to create a WBS.

The Top-down and Bottom-up Approaches

Two other approaches for creating WBSs are the top-down and bottom-up approaches. Most
project managers consider the top-down approach of WBS construction to be conventional. To use

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the top-down approach, start with the largest items of the project and break them into their
subordinate items. On the other hand, in the bottom-up approach, team members first identify as
many specific tasks related to the project as possible. They can aggregate the specific tasks and
organize them into summary activities, or higher levels in the WBS.

Mind Mapping

Mind mapping is a technique that uses branches radiating out from a core idea to structure thoughts
and ideas. Instead of writing and documenting, this allows people to write and even draw pictures
of ideas in a nonlinear format. This more visual, less structured approach to defining and then
grouping tasks can unlock creativity among individuals and increase participation and morale
among teams.

The WBS Dictionary and Scope Baseline

A WBS dictionary is a document that describes detailed information about each WBS item. The
format of WBS dictionary can be various based on the type of projects needs. The approved
project scope statement and its associated WBS and WBS dictionary form the scope baseline.
Performance in meeting project scope goals is based on this scope baseline.

Advice for Creating a WBS and WBS Dictionary

A unit of work should appear in only one place in the WBS.

The work content of a WBS item is the sum of the WBS items below it.

A WBS item is the responsibility of only one individual, even though many people
may be working on it.

The WBS must be consistent with the way in which work is actually going to be
performed; it should serve the project team first, and other purposes only if practical.

Project team members should be involved in developing the WBS to ensure

consistency and buy-in.

Each WBS item must be documented in a WBS dictionary to ensure accurate

understanding of the scope of work that is included and not included in that item.

The WBS must be a flexible tool to accommodate inevitable changes while properly
maintaining control of the work content in the project according to the scope
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Scope Verification
Creating a convincing and all-inclusive scope statement and Work Break Structure can be
challenging. Verifying project scope from time to time and mitigating scope changes as much as
possible can be even more difficult. It is crucial to coordinate milestones on your project and
periodically see how your progress is going on the project. Two main problems that projects suffer
from are poor scope verification and scope creep. Scope creep is basically when the scope of the
project keeps expanding and more tasks keep getting added as time goes on in the project, until it
becomes out of control. For example, FoxMeyer drug company had to file for bankruptcy after
their scope creep on a robotic warehouse got expanded too far. Another example is the
construction of a home. If you originally wanted a small house with wood floors, but along the
way you decide to add many extra things such as a pool, balcony, and greenhouse for your petunia
garden, clearly the scope is creeping way too far and the house will not get completed in a timely
manner. The main thing to remember is that scope needs to be constantly reevaluated during the
project to ensure that it is not creeping out too far beyond your original goals and that your
ultimate ends can be achieved in a timely manner.

Scope Control
Scope control involves actively managing changes to the project scope. There are several
important goals of scope control. First, it aims to make sure that any alterations to the scope are
made according to company policies. Second, it seeks to influence the factors that influence scope
changes, so we know which things can cause these scope changes. For example, if requirements
change, you should involve end users from the start. Other factors that may cause scope changes
are budget changes or running out of time or money. Third, it strives to manage changes when
they happen. Another key word related to scope control is variance, which is the difference
between planned and actual performance. Essentially, one would compare the redefined scope
with the originally planned scope to see the differences.

Suggestions for Improving User Input

There are several steps one can take to improve the input one receives from users. Good user
support is valuable because the project team needs that expertise available to them. Placing these
end users in influential roles on the project team is key to the projects success. Holding periodic,
regular meetings can help keep the project team abreast of what is going on, and allows the users
to approve certain key deliverables. On that same note, it is important to give some type of project
deliverable to the end users on a frequent basis, in order to get feedback on the work. Finally,
dont over promise to the end users and team up developers with users to provide optimum input
from end users.
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Suggestions for Reducing Incomplete and Changing Requirements
Here is some advice related to mitigating incomplete and changing requirements. Following an
established requirements management process helps to provide structure to the project, and
involving the users through methods like prototyping and JAD are key. Keeping detailed and
thorough documentation is also important. To manage this documentation, making a requirements
management database to be used for documenting and managing requirements could be helpful.
Conduct enough testing of the program or software along the way, if applicable. When reviewing
changes, look at them from a holistic systems perspective, since systems affect everything, even
think outside the system. Emphasize the significance of prompt completion dates in order to
prioritize tasks, and allocate project resources in order to adeptly handle project change requests.

Gold Plating in Project Management

One issue that commonly arises and can cause scope creep is something called Gold-Plating.
Jeff Atwood, the author of Gold Plating describes this practice as anything that adds unnecessary,
frivolous features or requirements. It may even be seen by some as having artificial value that
desperately tries to be something it is not. Oftentimes, gold plating will cause projects to
unnecessarily go over budget and exceed project deadlines. Gold-plating is not dissimilar to
attempting to add one too many cards to our already unstable card tower, and, just as the tower
may falter, so too can the project. This is precisely what can happen when disciplined
Requirements Planning is put to the side and the unrelenting delusion of perceived certain success
becomes the driving force of the project.

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There are two different kinds of gold plating that can occur during a project
1) Requirements Gold Plating
2) Developer Gold Plating

Requirements Gold Plating

Requirements gold plating occurs during the initial planning phase of a project. That is,
unnecessary requirements are piled onto the project. To avoid this problem during the requirements
phase, all areas of project management should be evaluated to determine what the most important
requirements are; however, the following five should be given special attention to ensure that the
goals of the project are realistic:

Stakeholder Management

Gold plating should really be left off the table in its entirety in the requirements planning phase of
the project. It should really only be considered once the project is well underway and can be given
a realistic and accurate estimate of the projects progress. After all, if something is considered
gold-plating, it is not required; it is merely an extra, unnecessary feature.

Developer Gold Plating

Developer Gold plating is slightly different than requirements gold plating and is much less
common. This type of gold plating occurs when the developers are actually creating and designing
the software and code of the project. Therefore, it is much more decentralized and up to the
individual working on the software. They may be simply trying to improve their own skills and try
out new coding techniques that will help their efficiency and effectiveness in the future. Therefore,
this type of gold-plating is much less of a risk, because each developer must still meet the deadlines
of the project.

Developer gold-plating is usually indicative of an employee who enjoys their work and is trying
to improve themselves, rather than the product. The gold-plating will come naturally as a by-
product of their strides to become a better software developer.

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Gold Plating Good or Bad?
Despite there being a general rule to avoid any and all gold-plating during the initial planning
phase, there are some cases where gold plating might actually improve the overall quality of the
product if the project is nearing its completion date with time and money to spare. Therefore, in
some instances (when project managers can be reasonably certain that their project is on schedule
and under budget), it can improve customer satisfaction and product quality when applied in the
appropriate areas. Additionally, developer gold-plating is often seen as a positive thing as it
improves the value of the developer (given that their focus is still on completing the project on

Scope Management Example

Managing project scope is about determining the limits to the project and how to meet the
requirements. You translate stakeholder requirements into goals to achieve and develop a work
breakdown on how to best get to those goals. You also set boundaries of what the project will not

Lessons Learned: Project Scope and Exclusions

Samer Kabbara, PMP, is a project manager with Davidson Consulting in Paris, France. In the
article, If Only I'd Known, Kabbara writes the following and cites a specific instance integrating
software for a telecom company:

On my first couple projects, I spent a considerable amount of time defining scope statement and
acceptance criteria without paying attention to project exclusions. Over time I realized that, as
important as it is to identify what is in the project, project managers should also ensure that all
items not within the project boundariesthose things that may otherwise cause confusion by not
being explicitly statedare described.

Things that seem out of scope for the project manager may not be for the customer or end users.
If it is not listed and shared at an early stage of the project, it might cost the project manager a lot
of trouble during project execution, by having to deal either with change management or with
unsatisfied end users or customers. I had to learn this on my own, but I wish someone had told me
to pay more attention to scope exclusions. They help you avoid difficult times and ensure a
stakeholders satisfaction.

Example: The building of a house for a family.

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A free-standing, single-family dwelling
o 2 story
o 3600 sq. ft.
o Brick finish
o Walkway from main home
o 2 story
o 1800 sq. ft.
Concrete Driveway
o Native plants
o Environmentally friendly

A sample of the work breakdown is below:

3. Project Execution
3.1. Lot preparation and clearing complete
3.1.1. Foundation excavation complete
3.2. Footings poured and set
3.3. Foundation poured
3.3.1. Block construction complete
3.3.2. Foundation set
3.4. Home and garage exterior walls placed
3.5. Roof set
3.6. Home and garage exterior closed to weather
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3.7. Driveway and landscape complete
3.8. Interior
3.8.1. Interior wiring complete
3.8.2. HVAC complete
3.8.3. Interior plumbing complete
3.8.4. Interior finish complete
3.9. Exterior

3.9.1. Exterior wiring complete

3.9.2. Exterior plumbing complete
3.9.3. Exterior finish complete
3.10. Walkthrough

Chapter Summary
Project scope management covers all the procedures necessary to ensure that the project achieves
the tasks it set out to achieve. Allowing the project bounds to veer out of control and promising
users too much can be a disaster for maintaining timely project completion. The key processes
covered include the following:

Scope planning
Scope definition
Work Breakdown Structure definition
Scope Verification
Scope Control
Ultimately, project scope management is a key component of keeping the project on track and
pleasing the end users and stakeholders. This skill is as applicable in project management as it is
in our personal lives as well.

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Chapter 4- Project Time Management


I like to do weird things in the shower, like drink my coffee, brush my teeth and drink
a smoothie. Its good time management. Michelle Williams

Time management is a challenge that every person faces each day. We all have 24-hours every day, so
why is it that some people are able to accomplish so much more than others? The answer comes down to
time management. Time management refers to how you organize and plan the time that you will spend on
each activity. One of the most distinguishing traits of successful individuals is deliberately planning how
they spend their time. In the next chapter, we will cover some of the many ways that project managers can
achieve proper time management in their teams that will allow the project to be most successful.

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Chapter 4
Project Time Management
Process describes how to monitor and control time spent within a project. It describes each of the
Time Management procedures step-by-step. By using this Time Process, we can control the
amount of time that it takes staff to build deliverables within a project, increasing your chances of
delivering "on time" and to schedule.
Fig. 1

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Fig. 1 Time Management Processes

The six Project Time Management processes are:

1. Activity Definition Activity Definition is a part of the planning process group. It identifies
the specific schedule activities which are performed to produce the deliverables.
2. Activity Sequencing Activity Sequencing is also a part of the planning process group. It
details interdependencies and dependencies among the scheduled activities.
3. Activity Resource Estimating Activity Resource Estimating is another process that is a part
of the planning process group. Activity Resource Estimating basically does what is name
defines it calculates the type and amount of resources required for each scheduled activity.
4. Activity Duration Estimating Activity Duration Estimating is also a part of the planning
process group. Activity Duration Estimating calculates the duration of time that will be needed
to complete a scheduled activity.
5. Schedule Development Schedule Development involves reviewing the activity sequences,
duration, and resource requirements to create the Project Schedule. It is a key component of
the planning process group.
6. Schedule Control Schedule control manages changes to the project schedule and is a part of
the monitoring and controlling process groups.

It is the project managers responsibility to continually update the Project schedule to have it reflect
accurate project activity. The six Project Time Management processes take place in the Planning
Process Group. It is essential that they are carried out accurately in order to obtain realistic costs,
resources, and schedules.


An activity or task is an element of work that has an expected duration, a cost, and resource needs.

Project schedules grow out of the basic documents that initiate a project.

The project charter including start and end dates and preliminary budget information.
The scope statement and Work Breakdown Structure.
Activity definition involves developing a more detailed WBS and supporting explanations to
understand all the work to be done and as a consequence aiding in realistic cost and duration

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An activity list is a tabulation of activities needs to be included on a project schedule, which
usually includes the activity name, an activity identifier and a brief description of the activity.
Activity attributes provide more information about each activity, such as predecessors,
successors, logical relationships, leads and lags, resource requirements, constraints, imposed dates,
and assumptions related to the activity.

Milestone charts are similar to bar charts but display only major events. They display major
milestones (for example bridge design completed). They are used to report status to Management.
A milestone usually has zero duration.


Activity sequencing is the identification and documentation of the logical relationships of schedule
activities. Schedule activities can be logically sequenced with proper precedence relationships and
leads and lags to support later development. Sequencing can be performed by using project
management software (automated) or using manual techniques or a combination of both.

Network diagrams are used to display activities and their dependencies. Network diagrams can
be used to perform critical path analysis. Network diagrams can also be used to perform crashing
and fast tracking of the project.

There are two types of network diagrams -

Activities on Node (or Precedence)

Activities on Arrow (or AOA)

Three types of dependencies are used to define the sequence among the activities.

Mandatory dependencies. Mandatory dependencies are those that are inherent in the
nature of the work being done and often involve physical limitations, such as on an
electronics project, where a prototype must be built before it can be tested. Mandatory
dependencies are also sometimes referred to as hard logic.
Discretionary dependencies. Discretionary dependencies are sometimes referred to as
soft logic. Discretionary dependencies are usually established based on knowledge of best
practices within a particular application area.

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External dependencies. External dependencies are those that involve a relationship
between project activities and non-project activities.


Estimating schedule activity resources involves determining what resources (employees,

equipment, or material) and what quantities of each resource will be used, and when each resource
will be available to perform project activities.

Some of the important questions to consider may be:

How easy or difficult will it be to complete specific activities?
Analyzing historical data to understand the particular organizations capability in
performing similar activities.
The availability of the resources in question.


The Activity Duration Estimating process requires that the amount of work effort required in
completing the schedule activity, the assumed amount of resources to be applied to complete the
schedule activity, and the number of work periods needed to complete the schedule activity is
determined. Two terms that come up often with regards to duration estimating are duration and
effort. Although they sound similar but they are essentially completely different in their meaning.

Duration includes the actual amount of time worked on an activity plus the elapsed time (i.e.
waiting on parts to arrive) whereas effort is the number of workdays or work hours required to
complete a task.

Three-Point Estimates
The accuracy of the activity duration estimate can be improved by considering the amount of risk
in the original estimate. Three-point estimates are based on determining three types of estimates:

Most likely. The duration of the schedule activity, given the resources likely to be assigned,
their productivity, realistic expectations of availability for the schedule activity,
dependencies on other participants, and interruptions.
Optimistic. The activity duration is based on a best-case scenario of what is described in
the most likely estimate.

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Pessimistic. The activity duration is based on a worst-case scenario of what is described in
the most likely estimate.
An activity duration estimate can be constructed using an average of the three estimated durations
which provides a more accurate picture than the single point estimate.
(Optimistic*.2) + (Most likely*.6) + (Pessimistic*.2) = three-point estimate


Project schedule development is an iterative process which determines planned start and finish
dates for project activities. Schedule development continues throughout the project as work
progresses taking into account the project management plan changes, and anticipated risk events
or identification of new risks. Ultimate goal is to create a realistic project schedule that can be used
as a basis for monitoring project progress for the duration of the project.

Important tools and techniques include Gantt charts, critical path analysis, critical chain
scheduling, and PERT analysis.


PERT is a network analysis technique used to estimate project duration when there is a high
degree of uncertainty about the individual activity duration estimates.
PERT uses probabilistic time estimates: Duration estimates based on using optimistic, most
likely, and pessimistic estimates of activity durations, or a three-point estimate.

The following formula is used by PERT -

Mean = (P + 4M + O)/6

Here P is the pessimistic estimate, O is the optimistic estimate and M is the most likely estimate.


Critical chain scheduling is a method of scheduling that considers limited resources when
creating a project schedule and includes buffers to protect the project completion date. CCM is
used for planning executing and managing projects in single or multi-project environments.

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A buffer is additional time to complete a task.
Critical chain scheduling removes buffers from individual tasks and creates two kinds of buffers:
A project buffer or time added before the projects due date.
Feeding buffers or time added before tasks on the critical path.

This method was developed to address the misuse of embedded safety(buffer) in the traditional
project management techniques. Some of those issues faced by Project Managers are:
Unlimited Resources - The CPM is an optimistic model that assumes that all resources
will be available throughout the project life span. This is not a practical assumption
Misuse of Float/Slack - Usually team members misuse the slack time provided in the
project plan by extending the work till the late finish
Activity completion Gain/Loss - In the CPM method if an activity is completed before
the actual finish date the project has to wait till the early start date of the next activity.
However, this does not happen in case of delays since if an activity is delayed it affects
the consequent activity and thus the entire project schedule.
Student Syndrome - Team members tend to delay the task till the last moment.

The critical chain is defined as the longest path in the network diagram which adds duration
buffers to time schedule considering resource constraints.


2 6

Resourc Project
Start 5 7 e Buffer 6 6 Buffer End


5 6
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Critical chain is Start -> C -> D -> E -> F -> End

Critical Path Method

Critical Path Method (CPM) is a network diagramming technique used to predict total project
duration. A critical path for a project is the series of activities that determines the earliest time
by which the project can be completed. Slack or Float is the amount of time a task can be delayed
without delaying the project. Tasks on the critical path have zero float.

GANTT Charts

Gantt charts provide a standard format for displaying project schedule information by listing
project activities and their corresponding start and finish dates in a calendar format.

Gantt charts are used to display tasks and their dates in a graphical fashion and track progress.
They are used to display information of the type task 1 is scheduled from date A to date B.
Typically the date range is displayed in the X-axis and the tasks on the Y-axis. Bar charts do not
show task dependencies.


Schedule control is primarily concerned with:

Determining the current status of the project schedule

Influencing the factors that create schedule changes
Determining that the project schedule has changed
Managing the actual changes as they occur.

Schedule Control: Tools and Techniques

Progress Reporting
The progress reporting and current schedule status includes information such as actual
start and finish dates, and the remaining durations for unfinished schedule activities.
Schedule Change Control System

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The schedule change control system defines the procedures by which the project schedule
can be changed. It includes the paperwork, tracking systems, and approval levels necessary
for authorizing changes.
Performance Measurement
An important part of schedule control is to decide if the schedule variation requires
corrective action.
Project Management Software
Project management software for scheduling provides the ability to track planned dates
versus actual dates, and to forecast the effects of project schedule changes, real or potential,
which makes it a useful tool for schedule control.
Variance Analysis
Performing the schedule variance analysis during the schedule monitoring process is a key
function of schedule control. Comparing target schedule dates with the actual/forecast start
and finish dates provides useful information for the detection of deviations, and for the
implementation of corrective actions in case of delays.
Schedule Comparison Bar Charts
To facilitate analysis of schedule progress, it is convenient to use a comparison bar chart,
which displays two bars for each schedule activity. One bar shows the current actual status
and the other shows the status of the approved project schedule baseline. This shows
graphically where the schedule has progressed as planned or where slippage has occurred.

Network Diagrams
Network diagram is a flowchart of activities and their relationships and how the project with
progress from start to completion [1]. It is the preferred technique to visualize activity sequencing.
They are widely used because they help visualize the project work, identify interdependencies
between activities and also simulate the effects of activity delays on the project duration. Based on
the project, network diagrams can be simple thus giving a holistic view of project activities or
could be complex enough to precisely monitor the progress of the project. Following is a simplistic
and generalized representation of a network diagram

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The network diagram is comprised of two entities, activity and duration represented as either a
node or an arrow. The arrow represents the relationship between the activities. Based on how the
activity is illustrated, there are typically two approaches to creating network diagrams.

Activity-on-Arrow is a diagramming technique that illustrates the activity as arrows and the
activity duration as a node. Activity-on-Node is a diagramming technique that illustrates the
activity as node and the dependencies as arrows. In modern days activity-on-node is the most
popular diagramming technique.

Network diagrams in a real-word situations be very complex to create and configure. However
there are some diagramming methods available to guide the project managers.

Precedence Diagramming Method (PDM)

Precedence Diagramming Method is the most common method of arranging the project visually
[1]. PDM follows the activity-on-node approach and thus represents the activities in boxes called
nodes and interconnects the boxes through arrows. The arrows represent the relationship between
the nodes / activities. Following is a sample PDM network that illustrates the use of nodes and
arrows to depict activities and relationship correspondingly [2].

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Tools like Microsoft Project provides feature to specify different type of dependencies. Consider
that are two activities A and B that the connected by arrows depicting the following dependencies
as illustrated the following figure [3].

1. Finish to Start (FS) The predecessor activity must finish for the successor activity to start.
2. Finish to Finish (FF) The predecessor activity must finish for the successor activity to
3. Start to Start (SS) The predecessor activity must start for the successor activity to start.
4. Start to Finish (SF) The predecessor activity must start for the successor activity to finish.

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Arrow Diagramming Method
Arrow Diagramming Method follows the Activity-on-Arrow approach to creating a network
diagram, thus the activities are represented as arrows and the nodes represent the start or end of an
activity. Unlike PDM, this method can only depict finish-to-start dependencies and hence cannot
illustrate all kinds of activity sequencing.

The method is fairly simple, where you start with a Node-1 and find all the activities that start at
that node. For each activity from Node-1, draw the finish nodes. The activity label and the duration
of the activity is marked over the arrow. The process continues with succeeding activities depicted
from left to right. A burst occurs when a node is followed by more than one activity, while a
merge occurs when multiple activity lead to the same node. The diagram is complete when all the
activities are incorporated as shown below [4].

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A GANTT chart is a horizontal bar chart developed as a production control tool in 1917 by Henry
L Gantt. It provides a graphical illustration of a schedule that helps to plan, coordinate and track
all the tasks in a project [5].

The GANTT chart provides a standard format for project scheduling using an activity list and a
calendar with its corresponding start and end dates. Consider the following sample Gantt chart
developed using Microsoft Project [6].

The left pane of the Gantt chart is the list of activities based on the Work Breakdown Structure
(WBS). The right pane is the calendar with bars depicting individual activities and the arrow
connecting the bars depicting its dependency. Thus it provides a graphical view of activity
sequencing with additional details like activity progress and milestones. Each activity can be
assigned to members of the project team and helps in tracking the individuals performance.

A Tracking GANTT chart illustrates a comparative view of the planned and actual schedule
information. The figure above is a tracking Gantt chart identifiable by the color coding of the
activity bars. The green bars indicate that the activity has completed on time or is progressing on
time, while the orange and red bars indicate the activity has been delayed. Project manager can
take corrective action by interpreting the chart. The activity delays can be fed into the Critical Path
diagram to determine if individual activity delays would delay the project finish date and corrective
actions like adding more resources or using buffer time could be undertaken.
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PERT Chart
A PERT chart is a project management tool used to schedule, organize and coordinate tasks within
a project. PERT stands for Program Evaluation Review Technique [6]. It is conceptualized by the
US Navy in the 1950s to manage the Polaris submarine missile program. It is primarily used when
there is high uncertainty over the estimates of individual activity duration. PERT is based on the
3-point estimate, factoring the optimistic, most likely and pessimistic estimates of activity

Critical Path
I believe that this nation should commit itself to achieving a goal, before this decade is out, of
landing a man on the moon..." - John F. Kennedy, May 27, 1961 On July 20, 1969, man put foot
on moon. Such a feat was possible only through immaculate production planning in which CPM
played its own important part.

Critical path method is an algorithm to schedule and manage set of project activities in a manner
such that a most efficient path to an end point can be achieved. Developed in 1950s by Morgan
R. Walker of DuPont and James E. Kelley, Jr. of Remington Rand arising out of a need to manage
defense projects, the method has found its way into mainstream usage.

With CPM one can analyze and estimate the time project will take for completion. It also helps
identify the activities that are critical, an activity being critical if a delay in its completion causes
the whole project to take longer time for completion. The CPM technique is not unique to IT
projects but can be used for projects in areas like research projects, construction, engineering, plant
maintenance etc.

An activity is a task in WBS (Work breakdown structure) which has a name, cost and the time
required to complete it. Following points list out the steps to carry out CPM analysis.

Identify the individual activities. Use WBS to identify all the activities in a project.
Determine the sequence of activities i.e. the predecessor and successor of each activity.
This analysis actually establishes the dependencies of each activity. There are three types
of dependencies
o Mandatory Dependencies These dependencies are inherent in the nature of work
being performed, for e.g. operating system installation, server purchase.
o Discretionary Dependencies Also called soft logic, this dependency is based on
business knowledge, best practices and is determined by the project team.

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o External Dependencies Deals with relationships between non project and project
Following diagram depicts the 4 types of dependencies

Draw the network diagram. A network diagram is a graphical display of all activities in a
project arranged in a manner which exhibits the logical relationships between them. In
other words the activities are arranged as per the dependencies.
Estimate the time each activity will take to complete. Based on previous projects experience
or common knowledge, the time to complete each activity is estimated and the network
diagram is updated with it. See diagram 1.


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Determine the critical path (longest path in the network). Critical path is the longest path
in the network diagram. To obtain a critical path, the network diagram is analyzed and all
the paths starting with the first activity and ending with the last activity of a project are
identified. Then for each identified path obtain the sum of the time required to finish each
activity on the path. The path with the highest sum is then the critical path. There can be
multiple critical paths in a project and the critical paths can change as the project
progresses. A critical path is named so because a delay in completion of any activity on it
results the whole project being delayed. To identify critical path, one needs to understand
the following four parameters of each activity
o ES earliest start time: the earliest time an activity can start provided that its
precedent activity has been completed first
o EF earliest finish time: this is obtained by adding the time required to complete
the activity with the earliest start time.
o LF latest finish time: the latest time an activity can be finished without delaying
the project. Equivalent to ES except that this value is obtained on scanning the path
from finish to start.
o LS latest start time: this is the difference between latest finish time and time
required to complete the activity.
o Slack time is the time difference between earliest start time and latest start time.
This is the time an activity can be delayed without affecting the project completion
date. Activities on critical path have slack time as 0.
Update the diagram as the project progresses. As the project starts and progresses, the
actual time required for completion of activities are revealed which can then be used to
update the network diagram. There might be some changes if the requirements change
midway through a project.

How to determine critical path: Consider the following network diagram

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Path 1: ABEHK
Length = 2+2+2+2+2 = 10 days
Path 2: ABEIJK
Length = 2+2+2+5+1+2 =14 days
Path 3: ACFHK
Length = 2+3+3+2+2 = 12 days
Path 4: ACFIJK
Length = 2+3+3+5+1+2 =16 days
Path 5: ADGJK
Length = 2+4+6+1+2 = 15 days
The critical path is Path 4: ACFIJK with total path duration equal to 16 days.

How to determine total slack and free slack: Before we start with the calculation, we will go
through few important definitions and formulas. Also, assume an activity i of a network diagram.
Free slack is the total amount of time an activity can be delayed without delaying the early start of
next activity.
Free Slack i = Minimum (ES)all successor activity of i ES i Duration i
Total slack is the total amount of time an activity can be delayed from its early start without
delaying the planned project due date.
Total slacki = LFi - EFi = LSi ESi
Forward pass- It determines the early start and finish date. It is similar to top down approach.
Backward pass- It determines the late start and finish date. It is similar to bottom up approach.
We have taken an example here:

Path 1: ABCF: 22 Days

Path 2: DEF: 14 Days

Path 3: GHIJ: 18 Days

Path 4: GJKIF: 23 Days Critical path

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Step 1: Calculate ES, EF for all the activities/task: We follow forward pass method here i.e. we
will start from the left most activity, move in rightward direction and go till the last activity.

a) By convention all the tasks in the start have ES=0. In here ES=0 for tasks A, D, G.
b) EFi = ESi + Durationi ; In here EFA = 0+4 = 4
c) ES for rest of the activities, other than the ones in the start, is equal to the EF of the task
previous to it. For example, here ESB = EFA = 4
d) Whenever there is a merge then ES of that task is equal to the largest EF of activities that
are part of the merge. For example, tasks H & K are merging in task I, so ES I can be equal
to EFH (7) or EFK (12). Since the largest of the two is EFK, ESI = EFK = 12
e) Follow step a-d to complete the EF and ES for all the tasks.

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Step 2: Calculate LS, LF for all the activities/task: We follow backward pass method here i.e. we
will start from the right most (last) activity, move in leftward direction and end at the first activity.

a) LF of the last activity is equal to its EF. In this example LFF = EFF = 23
b) LSi = LFi - Durationi; In here LSF = LFF DurationF = 23-6= 17
c) For rest of the activity, LF is equal to the LS of the task next to it. For example, here
LFE = LSF = 17
d) While tracking back if we find a burst then LF of that task is equal to the minimum EF of
activities that are part of the burst. For example, tasks G is bursting into H & J here, so LFG
can be equal to LSH (7) or LSJ (2). Since the minimum of the two is LSJ, LFG = LSJ = 12

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Now we have ES, EF, LS and LF for every activity. We can use them to calculate free slack and
total slack for individual tasks.
For example:
Total slack for D = LFi - EFi = LSi ESi = 9-0 = 12-3 = 9
Free slack for G = Minimum (ES)all successor activity of i ES i Duration i
Minimum (ES)all successor activity of G = Minimum (ESH , ESJ) = Minimum (2,2)
Therefore, Minimum (ES)all successor activity of G =2
ES G = 0
Duration G = 2
Free slack for G = 2-0-2= 0

Similarly, we can calculate free slack and total slack for all activities.

Activity Free Slack Total Slack

A 0 1
B 0 1
C 0 1
D 0 9
E 9 9
F 0 0
G 0 0
H 5 5

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I 0 0
J 0 0
K 0 0

Points to note:

a) Free slack is always less than or equal to total float

b) Total slack for critical path is always zero
c) Free float has nothing to do with project end date
d) If the float is negative then project manager should consider compressing the schedule.

Schedule Shortening: There are three main techniques to shorten the schedule using the critical
path. The techniques are mentioned below

Shortening- Achieved by adding more resources or changing the scope of activities.

Crashing This is process to speed up the project execution by compressing the total
project duration. Each compression in the time of an activity incurs some cost and trick is
to obtain the greatest compression with least cost.
Fast tracking this technique involves execution of activities in parallel.

Time Management Issues

As projects, have increased in scope complexity, many project companies are outsourcing the work
to Asia and other countries, where labor costs are lower than in the United States. In India alone,
the offshoring industry was estimated at $60 billion by 2010 (Carmel). Global work presents many
advantages and challenges. Not only are costs minimized, the quality of work remains high. With
a global workforce, the outsourced project teams are working in separate time zones than their
client. This can lead to delayed communications, which severely affects the time element of
project management. Due to the time discrepancies, additional costs may be required to coordinate
the project team and the client. While offshoring has many benefits, project teams must consider
the additional time constraints related with these activities.

Time Zone Differences

Indias time zone is UTC, +5:30, whereas the United States ranges from UTC, -5:00 to -8:00. This
means that at any given time, India is between 9 and 12 hours ahead of the United States.
With this dis-coordination, the gap is larger than 8 hours, or a typical work day. This means that
when the Indian teams are working, the American clients are sleeping, and vice versa.
Coordination, updated project status, and feedback are key elements of project communication that
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need to be discussed daily. However, when one team member is not at work when the others are
finishing up their workday, the project must rest at a standstill. Instead of calling or
videoconferencing, the project updates must be emailed, which are then read several hours later.
The emails are responded to, but due to the time zone differences, they problems are not addressed
until the next day. The complete status, feedback, and response cycle takes 3 whole days of
duration to complete, versus the one day of coordination seen in projects that exist in only one
time zone. Global projects, while result in cheaper labor costs, also include multiple coordination

Delay costs
o These costs occur when the work must stop at the end of the Indian work day and
cannot be continued until the American work day begins several hours later. After
the American team responds to Indian inquiries, the inquiries cannot be reviewed
until the Indian workday begins again. Rather than several hours of waiting, the
delays are compounded.
Rework costs
o When initial expectations are misunderstood due to poor communication between
the client and the offshore team, the project must be corrected and fixed. Often
times the communication is limited to email or other text, which limits the depth of
what is communicated. These lacking email lead to miscommunications, and
subsequently, rework costs.
Set-up costs
o Often times, a project delay is a minimum of 3 work days, which includes the initial
work, the feedback, and then the response. During this time, the project work will
be discontinued and then must be restarted after 3 days. The cost to re-start the work
that was delayed leads to set-up costs.

Overcoming Time Differences

Companies such as Infosys and Tata Consultancy Services are the major providers of I.T. services
from India. These are the companies which have a plethora of clients in Europe as well as Northern
America. While managing the time difference with Europe is manageable, the time difference, as
discussed in the previous section, is more than 9 hours with the Northern America. Due to this
chasm, there were a couple of costs involved because of these differences.

These costs were broken down to three major costs:

1) Delay Costs: As one person/team is waiting for the other one to begin the work next day,
there is often a compounded delay as the previous communications were asynchronous.
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2) Rework Costs: As stated in the previous point, a communication gap leads to a task not
completed as it should have been and these errors needs to be corrected. This cost is the
production cost of fixing the error.

3) Setup Costs: Any task that is deferred or delayed due to time difference leads to the person
failing to remember how that particular task was to be accomplished. This leads to a
relearning cost and time which come under the Setup costs umbrella.

We have several IT projects outsourced to other countries, project management offices site
numerous reasons for doing so. The chief reason for doing so being the diverse range of skills
available via outsourcing, which otherwise isnt accessible or is too niche in the local market.
Firms specializing in providing IT solutions have a wide pool of resources and individuals for
carrying out the work, making it a much more viable option to training and hiring newer staff for
that skill.

Another reason why projects are outsourced is the cost factor. IT projects are typically outsourced
to Asian countries, the most significant being India because of the large difference in the cost for
implementation. Labor is relatively inexpensive in these countries, making them a prime choice
for outsourcing projects.

But as project work progressed, companies soon realize the over-head costs associated with
outsourcing these projects:

There are differences in working hours of the two countries, for example the time zone in India
(GMT + 5:30) has almost no overlap with that in the United States. This has led to error unexpected
hindrance in the execution of the projects. There is very less communication between the project
teams handling the tasks. As a consequence, the developments that are made are often not up to
the expectations or are made keeping certain other assumptions in mind which were not discussed
efficiently using the formal documents used for communication.

A solution to this is sending the entire development team over to the project location, which
effectively will eliminate the problem of communication. But that again will result in other
unexpected costs, and these extra costs will deter one of the primary reasons why the project was
outsourced in the first place: lower costs.

Then there is a school of thought which emphasizes the fact that these time zone differences are
essentially a good thing and can be leveraged in advantage for the organization. Organizations can
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adopt the mantra of follow the sun, wherein work is carried out round the clock resulting in a faster
project execution. The team at client site works on the project during their work hours and then
the off shore team takes the work from them once their work day begins. This allows work to be
done round the clock.

But even this approach has several problems of its own. The chief one being ineffective
communication between the two teams. In fact, it may so happen that the work may actually suffer
if one team tries to take over a partially done task from the other team. Effective communication
via proper documentation and other protocols is a factor for the success of such an approach.

And again, it is not possible to totally outsource the IT project work in such a fashion, even though
it alleviates the situation to some extent! This leaves us to wonder whether or not there is a
recommended or right approach in the books of project management to handle outsourced

Although it would be difficult to formulate recommended approach toward managing time zone
differences, there are several case studies that describe how organization based in one part of the
world have effectively handled projects for companies based on another end and tackled the issue
of time zone differences pretty well. One of the first companies to implement these methodologies
is Infosys an Indian IT giant with delivery operation in India and across the world.

The Infosys case demonstrates a balance between organizational culture solutions and process
solutions. Importantly, Infosys has nurtured an organizational culture in which employees see
themselves in a global firm covering 24 time zones. One of the solutions, the liaison, is called the
onsite coordinator at Infosys. This person bridges the client site and the India-based engineering
staff. An advantage of time zone differences is follow-the-sun work. But at Infosys, it is used

Elaborating and summarizing each of them further:

Organizational Culture

Time differences cannot be changed, but the approach an organization takes to tackle it can
certainly be altered! Infosys has fostered an environment where its employees proudly go the extra
mile in accomplishment of project and organizations objectives. Instead of adopting a regular
workday, the employees are expected to work extra hours including weekends. This culture can
be seen throughout all employees who say its in their genes. From the very beginning, they are
oriented toward this culture and they exhibit commitment to be a valued Infosys employee. Infosys

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as an employer accommodates for the truly global nature of its employees work by providing key
facilities such as start-of-the-art campuses that never sleep equipped with cafeteria and
conducive environment for employees who work odd hours.

Infosys has modified the manner in which they conduct business with their clients; following a
waterfall, phase-based approach. Infosys begins project work at the onshore location with
requirement gathering. The liaison directly interacts with the client which allows them to
understand the business scenario and develop the solution accordingly. Following that, the project
is offshored for design, coding, and early testing.

Following these phases, the project is returned to the client location and further testing and
integration are conducted. Time zone differences are overcome by weekly meetings and status
reporting. The weekly client meetings are held in real-time, either in person or via audio
conference. Status reports are sent to all project members, whether in India, the United States, or
elsewhere in the world. These reports include updates for the project through detailed
documentation. These two methods are intended to keep everyone informed of the project and any
changes that must occur.


Contrary to how other service delivery firms were functioning, Infosys came up with a process
called Global Delivery Model which facilitated delivery of services by keeping the majority of the
workforce offshore. Through its standardization model, Global Delivery Model (GDM), Infosys
ensures optimum and minimum use of onsite resources. The tasks from the clients abroad are
systematically routed to the development team in India. GDM ran on the principle of dividing the
work among onsite, onshore and offshore. This meant that some Infosys team members were onsite
with client, a few others at the proximity centers and lastly a team at offshore delivery center which
was largely in a different country, here India. Once instantiated by Infosys, this was soon
inculcated in by all the service delivery firms.

Additionally, Infosys also attained the highest level of Capability Maturity Model, level 5, and
aligned it with its GDM. Such strict adherence to processes enabled a phase-based offshore
development model with minimum dependencies on other entities. Such an approach greatly
helped tackle the problem of time zone differences.


Infosys also employs technology to tackle the issue the issue of time zone differences. The

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organization makes use of technologies like video conferencing and instant messaging. Besides,
they have two internal applications, a methodology suite and a scheduling and estimation suite,
which help alleviate the time difference problem.

In a world that is becoming increasingly more global, we must learn how to work in a global
society. This includes managing time zone differences that exist all over the world. Although time
cannot be stopped or changed, many companies are increasingly working to mitigate differences
through special programs and processes.

Following the Sun Methodology

Follow the sun methodology was initially developed to provide round the clock customer service
using a global development model. This methodology has now been widely accepted around the
globe by a large number of IT companies. Follow the sun model exploits the time zone differences
around the world to get work done faster than usual by working on it 24 hours a day for 7 days of
the week. For example, you can reduce the project duration by a factor of two by having a project
team in North America hand over the work at the end of its workday to their counterparts in India
or China which are around 12 time zones apart. The team members in India or China can work
over it while the Americans sleeps and hand over the work to the Americans at the end of their
workday. In order to do this, all the work needs to be properly coordinated. Additionally, if three
teams are correctly located around the globe, then a threefold reduction is possible.

Earlier, it was thought that follow the sun methodology is suitable only for large companies.
However, this method can be scaled down to achieve a specific goal. In order to determine whether
the 24x7 model is suitable for your business, you need to ask the right questions. You need to
evaluate when your customers need you the most and how will you meet their needs where they
are. You also need to check if you can do with setting up a single remote office in the location of
your customers time zone, have your representative work at the customers office or need to set
up multiple offices at areas in various different time zones over the globe.

There are many tools and techniques available to help provide round-the-clock customer support.
Dashboards can be used to provide a global visibility to the issues and status updates throughout
the project. Collaboration tools like Google hangouts, Slack can be used to facilitate instant
conversations among teams over the world. Using these tools, you can virtually follow the sun and
keep yourself updated with the teams progress.

Infosys originated the term Global Delivery Model (GDM) in the late 1980s. As part of this model
Infosys started to have more project staff offshore in India and adopted the following three policies.
First, to improve the process maturity by using CMMI, second improving the GDM process and
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third to make the campus comfortable to work after hours. In contrast to the CMMI model with
hundreds of pages, GDM is a rather loose model that uses the concepts of task allocation, project
structure and governance. However, this model had its own problems mostly arising from time
zone differences. Also, there were coordination costs involved due to the time zone differences.
These costs were divided into three types:

Delay costs These costs are incurred when one location is waiting for response from another.
Usually these increase because of unclear and asynchronous prior communications.
Rework costs These costs are incurred when an error made by one location has to be fixed
by another due to improper understanding of the issue transitioned.
Set-up costs Costs incurred by delays due to time taken to learn or re-learn a task.
Infosys has tried to overcome these problems via organizational culture, adopting new processes
and utilizing ubiquitous technologies.

Following are the solutions practiced by Infosys to tackle time zone problems:
24-hour awareness Employees are taught about being in a global organization and adjusting
to time zone differences of the clients.
Time flexibility Employees are expected to be flexible with their time to adjust with the needs
as they work long hours. Technology plays a vital role here with mobiles and home laptops
facilitating this culture.
24-hour work environment To facilitate a work environment that works for 24 hours the
company has to create an environment in which the employees are comfortable to work in.
Facilities like transportation, food, security, etc. are some of the requirements.
Liaison This is usually a manager who acts as the middle man between distant geographic
locations. He is a person who is the link between the client and the organization back in his
country. Due to time zone differences the liaison heavily relies on real-time channels that is
mostly VOIP.
Allocation Work breakdown and schedules are planned in a way so that the dependencies
among different time zones are kept to a minimum.
Status reporting Due to time and cultural differences it is high likelihood of
misunderstandings. Routine project reports help in reducing coordination mistakes.
Meetings Having a routine and periodic, real-time meeting helps in proper coordination of
employees across all locations.
Escalation protocols Following a clearly defined escalation protocol helps in proper direction
of message to the right person on occurrence of problems.

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Methodology-embedded technology suites Integrated suites and tools help in proper
structuring of data preventing it from scattering and helping in easy query.
Awareness technologies These technologies helps to keep track of individuals availability,
location, their current work etc. Some examples include personal calendars, specific time zone
calendars, schedules for holidays for that location etc.

Why Infosys does not follow this approach

Infosys is not an Independent software vendor, the work culture is more phase-based and not as
amenable for acceleration as ISVs or software product firms. ISVs are driven by the pressures of
technology innovation cycles which shorten their time-to-market. The follow-the sun-approach
requires a flawless co-ordination throughout the entire life cycle of the project. ISVs are more
inclined and suited for follow-the-sun approach since they are smaller, less complex and have few
resources, thus fewer organizational dilemmas. Small delays due to miscommunications and
clarification mails etc. does not affect the functionality of Infosys to a great extent. Additionally,
the time-to-market goals are not as acute. In Infosys the employees already have a culture of
working extra hours and hence even without follow the sun there is some duration reduction.

Infosys follows the 10 solutions of the clock framework differently than the ISVs, they have
customized it to their needs and requirements, for e.g. ISVs give more importance to awareness
technologies which is not the case for Infosys. The success of Infosys has been mainly advocated
by the accuracy and efficiency of work performed, thus, using the follow-the-sun approach,
maintaining a CMM level 5 and reaping the benefits of low-cost offshoring at the same time is not
possible for Infosys. Hence, follow-the-sun approach cannot be considered as a routine
methodology at Infosys, however certain activities and phases of the project can employ this
approach to attain maximum benefit.

In a world that is becoming increasingly more global, we must learn how to work in a global
society. This includes managing time zone differences that exist all over the world. Although
time cannot be stopped or changed, many companies are increasingly working to mitigate
differences through special programs and processes.

Managing Global Projects

Revolutions in technology have made the world more well connected than ever before. Expanding
globally is one of the success stories of almost all reputed companies. Technology help companies
to have dispersed teams across the globe and strategize company's growth. Well, managing global

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projects is not a technological challenge anymore, rather it is an artistic challenge. The crunch in
managing global projects is maintaining discipline among global teams as well as leveraging over
the unique features of the disparate teams. An efficient global team would overcome the following
challenges between them to pave way to the success of the project:
1. Time-zone and geographical differences
2. Political and jurisdictional issues
3. Language and culture
4. Right sourcing
5. Communication
6. Process discipline
7. Stakeholder engagement

There are various underlying methodologies that are practiced by successful firms to overcome
these challenges. We discuss these challenges and the mitigating practices as we move forward in
this chapter.

How to manage global teams efficiently?

Identifying right team players:

Having team members with right attitude and skills help maximize the output of the global teams.
They should be self-motivated and should be able to work independently. Good communication
skills help teams to interact efficiently.

Define team goals clearly:

It is essential that the teams around globe has common goal. It is the responsibility of the manager
of the teams to make sure all the team members have a clear picture of the purpose of the project.
A team charter is a good method to achieve this.

Develop strong team dynamics:

Getting the relations up well within the team members is a great accelerator of the teams success
although it is a challenging task. Working with remote workers, the trouble between the team
members cannot be understood by their body language. Their actions account for their problems
with the team. Indicators such as reduced output, short and abrupt emails, shortage of new ideas
are a few ones which reflect the friction among team members.

Rewards and Recognition:

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Knowing your team members helps you to stay in touch with your team members and keep their
working spirits up. Identify the culture and traditions of your teams across the globe and recognize
their culture. Offer feedback to individual team members and give useful tips to them. Reward
individuals with incentives for their achievements and ensure that the rewards are equal.

Follow-up and flow of work:

Working at different time zones have the advantage of running the business throughout the
day with a team on the other side of the planet. However, the issues with handling work and
information's needs to be organized globally. Setting up catch-up calls, using cloud sharing
services and developing abilities to resolve technical issues by teams round the clock are few of
the good practices for successful global team work.


Managing global team is one of the challenging tasks in project management but with the
evolution of many global teams in the past decade or two, the successful teams have formulated a
good number of ground rules to ensure that the throughput of the global teams is maximum and
beneficial. One classic example is the Global Delivery Model of the IT outsourcing giant Infosys.
Infosys incorporated follow-the-sun model with liaisons at all working time-zones, preferably at
the client locations to ensure that the business is smooth and the flow of information is uniform.
With the availability of skilled human resources at remote locations, many companies are now
looking for captive centers outside the country, at different time-zones for cheaper and efficient
solutions. These guidelines would stand as a blueprint for their successful teams at the new
development centers.

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Chapter 5
Project Cost Management


Beware of little expenses. A small leak will sink a great ship. - Benjamin Franklin

Project cost management is one of the most critical responsibilities of a project manager. In order for the
project to be considered a success, it must stay within a reasonable variance of the established budget. In
the next chapter we will learn a number of tools that a project manager can implement to keep the project
within the budget. Lets find out what the process of managing project expenses is and what techniques
are available to project managers.

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Chapter 5
Project Cost Management
The process of monitoring and controlling the project so that it stays within the planned budget is
called project cost management. Project cost management involves four different processes that
interact with each other as well as with the processes in other areas of project management.

These processes are:

Resource Planning: the process of determining the resources and the quantities of it
required to perform project activities
Cost Estimating: the process of developing an estimate of the costs of each of the resources
that are being used in the project
Cost Budgeting: dividing the budget and allocating them to the different project activities
Cost Control: processes that have been set up to continuously track changes to the project
Cost Management is an integral aspect of project management and a critical factor in deciding
whether a project is successful or not. Each activity has some resources involved with it, and those
resources come at a certain cost. Planning these resources and estimating the costs involved is the
first step. Second is making sure that as and when these project activities are performed, the
resources and their costs are monitored and controlled in order to prevent the project from going
off budget.

All the above mentioned processes form a part of project cost management. Although these
processes may seem distinct and independent of each other, in reality they easily overlap and
during execution, these processes interact with each other in more ways than obvious.

In many areas, the cost management is included into the overall project scope whereas in some
cases this is done from outside the project by an independent financial management body that
specializes in related tasks.

Resource Planning
Resource planning is the process of determining what resources are needed for executing teaches
of the project activities and also estimating the quantity of these resources involved. In order to
plan the resources, some of the perquisites are:
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Work breakdown structure that clearly breaks down the entire project and lists out the
smaller activities or deliverables that need to be executed. Clarity in WBS helps to
accurately estimate the resources needed for the project and thereby calculate the costs
associated with it.
Project reference helps in comparing the current project in hand with similar projects that
have been executed in the past
Project scope statement contains the project objectives, which is needed during resource
Knowledge of the resources that are available is necessary for resource planning.
Organization Policies regarding human resource, purchase and rental of equipment and
regarding other aspects of resources used in a project, must be considered during resource
Estimate duration involved in carrying out the project activities
The tools and techniques needed for efficient resource planning include:

Judgment to identify and assess the inputs that will go into the process is important is
provided by the expertise of a group or an individual with specific knowledge or training.
Such expertise is available from different sources such as:
o Other departments or teams within the organization
o Consultants
o Professional and technical associations
o Industry groups
Identify alternate resources so that in case of a resource not being available, it can be
substituted with another similar resource. Once these alternate resources are identified, the
additional cost associated with the project in case of a resource failure, can be estimated
and accounted for.
Use of project management software in order to manage the resources and the project
activities being carried out by them.
The resource planning process leads to an understanding of all the resources that are involved in
the project and the capacities and capabilities of each of these resources. In cost management, the
resource planning process is one of the starting steps and plays a significant role in deriving the
project budget.

Cost Estimating
In cost estimating our main goal is to determine cost that would be incurred during each phase of
project lifecycle. We can use Work Breakdown Structure to allocate cost for each phase; we should
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make sure that we take care of all the risk factors that are involved while doing cost estimation.
Cost Estimation should be done in a manner so that it covers all the possibilities and risks that may
arise in future. There may be a lot deviation and variation from the initial planned cost, its
imperative that the cost estimate covers all the variation in cost.

While doing cost estimation we may outsource some part of our project to reduce the cost.
Outsourcing helps in reducing the cost. Value of a project involves its estimating its business
benefits, if a project is high on return then its value is kept high. To lower the cost, organizations
outsource some part of their work which reduces their overall cost. Therefore, based on business
benefits, an organization estimates total cost of the project.

While implementing projects an organization has to analyze all the phases whether more time in
analysis and design phase will result in lowering the overall project cost. We have to analyze the
impact that each phase will have on overall project and based on this analysis we should decide
how much time and cost to invest in each phase. By doing this we can effectively control the
overall project cost.

There are various factors based on which we have to decide the overall project cost, below you
can find some theses factors :

1) Work Breakdown Structure: we need to have work breakdown structure in order to

estimate cost in each phase. WBS gives complete idea about each phase of the project and
after doing proper analysis on effort and resources required in phase we can allocate
appropriate budget to each phase.
2) Project Duration: While estimating the total cost, the duration of the project plays a major
part, a longer project indicates a complex project hence more cost where as a short duration
indicates a simple project which can be implemented at a low cost.
3) Resource Estimation: We have to aware about the resources that would be required during
each phase of project. For example, more business analysts are required during analysis
phase than in testing phase. Similarly, more developers are required in development phase.
4) Resource Cost: We have to cost of using service of each resource. This can be in an hour
or weekly. Based on this rate we can calculate total cost of the project.
5) Risk Factors: While estimating total cost of the project, we have to keep in mind the risk
factors like project overrun , over scope and formulate a plan how our budget in going to
cater these risk factors .
6) Hardware and Software Cost: While implementing the project there are various external
costs like hardware and software require while executing the project, having these
estimates early on gives a brief idea about these external costs.
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7) Outsourcing: To lower the costs, organizations outsource some part of their project to
contractors. Organizations have to decide beforehand the part they will outsource and its
impact on overall cost, keeping security aspect in mind.
8) Vendors Management: There are many vendors involved in the project who provide
various tools, services to the project. Appropriate vendor selection is a crucial aspect of
costs estimating.
9) Currency: Generally, USD is used as a standard currency when doing costs estimation,
however European currencies and some organization prefer their local currencies while
doing costs estimation.
There are various ways in which we can calculate the total cost that will incur in the project;
some of them have been discussed below:
1) Top down Estimate: In this approach, we have the total cost that would be incurred in
the project and then we allocate cost to each phase based on resource requirement and
scope of the phase, since we already have total cost and then break it down in each phase
its called Top Down Estimation technique.
2) Bottom Up approach: In this approach, we calculate cost that will incur in each phase
and sum up the total to calculate the total cost of the project, since we first have to allocate
cost to each phase and then come to total cost its called Bottom Up approach.
3) Parametric Technique: This technique uses mathematical model either complicated or
simple to calculate the cost estimation.
4) Using Computer Software: There are numerous computer software available in the
market which can calculate total cost that would incur in a project.
After the cost estimation, has been done the organization would have these results related to cost
1) Cost Estimated document: A cost Estimated document would contain all the
information about the total cost incurred, cost in each phase , resources required in each
phase and costs of these resources
2) Cost variance plan: Cost variance plan gives idea how an organization is going to change
its plans keeping in mind various risk factors involved in the project.
In order to understand Project cost management, we have to analyze why we are using the project
cost management. We all know that cost is one of the most deciding factors which managers make
their decision on about whether to start the project or not.

These are some of the important aspects which the output of project cost management answers

How to Maintain and Analyze Project Profitability?

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The managers want to know whether the project will be worth the investment or the project costs
more than the returns expected from the project

Will the cost of the project be under the budget or there are chances of the cost overrun?

How to Gain Total Control on Time and Costs by Analyzing Real Time Information?

The project cost management also helps tracking the cost of the project in the real time that is we
can adjust the costs based on the actual and expected costs anytime and therefore better manage

How to Maintain Project Cash Flow?

The Cash flow is also very important in the big projects because the company generally finances
the required money from the bank or other stakeholder. In order to take the bring the cash at the
right time it is required to have a projected cash flow. This can be answered by the project budget.

Cost Budgeting
Cost Budgeting is the allocating the cost estimates to the individual tasks to prevent the cost
overrun of the project. The cost budgeting prevents the cost overrun by taking into account the
variances which can occur in the project. Ideally the estimates should be done before the approval
of the budget.

Cost baseline

The cost budgeting produce a cost baseline which helps us to monitor the performances based on
the estimates. From the cost budgeting we can also check the cash flow arrival and the required
spending tin the project which helps to manage our cash better.

There are various documents required to produce an effective cost budget. Some of these are

Work Breakdown Structure: Work Breakdown Structure divides the entire project into the
individual tasks so that the cost can be allocated to each of them.
Project Schedule: The project Schedule tells us about the project start date and the end date.
The project helps to estimate the cost based on the time required for each activity.
Risk Management Plan: the risk management plans helps us to know about the various
risks which can occur in the project that helps to better budget the cost for each tasks.
Tools Required

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There are various tools we can use to produce a cost budget such as the project management
software, excel file etc.

Cost Overrun

The increase in the cost of the project from the actual budget due to the various factors such as
underestimation of the project requirements, inefficient workforce, increasing the time of the
project. Despite the various efforts taken to prevent the cost overrun they are very common in the
IT projects due to the following reasons

Requirement of the project change overtime

Stakeholders are updated regularly about the status of the project which increases the
chances of scope creep and thus increasing the cost of the project.
The time required for the project is not estimated correctly which increases it costs

Cost Control
The final process of cost management is cost control, and is perhaps the most difficult to maintain
effectively. Most companies have experienced issues with controlling costs, and to this day it
remains a problem point for many project managers. In fact, according to The Standish Group, 53
percent of software projects will exceed their cost, schedule, or scope constraints by an average of
189 percent. Even the most robust project budget can be rendered useless by contingencies that
are not properly monitored and controlled. Variances from the cost baseline, both positive and
negative, are inevitable in the project execution stage; project cost control is the process of
observing, recording, and managing these changes, using tools and techniques appropriate for the
task. In addition, the process involves managing internal change requests and external change
effects over the course of the project, as well as issuing continually revised cost estimations based
on those changes. A comprehensive change management plan is crucial to successful cost control.

Cost control is completely dependent on preceding processes to determine changes in project cost,
scope, and time estimates. The more accurate these inputs are, the more effective the methods
utilized by this process will be at controlling costs. The inputs to project cost control are:

Cost Baseline: The same baseline developed during the cost budgeting process. It is used
as the point of reference from which all progress is compared to and performance is
Work Performance Data: To measure the use, progress, and performance of
organizational assets, functional information at each key pivot point is needed. Data
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harvesting methods should be in place at any point where resources are used or costs are
Performance Reports: Periodical updates in the form of written reports or review
meetings. They are most useful when used with appropriate performance measurement
Change Requests: Any input that will alter the cost baseline estimate is a change request.
All change requests must be managed by a change control system.
Cost Management Plan: Developed during initial cost estimation, the cost management
plan outlines the procedures and guidelines for managing project cost variances.
Because cost control occurs during the monitoring and controlling stage of the project life cycle,
this process requires and relies on information from previously developed outputs. A clear, well-
defined scope statement contributes greatly to the ability of this process to control costs. The first
step in the cost control process is developing the cost management plan during cost estimation.
Project teams should look to this document as a resource to manage all cost variances. This step
occurs before the project has actually started to frame the proper perspective for cost control during
execution. Cost management plans should include protocol for informing all cost variances to
project stakeholders as well as fundamental changes to the project scope. Additionally, the cost
management plan details the criteria for reporting significant changes to the cost baseline. Finally,
the appropriate metrics for measuring cost performance should be defined and explained in this

Tools and Techniques

All cost control functions are reliant on the effective use of tools and techniques specific to
controlling project costs. However, it should be stressed that these strategies are only as effective
as their inputs. Without a well thought out, detailed cost baseline, all actual performance and
techniques used to manage change are much less effective, because of the inaccuracy of the
information these functions rely on. Recognizing the strengths and limitations of these tools and
techniques contributes to their proper usage.

Some tools and techniques for cost control include:

Cost Change Control System: Manages change requests and by outlining the protocol for
changing the cost baseline. This system details the steps to recognize, handle, and integrate
both internal changes and changes from external environments.
Project Management Software: These tools can automate the calculations of cost
variances against baseline estimates, as well as manipulate and report various data critical
to cost management. The chosen software package for a project should be integrated into

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the cost change control system. These packages have the capacity to allow managers to
evaluate data from several projects at once.
Performance Measurement Techniques: Includes all techniques used to determine the
actual performance of a process versus the budgeted estimation from baseline. Examples
include everything from general accounting approaches to specific, project specific
techniques such as Earned Value Management. These techniques require the input of
performance data, detailed in the previous section.

Earned Value Management

Earned Value Management is technique used to manage project performance comprehensively, by
integrating cost and time data accrued during the execution stage against the baseline developed
during the estimation process to measure actual versus expected cost and progress. Although EVM
measures all processes in a project, it is especially useful for cost performance measurement due
to the quantifiable nature of budgeting. EVMs primary input is the Work Breakdown Structure,
using the broken-down tasks to specify task requirements and divisions, determine project scope,
and cost estimation.

There are three defining measurements utilized by EVM to derive performance metrics. They are:

Planned Value: The estimate of the resource requirements for every specific task,
fundamentally the budget, as well as the value of all planned work. Also, called Budgeted
cost of work scheduled.
Actual Cost: The measured usage of resources to accomplish any completed task, both
direct and indirect. Also, called Actual cost of work scheduled.
Earned Value: A performance value, obtained from contrasting measured usage of
resources to accomplish any work done against planned estimates. Also, called Budgeted
cost of work performed.
The primary metric derived from these values is the rate of performance (RP), obtained by
comparing the progress in a project at any point in time to the expected progress in the project
schedule. This is a quick value used to determine project tempo and adjusted estimates of cost.
Some other useful metrics include:

Cost Variance (Earned Value Actual Cost): The extent of differentiation in value gained
versus resources used, observed in the completion of a task. Cost Variance can be both
positive and negative. Positive numbers indicate a surplus in value, negative numbers
indicate a deficit in value.

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Cost Performance Index (Earned Value / Actual Cost): A rate of resource performance
that can be used to give a better estimate of project completion cost at any given moment
in a project. A CPI above 1 indicates resource performance above baseline, while a CPI
below 1 indicates poor resource performance.
Schedule Variance (Earned Value Planned Value): The measure of actual observed
value added or lost during the completion of a task. Measures how removed actual progress
is versus planned progress.
Schedule Performance Index (Earned Value / Planned Value): A rate of project
completion that can be used to give a better estimate of project completion time at any
given moment in a project. Rates above 1 are faster than expected, and below 1 are slower
than expected.


When these values are graphed alongside each other, the result is an S-curve that visualizes the
project baseline and current progress over the course of the project. Project performance can be
visualized by measuring the area between the actual and planned progress curves. From task to
task, this visualization can be used to indicate accomplishments and problem points as well as
forecast project completion. These forecasts are used to generate the outputs of this process, which
include the expected cost in time and resources required to complete a project.

In using Earned Value Management as a project management technique, steps should be followed
to ensure performance success:

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Establish the Planned Values- creating baseline criteria allows for a starting point when
measuring performance
Establish Earned Values- allocate when an element becomes earned
Measure Variances- measuring the variances between planned and earned values show
performance deficiencies
Determine Importance of Variance- management insight may be necessary to classify the
importance of measured variance
Forecast Outcomes- gathered data may now be forecasted to future outcomes, and can
show the new projections

Certification Examples:

- CEVO (Chief Earned Value Officer)

A certification aimed towards executives who need to hold a general understanding of the
application, benefits, and value obtained from the use of EVM for projects within their
- EVMP (Earned Value Management Professional)
A certification for specialists who hold strong project controls and project management skills
and meet a demanding set of competencies in program and project management; risk
management; quality management; scheduling; cost management; project budgeting; project
finance; Earned Value Management (EVM) analysis and application, implementing EVM
benchmarks and best practices; and EVM global industry standards implementation.
- CAEVM (Certified Associated in Earned Value Management)
A certification to develop the basic knowledge base of project management and EVM theory
for project personnel. Certification program includes intensive project controls, project
management and earned value management (EVM) skills and competencies.
- ECP (EVMBoK Certified Practitioner)
A certification for an EVMP Earned Value Management Professional or Project
Professional or Project Control Officer or Project Manager who fully understand how to
implement the 32 criteria of the ANSI EIA 748-C Earned Value Management Industry
Standards and wants to take their Earned Value Management System (EVMS) application and
implementation beyond the 32 criteria of the ANSI EIA 748-C Earned Value Management
Industry Standards. An ECP EVMBoK Certified Practitioner effectively and efficiently
implements ALL the 60 Bodies of the EVMBoK Earned Value Management Body Of
Knowledge on projects, programs and organizations.
- CCAM (Certified Control Account Manager)

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A comprehensive certification for how to effectively build, manage and control your Control
Accounts on your projects/programs and deliver successful outcomes. This certification
presents one with the necessary skills, strategies, and best methods on getting control and
project control account deliverables executed from the planning phase all the way to
monitoring and controlling within all budgets.
- EVMA (Earned Value Management Architect)
A certification for those specialists who hold superior project management and EVM design
skills, and can also implement vigorous, adaptable, and complete EVM information systems.

Common Myths About EVM:

1) It is only for the government and contractors.
2) It is only for large and long-term projects.
3) It is too rigid.
4) Theres an easier version called EVM Lite.
5) Implementation creates a great amount of extra work.
6) Organizations must be changed to use EVM.
7) New and expensive software packages are required for EVM implementation.

Agile EVM

Agile Earned Value Management is a technique used to manage projects like software
development. Since the development of software is usually more complex than say, a construction
project, an Agile approach is often more effective. Agile EVM is similar to regular EVM (simple)
with the addition of a few extra preparation steps:

Stories are managed in a single list (i.e. Prioritized Requirements List or Product Backlog)
Planned Value is determined by relative size comparisons to other items.
When a work item is done, the corresponding Story Points for the work are earned.

Agile EVM uses burndown and burnup graphs to forecast progress towards the completion date,
as shown below:

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The illustration above is meant to demonstrate a Burndown chart with scope increasing.

The illustration below is meant to demonstrate the same project. In the left panel it appears as if
the team did not accomplish many stories in the middle of the project, but then stayed hopped up
on Mountain Dew to complete the end of the project. However, in the right panel, you can see that
what really happened was an increase in scope at the beginning, and then some scope removed to
finish the project in time. The combination of the two hides the progress in the Burndown chart,
but helps to show the full picture (that the team made constant progress) in the Burnup chart.

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Critics of Agile EVM see many limitations in its inherent design, because EVM quantifies a
project plan. Where many Agile methodologies are utilized for discovery driven software
development. It may be impossible to plan certain types of software projects in advance, because
the process of developing the software may uncover opportunities while eliminating others. The
counter argument to critics claims, are that Agile EVM, like all projects, can be broken down into
smaller increments.

Cost control outputs should provide project managers, stakeholders, and decision makers the
information required to address and approve ongoing project changes and maintain project
momentum. In addition, the cost control process should provide reports at project closeout,
indicating project performance and details all lessons learned from the project. The transformation
of inputs to outputs using cost control tools and techniques results in more manageable and
effective projects. Some outputs for cost control include:

Revised cost estimates: Revisions that are reported to key stakeholders as critical
information on project progress. These reports are critical to decision making, and should
be generated from accurate performance data gathered and include key metrics for task
evaluation. Additionally, these reports can include updates to the budget, given the
appropriate approval to change the cost baseline are given.

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Project Adjustments: Any changes made to the project processes to align expected and
actual performance. Reallocation of resources, alternate methodology, and task
restructuring are all examples of project adjustments.
Revised Completion Forecasts: An updated estimate of both cost and time of completion,
as adjusted by key metrics such as Cost Performance Index and Schedule Performance
Index. These forecasts give stakeholders a more accurate perspective on project progress
and performance.
Post-Project Reports: Accumulated data on project performance broken down by process
and summarized to indicate problem points and accomplishments. Final cost reports and
lessons learned are included to provide key stakeholders a holistic understanding of the
path to the projects completion. These reports are vital to adjustments needed for
restructuring the organizational approach to future projects.


Estimate At Completion (EAC)

What do we currently expect the total project to cost?

Estimate At Completion (EAC) = Budget At Completion (BAC) / CPI

Estimate To Complete (ETC)

From this point on, how much more do we expect it to cost it to finish the project?

Estimate To Complete (ETC) = EAC AC

Budget At Completion (BAC)

BAC is defined as the amount of budget that had been allocated for the project

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Sample Problems

1. A project has a budget of $100,000,000 and scheduled for 10 months. It is assumed that
the total budget will be spent equally each month until the 10th month is reached. After 2
months the project manager finds that only 5% of the work is finished and a total of
$10,000,000 has been spent.

From the problem description, we decipher that

Budget at Completion (BAC) = $100,000,000
Actual Cost (AC) = $10,000,000
Actual Completion = 5%
Planned Completion = 20%

Planned Value (PV) = Planned value per month * number of months

Planned value per month = 100,000,000/10 = $ 10,000,000

Number of months = 2

PV = 10,000,000 * 2 = $ 20,000,000

Earned Value = Budget * (% of work done /100)

$100,000,000 * (5/100) = $ 5,000,000

Cost Variance (CV) = EV AC

CV = 5,000,000 10,000,000 = -5,000,000

Schedule Variance (SV) = EV PV

5,000,000 20,000,000 = -15,000,000

Cost Performance Index = EV / AC

5,000,000 / 10,000,000 = .5

Schedule Performance Index = EV / PV

5,000,000 / 20,000,000 = .25

Estimate At Completion (EAC) = Budget At Completion (BAC) / CPI

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BAC = $ 100,000,000

EAC = 100,000,000 / 0.5 = $ 200,000,000

Estimate To Complete (ETC) = EAC AC

200,000,000 10,000,000 = $ 190,000,000

Interpretation: Since the CPI and SPI and less than 1, the project is over budget and behind
schedule. Corrective actions are needed to be taken.

2. A project has a budgeted cost of $900,000. The project is to be completed in 9 months.

After a month, 10 percent of the project has been completed at a total expense of $100,000.
The planned completion should have been 15 percent. Calculate the CPI and SPI.

From the problem description, we decipher that

Budget at Completion (BAC) = $900,000
Actual Cost (AC) = $100,000
Actual Completion = 10%
Planned Completion = 15%

Planned Value (PV) = (Planned Completion% )* BAC

15% * $ 900,000 = (15/100) * 900,000 = $ 135,000

Earned Value (PV) = (Actual Completion %) * BAC

10% * $ 900,000 = (10/100) * 900,000 = $ 90,000

Cost Performance Index (CPI) = EV / AC

$90,000 / $100,000 = 0.90

This means that for every $1 spent, the project is producing only 90 cents in work.

Schedule Performance Index (SPI) = EV / PV

$90,000 / $135,000 = 0.67

This means for every estimated hour of work, the team is completing only 0.67

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Interpretation: Since both Cost Performance Index (CPI index) and Schedule Performance Index
(SPI index) are less than 1, it means that the project is over budget and behind schedule. The project
is in trouble and corrective actions have to be taken.

2. A software development project is expected to be completed in 8 months at a cost of

$10,000 per month. After 2 months, the project is 30 percent completed at a cost of
$40,000. Determine whether the project is on-time and on-budget after 2 months.

From the problem description, we decipher that

Budget at Completion (BAC) = $10,000 * 8 = $80,000
Actual Cost (AC) = $40,000
Actual Completion = 30%

Planned Completion = (number of months completed) / total number of months allocated

2/8 = 25%

Planned Value (PV) = (Planned Completion %) * BAC

25% * $ 80,000 = (25/100) * 80,000 = $ 20,000

Earned Value (EV) = (Actual Completion %) * BAC

30% * $ 80,000 = (30/100) * 80,000 = $ 24,000

Cost Performance Index (CPI) = EV / AC

$24,000 / $40,000 = 0.6

Schedule Performance Index (SPI) = EV / PV

$24,000 / $20,000 = 1.2

Interpretation: Since Cost Performance Index (CPI) is less than one, this means the project is over
budget. For every dollar spent we are getting 60 cents' worth of performance. Since
Schedule Performance Index (SPI) is more than one, the project is ahead of schedule. However,
this has come at a cost of going over budget. If work is continued at this rate, the project will be
delivered ahead of schedule and over budget. Therefore, corrective action should be taken.

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Project Cost Management can be the sole reason for a projects success or failure, and is
historically a critical factor in project management. Understanding fundamentals of cost
estimation, project cost life cycles, and cost control as well as basic accounting principles is
paramount for effective cost management. The utilization of proper tools and techniques for cost
management streamlines the estimation, budgeting, and control processes and allows managers to
make sound, informed decisions. Because each level of cost management builds on its precedent,
it is critically important to ensure the careful and precise development of each stage in the cost
management process. The result of the proper implementation of these methods are cost-effective
projects that are measurable, predictable, and most importantly, profitable.

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Chapter 6
Project Quality Control


Quality in a service or product is not what you put into it. It is what the client or
customer gets out of it. - Peter Drucker

Quality Control is an important concept that unfortunately, many project managers only
understand vaguely. In the next chapter, we will walk through the process of Quality Planning,
Quality Assurance, and Quality Control that will give you the tools to deliver a project that meets
the customers specifications. But first, lets start with a little more information on what quality
control is, and what goes into it.

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Chapter 6
Project Quality Control
In todays competitive world, quality of a product or service plays a major role in defining the
winning factor. The consumer in todays world would always prefer a quality product rather than
a normal product. Quality is one of the major factors that organizations need to keep in mind when
designing a product. Unfortunately, quality is one of the most overlooked factors and companies
are bound to fail for making such an expensive mistake. Organizations should ensure that quality
processes are in place and are judiciously followed. Quality also goes a long way in building a
brand and organizations are usually recognized for the quality they deliver than the goods they
produce. In todays economy, consumers are willing to pay that extra cost for a quality product
than purchasing a sloppy product for a lower price. Hence, it is the onus of the organizations that
they adhere to strict quality standards to ensure success in the market place.

The onus of producing the products with highest quality rests with the individual working on it.
However, the drive for quality should come from the top management and it is the responsibility
of the top management to ensure sufficient budget for quality processes. Usually, quality gets
overlooked due to the time schedules and the lack of commitment from the individuals. Unless
there is a strong quality focus from the top management for quality and the drive to align all the
individuals to work towards the quality goal, it is almost certain that the product would not succeed
in the market.

Quality Processes
It is of primary importance that an organization designs quality processes in the very early stages
of the project. Quality checkpoints should be placed at regular intervals to monitor the quality of
the project. Necessary actions should be immediately implemented when deviations are found
from the expected quality. Following project quality management processes needs to be followed
to ensure better quality.

Quality Planning
Quality planning processes involve determining which quality processes are relevant to a particular
project and how an organization should implement them. This is critical because quality planning
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processes vary from projects to projects and it is quintessential that appropriate quality planning
processes are identified and methods to implement them are thought about. Missing any of the
quality processes would lead to a leakage of large number of defects and might cost a fortune to
the company.

It is very important that organizations form strong quality teams to design the quality planning
processes. These teams should continuously liaison with the design and development teams to
better understand the product they are designing the quality processes for. The quality planning
processes should also be reviewed by the design and development teams to identify any potential
quality processes that have been missed.

Quality Assurance
Quality assurance involves all the activities that need to be performed in implementing the
processes designed during quality planning stage. It involves various tasks to achieve the aim of
the quality planning processes and serves the execution support for quality planning processes. It
also involves steps that are taken to achieve continuous improvement of quality. In order to
measure the quality, initial numbers should be benchmarked. This would help to track the exact
progress of the project and would help to certify if the quality of the product is improving or
deteriorating. Hence, it is very important that the numbers are benchmarked. Without the
benchmarking, it is impossible to measure quality and the numbers would not reveal much
information about the product. A quality audit can also be performed from time to time to assure
the quality of the product.

Quality Control
Quality control processes involves feedback on the product. The outcome of quality control usually
involves certifying whether a product has successfully passed the quality processes or not. This
would be the main gating criteria for the release of any product. A product has to be released only
when the quality control approves the release of the product by following the appropriate quality
processes. Quality control processes also suggest the rework that needs to be done and the
corrective actions that need to be taken in order to successfully complete the quality processes.
Quality control processes usually conclude with adjustments to the processes that need to be
carried out to ensure that the same mistakes are not repeated. Adjustments to the existing processes
would ensure that the same steps leading to the problems are not repeated.

Quality Control Processes

Quality control processes are the methods and tools used to examine and test the finished product
or service to determine if the results are acceptable or need improvement. There are many ways

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to measure quality that vary from physical inspection to statistical analysis to even that attitude of
those working on the product. The purpose of this process is to ensure that the product meets the
specified requirements and other important business criteria.

The quality control processes are usually determined before the product is judged based on how
effective the method will be in determining quality. One or more methods can be used to measure
different aspects of the production process based on what has been decided to be examined. Tests
are typically done at random to prevent bias and to get a broader perspective of the total production.
The goal of quality control is to discover the defects and identify them but not to correct them.
Also, given the nature of the different kinds of tests, it is important to match the focus of the test
to suit the product. For example, you wouldnt measure Cheerios dimensions down to the
thousands of an inch tolerance and reject anything that wasnt exactly to the standard. Approval
should be based on a range of sizes. However, if you were manufacturing a camshaft, those tight
tolerances would apply.

ISO Standard for Quality Control

ISO 9001 family of quality control standards stand for good quality management practices in IT
implementations. It defines quality control management systems and related supporting
standards. It also provides a set of quality control standard requirements for a quality control
system, irrespective of what the IT organization does, its size, or type of implementations. These
subsequent sections will focus on performance improvements, documentation, training,
and financial and economic aspects, covered through different processes involved.

Every quality control plan complying ISO 9001 standards aims at achieving the following:

Customer's quality control requirements

Applicable regulatory requirements, while aiming to enhance customer satisfaction
Achieve continual improvement of its performance in pursuit of these objectives

How the ISO 9001 model works

ISO facilitates customizing quality plan to incorporate diversity according to organizations

requirement. A very peculiar feature of ISO 9001 is that it lays down requirements that a quality
control system must meet, but does not force how they are met. This promotes selective variations
for implementation in different business sectors, cultures, and work environments.

Step by step implementation

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The process of implementing ISO 9001 depends on the complexity of existing quality program,
organization size, and the sophistication of processes. An ISO 9001 quality management system
consists of following 7 practices.

1. Organize implementation team

The institution should establish implementation team and appoint a Management Representative
(MR) to coordinate quality plan. Its members should include representatives from all divisions of
the organization. The members of implementation team should undergo ISO 9001 quality
management systems professional training.

2. Train Team

ISO 9001 quality management system should be designed for all categories of employees -
executives, line- managers and technicians. A very vital component of training includes imparting
knowledge on quality manuals, procedures and work instruction; auditing principles; techniques
of office management; process calibration, etc.

3. Generate implementation plan

The plan should include:

Details of quality documentation

System objectives
Responsibility matrix
Approval workflow
Resources and related training requirements
Forecasted end date

4. Document quality management system

Documentation should include:

Quality policy and objectives

Quality manual
Procedures and records in compliance with ISO 9001
Planning, operation and control of processes

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5. Document control

This should include:

Adequate review and approval from authority

Tracking change history and document versions
Segregation of documents based on origin (internal and external)
Proper maintenance of document catalog

6. Implementation

Smaller companies facilitate organization wide implementation of quality management system at

once (big bang). Whereas, larger organizations support phased implementations which allows for
evaluation of systems effectiveness and continual improvement. Progress should be tracked
through predefined matrices that comply with ISO standard. These activities include internal
quality audit, formal corrective action and management review.

7. Agile Improvement

An agile approach should be followed to ensure continuous improvement of QMS using

Quality policy
Quality objectives
Audit results
Analysis of data
Corrective and preventive actions

Examples Quality Control Tests

While there are numerous tests available, here are a few that are more popular:

Pareto Analysis This is an analysis based on a theory that 80% of defects are caused by 20% of
possible causes. Using a Pareto diagram, data collected from testing can help visually explain
where problem areas are.
Example of a Pareto diagram

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Six Sigma This is a newer quality control methodology that is best used by large corporations
who make a company wide effort to reduce errors in their products. The goal of six sigma is to
achieve 3.4 defects per million opportunities. This benchmark was derived from analysis based
on standard deviations and what is a realistic expectation. The method is based on a management
led company-wide devotion to discovering, measuring, fixing and controlling the production
process to minimize errors. Six sigma has limited opportunities to be used given the scope and
costs of implementing such a system, but the savings can be substantial as it focuses on prevention
of costly defects. This method ranks experience based on a belt system similar to those used in
martial arts. Those with black belts often lead quality control implementation for large companies
that are most likely to benefit from the strict quality control standards. Motorola was the company
invented and implemented the first six sigma system and still uses it today. It can be a large
investment for a company and does not always pay off. Sometimes the market does not want or
need products that have been so flawlessly crafted.

Six sigma formula and graph

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5-Why Analysis 5 why is an iterative process to determine the root cause of a particular problem.
It helps to identify the cause and effects of a defect by asking the question why? It starts with a
basic problem and drills down to cause of the problem. For example, there can be problem with
any module and using 5 why analysis the cause of the issue can be a programmers lack of

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Source :

Quality Metric

Success Indicator Metrics

Team efficiency Load factor = actual effort/estimated effort

(This metric is used to identify the team efficiency. Ideally it should be
close to 1.)

Efficiency Defects per opportunity = number of defects/total opportunities

Defects per stage = number of defects found during each stage
Review efficiency = Number of review defects/ total number of defects
Defect detection efficiency = total number of defects/total effort
Defect leakage = number of defects found in the next stage/ number of

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defects found in the same stage
Post-shipment defect percentage = number of defects found after
deployment/ total number of defects
Defect density = number of defects/ size

Effort Effort variation = actual effort - estimated effort / estimated effort

Project visibility index = Planned person-months/ actual person-months
Effort estimation accuracy = Actual project effort/ estimated project

Cost Cost/size
Cost of rework
Cost of production
Cost of appraisal
Cost of failure
Cost per hour
Cost performance index = Earned value/ Actual cost
Support cost = Total cost for support hours

Schedule Schedule variation = (actual duration - estimated duration) / estimated

Rework hours
Relative integration time = (Integration time/overall project time)%
(calculated in months)
Schedule performance index (SPI) = Earned value/ Planned value
Schedule estimation accuracy = Actual project duration/ estimated
project duration

Quality New open problems (NOP)=Total new post released problems opened in
the month
Total open problems (TOP) = Total open post released problems in the
Changed ratio of customer request = (No. of actual changed request / no.
of customer request) %
Number of customer calls
Failure rate = Number of failures/execution time
Mean Time Between Failure = (Downtime - uptime)/no. of failures
Meantime to Failure

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Time-To-Market Time to deliver
Number of validation checks before customers requirements are met

Case Study: Benefits of Quality Control

GE has been one of the most successful companies to use the six sigma approach. They were one
of the early adopters of the six sigma methodology and their success influenced many other
companies to use this system. explains that the system was expensive to
implement, costing over a billion dollars. However, they have seen a savings over 12 billion
dollars over five years. Other large companies have seen similar savings. The method also took
lots of training and support from management. It is investing in a culture that must be maintained
but can provide a lot of reward if done correctly.

Case Study: Impact of Quality Issues on companies

Toyota recalls vehicles (2009 2010)
This is a case which demonstrates the importance of attention to detail required to ensure quality
products where a small error in placing the floor mats of the vehicle cost Toyota great financial
losses as well as damaged its long-standing reputation of being the highest quality manufacturer
of cars.

In late 2009 and early 2010 several Toyota vehicles reported cases of unintended acceleration. At
first Toyota identified the cause as an out of place floor mat in the car which was causing the pedal
to stick and recalled some automobiles in November 2009. However, the unintended acceleration
cases were still being reported. On investigation, another cause that of a mechanical sticking of
the accelerator pedal was identified leading to a second recall in January 2010. Overall 9 million
vehicles were recalled worldwide.

Toyota had to suspend the sales of several models for weeks while the vehicle awaited replacement
of defective parts. 21 deaths were alleged due to the unintended acceleration problems. Following
the recall there was a sudden increase in the allegations blaming Toyota for accidents which lead
to Toyota getting involved in multiple lawsuits. An independent investigation by NHTSA and
NASA scientists proved that there was no error in Toyotas electric system, all the problems were
caused by mechanical defects like misplaced floor mats and sticking pedals.

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This case certainly proves that the cost of quality failure is much larger than the cost of quality

Dell recalls notebook batteries

Another interesting case shows that even though internal manufacturing processes follow high
quality standards, quality lapses could be caused by externally procured sub-parts. Dell received
reports of exploding and inflaming laptops due to overheating batteries. Over six cases were
reported where overheating notebooks caused property damage.

Dell wanted to ensure that such cases were not repeated and recalled over 4.1 million laptop
batteries. The batteries were manufactured by Sony and hence, Sony shared a portion of the cost
of this recall.

The photos of a Dell laptop catching fire in a conference in Japan were released on news channels
which hurt Dells reputation badly. This quality lapse was a huge setback for Dell as it was already
facing stiff competition and huge customer service costs. This was one of the biggest recalls in the
history of consumer electronics.

CMMI - Capability and Maturity Model Integration

Capability and Maturity Model Integration is a methodology which enables companies to achieve
their quality and business objectives. Initially developed by the Software Engineering Institute at
Carnegie Mellon University with the objective of assessing how well government contracted
software projects were executed, today it is applied in software as well as other fields like hardware
products manufacturing, services and acquisition.

CMMI helps businesses convert intuitive and haphazard business activities into well-defined and
optimized processes with definite steps. CMMI helps the businesses identify process areas that are
important for their business objectives and set conscious goals for improving those process areas.
A CMMI appraisal then rates the businesses based on their competency in these process areas.

CMMI Structure
The CMMI structure involves the following aspects

1. Key Process Areas: key Process Areas are a set of business activities which when
performed together help the company achieve its business objectives
2. Goals: Goals define the states for each key process area to assess whether the key process
area was implemented in a well-defined and optimized manner.

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3. Maturity Levels: There are 5 maturity levels used to appraise the capability level in each
key process area.
Currently CMMI addresses three areas of interest.

CMMI for Acquisition: It allows businesses to achieve operational efficiency in their

procurement processes so that quality products and services can be acquired at the lower costs

CMMI for Development: Helps companies increase customer satisfaction through quality
deliveries on time and at lower development costs.

CMMI for Services: Helps companies provide superior quality services by defining resources
needed (people, processes and equipment) and defining the steps for incident management.

CMMI Appraisal
A CMMI appraisal rates a company based on how well their processes emulate the CMMI best
practices. The rating given is based on the CMMI maturity levels from 1 to 5 with maturity level
5 being the ideal state where all the processes are optimized and have procedures defined for
continuous improvement. The five CMMI maturity levels are defined as:

Diagram Source: Wikipedia

Maturity Level 1- Initial

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The organization does not have well-defined processes. Most businesses processes are chaotic and
are carried out on an ad-hoc basis. Usually the success depends on individual competency of the
employees and cannot be repeated in similar projects.

Maturity Level 2- Managed

The organization has well-defined processes that are managed, measured and controls. There is a
specific plan of action for all the products and deliverables. The management has access to progress
reports on all the deliverables. Deliverables are reviewed with all the stakeholders and
commitments are revised when needed.

Maturity Level 3-Defined

Processes, standards and metrics are defined at the organizational level. While in Maturity Level
2 the processes may be defined from scratch for each individual project, in Maturity Level 3 the
processes for an individual project are derived from organizational standards. In addition the
processes are defined in greater detail.

Maturity Level 4-Managed

Statistical metrics are defined to measure the performance of the processes and the quality of
deliverables. These metrics are defined based on stakeholder interests. At this maturity level
processes are statistically controlled and hence tend to be more predictable.

Maturity Level 5-Optimizing

This level represents the ideal level where the organization focuses on continuous improvement of
the business processes. The quantitative metrics are used to measure the performance of the
processes and to identify weak areas which need attention.

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Chapter 7
Human Resource Management


If you fulfill the wishes of your employees, the employees will fulfill your visions.
Amit Kalantri

Human resource management (HRM) describes a formal system devised for the management of
people in an organization. Human capital, is arguably the most valuable resource of any company.
As such, it is very important to have established processes in place that help project managers
staff their projects with the people that provide the best fit. It is also crucial for the project managers
to have the skills that allow them to interact with those people in a way that is empathetic and
minimizes employee turnover. In the next chapter, we will look at some of the ways project
managers can use human resource management to help the project be a success.

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Chapter 7
Human Resource Management
Our study of Human Resource Management (HR) begins with the definition of what exactly
Human Resource Management entails. The simplest way to describe HR Management is that you
are utilizing your people to the best of their ability to achieve the most effective results. The
following processes are used to create a uniformed way to manage your people. The first step is
Human Resource Planning, which is when you identify project roles, responsibilities, to whom
each role is held accountable to, and document these for future use. The second step is Acquiring
the Project Team. This involves choosing the right people to fulfill each role you previously
identified. Third is Developing the Project Team by building each person abilities with regard to
subject major in order to develop the best project team possible. Lastly, a good leader is Managing
the Project Team through providing appropriate feedback, keeping a watchful eye of
performance, making the necessary changes, and resolving any conflict or issues that arise.

Psychologists and other theorists have spent a lot of time coming up with different explanations
and instructions regarding the management people within the work environment. Throughout their
studies, they found the three most important areas to watch in regard to project management were
motivation theories, the effect of influence and power, and the effectiveness of the different

Myers-Briggs Type Indicator Explained in Regards to Project Management

As people meet one another, regardless of if one is a project manager or team member,
individuality is a factor that makes each set of interactions unique and complex. Being able to
communicate effectively and understand someone elses point of view or personality is of the
utmost importance in order to be most effective. Since the early 1920s, studies about humans
personality types have been defined and refined throughout the years, commonly known as the
Myers-Briggs Type Indicator (MBTI). The MBTI categorizes people into sixteen different
personality types based on the premise that people exhibit four of eight possible general attitudes
towards life. Below, explaining the general attitudes and their differences, as well as a closer look
into the personality types will be examined.

To start, one has to understand the general attitudes that people can have. The MBTI categorizes
the attitudes into four groups, with each group having two options. The first group to mention is

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the attitude group of introverted (I) versus extroverted (E). The attitudes of the first group a used
to gauge how and where people derive their energy. Usually, introverts thrive on alone time to
recharge themselves, while extroverts thrive on energy from others, and like to be in the spotlight.
The second attitude grouping to know is the functions of perception: sensing (S) versus intuition
(N). Sensing and intuition describe how people receive information; for example, sensing is more
related to gathering information from the outside environment, whereas intuition is gathering
information from ones self. Additionally, the third grouping of general attitudes to understand is
thinking (T) versus feeling (F), which describes how one processes the information received from
the prior general attitudes discussed. Thinking process the information in a very logical and
analytical manner, in contrast to how feeling processes the information based on emotions. Lastly,
the final group of general attitudes that people possess is judging (J) and perceiving (P). Judging
and perceiving take the information that was gathered and processed from above, and indicates
how one might take action with regards to the information. People who exhibit judging as the
general attitude are organized and stick to rules, whereas people who exhibit perceiving take action
by spontaneity and without solidified plans. All in all, the general attitudes that people can have
according to MBTI create a total of sixteen different personality type combinations. Now that the
general attitudes have been grouped together, explanations of the sixteen personality types can be
divulged. Keep in mind that having a clear understanding of ones self and others will help project
managers and team members effectively communicate and work together to accomplish the project
and task at hand.

Intrinsic Versus Extrinsic Motivation

In the area of motivation theories, there are many different theorists who have tried to describe the
way people act to certain motivating pressures in their life. The first thing we must understand
about people is whether they possess Intrinsic Motivation or Extrinsic Motivation. Intrinsically
motivated people tend to participate in events because they have a desire to be apart because they
enjoy the activity. It is easier for someone who is intrinsically motivated to continue to participate
in the activity because they truly like what they are getting to do. On the other hand, extrinsically
motivated people participate because they will receive some reward or prize, or because they are
avoiding something bad from happening. This is a causal based motivation and your reasons for
participating in the activity will diminish if the motivating factor is removed.

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Maslows Hierarchy of Needs

Probably the most well-known theorist with regard to understanding peoples inherent behaviors
is Abraham Maslow. He is most famous for his development of the pyramid entitled Hierarchy
of Needs. Maslow states that peoples behaviors are guided or motivated by a sequence of
needs. Maslow describes a humans need as being a ladder, you must first fulfill the rung you are
on now but as each level is completed you focus on the next item. For example, if you are truly
starving you will be more interested in getting food then fitting in with you friends at that moment.
These unfulfilled needs have a way of taking over your senses and keeping you from moving to
the next ladder until they have been met. You have a carnal need to fulfill your bodys necessities,
and you cannot focus of moving up until you have satisfied where you are right now. It is said
once a need has been satisfied it no longer motivates your behaviors.

Herzbergs Motivational Factors

Then there was Frederick Herzberg. Herzberg talked about Motivational Factors such as worker
responsibility, recognition of a job well done or of an achievement, a love of the work you are
doing, and advancement within the company. Herzberg states that it is these factors which can
produce satisfaction in your job. The other factors were Hygiene Factors. These factors included
monetary rewards, better management, and an appealing environment to work in. Hygiene factors
can cause frustration if they are not available, but are not tied to satisfaction and do not provide
motivation to work harder.

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McClellands Acquired-Needs Theory

The Acquired-Needs Theory was produced by McClelland. He stated that our life experiences help
to shape specific needs which are gained or learned as we move through life. The first acquired
need is Achievement. This is when people enjoy challenging tasks to work on that contain realistic
goals and plenty of feedback. The second is Affiliation, which is when people desire to have
meaningful relationships and want to friends at work. Employers in this situation should try to
promote a work environment with cooperative group interactions. Lastly McClelland talked about
peoples desire for Power. This can be either a healthy desire for institutional power or the desire
for personal power, which could hurt the organization. You want to provide those with the desire
for institutional power management opportunities.

McGregors X and Y Theory

Finally, in the 1960s, Douglas McGregor came out with his Theory X and Y to describe human
relationships. Theory X assumes that employees do not like work and avoid it if given the
opportunity. Managers with Theory X employees must come up with punishment schemes to
motivate employees. Theory Y assumes that people enjoy working and consider it to be a natural
part of life. These people enjoy the esteem work brings. Theory Y employees would be intrinsically
motivated. A third theory was produced by William Ouchi in 1981, Theory Z, which focused on
motivation working. Letting workers know that we are all in this together as Japanese companies
have been doing for quite some time.

Thamhain and Wilemons Nine Ways to Influence a Project

Lastly, Thamhain and Wilemons came up with 9 ways to have influence on a project.

The first is Authority. This is where you have a legitimate right to give commands and orders.
The second is Assignment. This is the authority you receive by having control over someones
future work assignments. For example, if you do not obey your next assignment will be in Siberia.
The third way is Budget. Those who control the budget can use this power by threatening to
withhold part of the discretionary fund.
Fourth is Promotion. These are those people who can change a workers current status within the
The fifth goes along with promotion in that the person can control Money and the employees
ability to receive a raise.
The sixth is Penalty. You can have control over someone if the project manager can leverage a
punishment on the employee.

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Work Challenge is the seventh way to have influence over a project. This entails being able to
assign the employee to a task that they enjoy.
Eighth is Expertise. You can influence a project is you have a special knowledge of the project
that others believe is important.
Finally, the last way to influence a project is through Friendship. This hits home for many of us
as it is when you establish personal relationships with your colleagues and manager.
When talking about influence one normally thinks about Power. Power is the ability to influence
behavior to get people to do things they would not normally do. Power comes in five different
forms: reward, coercive, expert, legitimate, and referent power.

Organizational Planning
Organizational planning is one of the most important responsibilities of the management of an
organization. It is the tool that is used by the management to set organizational vision, devise
strategies to achieve the vision, entrust responsibilities at every level of the organization and ensure
that the achievement of the vision becomes a collective goal of the complete organization. The
process of organizational planning involves identifying and documenting project roles,
responsibilities and reporting relationships. The outputs of this implementing this process includes
the below deliverables:

Project organizational charts

Staffing management plans
Responsibility assignment matrix
Resource histograms

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Project management charts help in giving a business oriented picture of the hierarchy in the
organization. A cursory look at it and the hierarchy of the organization will be clear, thus, if one
has a problem that is to be discussed regarding the testing domain in the organization, one would
exactly know all the relevant people who could help in resolving the issue and also know the
people who could take decisions to get something implemented.

Staffing management plan is a portion of the project management plan that allows various project
teams working together to efficiently manage the resources within those teams and achieve the
organizational goal effectively. It describes when and how people will be added to and taken off
the project team.

Responsibility assignment matrix (RAM) is a matrix that maps the work of the project, as
described in the WBS, to the people responsible for performing the work. It can be created in
different ways to meet unique project needs.

Resource histogram is a column chart that shows the number of resources assigned to a project
over time. It depicts the amount of time a resource is allocated to work in a project over a period
of time.

One of the core reasons that has led to a sophisticated and in-depth study of managing resources
in an organizations is the need for management to understand the reasons that lead to a resource
quitting a job. Some of the reasons behind this is as below:

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Monotonous nature of a job can lead the resource question ones ability to make difference.
Lack of proper recognition of the resource can be a cause of dissatisfaction
Again, a monotonous job can cause the resource to question the value addition of the
experience one is having while working in a job.
Apart from the above reasons, lack of cohesion within the project team and the search for
a more lucrative job remain the most common reasons that resources tend to leave a job.
This need on the end of the management to determine the reason of employee dissatisfaction has
led to a more detailed study of how tasks are allocated to resources and the development of work
allocation metrics as follows:

Resource loading refers to the amount of individual resources an existing work schedule requires
during specific time periods. It helps project managers develop a general understanding of the
demands a project will make on the organizations resources and individual peoples schedules.

Over Allocation means allocating more than the available number of resources to perform a work
at a given time. In other words, the same resource being assigned many tasks belonging to more
than one project at a time refers to over-allocation. This might take place during times of resource
crunch or other such project management situations. Such a situation requires of a resource to
juggle many tasks at the same time and might prove to be a challenging and daunting task to be
handled for a small period of time. Prolonged over-allocation of a resource might simply lead to
dissatisfaction in the resource. The solution to avoid over-allocation is called resource leveling.

Resource leveling is a technique for resolving resource conflicts by delaying tasks. The main
purpose of resource leveling is to create a smoother distribution of resource use and reduce over

There are quite some benefits of resource leveling.

When resources are used on a more constant basis, they require less management.
It may enable project managers to use a just-in-time inventory type of policy for using
subcontractors or other expensive resources.
It results in fewer problems for project personnel and the accounting department.
It often improves morale.

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Developing the Project Team
The fact that human resources form the backbone of any business enterprise is a given. Distilled
into its purest form- HR concerns the macroscopic and microscopic view of the organisational
hierarchy as well as its behaviour and employee relations. Conversely, the trickle-down effect
ensures that project management must focus on human resource management as well.

Traditionally, firms create and acknowledge the need for dedicated human resource development,
human resource management and similar departments. At the microscopic level or the project
overview level, it is of utmost importance that the project manager is capable of creating provisions
for human capital upkeep. Incidentally, given the multi-faceted role of the project manager, it is
imperative that the PM be well-versed in employee relations to ensure smooth, seamless and timely
delivery of all tasks.

Firstly, the PM must be aware of the organizations culture, policies and regulation, structure,
vision, mission statement and intent. An inherent knowledge of the afore mentioned is necessary
for the PM to determine the validity and viability of the project, chart out the reward-penalty
scheme for subordinates performance and ensure his/her interpersonal interactions with
underlings is tinged with empathy and the tenuous relationship between colleagues is less-
antagonistic and more of camaraderie.

Secondly, the PM must consider the inherent characteristics of the organisation structure and the
cause-effect nature of said structure. It is highly advisable to view all project teams with the lens
of the organisational hierarchy to absolve the team of any and all accountability mishaps. To better
comprehend this point, the reader must visualise a matrix structured organization the structure is
tinged with intertwining accountability mapping which may get even more complex with the
increase in degree of the matrix. The most common form of matrix structure is of the order two(2),
where the functional and deliverable lines map back to the mid-level management comprising
Functional (denoted by a solid line) and Delivery (denoted by a dotted line) managers. An
employee would need clearance from both his solid line and dotted line managers for any
activity. The delivery/dotted line manager is effectively industry jargon for Project Managers.
Thusly, the PM must adhere to inputs from his solid line counterparts when dealing with the human
capital assigned to his/her specific projects from issues ranging from billable hours to personnel

This brings us to the concern of determining the right balance of reward-penalty to motivate and/or
coax the human capital to deliver upon the business needs of a daily nature. As stated above, the
organization culture is predominantly tinged with the country of incorporation and/or country
where an office may be located. This causes differences in work ethic and negotiation practices.
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The very recognition of scope of work and timely delivery get affected if the teams coordinating
on the project adhere to different sets of work practices that may be in line with their countries
culture but may fall short of industry best practices or the organizations regulations.

The reward-penalty scheme has often been compared to the carrot-stick approach. Considering the
duality of individualism-collectivism, it is almost a razors edge trapeze walk for the Project
Manager to bring his/her subordinates on board to deploy the end target in a timely and on-budget
fashion while not curbing their individual motivations and grievances. Once the stakeholder
responsibility matrix is outlined, the PM should, immediately create the RAM (Responsibility
Assignment Matrix) or the RACI Responsible Accountable Consulted Informed() or the PARIS
(Participant Accountable Responsible Input-required Sign-off required) matrix to highlight the
division of labour and delegation of authority to avoid colleagues stepping on each others toes.

Most of the aforementioned statements speak at macroscopic level- it is also the PMs
responsibility to micro-manage without offence given to stakeholders. It is the PMs duty and
prerogative to acquire resources to help achieve successful, timely and on-budget completion of
the task-at-hand. Most importantly, the human capital is varied in terms of their interpersonal
interactions despite having similar motivations (that might often compete with their peers). It is
imperative that the PM employ some measure of personality assessment to calculate and use
compatibility scores to determine the right fit for the job.

The Strengths-Find tests, Jung Typology Test, Rorschach Test, Myer-Briggs Test are examples of
personality tests that could help determine resources with:

1. Similar personality types/categories

2. Opposing personality types/categories
3. Complementary and/or Supplementary personalities
4. Right role for the personality type determined
5. Right handling/interacting techniques for certain personality types
6. Skills included in personality categories
7. Best avenue of usage of skills of specific categories
8. Leader/follower implications of personality types

Almost considered a pseudo-science, owing to the lack of hard-coded empirical studies, Human
Resource Management has nevertheless gained ground owing to the successes it has enjoyed at
both the macro- and micro- levels of the organization. The present day need for soft skills,
emotional literacy, emotional intelligence quotient (EQ) and certain inherent personality traits that

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are more tangibly determined than most others (viz. leadership) have propelled HR Management
into the forefront of project conscious firms and individuals. Conversely, the implications of
putting the HR concerns on a back burner may have catastrophic effects on the overall health of
the institution while violating the time, scope, budget, quality constraints of the project

To conclude, it would be remiss on the part of the PM and the PM Institute to ignore the
contribution of Human Resource Management on the overall project management discipline as
project are not confined to deliverables alone, rather it is the human task force that accomplishes
the work assigned in the project.

Tuckmans models of team development

Bruce Wayne Tuckman is a professor of educational psychology at the Ohio State University. He
is best known for his research on the theory of group dynamics. He published one of his theories
in 1965 called Tuckmans Stages.

This theory describes the process of team building in terms of 5 different and progressive stages.
All the stages are present in any team formation in varying degrees and this knowledge is essential
for any manager in charge of a team.

The initial four stages according to Tuckmans first paper are:


This is the initial stage. The team meets for the first time in this stage. Members have a feeling of
excitement, anticipation and optimism in various degrees. Every individual is unsure of their place
and role in the team. They are constantly measuring how the teams objectives map to their own.
This is a time for introductions, formal behavior and being clear on the teams goals, and their
respective roles.

This is a time where the leaders are looked upon to provide guidance, direction and clarity. At this
stage the leader must provide great amount of support. The team leader outlines the mission and
needs to generate agreement on team roles, rules to be followed and provides the guidelines for
decision making.

Because there are so many uncertainties, very little work gets done at this in initial stage.


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As time passes and the uncertainty subsides, people begin getting more comfortable and
determined in the team. The silent leaders begin to assert themselves and slowly sub-groups and
factions begin to form. There is a degree of unease between the differing factions.

As roles and responsibilities become clearer and work starts, differing views over the approach to
take or the viability of the goal itself begin to emerge. Some members may realize that the amount
of work to do is just overwhelming them. There may be cases where people are defensive or
choosing sides or even resisting take up the assigned tasks.

The role of the leader in this stage is very important to facilitate discussion among the differing
sub-groups. It is very important to ensure common understanding of agreements. The leader must
be highly involved in providing directions and support and should focus on encouraging
interactions and dialogue. Often in this stage peoples trust lie only in the leader and thus the leader
must be careful in not choosing sides or appearing high handed. In this regard, the persuasion style
must be to sell the idea or consult the team members as a friend. A good way to reduce the tension
is to keep the people engaged. The leader should demand and expect results. In order to build team
spirit, it is important to recognize, publicize and celebrate team wins.


Gradually a hierarchy is established and the team moves to a norming stage. As the interactions
between the team members have increased they may begin to socialize together and even share
personal problems. They become comfortable asking for help from each other and offer
constructive criticism. The commitment towards the tea goal strengthens.

However, there is often a regression towards the storming stage when new tasks are introduced or
when uncertainty rises. The team will often bounce back and forth between storming and norming
as issues crop up, but this behavior dies out as time passes and even the bounce back to norming
from storming is quicker.

The role of the leader in this stage is to facilitate the norming processes. There is a lower level of
direction required and the team leaders role shifts to supporting through listening and advising.


This is the ultimate goal and the last stage of the team building exercise. At this stage the team
focuses on achieving goals. Through the rigors of the storming and norming, team processes are
well understood and members can focus their energies on achieving goals. It is at this stage that
members also focus on self-development.

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The team can take on new tasks with ease and little direction or support. Members leaving or being
included in the team has little effect on the established work culture and efficiency.

The role of the leader in this stage is to coach the team members through observation and support.
The level of direction required from the leader is minimal.


In 1977, based on literature reviews and related research work, Tuckman, working with Mary Ann
Jensen, added a new stage called adjourning.

Adjourning is the stage where after the successful completion of the goal or as part of
organizational re-structuring, the project team is disbanded. This stage involves closing the
completing the final tasks, systematically closing down the project activities for the final sign off
with the client. In order to record the achievements, the team briefs and shares the process
improvements developed as part of the project.

There is also a feeling of loss and a bittersweet sense of accomplishment. Due to this fact many
people have called this stage as mourning as well. Many friendships formed during the project
endure for a lifetime. Indeed, many team members go on to work together for other projects.

The team leader must make sure to celebrate the success of the team. This leaves the team members
with confidence for their future endeavors.

HR Practices to Retain IT Employees

Employees are the wealth of any organization and it is really important to maintain a healthy
atmosphere in order to retain the employees. The write up describes the various principles the HR
department could follow to retain their employees.

Retention Practices for IT Workers

The following are the categories of retention practices can be employed by the HR department of
an organization.

1. Work environment
A healthy work environment is the top priority of most of the employees. By healthy work
environment, we mean that the work should be interesting

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a. Interesting work Employees should be given challenging works to keep them
engaged and motivated. An organization should always find ways to help
employees grow their skillset. Rotation of employees among various projects can
be one way of establishing this.
b. Good communication team and senior management Strong communication
channels among team members and with senior management can make a lot of
difference in an employees confidence and it will make them feel they are an
important part of the organization.
2. Career development
a. Training to improve skills Training should be provided to employees regularly to
keep their learning curve in upward trajectory. The training can later be applied in
b. Frequent appraisals Regular feedback and appraisal can help employees remain
aware of their performance. Supervisors should set specific goals for them and
guide them for improvement.
c. Career paths - It is important for an organization to understand the career aspirations
of their employees. Employees should be encouraged and guided to talk to their
supervisors and executive management about their career goals.
3. Community-Building Initiatives
a. Lunches Informal setups like a lunch is an effective method in building team
spirit. Team members will get to know each other and a collaborative work
environment can be established.
b. Social activities Social activities like social services, cultural events are important
ways of improving team morale and employee engagement.
4. Monetary incentives
a. Monetary rewards Monetary rewards always boost a persons confidence and
self-esteem. Organizations should always keep track of their employees
performance and reward the high performers for their contribution.
b. Bonus Quarterly or annual bonus should be given to high performers to
acknowledge their works and encourage other employees to perform better.
5. Employment Incentives
a. Financial stability Financial instability can cause a lot of damage to an employees
confidence and hence to his performance as well which is detrimental to an
organizations performance graph. If an organization wants to keep long term
relationships with their employees then financial stability to be provided to them.

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b. Employment security A permanent employment and job security will help an
employee set his or her future collaboration with the organization. It will help an
employee perform better and achieve his or her career ambitions.

Though companies strive to attain these categories, implementing every category towards IT
retention would cost the companies so much so that they would be reluctant to try. Further research
has pointed out that the following HR profiles are followed by the company in order to improve
their retention rate.

The different HR profiles are:

1. Human capital-focused profile

In this profile, the employees are considered as a long term investment. Special focus is
given to the career development of the employees. Employees have firm specific
knowledge and skills. Employment security and monetary incentives are the key practices
to retain employees.

2. Task focused profile

Employees of this profile are considered as short term output producers. They are usually
hired externally on contract basis. They have a clearly defined job and generic skill set.
Monetary incentives are the common practice used by the HR to retain employees of this

3. Secure Profile

Employees of this profile are long term employees. The most important HR practice to
retain these employees is by giving them employment incentives which include
employment security and financial stability. Lesser emphasis is given on work environment
and career development.

4. Utilitarian profile

This profile is similar to the Human capital-focused profile. Employment incentives and
monetary incentives are the common HR retention practices.

5. Incented technician profile

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Employees of this profile are usually hired for their technical skills. High emphasis is
placed on monetary incentives to retain these employees. However it is usually not
successful because of the competition for IT staff in the market.

Some of the key learning practices on IT retention are:

1. Manage the mindset profile, not single HR categories/practices:

The holistic nature of the retention practices must be recognized. These practices must
be aligned strategically to not only retention goals but also the organizational goals.

2. Benchmark the profile and monitor for internal and external change

The first step to benchmark is to inventory the IT organizations HR practices. The next
step is to assess the current emphasis placed on each of the practice. The last step is to
compare the assessments to one of the five mindsets. Periodic benchmarking helps
increase the organizations ability to recognize any changes.

3. Leverage long-term employment opportunities to retain valued firm-specific skills

It has been observed that firms exhibiting secure mindset have low turnover rate
because they provide employees reliable employment and financial stability. They
dont have to implement monetary incentives or career development practices. Thus,
employment security can be a huge influencing factor.

4. Examine not only your companys practices, but also those of your outsourcing

Managing vendor relationships is always a challenge especially if the outsourcing

partner is at an offshore location as HR practices may vary. These differences can lower
productivity of both teams, retention of valued internal workers and overall
effectiveness of the partnership. Thus, it is important to use the IT retention practices
and the five HR retention profiles to compare the HR practices. This will ensure that
the practices are consistently applied across the client vendor teams.

HR Retention: Personal Experiences

Every organization needs key resources to establish a firm ground in their business area. These
key resources being people. In order to function efficiently and meet organization goals it is

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essential for every organization to implement effective HR retention practices. By doing so,
organizations can leverage these key resources to derive at its intended results. Thus, it is important
for every organization to identify its ideal turnover and retention rate. Turnover rate refers to the
percentage of people who leave the organization within a period of time. While retention rate refers
to the percentage of people who continue to stay with their employers. By identifying turnover and
retention rate threshold limits, organizations can strategize their HR practices to retain the right
kind of people for various tasks.

The organization I was working with was a great place to work, especially for a fresher or a new
recruit. I began my training in 2010 which was the first step before I could join a business unit.
My training involved learning various programming languages such as C, C++, Java and HTML.
Other trainings were provided in testing, mainframes and databases. One of the reasons I was able
to make an easy transition into the business unit was due to the great training facilities provided
former employee at CTS, India.

Many organizations use career development as a means to retain resources. Career development
strategies includes trainings, e-learnings and certifications. This method, as seen in the above
example, has proven to be a successful indicator of resource retention. Many employees are able
to take advantage of these resources and improve their technical and soft skill knowledge. Survey
findings have shown that employees who make use of the career development resources are more
satisfied with their respective employers and have continued working with them.

Other HR practices which help in achieving ideal retention rate include providing a flexible work
environment & monetary incentives. Based on their target rate, organizations may vary their
implementation of HR practices. Organizations which have low retention rates, achieve this feat
by providing career development opportunities as explained earlier. Those who have a medium
retention rate retain their employees by providing a work-life balance. Leisure weekends, work
from home, strict 8-hour policy are some of the means by which firms retain their resources. One
of the employees at IBM had an experience to share where she was retained by the company
considering her hard work and overall performance. She resigned from IBM because she had a
child to take care of and she wanted to do work from home which was not available in the project
she was allocated to. She was retained by the resource deployment manager by allocating her to
some other project where work from home was possible. Polls and surveys of employees from
various backgrounds have shown that approximately 78% of the participants would rather settle
for a proper work-life balance with their current job than other perks and benefits.

While most of these practices and strategies involve people, who perform generic tasks in
companies, strategies for task-driven companies vary. In firms where skilled resources are required
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whether it be a skilled programmer in a language or those in business roles, the demand for such
hires with such specific skillsets is less. Organizations lure these people using strategies such as
monetary and employment security. Employees are more likely to stay in a company if monetary
compensation, bonus packages and other monetary benefits are provided and in good amount.

I was not onboard for any project for 3 months, despite of having the best skillset in the market.
I talked to my manager and told him I am looking for a switch being disappointed from the way
my career was shaping up. He assured me he will compensate for the loss by providing me some
good opportunity in future. Within 15 days, he gave me an offer to work onsite in Belgium for a
multinational banking project- former employee of Tibco Software in India.

For organizations, which have a high turnover threshold and require hires skilled in specific areas,
these schemes have proven to be viable to achieve their target goals. For cases such as given in
above example, the skillset matters a lot for the company. If an employee has some specific product
experience which is not easily available in the market, HRs make all the efforts to retain such
employees. While there are several other directions which organizations can take while structuring
their HR practices and retention policy, the above strategies just cover the tip of the iceberg. It is
important that managers and HR should implement such policies, at the same time employees
should be aware that the company values them. If they are dissatisfied because of any reason, they
should talk to their supervisors and try to find a solution. As human resources play a big role, it is
imperative that firms measure, validate and re-check their policies.

For other countries, the following matrix shows the rank of different work goals for employees
that can be used to determine retention practices which HR should follow in their companies.

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Team Conflict
One of the most important responsibilities of a project manager is to manage the project team. Project
managers ensure that the project runs as smoothly as possible. In order for projects to be efficiently
executed, the chemistry of the team must be healthy. If there is any conflicts within a team, attention is
taken away from the task at hand. Conflict comes in many forms but all kinds negatively affect the team.

While conflict amongst teams is out of anyones control in some circumstances, project managers can take
steps to mitigate the conflicts that arise. According to the PMBOK Guide, there are five different techniques
to implement [1]:

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Team Conflict: Personal Experiences
Communicating technical concepts to non-technical audience: Conflict in skillset

During my tenure at Tata Consultancy Services as a software developer working in the wealth
management division of a leading American bank, there had been challenging conflicting
situations on multiple occasions. One such occasion was during one of the releases when the
release code base had to be handed over to the Unit and Integration Testing team.

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The clients application was a complex code that was developed to be platform independent such
that implementation of one code should be flexible and optimized to adapt to all the devices. After
development, code had to undergo testing and a major challenge was explaining the code to the
testing team completely comprised of colleagues from non coding background. The responsibility
of explaining the code was given to me.

There was a major conflict of skillset as, for a thorough testing of the application, the testing team
needed a grasp of the semantics and running knowledge of software development, object oriented
programming and MVC architecture. I also had to make sure that I explained critical information
in a short time frame. To effectively explain it to them, I would always think of it as explaining
something related to technology to my father who is not a very tech-savvy person. Applying this
ideology into practice helped me simplify the knowledge transfer sessions.

Finally, not only did they understand the code really well, but also created some amazing test cases
that thoroughly tested the application. But thats not the only successful aspect, the interesting part
is that even after UAT phase, we didnt have any change requests which meant that we saved client
$50,000 for every Change Request that they would have logged. And when the client traced back
the reason for this success, the path led straight to me and the client appreciation mails kept
flooding my Managers mailbox.

Accommodating different working styles in the workspace: Conflict in working styles

As a consultant at Deloitte LLP, I was part of the third party risk management team which
performed software audits for giants in the IT industry. The team was categorized into three parts
to handle different phases of the project; The risk assessment team, Data Analytics(DA) vertical
and the End user License Positioning (ELP) vertical. The output of the ELP team was completely
dependent on the results obtained from the DA team. Therefore, the team members handling a
particular account had to be in constant communication within these two verticals.

Chaos consumed when newer members were inducted into the team and the more experienced
folks left the company for good. It was understandable that the newbies would have a learning
curve, however the deliverables were seriously getting affected and we overshot deadlines on
several occasions. After some firefighting with the clients we were able to assess the situation and
devised a contingency plan to ensure that future deliverables were not affected.

The remaining employees with considerable experience were equally distributed in the DA and
ELP verticals and assigned to handle different projects. They were responsible for their particular
sub group and had to ensure that the newer members were up to speed. Assigning experienced
members with inexperienced members ensured that the team values and the projects unique
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requirements were understood and imbibed by all the team members. Within no time the team was
up and running and we were able to take on the busy season with minimal time and budget

Adapting to different point of views: Conflict in background expertise

Not everyone in the IT field has their entire background experience solely focused on the
technology industry. Because I had a background in Finance and Economics, I was able to look at
certain situations from a different perspective than my peers. While working on a project, I
challenged the assumptions built around loans that my team members believed to be correct.

Breaking through the preconceived notions of the issues at hand were harder than I realized. Not
only did I have to draw attention to the errors in logic but I also had to explain the financial
reasoning. As well as clarifying the logic, I had to find a way to relate it in terms that IT personnel
would understand.

After addressing issues and following up with the rationale behind the changes, my team members
began accepting my expertise in the financial aspects of the project. I soon became the financial
connoisseur of the group and my background was finally accepted in the IT realm.

Case Study - Personality and Team Dynamics

This case study compares the personality type combinations of two information system project
teams and discusses the results on overall team effectiveness.

A medium-sized software development company in the United States uses project teams in the
development of information systems software. Company management observed an evident
difference in the productivity of two project teams. The teams were given assignments to develop
information systems of similar complexity. Team 1 took a significantly longer amount of time for
the development process and their output was of moderate quality. Team 2 finished the project
before the planned completion date, while producing an information system of high quality. One
problem seen in the dynamics of team 1 was poor communication among its members including a
large number of misunderstandings and failures to communicate. They also had difficulties in
getting the team organized and on track.

The two teams were performing similar tasks and did not vary in terms of demographics and skill
level. The question then becomes: Why did the performance between the two teams vary so

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drastically? The study revealed that the differences largely had to do with the different personality
types among the team members.

Personality-type composition and team performance

The case revealed two teams of varying levels of performance. Team 2 produced higher quality
results than that of team 1. The personality types of the teams were analyzed to find any differences
that may have an impact on overall team productivity. It is important to have a team dynamic with
differing personality types. Team 2 was better balanced in terms of personality types than team 1.
Team 1 had 80% introverts and 20% extroverts compared to team 2s even percentage of 50% of
both types. Introverts tend to keep information to themselves and are less likely to speak up during
meetings. These results reveal why it may have been more difficult for team 1 to communicate
with each other throughout the project.

The second factor of the personality test is comparing information intake resulting in sensing (S)
or intuition (N), and the third factor compares decision making resulting in thinking (T) or feeling
(F). Team 2 had a better balance for both of the preceding personality types. These combinations
are very important for effective team dynamics because much of a teams work involves receiving
and processing information to make decisions about the tasks at hand. The percentages of sensing
versus feeling were similar between the teams with team 1 having 60% Ns and 40% Ss. Team 2
had 57% Ns and 42% Ss. Sensing types focus on the details but may miss the bigger picture,
while intuitive types may have difficulty putting the concept of teamwork into action. Intuitive
types are more comfortable imagining the bigger picture and foreseeing what the system will do
rather than working with the details of putting the system together.

The study states that Team 1 had only had 20% Fs, while team 2 had 42% F types. The difference
in the way thinkers and feelers address certain issues can cause problems and conflicts when trying
to build an effective team. Thinkers care more about accomplishing the task, while feelers are more
involved with how the team is working together. This difference in task orientation vs. people
orientation indicates that the T/F difference could be the most influential factor on a teams feelings
of unity and fellowship. This suggests that is logical to have a good balance of thinkers, or task
oriented individuals, and feelers, the people oriented team members, in order to create the most
effective team.

A big reason team 1 did not perform as well as team 2 could be that their predominantly thinker
team members focused most of their attention on completing the task and focused less on user
needs and the other feeler members of the team. Meanwhile, Team 2s higher percentage of F
types could have helped draw greater attention to the needs and feelings of other team members.
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Some members of the team prefer an organized, systematic approach to problem solving while
other prefer a more relaxed approach. Inherently, when team members have opposing approaches
to problem solving, conflict will arise. The T will be much more interested in accomplishing the
objectives of the project whereas the Fs will be more concerned with how the group is working
together. The study states that, Team 1, which was composed of a large percentage of T types,
may have raced ahead to get jobs done without everyone being on board, while team 2s larger
percentage of F types may have helped them focus more attention on group harmony., which
reiterates what outlined above.

Based on the study - the first team had a more even spread of Judging versus Perceiving types
(70% J, 30% P) than the second team (100% J). In this instance, too much diversity may deter
team success. The J/P difference is, seemingly, the most important factor to a teams success or
failure. Judging types have a need to move on, to close one part of the project and move on to other
goals, whereas Perceiving types would spend more time considering other alternatives and to make
snap assessments. A group with too many J's could focus too much on meeting deadlines and rush
through the project without careful consideration of alternatives. On the other hand, too many Ps
in one place could fall behind because they spend so much time trying to come up with every
solution possible. In this case, given a complex project with many viable alternate courses of action
that would prolong the decision-making process, as long as team 2 carefully considered the
alternatives, they would be the more likely team to finish their task on schedule than team 1.

Leadership is an important quality of JAD teams. In the case example, the lower performing teams
(Team 1) leader was an INFP, while the successful teams (Team 2) leader was an ESFJ. Team
1s introverted leader may have held back information and cut meetings short because being with
other people can sap an introverts energy levels. The Team 2s extrovert leader may have been
more effective in facilitating group conversation and better at involving all members of the team.
Team 1s intuitive (N) leader may have been a proponent of a unified team, but unable to move
that support into execution. Team 2s sensing (S) leader may have been more effective in keeping
the group on track with deadlines. Team 1s feeling (F) type leader may have clashed with the
great amount of members who were thinkers (T's). This F leader may have been focused more on
group unity rather than getting the actual task completed, which could have frustrated the T type
workers. In contrast, while team 2s leader is also an F type, there were a larger percentage of F
types on the team who could offer support for the leader in highlighting team unity as a key factor.
This shared vision likely enhanced their performance. Team 1s leader is a perceiver (P), a person
who struggles with finding closure on important issues to move on to other necessary items.

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Team 1s large percentage of introverts, thinkers and perceivers may have resulted in less-effective
group communication. Team 2s large quantity of extroverts, feeling types and judgers may have
facilitated group communication.

Team composition of personality types appears to be a correlated variable for differences in team
performance. This case example shows that for the most part, diversity in team member personality
types is needed to produce successful team results. Team 2s greater balance of extroverts and
introverts, sensing types and intuitive types, and thinking and feeling types appears to have
influenced successful team performance. Team 2s large number of judging types also ensured that
the project was completed on schedule. It is no wonder that one of the main goals of many HR
divisions is to employ a diverse worker pool.

Conclusion and recommendations

The case example of IS development teams presented here indicates that personality types are an
important factor in successful team performance. Organizations that wish to develop high-
performing teams should analyze the personality-type compositions of these groups and assist
team members in understanding their own individual attributes as well as appreciate the
contribution of the other members.

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Chapter 8
Communications Management

Communications Management - Introduction

The difference between mere management and leadership is communication - Winston

Communications management is the coordinated efforts of planning, implementing, monitoring,

and revision of all communication channels within an organization and between other
organizations. Project management is tasked with identifying and addressing the flow of
information, who needs information, when is that information needed and who is ultimately
responsible for transmitting and providing information.

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Chapter 8
Communications Management
Through the PMIs Pulse of the Profession In-Depth Report it has been found out that in the
organizations considered as highly effective communicators, 80 percent of the projects met their
original goals, versus only 52 percent at their minimally effective counterparts. The report further
showed that the effective communicators companies had 71% project on time in comparison to
only 37% in minimal effective communicators. The budget was additionally met on 76 % of
projects in highly effective communicators and only by 48% in minimal effective communicators.

Source: 2013 Project Management Institute, Inc. Pulse of the Profession In-Depth Report: The High Cost of Low Performance: The Essential
Role of Communications, May 2013.

Communication occurs internally, externally, vertically, and horizontally in a Project. Various

people are involved in the communication process of a project including Project managers,
Customers, Sponsor, Functional Managers, Stakeholders, Team Members and sometimes even
people outside of the project who can provide valuable inputs through their experience or skill

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Importance of Project Communications Management
The key to any project is communication. How else would information and ideas be exchanged
and challenged? Communications management is the process of successfully communicating ideas
from one to another in a project without altering the actual content of the message or idea. In this
section of the chapter, we will discuss the importance of communication in a project and how it
can be used to gain an advantage to reduce time and cost and improve quality.

Take Apple for example one of the most popular electronic giants. Communication is a vital
aspect for their business. Ideas, directions, procedures, and general information have to flow all
the way from the management to the project managers and all the way to the individual coder or
tester that are involved. Each person will interpret the message in a subjective way, based on his
or her discretion. This will cause a ripple effect slight variations of the message as it is passed
down from one person to another. The most effective way of avoiding the ripple effect is to follow
an appropriate communication management plan, where set guidelines will be in place with proper
communication open in order to avoid deviating from the actual content of the idea or message.

Communication is possibly the ultimate threat to numerous projects around the globe. There are
many factors that strictly relate to a well-communicated project such as time, quality, and cost.
Time can be drastically reduced if the IT professionals can properly understand the requirements
from the clients. If the guidelines and requirements gathering are ambiguous, then IT professional
have to conduct additional meetings and interviews in order to obtain the needed information. If
wrong information was communicated or interpreted, then the design and build of the final
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deliverable will be incorrect. This will have a major setback in the project, which will greatly affect
cost. Cost depends highly on the amount of time worked. The more the time spent on a project,
then the more likely that the projected project budget will be surpassed. With time constraints and
improper requirements, the quality of the deliverable will also drastically diminish, leaving a very
unhappy client. This is an ongoing chain reaction, which will cause the debacle of the whole

Statistics show that IT specialists lack communication skills. To mitigate this drawback, the MIS
professionals are introduced to bridge that gap between the client side and the IT side. The MIS
professionals should have strong verbal skills to fully understand the needs by the client and
properly communicate this information to the IT side.

Face-to-face interaction is probably the most effective way of communicating. A person can gain
more information from the tone and body language of the person than the actual words that are
said. So, frequent meetings with the clients should be promoted in order to have an effective
connection of the flow of information, so there would not be any discrepancies.

In this section, we have talked about the utmost importance of communication. We have also dealt
with the advantages and disadvantages regarding this topic. It is the backbone of any project.
Without proper communication, the entire project will collapse. In the next sections, we will
discuss about the stakeholders that are involved in a project, techniques for good project
communication, and performance for success.

Project Communication

While working on a project, the chain of communication covers elements present inside as well as
outside the organization. One of the major problems is in the clarity and detail of information being
provided to the appropriate stakeholders. There are times when a project manager is not able to
relay the information to the executive committee, on the other hand there are times when the
executive committee falters in providing appropriate requirements and scope to the team. This
results in rising of risks across various project phases.

Action Plan for Communication Management

Identify the key stakeholders and their preferred means of communication. For instance,
face to face meetings, email, video conferencing, shared repository, conference calls.
Define the responsibilities of all resources in the team at various levels in terms of
information to provide at particular time intervals.

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Create awareness across the team as well as external stakeholders about the communication
channels decided for the project.

There can be two broad categories of communication in terms of project management:

Synchronous and Asynchronous communication:

Synchronous Communication Asynchronous Communication

Meetings Face to Face Email/Fax
Conference Calls Shared Repository
Video Calls Notes/Memos
Instant Messaging Newsletter/Bulletin Boards
Standup Presentations

Challenge: Time Zone, Language Challenge: Time Overrun,

barriers Miscommunication

Modern ways of Communication Introducing Enterprise Social Network

Every organization needs an informed workforce to ensure efficient project management. Every
worker works as a project manager at some time, whether or not he or she holds the title. That
person is responsible for work starting from sales, marketing, developing product to hiring people
and many more. This requires an effective communication channel and therefore a lot of
companies have started using various social technologies like communicating customers on
Twitter, creating Facebook pages and getting feedback through these medium. Enterprise Social
Network is an important method used by many organization that encourages conversation across
different divisions encouraging large scale communication. Few of the many features of ESN are
as follows:

1. It facilitates communication through social graphs that makes communication process

more easy to handle and widespread
2. It provides a real-time visibility of progress in a project that creates awareness among all
types of employees and facilitates healthy competition
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3. ESN has the ability to provide across the border awareness which keeps member of
different hierarchy in loop. This helps in receiving feedback and change request that avoids
extra work towards end of project.
4. This encourages conversation across different departments and it also provides a platform
where different department can help each other when required.
5. This also acts as a single source of truth where everyone is aware of project work and thus
stimulates a healthy work environment.

When an organization consists of many departments like sales, purchase, marketing, engineering,
finance and others, it becomes difficult to communicate with each other if different department
uses different mode of communication. There arises a situation where employees get confused
which communication to take into consideration. These situations can be completely avoided by
having a common and transparent platform for communication. This will help the organization to
communicate in an organized way and avoid extra work due to miscommunication. Socialcast is
one such tool by VMware which provides these facilities to enterprises and help in improving the
involvement of the entire team in the project making them understand the importance of their roles
and responsibilities.

Another effective measure to establish efficient communication is to design the communication

alignment matrix. This matrix reveals the mismatches between the communications and
information exchanges that were supposed to occur and those that actually occur.

The main aim of a communication plan lies in accomplishing the tasks such as: sharing
information, involve external stakeholders in an efficient way, assign responsibilities, manage
stakeholder expectations, understand sponsors way and need for information, highlight the
importance of team communication channels. All these measures should ultimately result in an
effective communication framework facilitating greater and faster understanding of project goals
and requirements. It should be a stepping stone towards anticipating risks, prevent duplicate work
and reduce the efforts associated with miscommunication and delay of information.

Communication Channel

Project communication is one of the most vital components in any given IT project. It becomes a
key factor in the success of the project. A projects success depends on how well each individual
stakeholder of the project communicates with the other. It is highly important that each and every
individual involved in the project develop the critical set of communication skills and techniques.
Most of the IT project managers agree that communication and interaction between the people
involved in the project help in the success of, or destroy the project.

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Project Communication helps the project manager to motivate, lead and delegate work to the
project team, as well as helps to report back to all the stakeholders of the project. There are three
communication channels that a project manager must follow for a project. They are as follows

Upward Communication Channel

Downward Communication Channel
Lateral Communication Channel


Effective communication with the higher management

Helps to highlight the problems, issues and risks faced by the


Tools used for upward communication are Exception reports,

Project charter and project communication plan

Helps to get top management support for the project

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The project manager must provide direction and guidance to project


Keep track of the pending tasks, tasks scheduled, deadlines.

Tools used for downward communication are face to face

communication, Email, project plan, Issue log etc.

Project manager requires delegation skills.


The project manager must communicate with the clients, contractors

and vendors.

Used to negotiate resources, deadlines etc.

Tools used for lateral communication are Contracts, Emails etc.

Project manager requires good people skills and diplomacy.

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The ways in which these three communication channels are managed and improved are important
to increase the chance of success in the project.

Advantages of Use of Communication Channels

The effective use of the communication channel provides numerous advantages from the project
perspective. The various benefits that the communication channels provide are as follows

Support project team development

Effective communication among the project team helps the team members to understand
the requirements of the project clearly. It also helps to communicate the deadlines and
importance of each and every milestone. Effective communication means improved
performance among the team members.
Helps throughout the SDLC life cycle
Starting from the user requirements gathering to the implementation of the project and the
support and maintenance work that follows are all helped by effective communication. It
helps to inform the stakeholders of the different types of channels used in the project, the
reporting hierarchy etc.
Keeps stakeholders up to date
Effective use of the communication channels helps to keep all the stakeholders in the loop
of the project and thus keeps them up to date on the progress and status of the project.
Drastic reduction in documentation
Effectively using the communication channels from the early stages of the projects i.e.
from the user requirements gathering stage drastically reduces the need for extensive
project documentation.

Top Communication Skills of Project Managers

Research shows that effective project managers have similar traits and skills. Furthermore, even
though an abundant number of project managers exists, truly effective project managers are few
and far between. So what makes a truly effective project manager?

It is apparent that effective communication skills is a key component for an effective project
manager. Put simply, a project manager can have as high of a technical competency than Bill
Gates, but if a project manager cannot communicate with others their leadership will be greatly
limited. In these modern times, information technology is less about coding and more about how
information technology connects others.

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Effective communication skills stem from a variety of soft skills. Some of the traits seem simple,
yet more often than not are drowned out by the project managers holistic search for more technical

Communication Skills of Project Managers

Confidence Clarity

Trustworthiness Consistency

Respect Accessibility

Energy & motivation Flexibility

The first group of communication skills are more so personality traits. Project managers must be
confident in their role, as well as respectful to their team and trustworthy. In addition, a project
manager must set the tone of energy and motivation for the team they are leading.

The second group of communication skills are more so behavioral tendencies. Project managers
must be clear and consistent in their actions, accessible to their employees, and flexible with their
schedules. Interestingly enough the higher one climbs up the corporate ladder, the less they think
of themselves and the more they think about others.

In order to design an efficient communication plan, it is highly essential to identify the stakeholders
for the project. According to Guide to the Project Management Body of
Knowledge (PMBOK Guide), a stakeholder is defined as a person or organization that is actively
involved in the project, has interests that may positively or negatively affect the performance or
completion of the project and may exert influence over the project, its deliverables or its team

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Stakeholder Management
The process by which you identify who your stakeholders are and how to meet their expectations
and hence win their support is called Stakeholder Management. The stakeholders of a project
are identified during the start of the project by interviewing each stakeholder and recording their
name, goals, expectations and concerns in a document called the Stakeholder register (Greene
and Stellman p500). Furthermore, each stakeholders level of commitment and need for
communication in the project is also determined. This will help us in designing a communication
strategy that provides each stakeholder only with information that they are interested in. It is also
useful to group the stakeholders into groups as each group would have similar stake in the project.
It is important for the project manager to clearly understand the stakeholder expectations as the
project success or failure depends on this.

Additionally, it is not just important to identify your stakeholders but it is also necessary to find
out what motivates them. This is part of designing the Stakeholder Management Strategy. A
good way to do this is to prepare a Power/Interest Grid (Greene and Stellman p503). People with
high power need to be kept satisfied while people with high interest need to be kept informed.
People who have high power and low interest are the ones who have a high degree of influence,
and must just be kept satisfied with the project even though they arent interested in it.

A typical Power/Interest grid looks like this:


This first step of identifying your stakeholders and their goals, expectations and concerns is called
Stakeholder Analysis. Once the stakeholder analysis is completed, the next step is Stakeholder
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Planning. This is the stage where you decide how to manage your stakeholders and how to keep
up to their expectations and therefore gain their support for your project. In her blog
(, Rachel Thompson enlists the various
steps towards stakeholder planning. They are:

1. Prepare the power/interest grid.

2. Think through your approach to stakeholder management.
3. Work out what you want from each stakeholder.
4. Identify the messages you need to convey.
5. Identify actions and communications.

Good stakeholder management is critical to ensure the success of a project. It helps create a good
positive relationship with the stakeholders and therefore reduces project and work stress. In the
modern business environment, an honest, transparent and open stakeholder management process
is favored.

Stakeholder Analysis
An important part of communication is knowing who you are talking to and how you are
communicating to them. A Stakeholder Analysis focused on project communication is an effective
way for a project manager to know who he/she is communicating with, what medium of
communication is being used, and when the communication should take place. It is also important
to note that different people require different forms and frequency of communication. For example,
a subcontractor will require a less frequent amount of communication than someone in a
management role within a company.

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By identifying the needs of all stakeholders involved and related to a project early in the
communications planning phase the risk of poor communication is mitigated. A project manager
will be able to know when and how each stakeholder will need to be communicated with
throughout the project and will help to ensure that failed communication is not an issue for the
project. Additionally, by delivering documentation to the stakeholder in a consistent manner (hard
copy, email, etc.) the stakeholder will be accustomed and comfortable with the information they
are receiving and will know what to expect throughout the project.

Reporting Performance to Project Stakeholders

Without the approval of project sponsors and the support of other related stakeholders the project
would not exist. Thus, it is very important to keep these stakeholders informed on the projects
performance and status.

Project performance updates, despite their form, should include all related project information
including scope, cost, timeline, and quality. Performance reporting should begin at the start of the
project with development team meetings and reporting should continue throughout the project with
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project team meetings and various other types of correspondence. A development team meeting
should take place with the project manager and all stakeholders present. The meeting should focus
on outlining the project's requirements in relation to scope, cost, time, and quality. It should also
formalize the projects implementation process and monitoring standards. Project team meetings
should focus on the status of the project, achieved/missed milestones, and finding solutions to
correct any issues that may have surfaced. The project manager and all sub-task managers should
be present during team meetings. Other correspondence can include emails, memos, and phone
calls to the stakeholders to keep them updated. It would also be good practice to hold periodic
physical meetings with stakeholders as well.

The quality of the reports themselves is also of great importance. Only include the pertinent and
necessary information when reporting to stakeholders. Stakeholders do not want to be bothered
with irrelevant information and may not have the time to sift through pages and pages to get the
information they need. Reports need to be consistent in format and should be well structured so
that different types of information are easily identifiable within the document. Remember, to
maintain a good relationship with your project stakeholders you must keep them in the loop on all
major progressions and any major project issues.

Improving Project Communication

While communicating, your performance is important, evaluating your communication
performance is equally if not more important. As project managers, team members, and company
executives we should continually strive to increase our communication effectiveness.

One way to improve the effectiveness of communication is to simplify your message so that it can
be easily understood by your audience before you dive into the details. Avoid using acronyms or
technical jargon that may obscure the initial reception of your message. Provide some level of
additional clarification to make sure that everyone understands as questions are not the only sign
that people do not interpret what you are saying. Another way to improve is to pay attention to
whether your audience members are hearing or listening. As more information becomes available
with ease and convenience at our fingertips, our attention is often disrupted from the things we
should really be focusing on. Thus, we should watch for signs from our audience. Look and listen
for cues such as head nods and verbal Okays. When corresponding through nonverbal channels
it is even more important to utilize both improvement strategies above for your readers. Things
that are written can easily be misunderstood with the absence of verbal and physical cues of the

Some tips to improve communication are as follows:

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1. Position communication as a strategic function If the project team focuses on the
big picture communication goals than on the task specific, the audience will contribute and
benefit more from the communication.

2. Define the target It is extremely important for the facilitator to know the target
audience. Only when we have understanding of our target audience we can choose the most
efficient communication medium

3. Make it a group effort Ensure that everyone participates in the communication

process. Communication is everyones responsibility and just not the top- management. It
is vital that the team members communicate with each other without waiting for the
management to initiate the medium.

4. Mix it up Integrate variety of communication channels like emails, telephone calls,

video calls, group chat, etc. to accelerate information exchange.

5. Get an outsiders opinion -Communication can get stale when the same stakeholders
make the same decisions year in and year out. Including a fresh set of eyes in the
communication process helps organizations identify risks and potential mistakes

As a closing thought, improving communication effectiveness can also improve project

performance. Project managers should not only focus on improving their own communication, but
also improving the communication of the project team and its members. Managers should promote
clear communication methods and clear communication channels throughout the projects
duration. As team members become better communicators, everyone on the team can further
understand the goals they are expected to achieve, how they are going to achieve those goals, and
how they can accomplish these things together.

Communication in Action A Compilation of Insights from Case Studies

Whether it is in person or via email, with a sponsor or a stakeholder, effective communication
serves as the very bedrock of business. It can sway public opinion, give teams a sense of purpose,
persuade executives to increase fundingand boost project success rates. No matter the scenario,
the result is the same: Lack of effective communication dramatically increases the risk projects
face and the likelihood that they will fall short. Ineffective communication is to blame for more
than half of projects that fail to meet business goals, according to the Pulse communication report.
Of the US$135 million at risk on every US$1 billion spent on projects, US$75 millionmore than
halfis on the line because of poor communication. This section presents insights gathered from
executives across the globe in PMIs whitepaper called Communication: The message is clear. The

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information has been presented in a distilled format to allow practitioners of project management
to assimilate quickly important information.

Communication should be engaged - Effective communication does not just convey facts. It
makes people understand the role they play in the project. Done right, communication engages
everyone who touches the project, from executives and end users to project managers and their
Communication should be across the team spectrum- Project communication planning
should not be limited to internal stakeholders. Many projects affect user groups, leaders and
communities outside of the enterprise. Whether the organization is launching a product that
requires regulatory approval or adding infrastructure that will cost customers money, the
community will have a say in whether that project moves forward or not.
Communication is one vehicle - Even after the project is finished, team leaders and project
sponsors are still responsible for communicating with end users, business unit managers and
executives about what the team accomplished and the value the project brings to the
Communication should be a priority It is an unfortunate byproduct of todays rapid-fire
paced business environment, but the reality is that communication often falls to the bottom of
everyones to-do list. Meetings are canceled, reports are ignored and questions go unasked.
Yet regular communication between the project team and organizational leadership is a critical
risk management step that organizations ignore at their peril.
Communication identifies potential problems - Regular project communication from the
team help sponsors, leaders and clients stay abreast of progress and help identify any potential
problems. The project team does what they think stakeholders want, but without feedback from
those stakeholders, they cannot be sure.
Establish a formal communication plan - To avoid communication misfires, some
executives suggest that the department establishes a formal communication plan for every
major IT project. It requires the business owner and all functional stakeholders to participate
in a formal review at different stages of the project. A dozen partners come togetherfrom
human resources, finance records management, information security, acquisitions, IT
infrastructure and capital planningto discuss progress, assess risk, and review the schedule
and budget. While constructing such a rigorous communication plan takes time and should be
built into the project schedule, it is well worth the effort in saving cost and money later on.
Communication Roles should be incorporated - Although communication plans should be
customized to suit the organization, apart from outlining what needs to be communicated and
to whom, how often these exchanges should happen, in what format, it is necessary to

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incorporate why the communication is being exchanged. This conscious effort to incorporate
the roles of communication or the why will empower team members and they are more likely
to make time to do it.
Communication should give people what they want The goal of an effective
communication is to ensure that the recipient receives the indented messaged in their preferred
format. Some people live and die by emails filled with spreadsheet attachments. Others want
a simple text. Therefore, all of those preferences should be considered as the project
communications are developed.

Communications Management in the context of global teams

Communication management can become complicated when dealing with global teams due to
cultural, geographical and time zone differences. This means that project managers are dealing
with teams not just in different time zones but also those that have different work ethics, different
working hours and different socio cultural behaviors. Following are some techniques that project
managers can utilize to manage teams in global settings.

Common platform
Using a shared platform for project management not only increases visibility across all members
but also provides a single centralized place to view all information regarding the project and keep
track of key milestones. Some key contributors to develop a common platform include

o Collaborative project management: Project managers can choose to use a

collaborative project management software that everyone on the team can access in
their own timeframe and then track and follow progress and comments of other team
members. Several cloud-based software are available that also offer features such as
instant messaging to foster communication.
o Video conferencing: Because much of human communication is non-verbal through
facial expression, gestures and body language, using a video conferencing tool can help
project managers understand such cues. For important project meetings, using video
conferencing will increase team members engagement and reduce the chances of
miscommunication. Recording such meetings and distributing the recordings will also
serve as an important project artifact that could be referred to later. Also, encourage
project team members to communicate with both phone calls and emails. Calls bring
personality into the communication, whereas emails bring clarity. Use instant messages
for quick access to information from team members. Numerous vendors offer
collaboration suites, which include meeting, chat and video conferencing tools.

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o Combine Calendars. The Middle East observes Friday and Saturday as the weekend
and much of the European workforce goes on sabbatical sometime during summer. To
keep track of regional holiday and vacation schedules, use tools that let you merge
different calendars. Many online meeting applications allow a single global view of
calendars from different time zones.

Cultural Differences:

In many Asian cultures, saying yes or nodding is a respectful way of showing that the listener is
paying attention, not necessarily that he or she agrees. Ensure that teams have been trained in
cross-cultural communication to avoid misunderstandings that can derail a project. Many such
cultural training videos can be found online although formal training can be received from vendors.

Using interpreter:
Though English is the global language for business, strong accents can still impede
comprehension. In a business-critical customer negotiation, such confusion can threaten your
project. In these situations, it is important to have a language interpreter who can bridge the
communication gap. If that is not possible, contact your organization's sales teamsthey are
usually local and have expertise in the area's languages.

Include All Team Members:

Many remote teams complain that they do not feel included. Avoid this by setting clear ground
rules at the beginning of the project that outline who will do what work and make which decisions.
Also remember to request feedback from your remote team members to ensure that everyone can
contribute their expertise. This will also help you match the best-suited individual to a required
skill set.

Work Around Time Zones:

In one of my recent projects, we had team members joining calls and videoconferences from the
U.S., the U.K., Hong Kong, India and Australia. This presented us with the challenge of finding
an acceptable meeting time for everyone. We ended up adjusting the meeting agenda so that team
members calling at inconvenient times only had to participate in part of the meeting. That helped
keep those team members fully involved. Try to rotate which team members have to log in at
inconvenient hours. Additionally, explore the possibility of subdividing the teams based on two
major time zones.

Be Aware of Local Labor Laws:

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Remember that local laws or customs could result in additional resource costs. For instance, in
many countries, team members who work after 5 p.m. are eligible for overtime. Do your best to
facilitate team coordination within reasonable periods and try to allocate work streams that can be
executed around the clock to avoid the extra costs associated with overtime hours.

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Chapter 9
Risk Management

Risk Management - Introduction

Life is more risk management, rather than exclusion of risks. - Walter Wriston

Risk management is the identification, assessment, and prioritization of risks followed by the
coordinated application of available project resources to minimize, monitor, and control the
probability and impact of both predictable and unpredictable risks. Overall, the goal or risk
management is to provide assurance that uncertainty does not hinder project goals.

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Chapter 9
Risk Management
According to the 5th Edition of the PMBOK Guide, project risk is an uncertain event or
condition that, if it occurs, has a positive or negative effect on one or more project objectives such
as scope, schedule, cost, or quality whereas Risk Management is the identification, assessment,
and prioritization of risks followed by coordinated and economical application of resources to
minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize
the realization of opportunities.

The causes of the risk can come from many sources such as a requirement, an assumption, a
constraint or a condition.

As an example, we have examined the risks involved in CodeWorks Corporation, which is trying
to move all its enterprise applications from Mainframe to Windows based server. The project
involves a great amount of expertise as both the existing and new technologies have a lot of
differences in terms of skillset, resources and other non-functional attributes. Since the major
business processes run on Mainframe server and the whole business is totally dependent on it, it is
imperative to be cautious when moving the critical data and applications from one region to
another. In the below section, we have tried to apply a suitable risk management framework that
involves Identifying, Analyzing, Responding and Tracking risks and some mitigation strategies.

1) Risk Identification
1.1) Human Resource Risk
If critical resource who has enough expertise in the migration process leave the
company or has to take leave due to personal problems.
1.2) Vendor products pricing
If the pricing of the software/hardware component increases, then it may lead to
financial problems.
1.3) Natural Calamities
Natural calamities like fire/earthquake can cause great loss to the project.
1.4) Uncertain server behavior
Since the project is first of its kind for the enterprise, the exact functionality of the
Windows server is of a concern to the huge data that comes across every day.

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1.5) Data conversion risk
The data format in mainframe system is different than what followed in Windows based
system which can be big risk during data migration activities.
1.6) Data loss risk
The project involved migrating critical data and there is a risk of data loss due to large
amount of data transfer.

2) Risk Analysis
The below table showcase the severity of risk based on the likelihood and consequences:


Insignificant Minor Moderate Major Catastrophic

Likelihood: 1 2 3 4 5

A (almost H H E E E
B (likely) M H H E E

E (rare) L L M H H

Based on the above table, the identified risks are then classified:
Human Resource Risk [C4] Vendor products pricing [C2]
Natural Calamities [D5] Uncertain server behavior [B3]
Data conversion risk [B4] Data loss risk [A2]

Risk response not only involves jumping to the issue and solving, but also other approaches
in which the project manager needs to make decisions whether to leave that risk, transfer
it or handle it. Below are some approaches followed and also supported in some form by
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Avoidance-based responses are employed at any point in the development lifecycle where
future planning work is performed. Typically, most risk avoidance occurs during the
project definition and planning phases of a project, where objectives, scope, key success
factors, work breakdown, and project outputs or deliverables are defined. An example of
risk avoidance is the use of a stable, established technical solution in preference to an
untried or complex new technology. However, risk avoidance solutions may limit the
ability to achieve high-level Project objectives, by unnecessarily constraining a desirable

Control-based responses occur at all points throughout the development lifecycle, and are
typically the most common response. They identify an action or product that becomes part
of the team, and which are monitored and reported as part of the regular performance
analysis and progress reporting of the Project.

Acceptance of risks as a response may be based on the cost-ineffectiveness of any available
response or solution. Legal risks in our project would be that some clients of LifeSaver
would oppose transition to information systems and automations. Though there would be
some legal costs involved, we accept the risks and set aside risk buffer time and budget for

Transfer-based responses target the party who are best placed to analyze and implement
the response to the risk, based on their expertise, experience, and suitability. For our
project, we use this as a final measure because we have limited resources and time.
Transferring procurement contracts would be justified but not the in-house development

Investigation-based responses do not define any mitigation for reducing an individual risk.
They are responses to risks where no clear solution is identified, and further research is

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Risk tracking is an important part of risk management. In it, the team monitors the status
of risks and the actions it has taken to mitigate them. Risk tracking is essential to effective
action plan implementation. This means devising the risk metrics and triggering events
needed to ensure that the planned risk actions are working. This can be done through
Risk tracking includes:
o Monitor risk scenarios - Risk scenarios are monitored to determine if the
probability of risk occurrence is changing. Tracking risk scenarios over time
increases the level of confidence that risk probability has been accurately projected.
Example: Database modules are coded differently in COBOL compared to
programming languages written Windows based applications.
o Compare thresholds to status - Through status reports and other project
documentation, thresholds outlined during the Risk Planning are monitored. Once
a threshold has been exceeded, the risk action plan is executed.
o Provide notification for triggers - Triggers are set to notify the project when
unacceptable risks are encountered. Triggers can indicate the need to revisit the
risk action plan, inform the project that the risk action plan can be put on hold, or
signal the release of an action plan.
o Report risk measures and metrics - Measures and metrics are used to determine
the effectiveness of the risk management process and risk planning. The project
reports on risk measures and metrics to verify that risk management and tracking
are occurring according to plan.

Importance of Project Risk Management

Risk is inevitable in an organization when undertaking projects. However, it is important to ensure
that the risks are kept to minimal and hence risk management is widely used in the organizations
for the above stated purpose. Risk Management is one of the nine knowledge areas as defined in
PMBOK. It is a process adopted to identify, analyze and respond to the potential risks that can
arise during a project life cycle and prepare mitigation plans for the same.

Risk Management is an important part of project management that can contribute widely in
lowering the project costs and avoiding project overruns. It can help improve project success by
helping make key decisions during the important stages of the project. The decisions are based on
a set of facts that are based on analysis performed in the earlier stages using risk analysis tools.
Selection of good projects, determination of project scope and development of realistic estimates
are few of the key areas where the decisions of the stakeholders are considered prior to moving
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ahead to the next stage. Risk management can help the managers take these key decisions of the
project, reducing the chances of project failure.1 KPMG found that 55 percent of runaway projects
projects that have significant cost did not risk management at all.

Essentials of Project Risk Management

A project risk can be defined as an uncertain event or condition that, if it occurs will have a positive
or negative effect on a projects objectives. The negative risk involves understanding potential
problems that may affect the budget, schedule, scope, agreed level of quality and the project output
and how they might impede project success. Once the risk has been identified, project managers
need to come up with a mitigation plan or any other solution to counter attack the risk. Positive
risks are risks that result in good happening, sometimes called opportunities.

Managers in the organization can plan their strategy based on the six steps of risk management.
Following are the steps to manage risks effectively in an organization.

Risk Management Planning

Risk Identification
Qualitative Risk Analysis
Quantitative Risk Analysis
Risk Response Planning
Risk Monitoring and Planning

1 Cole, Andy, Runaway ProjectsCause and Effects, Software World, Vol. 26, no. 3, pp. 35 (1995).

Risk Management Planning

Risk planning is a critical and often overlooked process on every project. Proper planning at an
earlier stage can improve the success rate of the project. The reasons for risks can be varied, some
are internal to the project and some are external. The project environment, planning process,
project management process, and inadequate resources and so on can all contribute to risk. Some
risks are known in advance (known knowns) while some of them arise during the project lifecycle
(known unknowns). The purpose for Risk Management Planning is to create a risk management
plan, which describes the process for defining, monitoring and controlling the risks throughout the
project. This plan becomes a deliverable of the project planning process.

Risk Management Plan includes a description of the methodology that might be used to perform
risk management. It also includes a brief outline of how the risks would be managed but do not
aim to provide responses to the risks. The responses to the risks are defined in a different project.

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It does not address specific risk behavior, instead creates a framework for the risk management
process. The framework outlines the following aspects of risk management,

Risk Process: The plan outlines the process to be followed for risk identification as well as
the level of depth of information to be provided for each risk.

Risk Responsibilities: Roles and responsibilities of the people involved in the risk
management process are stated here.

Risk Budget: Funds for risk management are generally specified in the overall project budget.
The plan details how and when the team might use this budget for risk mitigation purpose.

Risk Thresholds: It represents the personal and organizational tolerance for risk. It is the
amount of satisfaction or pleasure from a potential payoff.

Risk Evaluation: Risk Management plan should include some detail on how risks will be
scored and termed.

Risk Process Timing: The risk management plan should include detail on the frequency of
risk identification, assessment and response development.

Risk Identification
After you complete the risk management planning process, the next step is to identify the risks
your project may face. The process of risk identification is to help you figure out what actions
might happen that will affect your project in either a negative or positive way. Your team can come
up with as many risks as possible and during the analysis phases of the risk management processes
you can narrow it down to your top ten risks. Some tools and techniques your team can use to help
with risk identification are brainstorming, the Delphi Technique, interviewing and SWOT analysis.
The main output of the risk identification process is the risk register. This output will get
information from multiple risk management processes. From the risk identification process you
will be able to start the risk register by adding the risks you have identified that will affect your

Risk identification, part of the risk management planning process, involves determining what the
risks are to the project and the characteristics that are associated with these risks. It is an iterative
process, where the project team performs the first iteration of risk identification, followed by the
project team and primary stakeholders performing the second iteration, the final iteration of the
process can then be performed by a person or a team that is not involved in the project. The purpose
of risk identification is the quick, early and continuous recognition of events that, if and when they
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occur, will have undesirable influences on the project's capabilities to conquer performance
milestones or impact outcome goals. They may be an internal part of the project or can be
influenced by external elements.

There are a variety of ways to classify risk assessments that includes project risk assessments,
assessment of risk to support investment decision, analyze options for alternatives, and
assessments of financial or operational variability. Risk identification needs to be in accordance
with the type of assessment that is being performed to serve as a backbone for risk-informed
decision making. For instance, the initial step for an acquisition project is to identify the long term
objectives and the short term goals and milestones, consequently harboring a common platform
for the team to assess the success criteria for the project. This defines bounds for the scope and
provides context by which the risk is identified, classified and assessed.

The inputs to the risk identification are the risk management plan, risk categories, historical
information and project planning outputs, on which the tools & techniques are applied, to yield the
output in the form of risks, triggers to identify those risks and input for other processes.

Inputs to Risk Identification

1. Risk management plan It is a formal document prepared by the project manager to
identify risks, estimate impacts and define mitigation procedures for the corresponding

2. Risk categories Identified risks are then classified into well defined categories, The
categories cater to common sources of risk for the industry or application area. The
following are some of the risk categories:

Category Description
Technical Risks Risks related to use of complex
technology and reliance on niche
technologies. E.g. Integration risks
Project Management Risks Risks related to cost, scope, time and
quality aspects of the project. E.g.
Inaccurate budget estimates.
Organizational Risks Risks related to organizational policies,
culture. E.g. Resource conflicts, lack of
prioritization of projects

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External Risks The risks caused by external factors like
climate, legal or labor. E.g. Earthquake,
civil unrest.

3. Historical information The data available from the past projects of the organization. The
two common sources of information are:

3.1) Project files: These include final project reports, or risk management plans.

3.2) Published information: These include commercial databases, published

studies, and academic papers for reference to the project managers.

4. Project planning outputs Project planning includes documents like project charter, project
scope, WBS, etc. On the basis of these documents, possible risks are identified across the
whole project.

Tools & Techniques

1. Documentation review This refers to both historical and current documentation related
to the project like scope statement, project contract, prior project files etc.

2. Information gathering techniques Some examples of information gathering techniques

used in risk identification are given below:

Technique Description
Brainstorming It is one of the most common tools for risk
identification. The process involves
experts from various streams, guided by a
facilitator to develop a comprehensive list
of quantitative and qualitative risks.
Delphi technique This technique is useful in getting a median
view of the data by a structured group and
not letting any one person have an undue
influence on the outcome. It utilizes a
questionnaire to solicit ideas about the
risks and then revises the risks on the
course of few rounds.
Interviewing One of the most common techniques
deployed in project management. Different
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stakeholders are interviewed based on their
experience and/or expertise.
SWOT analysis SWOT stands for strengths, weaknesses,
opportunities and threats. It examines the
project from all four perspectives which
helps in identifying risks from a holistic
point of view.

3. Checklists Checklists are a simple and fast method to identify risks. On the downside,
preparing an exhaustive checklist of risks is a tough task. The checklists are usually
prepared using historical data.

4. Assumptions Analysis This technique develops on the assumptions/hypothesis made at

the start of the project. Risks are identified from inaccuracy, inconsistency or non-
conformance to the assumptions of the project

5. Diagramming techniques The following diagrams are used to identify risks:

5.1) Cause and effect diagrams Also known as Fishbone or Ishikawa diagrams.
5.2) System or process flow charts Depicts the flow and relation of various
elements of the system.
5.3) Influence diagrams Graphical representation to show relationships, such as
causal influence, time dependency between variables and outcomes of a problem.

Outputs of Risk Identification

1. Risks The list of identified risks, may have a positive or negative effect, on the project
objective for development of risk mitigation strategies.

2. Triggers - A list of potential warning signs that indicate whether a risk has occurred or is
about to occur. E.g. Failure to meet set milestones indicates delay in schedule.

3. Inputs to other processes - Inputs from risk identification may identify need for further
action in other areas. E.g. Inadequate testing detail in WBS.

Risk identification is an iterative process. With the development of the project, more risks which
are relevant and more specific to the domain will be revealed. Every phase of the project life cycle

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will come with its own set of risks and will have to be assessed. The risk statement will be adjusted
regularly to suit the new information that is obtained as a result of the identified risks.

Brainstorming brings together the project team to come up with ideas as a group with a facilitator
running the session. Brainstorming should not be overused though because sometimes it can hinder
the groups ideas by not allowing individuals to say their ideas because of what others might think.
The Delphi Technique
The Delphi Technique focuses on getting a consensus from everyone by using rounds of
questioning and written responses. It gets this consensus from a panel of experts that make
predictions about future developments. It helps getting rid of or lessens biases that might occur
during a brainstorming session.
Interviewing helps get facts from people through many different methods, such as through the
phone or through email. This is a good way of collecting information especially from people who
have project experience to identify risks. You are able to get their perspective of the risks that
might affect the project.
SWOT Analysis
SWOT stands for strengths, weaknesses, opportunities and threats. Figuring out your threats using
the SWOT analysis can help in identifying the risks of the project.

Qualitative Risk Analysis

You will now begin your analysis on the risks you have identified from the second process; you
will start with qualitative risk analysis. Here you will figure out the likelihood of the identified
risks occurring and the impact the risks will have on the project. This will help in ranking the risks
you have identified to see the importance of each risk. There are three tools and techniques that
you can use to help with qualitative risk analysis: probability/impact matrixes, the top ten risk item
tracking, and expert judgment.
Probability/Impact Matrixes
This matrix has two different parts; at one end it holds the probability that the risk will occur and
at the other end it has the impact it will have on the project. This will give you a guideline to help
you classify your risks without biases that internally you or the team might create for specific risks.

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The Top Ten Risk Item Tracking
This tool helps you keep track of your risks throughout the length of the project. It helps establish
a periodic review to make sure your project is on track and not left unprotected from the top ten
risks that you have identified. Tracking can help keep the project team in check of the risks and
state the progress of resolving the risk.
Expert Judgment
The last tool that is available to do qualitative analysis on the risks of a project is using expert
judgment. Expert judgment is exactly what it sounds like using knowledge and previous
experiences to help identify risks. You can ask certain people on the project or top management
that have previously worked on similar projects.

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Quantitative Risk Analysis
Quantitative analysis is done usually when there are many risks and assessment using qualitative
risk analysis is complex. It is usually done in large projects involving leading-edge technologies.

For Quantitative risk analysis involves large data set, risk analysis on the data set and modeling
techniques. Data is usually available from historical projects that have been implemented in the
past. Some of the common qualitative risk analyses are decision tree analysis, simulation and
sensitivity analysis.

1. Decision tree analysis

There we analyze all the outcomes for a project and assign probability to each outcome. The
outcomes form the branches and can be further split into branches if needed. Then we calculate
the Expected Monetary Value (EMV) by multiplying the probability and the outcomes expected
monetary value and adding them up. For e.g. If project A has two outcomes, completing the project
using technologies 1 or technology 2, the probabilities of completing and costs associated shown



(0.7 probability)

Technology A -$40,000

(0.3 probability)


(0.5 probability)

Technology B

(0.5 probability)

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EMV for Technology A & B can be calculated as below:

Technology A: 0.7*($600,000) + 0.3(-$40,000) = $408000

Technology B: 0.5*($600,000) + 0.5(-$100,000) = $250000

EMV of that branch which has a positive and higher dollar value should be selected as the risk
associated is lesser since the desired result is more probable.

2. Simulations
Simulation analyses the expected behavior of a system using a model of the system. One of the
popular simulations is the Monte Carlo analysis. These analyses can predict the completion date
and the probability and the costs associated with them. Many distributions functions are available
in these simulations which help to analyze.

3. Sensitivity Analysis
Sensitivity analysis is used where one or more variables could affect the outcome. These variables
are input and the resulting outcome can be compared and analyzed to see the break even.

Risk Response Planning

Once the risks are identified and quantified, an organization should come up with appropriate
response to them.

Negative Risks
There are four response strategies for negative risks:

1.Risk Avoidance
Here the risk can be avoided in total and use the approach which is familiar to the team.

2. Risk Acceptance
Here the organization accepts that the risk can occur, and in that event, accepts the consequence
and switches to the back-up plan that was decided to be implemented when the risk occurs.

3. Risk Transference
Here the organization transfers the consequence of the risk to a third party. Examples include
purchasing insurance or claiming warranty.

4. Risk Mitigation
In case the risk leads to undesirable consequences, steps are taken to mitigate or reduce the impact
of the consequences.
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Positive Risks
Responses strategies for positive risks are as below:

1.Risk Exploitation
This ensures that the risks that are taken result in positive risks only.

2.Risk Sharing
Here the risk ownership is allocated to another party.

3.Risk Enhancement
Here the positive risk maximizing parameters are identified and changed to give maximum desired

4.Risk Acceptance
Acceptance can be applied to positive risks when the team is not able or decides to take any action
towards the risks.

Risk Monitoring and control

Risk monitoring and control must be performed throughout a projects life cycle. Monitoring risk
factors has to be an ongoing activity since previously identified risks may materialize at any stage
in the project. There is no guarantee that identified risks will materialize. There is also a probability
that new risks which had not been identified earlier might come up. The project team must,
therefore, monitor risk areas carefully in order to keep the project within estimated schedule and

Risk monitoring and control is performed by following the Risk Management Plan. This is done

Tracking defined Milestones

Following risk mitigation strategies
Alter strategies as necessary
Implement planned contingency activities
Use workarounds for previously unidentified risks
Perform redistribution of assets if necessary
Eliminate obsolete risks from the risk list
There are two possible response types to risks:

Change in the project scope: The scope of the project has to be reduced if the project time and
cost are fixed. This will mean that part of the functionality will not be delivered to the customer.
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Elimination of risk: The project schedule can be changed to overcome the risk. This might require
additional resources (time, money and people) or cause a delay in the delivery of the project.

The tools and techniques that are used to monitor and control risk are:

Risk reassessment
Risk audits
Variance and trend analysis
Technical performance measurement
Reserve analysis
Status meetings
Top Ten Risk List
Outcomes from Risk Monitoring and Control: Apart from the obvious outcomes like control of
risk factors and successful project implementation, this activity also generates learning that can be
leveraged by the entire organization. Lessons learnt from the risk management process can be
incorporated into the organizational process assets.

Software tools for Risk Management

Risk management tools enable project managers to evaluate risks and create risk mitigation plans.
There are a number of risk management tools in the market today. These tools provide risk
assessment and risk management templates that project managers can tailor according to their
specific needs. These tools also provide the capability to create decision trees and graphs which
make it easier to identify, assess and mitigate risks.

One of the most commonly used and simple tools is the Risk Register. These might be simple
Spreadsheets or Word documents which are used as such or as part of a sophisticated risk
management database. Monte Carlo simulation software is a popularly used risk management
software tool.

Other popular risk management software available in the market: EasyRisk Manager, IBM
OpenPages GRC Platform, RiskAoA, Systems Analysis Programs for Hands-on Integrated
Reliability Evaluations (SAPHIRE), etc.

Project managers must be able to identify the proper risk management tools that suit their project
scale and needs to assist in effectively managing the project.

Why risk taking risk?

Risk management is an essential activity in project management irrespective of the size of the
project. A very well-known example of poor risk assessment and management is the financial
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crisis of 2007. Poor risk assessment by Wall Street led to a huge financial debacle which left
repercussions in the world economy.1 The Citigroup publicly accepted that the reason for the dip
in their revenue during the crisis was poor risk assessment.2 Bank of America committed a mistake
when it did not perform proper risk assessment before charging its customers to use their debit
cards to access their funds. Another example is the project to create a nuclear waste repository in
the Yucca Mountains in the state of Nevada. The resistance from the people was not expected and
led to the project being scrapped after years of struggle.3

There is a very well-known proverb: Look before you leap. It is always a wise to weigh the risks
involved before entering a project. Risk management enables project managers to evaluate risks
and develop a clear plan to overcome them if and when they occur.

Retrospective, meaning looking back on, contemplating, or directed to the past, is a method
used to evaluate past projects based on certain criteria. Retrospectives are beneficial for many
reasons, including learning what was done wrong and what may be improved upon for future
projects. This may help mitigate risks that may come up in a future project; for example,
unforeseen risks that arose in a project may become more apparent in a future project.
While Retrospectives do offer many benefits to companies, some do not opt to do them. This is
because companies do not see the value in performing a retrospective, or would rather leave the
past projects in the past and instead only look to the future. Companies may see it as a pointless
endeavor; a company may not want to spend more time and money on a project that is already
completed. However, understanding the reasons behind a projects success or failure is vital to
increasing success and reducing the risk of failures in future projects.

Conducting a Retrospective
Retrospectives should not only be done at the conclusion of a project; Ideally, retrospectives should
be performed throughout the project, as well. All stakeholders need to be represented in a
retrospective. When conducting a retrospective, it should begin with a description of the project,
then the project timeline, lessons learned, and lastly evaluation of success/failure. The lessons
learned section is one of the most important parts of the retrospective.
Analysis during the retrospective is where companies may learn what to do correctly for a new
project, as well as the root-cause of a problem. Methods such as the Pareto analysis may be
beneficial in learning the root cause of problems so that they may be remedied for future projects.

Evaluating Project Success

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Evaluating a projects success can be highly subjective; for example, is a project a failure if it is
$1 over budget? What if it was $10,000 over budget? $1 million?. For this reason, it is important
to have some criteria to evaluate a projects success against. One way to do this is to split up project
success criteria into two categories: process-related criteria and outcome-related criteria.
Process-related criteria:

1. Time - was the project completed on time?

2. Cost - was the project completed over-budget?
3. Product - was the end product completed?
Outcome-related criteria:

1. Use - was the end product used by its intended users?

2. Learning - did the project increase stakeholder knowledge?
3. Value - did the project increase value for the company?

As illustrated in the figure below, all six project criteria work together to determine a projects

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As a project manager, it is important to understand the inherent trade-offs that exist in the process-
related triangle and outcome-related triangle. When a project is under pressure to meet its budget
expectations, either the project will take place in less time or the project will finish with less
features than originally planned in order to meet the budget. Similarly, if you revise a project plan
to include more features in the final product, there will have to be a corresponding increase in
either time, cost, or both.

When taken together, analyzing all criteria in a project may better determine a projects success or

Why Are Bad Projects Hard to Kill? A risk management case study

Whats common about most projects in a professional environment, is that there is always a sense of
enthusiasm and motivation towards a new idea or project that promises much. That energy usually
originates from a single person or a relatively small group and spreads quickly across work groups and
in some cases across the entire organization. Great business success stories usually begin with one man
thinking out of the box, one man purposing to do things differently, or one man crossing the boundaries
of mediocrity. When success is in sight, it is easy to attract interest even from the senior management.
Colleagues begin to think of ways in which they can contribute to the projects success or betterment.
The whole atmosphere is fascinating and positive and everybody wants to be a part of it.

In those terms, we could say that our world does not have a lack for passionate contributors to the
success of a project. Some of them might just be led by blind faith. The success or failure of the project
might matter little to them, but to be identified by their bosses as one who was involved in a successful
or ground-breaking project would be their hidden motive. Whether the motives are positive or negative,
the ends seem to justify the means. If a company is constantly able to bring the right kind of talent to
the right project, everybody gets what they want.

However, amidst all the excitement, is it possible that were missing something that is pivotal to the
ultimate success of the project? What about the need for critics and exit champions? Is it not desirable
to be the one responsible for thinking of ways in which a project could fail? What about the risks
involved or what are the potential obstacles that need to be overcome? It is hard to think of these
questions when the atmosphere surrounding an idea is overwhelmingly positive. Nobody wants to be
the one who burst the bubble. Amongst the numerous project champions and initiators, it is hard to
find a critic or an exit champion.

One of the most important chain of activities during the lifecycle of a project is to identify, assess and
prioritization the possible risks. It is of paramount importance for every project to have a group of like-

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minded individuals who can assess project uncertainties and possible failures. Furthermore, they must
also play a part in mitigating those risks. In this section, we intend to identify who the exit champions
must be, the character traits that they must possess and the true value they will add by analyzing two
case studies, wherein bad projects where pursued without adhering to risk-management methodologies
which lead to catastrophic financial losses and how they could have been avoided.

Essilor was an established and trusted organization that specialized in the manufacture of optical lenses.
They had long been proud of their research and extremely successful past inventions. In 1959 for
instance, they invented the progressive lens, which corrected both farsightedness and
nearsightedness. With the backing of strong track record in research, the company launched itself into
a new idea in the year 1979, of using a composite glass-and-plastic material to make lenses that would
be lightweight, shatter resistant, scratch resistant and light sensitive. Sighting this as a breakthrough
invention, the CEO roped in some of the key contributors to successful projects in the past and soon
set the ground rolling. Soon everyone began believing in the inevitable success of the project. However,
there were some key risks that needed to get considered. Doubts were raised early on about the cost
and the durability of the new lens. The director of research and manufacturing questioned whether or
not the product is even viable, but his views were soon brushed aside as negative and skeptical.
Through the course of the project there were many indications of flaws and fundamental issues with
the composite material, but the project team did not slow down as new budgets were approved to
continue research on the product. In September 1990 however, an assessment of the risks revealed that
quality problems were still unsolved and the success of the project did not seem possible. They finally
decided to bring an immediate halt to all research work and halt production in a year. It cost Essilor
more than $50 million in 1990 dollars.

In early 1985, Lafarge a world leader in building materials and a major player in cement, seemed to
have found a breakthrough in its ongoing research project on the crystallization of gypsum. The
engineering manager of the gypsum division concluded that the crystals could serve as superior
substitutes for the ground-up minerals commonly used in making paint and paper. The idea looked
brilliant and the internal forecast indicated that the annual sales could be at $40 million at the time.
The senior management soon gives consent to the project and they find a sponsor for the initial tests.
To add to the positive feeling, the first production trial of the paper filler is a technical success. The
successful trial heightens the optimism around the project and the forecasted annual sales were $190
million in 1998 dollars. However, similar to Essilors project, early concerns were raised about the
manufacturing process, the products profitability and the need for a more concentrated version. These
risks are ignored and more money gets invested into a new plant, where work on improving the product
would take place. Further concerns are raised by a newly recruited mineral fillers manager about the
technical challenges, but his concerns were ignored. Things eventually began to fall apart for the
project team. First, the sponsor showed little interest in the further trials. Later in April 1991, the task
forces report confirmed that paper filler itself wont be profitable and newer products were needed for
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pilot testing. These factual findings forced the management to terminate the development of the paper
filler. Finally, in 1992, the plant is sold and the entire project was stopped, costing the company a total
of nearly $30 million in 1992 dollars over seven years.

Two companies that were leaders in their respective industries and possessed years of experience doing
research in their respective fields, somehow managed to ignore the numerous indicators of project
failure. There are numerous lessons that can be learned from the 2 examples we looked at, but there
are two important takeaways that we would like to focus on. Firstly, a vital component was missing
from both Lafarge and Essilors project plan effective risk management and a team dedicated to
assess and respond to risks. Secondly, the voices of the few exit champions or critics we given no
credence whatsoever. Constantly, a few individuals raised concerns about flaws and possible pitfalls
that they felt the project was headed towards. However, these voices were drowned out among the
multitude of cheerleader squads.

These two organizations learned the significance of effective risk assessment the hard way. In
conclusion, although innovators and project champions are the ones who lift an organization to the
hilltop of success, it is the exit champions and the critical thinkers who keep it from falling off the

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Chapter 10
Project Procurement Management

Project Procurement Management - Introduction

Purchasing power is a license to purchase power. - Raoul Vaneigem

Project procurement management revolves around the means of acquiring goods and/or services
from an outside source. Project procurement follows a series of related activities carried out during
the execution of a project and is completely dependent on the end goals of the project.

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Chapter 10
Project Procurement Management
Procurement is a natural part of ordinary business, from operations to projects, throughout all
departments and fields. Companies utilize procurement to source those products, services, ideas
or resources that are not readily available in-house. We will try to show several of the main aspects
of procurement through this chapter of the text: Planning, Conducting, Administering and Closing.
Each aspect of procurement ultimately leads to a more effective and efficient process for procuring
products or services for a company.

Plan Procurements
Planning procurements is a process of documenting the project decisions, identifying sellers and
specifying the approach to be followed. Plan procurements identify those needs that must be
acquired from outside the organization to achieve the project objective or operating goal. It also
identifies those needs that can be accomplished by the project team. Procurements planning is
ultimately deciding what product or service is needed, how it is needed, and is that service needed.

Why is procurement planning important?

- Provides an opportunity for all stakeholders to meet this gives the Project Manager a
realistic estimate of project budget and time including the resources to be acquired and the
time taken to procure that resource.

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Plan Procurement: Reference: A Guide to the Project Management Body of Knowledge
(PMBOK Guide), Fifth Edition

Plan Procurements Inputs

The inputs for procurement planning are as follows:

Scope Baseline Scope statement, WBS, WBS dictionary

Requirement Documentation Requirements are collected during the initial phases of
a project as part of the project plan. Safety, security, environmental concerns and health
and legal implications are also considered.

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Team agreements Team agreements are contractual documents that detail about
team(s) that are a part of this contract and some other arrangement from other parties.
Risk register
Activity resource and cost requirements
Cost performance and environmental factors

Plan Procurements Tools, Techniques and Decisions

Make or buy - Determines whether the organization should build the product on its own
or purchase from outside. Evaluation of drawback and opportunities are performed before
making a final decision. The decision is based upon several factors: skill and resource
availability, cost incurred and the time required to develop the product. Substantial
financial analysis is performed before making the decision.

Expert Judgment expert judgment will be used to evaluate the inputs and outputs of the
process. Expert judgment helps in identifying or modifying the seller proposal.

Contract Type there are several types of contracts that are available in the market.
Hence, thorough analysis must be done before deciding on a contract. Fixed contracts have
features such as fixed price or fixed price incentives. Otherwise, Cost-reimbursable
contracts have a cost plus a fixed fee or cost incentive fee qualities.

Fixed price contract

This contract is for acquiring goods with clearly defined specifications.

This contract involves a lot of risk, as the seller has to accept the terms and
Seller would require large reserves and hence can increase profits by
cutting costs.

Cost Reimbursable Contract

This type of contract is opted when the product or work to be done is

uncertain and estimating cost and resource requirements are
difficult. The seller would require an accounting system in place to best
keep track of all expenses.

Time and Material Contract

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This contract is useful when the level of effort needed can be expected or defined
when the contract is issued. The buyer should have budget and time limits in
place to control the cost incurred over the contract.

Plan Procurements Output

There are several outputs of this planning process which are detailed below:

Procurement Management Plan A plan which clearly explains how the procurement
processes will be handled right from developing procurement documents to handling

Procurement Statement of Work (SOW) The SOW is developed from a scope baseline
and outlines only that portion of scope that has to be included in the contract. SOW also
expresses the procurement item such as product or service, nature of the item and also if
the buyer has available the capabilities to develop them.

Make or Buy As discussed above, the outcome of make or buy is stored in this
document. That is, whether the organization produces the products or services required or
will they be acquired from an outside organization.

Procurement document Procurement documents such as information of sellers, contract

statement, terms and conditions, to list a few.

Source Selection criteria Understanding of need, technical capability, financial risk and
risk references.

Change requests Several change requests may arise from project procurement plan.
Integrated change control evaluates the project constraints for those change requests and
decides whether to implement them or not.

Administer Procurements:
For all items and services purchased, leased, rented or acquired for a project, it is necessary to
establish standards to measure and monitor the procurement process. Procurement administration
deals with the handling of vendors and maintaining good relationship with suppliers; this ensures
quality of procured material and services, handling payments and updating the contracts as

An effective method to administer procurements is by incorporating project management

techniques and processes; purchasing managers should understand and incorporate the project
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management processes in administering purchasing activities. This can lead to better
vendor/supplier relationships. This task of effective application of project management tools in
purchasing is easier said than done and requires coordination at multiple stages in the procurement
process across all the vendors and products. Important project management methodologies that
can be adapted in procurement include:

Project planning and execution: have a proper plan for procurements. Plan ahead of time,
communicate with the consumer departments, and discuss their near future plans to gauge
an estimate of upcoming demand.

Monitoring Quality: ensure that the materials and services provided by the contractors are
of agreed upon standards.

Performance Metric: keep note of the contractors performance in terms of quality of

services and goods, cost, timely deliveries and technical capabilities.

Change Management: approve when changes are required, monitor changes, and make
sure that all changes are communicated to stakeholders. Within the procurement
department, the stakeholders include suppliers, vendors and the consumer department.

One important aspect of administration of procurement is financial management. It deals

with negotiating deals, deciding on prices and ensuring timely payments. These simple
steps of project management go a long way in developing good relationships with suppliers
and ultimately ensuring smooth procurement now and in the future.

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Administer Procurement - Inputs: Reference: A Guide to the Project Management Body
of Knowledge (PMBOK Guide), Fifth Edition

Administer Procurement Tools and techniques and Output: Reference: A Guide to

the Project Management Body of Knowledge (PMBOK Guide), Fifth Edition

Inputs to procurement administration:

Change Requests: this includes any changes to the vendor contracts. Modifications in the
service terms change in quantity and product specifications. In case of unsatisfactory
services by vendors, change requests are used to terminate contracts.

Results: these are the deliverables for measurement of work performed by contractors.
This includes details such as quality of work done, timeliness, costs among others.

Purchase Receipts: for any service or item procured, the seller must provide invoices;
payments are made only on submissions of invoices detailing the work done, the period
and the payment due.

Procurement Documents: Documents involved in the procurement cycle are called

procurement documents and they are an integral part of early stages of project initiation.
Procurement documents are the contractual relationship between the customer and the
supplier of goods and services.

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Project Management Plan: A project management plan is a formal approved document
that defines how the project is executed, monitored and controlled.

Performance Report: Statement that displays measurements of actual results of some

person or entitys activity over a definite time period. Corrective action is taken for
unfavorable performance.

Approved Change Request: Approved change request is a change request that has been
processed through the integrated change control process and approved by all relevant
stakeholders as defined in the integrated change control process.

Work Performance Information: Its the raw data of the projects status, or is the as of
now status of the processes from each knowledge area. This information is utilized in
creation of work performance measurement and performance report.

Tools and Techniques:

Change Control: this system outlines the rules and procedures to be followed in order to
change or modify the contract. This includes paperwork, procedures to resolve disputes
and approval from authorities. Change control systems for procurement administration
should be integrated with the overall change control system of the project.

Performance Reporting: this tool is used to communicate a vendors/suppliers

performance towards contractual obligations to the higher management.

Payment Gateways: this tool handles how the firm manages payments to suppliers.
Generally, this is done through the accounts payable system of accounting, however
depending on the size of the organization and the customization it has made, payment
procedures can be quite complex.

Inspections and Audits: The process for both inspections and audits is essentially similar.
Prepare the inspection/audit plan taking into consideration the nature of these reviews, the
particular products or services to be inspected, the types of tests required to ensure that
each product works as expected, and the delivery schedule. Develop specific checklists
and/or other instruments to support the inspection or audit. Conduct or supervise the
inspections and audits. Hold nonconforming products separately.

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Claims administration: Claims administration involves documenting, processing,
monitoring and managing the claims or contested changes through the contract life cycle
according to the terms in the contract. If the claims cannot be settled amicably between the
contesting parties, alternate dispute resolution (ADR) need to be used to reach a settlement.

Correspondence: communication between buyers and sellers. This includes contract
terms and conditions, penalties in case of unsatisfactory services and penalties for late
Contract Change: any change in the contract terms and conditions is approved through
the purchasing agent up to the manager. All related documents are updated as per the
change in contract.
Payments: clearance of dues raised using the invoices.

Conduct Procurements:
In essence, anyone involved in procurement and outsourcing, mainly conducting them, is faced
with the task of deciding and choosing which vendor to supply the work or provide the good,
product or service. It is the responsibility of this team (generally made up of management,
technical and cost saving reps) to alert and inform all possible vendors that the company is
presently attempting to source some item.

To begin the Procurement Process, the team will send the appropriate documents to potential
vendors to elicit bids and proposals. The procurement team will need to be aware of many
variables during this process, as the selection process is not as simple as choosing the lowest
bidder. They must maintain awareness of the vendor history, product quality and value, the
logistics of product delivery as well as their own companys previous procurement history (i.e.
preferred or historical vendors, standing in the market, as well as company reputation).

Product Procurement may be seen as a process similar to managing projects: it must be initiated,
planned, executed and closed. Initiation will consist of gathering information as to what product
is to be sourced, what is the minimum acceptable quality, where has it been sourced previously,
and what is the maximum that the company is willing to pay for its purchase.

Procurement Planning will involve utilizing the gathered information to inform and alert either a
single preferred vendor or multiple vendors that you wish to source a product; this gives them an
opportunity to perform their own research, review their historical sales data in order to provide a
comprehensive product list with their own goals (expected margins, lowest acceptable margins,
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total amount of product available for sale). The Planning phase will also provide information as
to the specific manner in which bids and proposals are brought forward for consideration. It is not
uncommon in todays virtual working environment that all interested parties will join in a web
conference hosted by the buyer or purchasing company. This will give an opportunity for details
to reach all parties as well as answer questions that could affect all present, such as quality or
quantity restrictions, expected timeline and delivery schedules, as well as INCO terms regarding
shipping and transfer of ownership.

Execution of the Procurement plan will include reviewing all bids and proposals put forth by
vendors; this review needs to be done against many key determinates, not the least of which will
be the values of your company, your pricing expectations as well as your history with each
prospective vendor. Each member of the procurement team will have different reasons to prefer a
given vendor over another, and a consensus must be made. Once the choice has been made for a
vendor, negotiations for specific details must be made, specifically determining the exact price per
unit of product, the expected delivery schedule and point of ownership transfer (there are more,
but for the sake for brevity, we only listed a few here). Formal Proposal Sheets can be used by the
buyer in order to more effectively evaluate a vendor, their proposal and other criteria against the
other vendors. The development of this form is generally open to the needs and expectations of
the company requesting proposals. The companys mission, values and business strategy should
all be considered when weighing bids and proposals. Also remember that sourcing of products for
a given project or department of the company should involve stakeholders from those areas; they
are the ones with work and quality at stake and should have a voice in deciding where money is
being spent and on what quality of product is being sourced.

Buyer/vendor relations are important at all stages of business and can have a large effect on future
business practices and policy. How your company interacts with any given vendor will ultimately
affect future bids or proposals; depending on their view and opinion of your company, you may
elicit more or fewer responses in the future. These relationships can also affect pricing and
delivery from a vendor: trusted vendors may become strategic partners that could lower your
supply chain costs. This is also one of the reasons for opening the request for bids/proposals to a
large number of vendors, as they will begin to compete for the chance at the contract, thereby
lowering their prices and adding value that others may not have or provide.

Close Procurements:
There is a wealth of information that can be gathered by an organization during the course of the
entire project. It is imperative for organizations to gather all of this information as this can be

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invaluable for an organization (with respect to its future projects). Hence, project closure steps are
followed to fully understand, interpret and make data available for future use.

There are primarily 2 documents that result from the close procurement process:

Closed Procurements
Organizational Process Updates
Numerous procurement audit tools can be used on the Project Management plan document to
arrive at a Closed Procurements document; this serves as the output for the entire process. This
tool is used to keep a check on the supplier(s) to see if the deliveries are according to what was
specified in the contract. Ultimately, the main purpose of using this particular tool is to assess the
successes and failures of suppliers and document them for future use. As an addendum, the
Organizational Process Updates document (OPU) is an output when Negotiated Settlement tools
are used on the Procurement documentation. Simply put, this document helps an organization
streamline its processes through understanding the course the project took to completion and the
steps that could be streamlined for future projects. This all helps to avoid some issues that might
have served as bottlenecks for previous projects.

The Close Procurement is synonymous with the term Contract Closure. At the end of a contract
and after all of the deadlines have been reached, procurement is deemed as closed. Consequently,
a close procurement process will not exist if a project has no contract set in stone. It is imperative
to note that a Close Project phase will occur after the Close Procurement phase. In the life cycle
of a project, the close procurement step can be run multiple times i.e. it can have multiple iterations
through the project life cycle depending upon the contracts negotiated beforehand.

During the course of a project, deliveries are recorded by numerous suppliers. It is imperative for
us to make sure that these deliverables are of an acceptable quality. This assessment is made in the
Close Procurement stage. This document also contains the steps that are to be taken if legal
consequences were to arise, specifically if the contract were to have issues or deliveries fail to
meet the requested quality. A negotiated settle is the most desired outcome in the event of
disputes. Such a settlement helps sustain the relationship and saves legal costs that are concomitant
to settling in court.

It is customary for the organization which buys from the supplier to indicate contract completion
with a formal written notice. The formal acceptance of the supplied product and pertinent closure
information are often a part of that contract. From a legal standpoint, early termination clauses of
the procurements from supplies are also written in to make sure that standard practices are enforced
in such an event. Ultimately, the main aim of this document is to make sure that the project team

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procures the resources it needs at the right time to get their work done without delays or others\
sourcing issues.

A tool named Record Management System is commonly used at this stage: it helps in the retrieval,
searching and archiving of various documents pertinent to this stage. More often than not, it is at
least partially, if not fully automated and the reason for this is the immense amount of information
gathered during the procurement stage. These are the outputs, basics steps and tools and
techniques used in the close procurement stage.

Procurement for projects as well as normal business operations is a complex affair and requires
large amounts of time, resources, knowledge and experience. This is evidenced by the sheer
amount of text that can be found for the different stages of Procurement. Throughout the business
world, some people spend their entire careers within the Procurement department of their
respective companies, while others have only a limited understanding of the most basic processes
required to procure the simple items used daily by a business.

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Chapter 11

Stakeholder Management

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Chapter 11
Stakeholder Management
Stakeholder Management comprises of the methods required to classify the people, teams and
departments that could affect or be affected by the project, to examine stakeholder potentials and
their impact on the project, and to develop suitable plans and policies for effectively engaging
stakeholders in line with the stakeholders interest and participation in the project. The Stakeholder
Management Plan helps ensure that stakeholders are effectively involved in project decisions and
execution [PMBOK 5th Edition] throughout the lifecycle of the project, to gain backing for the
project and expect confrontation, clash, or opposing objectives among the projects stakeholders.
The Stakeholder Management Plan includes several sections [PMBOK 5th Edition]:

Identify Stakeholders identify by name and title the people, teams, and departments that
have significant effect on project course and its accomplishment or who are considerably
impacted by the project.
Plan Stakeholder Management identify the strategies and mechanisms that will be used to
achieve the greatest support of stakeholders and minimize struggle.
Manage Stakeholder Engagement outlines the procedures and steps that will be undertaken
to carry out the intended strategies.
Control Stakeholder Engagement describes the methods that will be used to monitor
stakeholder engagement and alert the project team if problems are sprouting.

Identify Stakeholders
In order to develop an effective plan for managing stakeholders, they first need to be identified
and evaluated. Stakeholders needs to be identified by carrying out a stakeholder analysis in which
potential stakeholders and relevant information (interests, involvement, interdependencies,
influence, and potential impact on project success) are gathered, documented and analyzed.
[PMBOK 5th Edition].

The Stakeholder Analysis Register should typically capture the following information

Team / Group Name

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Number of Stakeholders in the Group
Description of the Team / Group
Level of Impact on the Project
Issues, Opportunities and Risks associated with each group
Strategies and Actions to address issues, risks and opportunities

A snapshot from the Stakeholder Analysis Register is provided below.

Please note: Impact is measured by High (H), Medium (M) or Low (L). State of change readiness
is assessed using the measures from PMBOK as follows:

U Unaware this group has no information about the project

R Resistant aware of project and resistant to the changes and impacts the project may bring
N Neutral aware of the project and neither supportive nor resistant
S Supportive aware of the project and the potential changes and impacts and is supportive
L Leading aware of the project and actively engaged to ensure the projects success

Stakeholder Analysis Register sample table:

Stakeholder Unaware Resistant Neutral Supportive Leading

Stakeholder Power/Interest Classification

An important result of the stakeholder identification and analysis work, including the
Power/Interest Grid, is to classify the most influential and most impacted stakeholder groups so
that a focused stakeholder management strategy and plan can be developed and executed.

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Figure: Sample Stakeholder Classification Matrix

Plan Stakeholder Management

Plan Stakeholder Management is the process of developing appropriate management strategies to
effectively engage stakeholders throughout the lifecycle of the project, based on the analysis of
their needs, interests and potential impact on project success. The key benefit of this process is that
it provides a clear, actionable plan to interact with project stakeholders to support the projects
interests (PMBOK 5th Edition).

Based upon the information gathered in the Stakeholder Analysis Register and Communication
Plan, the Project Manager will be responsible for engaging stakeholders through the lifecycle of
the project. The level of engagement compulsory for each stakeholder may vary over the
development of the project. For example, during the beginning stages of the project, it might be
essential for the Project Manager to involve key stakeholders. Highly engaged key stakeholders
in the early stages of the project are pivotal for project kickoff, achieving staff buy-in and clearing
obstacles. As the project progresses, the level of engagement tend to shift from key stakeholders
to the broader project team and end-users.

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Manage Stakeholder Engagement
Stakeholder Engagement Management is the process of communicating and working with
stakeholders to meet their needs and expectations, and to address issues as they occur. Stakeholder
Engagement Management is the process to methodically substitute appropriate stakeholder
engagement in project activities throughout the life of the project. The key benefit of this process
is that it allows the Project Manager to increase support and minimize resistance from stakeholders,
significantly increasing the chances to achieve project success [PMBOK 5th Edition].

Monitor Stakeholder Engagement

Monitor Stakeholder Engagement is the process of monitoring overall project stakeholder
relationships and adjusting strategies and plans for engaging stakeholders. Monitor Stakeholder
Engagement involves collecting data, assessing the level of engagement and using insights from
the data collection to adjust strategies and tactics for engaging effectively with stakeholders.

Denver Airport: A Scope & Stakeholder Management Case Study

At an airport, baggage can be a significant hurdle to an efficient trip, or project for that
matter. The city of Denver recognized this when, in 1989, they began construction of a massive
new airport with the most elaborate automatic baggage handling system ever attempted. We are
analyzing this endeavor as a case study not only because it completely failed, but because poor
scope and stakeholder management had a lot to do with this project management disaster.

Lessons from the Denver Airport Case - Scope Management

Scope is, essentially, all about meeting the requirements set for the project. In planning for
this baggage system, the Denver airport team set some very lofty goals and requirements. In fact,
none of the 16 companies that were part of the initial bid offered to have the system ready by the
opening set to occur in October of 1993. They simply did not have the time to complete this
massive project. From the start, the scope of this project, which included 88 airport gates and 17
miles of track, was set too high.

A contractor named BAE was eventually convinced to take on the project by airport
management partly motivated by the fear of losing the opportunity for market exposure, despite
the apparent difficulties. They were also had been motivated by the fact that a very much simplified
and smaller version of the system was constructed; which did not account for many of the
coordination issues of a large system. To aggravate this situation, the plans to attack this unrealistic
goal were set during only 3 sessions between BAE and the Denver Airport management. A key
takeaway from this is the fact that proper planning at the beginning of the project leads to in-budget
scope of the project as work begins. If the Denver management would have spent more time
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recognizing the imbedded logistical complexity at the forefront, the resources spent would have
been able to match the scope requirements. 3 meetings would have been a start, but fell short of
the effort required to set the scope for such a comprehensive project.

The fact that scope was not set well at the beginning of the endeavor intensified issues in
the middle of project execution. The plans to include racks for ski equipment and additional tracks
for maintenance were not initially drafted. These changes increased the scope of a project that
already had massive scope; which were eventually factors in the projects downfall.

What if the project managers had sat down with BAE to consider the all of the potential
features they wanted on the system? Maybe the idea of having ski equipment racks would have
surfaced? After all, they were in Denver. Our recommendation is to take time to define the scope
of the project well, especially in the planning phases of the project. Dream big and think of the
project with every feature and add-on you can think of. Then think of the project with the base
necessities to function. After doing this, you might find that the scope for your project is a balance
between the two.

Review Questions - Scope Management

Who did you notice were the key players in setting the scope of the Denver Airport project?
What is one thing you would have done as a project manager to make sure that scope was
set appropriately?
Would you have changed the project after 16 contractors refused to enter a real bid?
If so, what would you have changed?

Lessons from the Denver Airport Case - Stakeholder Management

In addition to scope, stakeholder management also proved to be essential throughout the

project. Although the Denver airport baggage handling system was the largest of its kind, it was
not the first implemented. Much simpler versions of an automated system were implemented in
both San Francisco and Munich, Germany just a few years beforehand. In these systems, each
airline took ownership of handling the baggage. At the Denver airport, management decided to
implement an airport-wide system between multiple airlines in April of 1992. This lack of
understanding between stakeholders had an opportunity cost of about 2 years worth of
construction and planning. This delay not only took away time to complete the project, but
complicated the plans when compared to the work that had already been accomplished on the
airport infrastructure.

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So, what is the key stakeholder management takeaway from this? It is important to clear
any assumptions made with stakeholders at the beginning of the project. This even applies to things
that may seem obvious. The Denver team assumed that each airline was going to manage the
baggage in contrast to the integrated system that was eventually agreed upon. This may have
seemed like the unquestioned plan of action given the precedent of automatic baggage systems at
other airports, but this misunderstanding certainly hurt the success of the project.

Poor stakeholder management also hampered coordination efforts with the airport
construction team. The lost time due to miscommunication with the airlines not only gave the team
less time, but gave them less flexibility in designing the baggage system. While construction
managers worked for those 2 years, they did not envision an integrated system, which required so
much more space.

Consequently, the project team had to contend with the sharp corners and narrow gaps that
were already built. Those walls werent going anywhere. In practice, the already built
infrastructure did not agree with the designs of the baggage tracks at all. The project team
eventually had to cut down the speed of the track from 60 miles per hour down to 30 to keep full
baggage carts from crashing into wall. This effectively cut the time gain realized by having such a
fast-tracked system. The baggage project team and the construction team had tunnel vision, and
worked toward their respective goals with little integration or synergy. In retrospect, the two teams
should have started their planning together. As a key takeaway, know that your project
management team can sometimes operate within a larger picture in light of the entire enterprise.
Therefore, stakeholders management can extend beyond your own team to other areas of work on
a large scale project as well.

As a project manager, it is your job to understand the part played by different stakeholders.
Each stakeholder is like a piece of a puzzle that you are fitting together. In the Denver case, the
key stakeholders included the Airport management, BAE team, construction contractors, baggage
system engineers, the airport customers, and the airlines themselves. Each group has their own
responsibilities and tasks to do for the project. The project managers failed to integrate these groups
and set them working toward a single goal. Instead, they permitted the teams to work in their own
bubble, and miscommunication ensued.

Review Questions - Stakeholder Management

As a project manager, what would you have done differently?

Did the number of stakeholders to manage in this case surprise you?

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What stakeholder do you think exerted the most pressure on the project management team?
If the team had prepared more time to work on the baggage system, how might stakeholder
management have changed?

Original Case Study Source - Done by Calleam Consulting

Calleam Consulting. "Denver Airport Baggage System Case Study.

International Project Leadership Academy. N.p., 2008. Web. 13 Apr. 2016.


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Chapter 12
Ethics in Project Management

Ethics in Project Management - Introduction

Ethics is the knowing the difference between what you have a right to do and what is
right to do. - Potter Stewart

Every business decision can be tied to some application of an ethical principle. Project managers
must be trained in the art of knowing between right and wrong, and how to handle difficult
situations that ultimately test the character of their morals.

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Chapter 12
Ethics in Project Management
What are Ethics and Why Do They Matter?
Anyone involved in business the past few years has undoubtedly heard of the controversies
surrounding business ethics. These days, the striving of businesses to perform ethically is as in
demand as the much hyped going green initiative. Despite all the attention, many still struggle
to define what exactly ethics means, and why ethics even matter.

Lets consider a few scenarios. First, imagine you are a successful salesman at your company and
your top client has sent you an expensive gift with a note to say thank you for all of your hard
work the past year and that they are looking forward to continuing the business relationship. Is it
unethical to accept the gift? Perhaps their contract is currently up for negotiation, or they have
recently brought you a new line of business to consider and you know the price they seek to secure
is lower than your companys target level. Do these factors influence your decision? Now, lets
imagine you are an up-and-coming business analyst at a large firm. The firms board of directors
has asked you to present your findings based on last quarters production. While building your
presentation, you include data depicting one of the firms products which is not performing as well
as previous estimates had projected. When you ask your supervisor (who has a vested interest in
the failing products development) to review your presentation, she edits the report to remove the
unsatisfactory data, stating that at this stage in the product life cycle statistics arent yet conclusive
(even though the numbers you included were reported and signed off by the project manager at the
last status meeting). What should you do?

Sometimes, the solutions to ethical dilemmas are simple and easy to find. Other times the solutions
are complex and may require additional effort to solve. Given the innumerable types of ethical
dilemmas one might encounter throughout life, having a system in place to support ethical decision
making is key to managing the decision making process.

Violation of ethics: Now that we have set a relatively clear definition of what ethics are, it would
be of interest to know when we can say that ethics are violated. In the general sense of project
management, we can say that ethics are said to be violated when one stakeholder has to
compromise on their regular duties in order to satisfy the unaccounted (generally personal)
interests of another stakeholder. The important features to note here are:

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Compromise of duty: There needs to be a violation of duties/responsibilities of the
individual. The stakeholder may or may not be willing to compromise on their duties,
however the compromise finally happens.
Unaccounted interests: The interests of the other stakeholder which are to be satisfied are
not accounted for anywhere in written communication or documentation or they do not go
through the formal change approval process drafted by the organization.
Personal nature of interests: The interests of the other stakeholder are often inclined to
satisfy their personal ends and do not benefit the large majority of stakeholders of the
Types of ethical dilemma and their relevance in project management: Ethics are generally
classified into 4 main forms based on theories and fundamental bases provided by 4 great thinkers
and scholars.

1. Virtue ethics: These are ethics which stem from the personality and principles an
individual sets for themselves. This form of ethics has its foundation in Aristotles
Nicomachean ethics.
2. Relativistic ethics: These ethics are based on a persons emotions or feelings which are
not based on any reasoning and are relative, varying from subject to subject. This form of
ethics are based on David Humes non-cognitive ethics.
3. Utilitarian ethics: These ethics are based on an individuals idea of what is defined as
good and acceptable in his surrounding social settings. The idea is to do what is best
for a majority of stakeholders based on a sense of personal knowledge. This form of ethics
are inspired from Jeremy Benthams Utilitarianism.
4. Deontological (Duty) ethics: These ethics are based on an individuals sense of duty and
responsibilities assigned to him as part of his profession. These ethics are based on rules
and are never meant to be compromised regardless of the consequences that may follow.
These ethics are based on Immanuel Kants deontology.
An ethical dilemma generally occurs in an organizational setting, when deontological (duty) ethics
conflict with other types of ethics an individual would have (i.e. virtue ethics, relativistic ethics or
utilitarian ethics). In order to draw the context to project management, we may look at an example.
Imagine that you are working in a project as a tester. The project is in the final stages with client
delivery due in a week. You stumble upon a critical flaw in the code which might not lead to
application crashing anytime soon, but would eventually lead to it. You report the situation to your
project manager and expect to report the same to the client. If you report now, the project delivery
would be delayed and there is a high chance of client being dissatisfied with it (though you might
expect the client to understand the situation, but you cant be sure they would), your project
manager would be blamed for the cost of rework and would end up with a bad project rating. If
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you chose not to report and if the application crashes after data migration, the client would incur
significant losses. In this case there is a high chance that the project manager might prefer not to
report the flaw immediately and push the fix in the next upgrade. Here your deontological (duty)
ethics would conflict with your utilitarian ethics and hence the dilemma. However, certain decision
support systems can help us navigate these tricky situations.

Also, our ethics form as we are influenced by the people and the environment around us. There
are ethical views that apply to people all around the world, while others are more personal, and
apply only to us. Over time, your ethical views can change over time as youre exposed to different
situations and environments.

Also, lets try to talk about Business Ethics in general. Ethics are not necessarily the same across
all organizations and different types of industries. And so, when working for any organization, we
need to familiarize ourselves with the Business Code of Conduct of the specific company.
When talking about ethics management, its also important for the employer to understand the
benefits that the company will receive when implementing Business ethics and share the same
information to all the employees, clients and other stakeholders involved to keep everyone
informed about the same.

Lets take a look at one example which is related to Business ethics. Generally, when we work in
an organization, we come across this situation where some employees try to rise in the company
by taking credit for work that was actually not performed by them, but by the other employees.
This is a frequent practice that happens across the globe and in all kinds of organizations
irrespective of their line of business. Having said that, it can have a negative impact on morale of
the people who actually did the work and also on other team members. Hence, its important to
prohibit this behavior and bring in a policy that addresses such case. Employee complaints
regarding the same should be thoroughly investigated and strict action against the person should
be taken if found guilty.

A few other ethic violations that one should avoid doing as part of Business Ethics are:

1) Pursuing multiple jobs at the same time

2) Sharing confidential company information to competitors or other people
3) Abusing fellow employees or the clients
4) Sharing login credentials with external people
5) Accessing restricted information (important documents, websites, workplace)
6) Damaging company resources (software, hardware)
7) Reporting incorrect working hours

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8) Fighting with people inside the company premises
9) Forging and claiming incorrect bill amounts: - taxi bills, dinner bills
10) Sending/accepting gifts from clients
A good example of an effective decision support system is the Code of Ethics created by the Project
Management Institute (PMI). PMIs Code of Ethics is anchored in four universal values of
responsibility, respect, fairness, and honesty that were selected based on their importance to the
global project management community. Even though [one] might argue that there is no [single]
right answer [to an ethical dilemma], the Code of Ethics provides a framework for introspection
and dialogue, (Duggal). Once a corporation or project team has agreed upon a decision support
system or its own Code of Ethics version, what additional steps will assist them in ensuring ethical

First and foremost, the Code of Ethics must be visible to every member of the organization, and
perhaps even stakeholders. A good idea is to post the Code of Ethics on the company website;
management could also provide a hard copy of the code for employees to keep at their
workstations. Secondly, many organizations these days are requiring new (and even experienced)
employees to take an ethics training course. By doing so, they are developing and fostering a
company culture enriched in behaviors centered on ethical business practices. Finally, despite
implementing a Code of Ethics and ensuring corporate culture is focused on ethical behaviors,
companies must also ensure their employees are comfortable reporting ethical dilemmas should
they occur. By providing anonymous communication channels and assurances that employees will
not face repercussions for reporting ethical dilemmas, corporations greatly increase the likelihood
of staying abreast of any potential issues.

Dealing with Ethics in the Business Environment

For as long as commerce has existed, there have been issues regarding ethics in the business
environment. Oftentimes one finds the topic of business ethics to be widely debated, leading to
many divergent views among people. Business ethics encompasses various codes of conduct and
moral rules that directly affect the professional business environment. It is comprised of moral
values which regulate decisions and their implementations in the business environment. Some
rules of business ethics have been made obligatory and corresponding laws have been enacted in
this regard. Various stakeholders in business, such as directors, managers, suppliers, employees
and related personnel, will need to apply ethical practices in every aspect of their decision making.
Any actions taken will have both direct and indirect effect on the business operations and all
stakeholders involved.

The most important ethical considerations in business can be broadly categorized as follows:
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Ethics in Human Resources Management
This includes, among others, practices pertaining to human resources such as engaging child labor,
long working hours, and dubious hiring and firing processes. Basic human values must be upheld
under any circumstances.

Ethics in Production
This includes business ethics that are meant to ensure production functions or activities are not
damaging to the consumer or society and that seek to discourage companies who use subordinate
quality processes to achieve cost efficiency leading to low product quality.

Ethics in Marketing and Sales

This deals with the practices of marketing and sales associated with a company. As a consequence
of intense market competition, companies may resort to practices like hoarding, price wars, brand
wars and use of unfair tactics. These practices are potentially harmful as they could lead to
prejudices in the minds of the people.

Ethics in Property, Property rights and Intellectual property rights

This primarily deals with ethics regarding the safeguarding of intellectual property rights of a
company. Given the high degree of globalization, it has become increasingly important for
companies to implement proper measures to safeguard their intellectual rights, ensuring they can
salvage their research costs and secure a profit on their innovations.

Ethics in Technology Use

Companies with a desire to stay ahead in the market may resort to practices such as data mining,
invasion of privacy, data theft and workplace monitoring. Normally ethics in technology can be
defined in two contexts: one is whether the pace of technological innovation benefits humankind,
the other is either over-empowering people or denying them just opportunities.

Ethics in Accounting and Reporting

This category of ethics is most highly abused in comparison with the other categories of ethics.
Ethics in accounting and reporting deals with the integrity and accuracy of a companys financial
information. Discrepancies can be found in many different areas, including auditing, managerial
accounting, tax accounting, financial planning and consulting. Proper control measures are
required to monitor and mitigate the risks involved in accounting and reporting procedures.

Ethics in International Business

Globalization has diminished the barriers between countries. It has also called for universalization
of values in order to carry out trade smoothly and seamlessly. Issues arise from the diversity of

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business ethical traditions in various countries across the globe. Issues like dumping and
providing goods at a cheaper price in third world countries have become very prominent as of late.

Business ethics is concerned primarily with the relationship of business goals and techniques to
satisfy human needs. For furthering ethical practices in business communities, the concept of a
code of conduct has assumed great importance. The need for business ethics, i.e., a set of generally
accepted standards of personal conduct, is evident throughout the world. Though legislative
representatives might establish statutes and administrative laws in critical areas of interpersonal
conduct, more must be done to ensure the safety and personal welfare of those whose lives can be
vitally affected by unethical practices.

How does The Prisoners Dilemma Relate to Ethics?

The prisoners dilemma is a classic case where the choices two entities make are analyzed and
every scenario is examined for plausible results. In the next few paragraphs, we will attempt to
explain the prisoners dilemma.

Two men are caught committing a crime however the police do not have sufficient information to
convict either for the crime. The men are separated in different cells and the police need to extract
information from both men. Plausible scenarios with respect to each man and his choices are:

1. Both men decide to rat each other out resulting in each receiving a sentence of three
2. Both men decide to stay silent and each receives a sentence of only one month.
3. While one man stays silent, the other rats him out. The one that rats out his fellow prisoner
is designated the betrayer and the one that stays silent and cooperates is designated the
cooperator. Here, the betrayer goes scot-free while the cooperator has to serve a one year
The optimal result desired out of this exchange is that both men remain silent and each receives a
short sentence. However, it is more likely a prisoner will rat out his opponent due to the
fundamental need of self-preservation. In this context, it is most likely that the actions
demonstrated by either man are due to enlightened self-interest rather than pure selfishness.
Enlightened self-interest is defined as selfishness and acting in the best interest of the self, while
being cognizant of the big picture. Individuals should be aware of the repercussions their decisions
may have on the environment and the people around them.

The purpose of all moral education should be to inculcate a sense of enlightened self-interest in
individuals. Having a sense of enlightened self-interest allows each individual to work within the

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framework of the ethical norms of society and come to the best plausible decision when there is a
moral conflict i.e. to act in interest of self or of the greater good.

In the scenario of the prisoners dilemma one can exploit their opponent or cooperate with them.
Both persons could exploit each other or one could exploit their opponent while the other
cooperates. Finally, the last situation presents an option where both cooperate with one another.

Is it a good strategy to always cooperate with an opponent? Possessing altruistic goals and
willingness to take the fall for other individuals may seem heroic. However, from the perspective
of formulating a strategy and creating a win-win situation, being passive is of absolutely no use.
It is therefore important that one should be willing to retaliate if necessary.

On the other end of the spectrum, one could be a ruthless attacker. Constantly betraying the
opponent obviously seems like a morally wrong act. Exercising this strategy seems unethical.

Finally, there is the strategy of seeking to obtain the middle-ground. An individual should not
remain passive and take the fall all the time; neither should they be constantly on the offensive.
The strategy of taking the middle ground requires an individual to have the willingness to retaliate
if necessary while also being capable of showing mercy and forgiveness for others. If for example,
after one round of exploitation an opponent defects, the individual should also be willing to stop
the exploitation process and begin cooperating.

Therefore, as it was stated earlier, the strategy followed in every round of the prisoners dilemma
should be within the framework of enlightened self-interest.

What are the Consequences of Unethical Behavior?

The previous sections of this chapter introduced the concepts of ethics, their importance for project
management professionals and the various ways to deal with ethics in the business environment.
While there are various luring mechanisms which pull professionals to indulge in unethical
behavior, this section will explain and deal with the various consequences of unethical behavior.
In order to explain various scenarios, let us consider a few examples that have shaken the entire
corporate world due to their miserable failures owing to unethical behavior.

The first scandal to be described is the Enron scandal in which both Enron and Arthur Andersen,
an accounting firm, were involved. Enron Corporation was an American energy company based
in Houston, TX which decided to falsify its accounting statements with the help of its accounting
firm, Arthur Anderson, to attract investors. The outcome was far beyond the expectations of those
involved. Enron went bankrupt in 2001 and was forced to sell off all assets. More severely, the

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company faced legal battles in several countries within which it operated and the individuals
involved in the malpractice were forced to face punishment. The implications of the scandal were
also seen by Arthur Andersen when the company was disbarred from auditing public firms by the
SEC; this quickly led to the dissolution of the company. This scandal greatly shook corporate
America as well the whole business world, leading to the creation of stronger regulations and more
strict laws to prevent these events in the future. This example throws light on the importance of
professional ethics and how the unethical behavior of decision makers can affect the lives of
thousands of employees and shareholders.

Referring back to the previous sections of this chapter, issues regarding business were seen since
the beginning of commerce. Project management professionals, specifically in the Information
Technology world, will be at the helm of projects responsible for major budget making decisions
and status reporting; there is immense scope and countless opportunities to choose an unethical
path to satisfy the short term at the detriment of the future.

Most of the ethical issues revolve around tracking and manipulating emotions and most issues
concerning ethics are due to mismanagement of ethics. Most of the project managers fabricate
status updates and budget reports in order to save themselves and their projects as well as to stay
away from various situations that embarrass them.

There also exists expansive opportunities for non-managerial employees to indulge in such a
behavior; such activities could include the replication of software for personal use, falsifying the
number of hours worked to increase wages paid or to misuse confidential data. Each of these
incidences could lead to serious legal consequences. In addition to the various legal implications
of unethical behavior, there are other consequences that have additional implications. First and
foremost, the reputation and good will of the person/ organization is lost and the effects can be

Another consequence of unethical behavior would be the decrease in productivity of the

employees. This is due of the loss of mutual trust between employees and management.
Management can establish a series of checks and balances to ensure that the company is being
managed in an ethical manner and that the employees are performing as expected and according
to the company mission. The threat of employee misbehavior becomes paramount due to the
expenses associated with hiring, training, loss of production and recruiting of replacement human

Thus, in addition to the legal complications involved, there are many other damages to the
organization that are far more damaging, such as a loss of productivity, extraneous expenses

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associated with human resources issues, as well as damage to the goodwill of the public and the
lack of a reputable business entity. Sales, recruiting, strategic alliances (among other attributes)
will all suffer significantly over time from unethical behavior within a company entity.

In spite of such consequences to unethical behavior, more often than not , people are involved
directly or indirectly in cultivating it. In todays business environment, the line between right and
wrong is fading. Workers with high moral standard are helpless against unethical behavior they
notice in their colleagues, and to make it worse, many unethical conducts go unpunished because
of legal insignificance.

There are several traps that cause this. Empathy is considered a trait that is remarkable in business
situations to understand team members and communicate effectively. However this very same
empathy causes us to excuse our colleagues unethical behavior and thus indirectly add to it.
Obedience is a gilt edged knife. Obedience and coercion are employed by a person of higher
authority and those under, just go with the flow to do what they are told irrespective of its
consequence. Morals tend to go out the door when the job is in jeopardy. Even those who may
have a strong moral background before they enter the company could agree to continue the
practices followed in the company for the sake of job security.

It is critical to establish a culture that rewards ethical behavior. An organization must instill a sense
of duty within its employees. Not only is a duty to ones employer to a duty to society that
reinforces the core ideals of responsibility, respect, fairness and honesty.

But doing this affects both the physiological and mental health of employees. Measures need to be
employed not just by the people but also the company to enable employees to understand that
unethical behavior will not be supported at any rank. It should not just remain a procedure but an
actively advocated practice that allows for fair and open conversation that precludes any adverse
affects for the employees.

Transparency, communication, and accountability around ethical behaviors are a few of the
leadership behaviors commonly suggested to leaders. The behavior scientist can provide focus
education and coaching on these behaviors to enable leaders to demonstrate critical behaviors
which demonstrate a focus on ethics and being ethical.

Ethical Dilemmas in Project management:

How important is ethics in Project Management?

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During the Knowledge Transfer phase for a project in a telecom company, a team of individuals
with varied experiences was sent to the UK. The new employees in the team were really excited
and were very punctual with time and deliverables. The more senior team members had seen it
all and were casual in their behavior. The client did not appreciate the casual behavior and team
members reaching the office at different times. They started pressing the project manager and
escalated the matter. The senior team members were warned over telephone and sent a strong
email. The project manager then had to come to the client location in the UK and watch the team
for a week. This not only degraded the image of the company but also increased the project cost.
The team members lost the trust and respect of the management as well.

A significant number of project managers face ethical dilemmas with varying degrees of
frequency. Almost 80% of PMI members face such dilemmas in the practice of their job. So when
we are discussing project management, we would be remiss not to talk about how to handle such

Ways to make ethical decisions:

A common approach in Organizational Behavior Management (OBM) to analyzing the intricate

components of an organization is Behavioral Systems Analysis (BSA). BSA is an approach to
organizational design and management based on the premise that organizations are complex
systems. In short, changes in one aspect of an organization affect performance in another part of
the organization. BSA can arm organizations to further integrate ethical practices into a company.
For example, Lattal & Clark (2007) provide a thoughtful list on ethical practices that organizations
can employ to encourage ethics:

1. Set ethical values statements.

2. Discuss ethics during performance reviews.
3. Reinforce ethical behavior.
4. Retain ethical employees.
5. Make ethics a hiring priority.

This is further reinforced by the Ethics and Compliance Initiative (2015) whose recommendations
based on the Research Report from the National Business Ethics Survey (NBES) consist of 4

1. Pay attention to personal character when hiring and make 24-7 integrity a job expectation.

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2. Educate managers about the way employees evaluate leaders, including the impact of
private behavior in the age of social media.
3. Encourage leaders to share credit for success and seek honest feedback from employees.
4. Annually review business objectives and policies to ensure they promote ethical

When moral standards are unclear or unenforced, its easy for employees to act in questionable
behaviors that are readily rationalized. Environments that nudge employees in the right direction,
leaders who demonstrate ethical behavior and encourage ethical behaviors, and organizational
systems built to support ethical practices is the perfect ethical trio.

Ethics is inherently subjective. What may seem like the ethical choice for one person may not seem
ethical for another. It is also not always unethical to take selfish actions to help oneself. There are
many different schools of ethical thought.

Utilitarianism is the belief that one should act in a way that benefits the greatest number of people.
The advantage of this belief is that it is straightforward and relatively objective. Utilitarianism is
simply a calculation of the most value added solution and is easily justified since the methodology
is non-discriminatory. If your project would take away jobs from 1000 people but add massive
benefits and productivity to 50,000 people than you can justify it by claiming the net benefits
outweigh the cost. Utilitarianism's greatest flaw however is the risk that it greatly excludes the
minority in favor of the majority. Certain actions that may slightly benefit the majority but
devastate a minority of people may be justified under the pretense of democracy or that the
majority should rule. An example would be if you were a consultant and received a kickback from
a vendor to sell your client a product more expensive than an alternative on the market without
any added benefits. Utilitarianism ethics would weigh the costs and benefits of doing so to your
company and it may determine the consequences and risks of committing fraud would not be worth
the potential payoff from the kickback.

Deontology is the belief that there are a priori duties that override any consequences that may arise
from them. The flaws with deontology come when you have conflicting duties that conflict with
one another. Sometimes you may be forced to prioritize one duty over another. From the previous
example, deontological ethics would reason that as an IT consultant you have a duty to your client
to act in good faith and maximize their benefits. With the previous example the ethical reasoning
would be that it is your overriding duty to not accept it because it would violate ethical principles
despite the benefit it would provide to your firm.

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There is no universal way to determine which ethical framework a company should use. A
company needs to identify what values it holds. A non-profit might value its duty to society while
a large C corporation will have an obligation to maximize shareholder profits. Every company
needs to determine the values it holds highest in the world and instill those values in its employees.
When the employees are committed the ideals of an organization the ethical decision will follow
those ideals whether it be in the sense of duty, a cost benefit calculation, or a mix of the two.

One common rule of thumb is for testing whether a response is ethical is to ask, Imagine that
whatever you did was going to be reported on the front page of your local newspaper. How would
you like that? Would you be comfortable? This would be the easiest way to understand that you
are facing an ethical dilemma and deal with it.

Making companies and employees face the benefits of following ethical business practices will
encourage all those involved to uphold high standards of ethical behavior. A sense of trust and
respect among peers in an organization, a reputational advantage when it comes to sales and in the
long run better future is what an ethical organization and its employees can enjoy by being ethical.

Ethics in HR Management

This includes, among others, practices pertaining to human resources such as engaging child
labor, long working hours, and dubious hiring and firing processes. Basic human values must be
upheld under any circumstances. Ethics in human resource management is an important talking
point today because of the globalized world we live in.

Its common to hear about employees being laid off as factories are being relocated to third world
countries and natives losing jobs to skilled immigrants. Amongst the hullaballoo, its often difficult
to have a good discussion on the ethics behind these decisions. In this portion through a case study,
we aim to open up a discussion on the various aspects of ethics in human resource management.

Foxconn is synonymous with the iPhones. Its a Taiwanese manufacturing company that has a
lucrative contract with Apple to manufacture iPhones. The company builds phones for apple
through its factories in China. Everybody talks about the Foxconns excellent financial
performance. Here, through an excerpt from the English daily The Daily mail we would like to
start a discussion on ethics in human resource management.

Apple have opened the doors to their Chinese 'sweatshop' factories where employees are paid as
little as 1.12 an hour. Many of the staff perform monotonous tasks like wiping down screens or
shaving aluminum from the edge of the Apple logo for ten tedious hours at a time. And now the

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conditions inside the factory in Shenzhen - where 18 employees have killed themselves - can be
seen, after ABC TV network were given exclusive access.

The broadcaster revealed that the entry-level salary of just 180 per month is so low that it would
take more than two months salary to pay for the cheapest iPad. Even if the lowest earners do the
maximum available overtime of 80 hours per month, they still do not earn enough to pay tax.
Previous reports have claimed that some of the workers were doing 24 hours at a time, while others
were forced to stand for their entire shifts.

While the Nightline documentary knocks down those suggestions, it does show the suicide nets
covering the whole site, in place to stop over-worked and stressed employees leaping to their
deaths. Managers ordered asked for the nets to be put up two years ago after nine workers
committed suicide in the space of three months.
Apple - the world's most valuable technology company - have faced claims that their contractors
are forcing staff to do overtime involuntarily and employing underage workers at the factory. It
was in response to these attacks that Apple threw open their doors at the Foxconn City plant in
Shenzhen, China. Foxconn City is a unit of Taiwans Hon Hai Precision Industry Company which
employs up to 1.1million people in a series of huge factory complexes in China.
Liang Juan, 26, told ABC News that management is 'strict'. Wearing a white boiler-suit in the
spotless factory, it is her job to flip over camera lenses with a tiny pair of tweezers. Asked what
she thinks about when performing the dull task, she said: 'I don't think much about other things
because the management is strict and we're busy working and have no time to think about other
Despite the boring jobs unemployed young Chinese workers queue up for work - and employees
say that working conditions are much better than at other factories. An estimated 3,000 people
were queuing at the gates to find work on one day when ABC News were there.
Workers are charged around 11 per month to share a dormitory with seven other people and pay
around 50 pence for a rice dish in the cafeteria. Apple have also allowed independent examiners
from the Washington-based Fair Labor Association in to carry out inspections.
The Foxconn City complex of factories, run by Foxconn Technology Group, employ 235,000
workers and Microsoft, Dell and Hewlett Packard projects are also built on the site. In 2009, a
Foxconn employee fell or jumped from an apartment building after losing an iPhone
prototype. Over the next two years, at least 18 other Foxconn workers were linked to attempted

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Despite claims to the contrary, the abuses appear to have continued. With demand for the firm's
products soaring the factory is forced to churn out products in growing numbers. Last year they
sold 93 million iPhones, 40 million iPads, 38 million iPods and 17 million computers.
Topics to discuss:
Should Apple continue its partnership with Foxconn?
Is it ethical to buy an iPhone?
What is the role of government in all this?
Should a corporation with a track record of poor HR practices continue to operate?
What are the factors executives should consider while outsourcing?
Suggested watching: Up in the Air (English movie)

Another important facet of human resource management is employees / employers conduct

during layoffs. In some cases layoffs are necessary due to poor economic climate, in certain others
it is due to a companys poor financial performance and in other cases it is to maximize
performance. Whatever the underlying reason it is critical to conduct this sensitive exercise in the
most humane way possible. It is important to keep in mind cultural, economic, ethical and other
human resource factors while conducting this exercise.
We would like to spark a discussion on this through the following incident as reported in the
Striking staff at Air France have taken demonstrating their anger with direct action to a shocking
new level. Approximately 100 workers forced their way into a meeting of the airlines senior
management and ripped the shirts from the backs of the executives.
The airline filed a criminal complaint after the employees stormed its headquarters, near Charles
de Gaulle airport in Paris, in what was condemned as a scandalous outbreak of violence.
Photographs showed one ashen-faced director being led through a baying crowd, his clothes torn
to shreds. In another picture, the deputy head of human resources, Xavier Broseta, left bare-chested
after workers ripped off his shirt and jacket, is photographed being pushed to safety over a fence.
Tensions between management and workers at Frances loss-making flagship carrier had been
building over the weekend in the run-up to a meeting aimed at finalizing a controversial
restructuring plan involving 2,900 redundancies between now and 2017. The proposed job losses
involve 1,700 ground staff, 900 cabin crew and 300 pilots.

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After the violence erupted at about 9.30am on Monday, there was widespread condemnation from
French union leaders who sought to blame each others members for the assaults. Laurent Berger,
secretary general of the CFDT, said the attacks were undignified and unacceptable, while Claude
Mailly, of Force Ouvrire (Workers Force) said he understood Air France workers exasperation,
but added: One can fight management without being violent.
Manuel Valls, Frances prime minister, said he was scandalized by the behavior of staff and
offered the airline chiefs his full support. Air France said it had lodged an official police
complaint for aggravated violence. Several hundred airline employees had gathered to
demonstrate outside Air Frances head office and members of senior management were greeted by
an angry crowd shouting and waving flags and placards featuring the company chiefs portrayed as
criminals in police mug shots. As executives entered the building, dozens of workers forced their
way into the committee room shouting this is our home.
The Air France president, Frdric Gagey, escaped unharmed. However, Pierre Plissonnier, vice-
president of the airlines Orly airport hub, was attacked. Afterwards, Broseta told a press
conference that he was shocked and disappointed by the attack, but added: What we saw this
morning is not typical of company staff. He said: Ive received hundreds of messages of
sympathy from union representatives and colleagues.
The French finance minister tweeted his support for the attacked men. Those who engage in
violence are irresponsible. Nothing can replace social dialogue, Emmanuel Macron wrote. The
French employers organization, MEDEF, blamed an irresponsible minority for unacceptable
and scandalous aggression.

Air France was founded in 1933 and in 2004 merged with the Dutch airline KLM to create the
worlds fifth-largest air transport company. Increased competition from Middle Eastern rivals and
budget airlines recently prompted the loss-making group to seek a reorganization and 1.8bn
(1.3bn) savings. The company is also planning to close five long-haul routes and sell off 14 of its
larger, long distance aircraft.

On Monday morning, before the demonstration, Philippe Martinez, secretary general of the
powerful CGT union, told RTL radio: For several years now, successive heads of Air France have
suggested rescue plans each time, its a bottomless pit with the same suggestions. I believe they
are trying to set one lot of us against the other. We need a real expert appraisal of the situation.
He admitted that Air France had been hard hit by the deregulation of the industry and the popularity
of low-cost airlines.

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It is not the first time French workers have taken matters into their own hands with violent results.
Since 2009, as the global economic crisis has escalated, several bosses have been held hostage by
angry staff. In January 2014, workers at a Goodyear factory in northern France prevented two
managers from leaving and said the pair would be held until the company gave a satisfactory
response to requests.

Olivier Labarre, director of BTI, a human resources consultancy, told Libration newspaper in
2009: This happens elsewhere, but to my knowledge, taking the boss hostage is typically French.
Its the nature of the social dialogue in our country.

Topics to discuss:
As a project management profession how would you resolve such a scenario?
Was the employees response understandable?
Was it ethical for Air France to fire its employees?
Should the law be changed to deal with such situations? Explain you view point.
Example: Child labor

There are major ethical issues associated with child labor, and many American companies are
guilty of outsourcing labor to third world countries where children work. Many of these
companies, like Nike, and Apple, have taken drastic measures to ensure that this is not occurring,
as it is a huge liability to their brand.

The fundamental, unethical argument against child labor is that every child should have a right to
his/her childhood - to be educated fairly and to enjoy certain freedoms. Working as a child
prohibits the amount of time one can become more educated and have fun before reaching
adulthood. This lack of education will likely suppress the career potential of a child in his/her adult
life. The child will be behind others his/her age and will not be exposed to the same level of jobs
of others, therefore maintaining a life of being poverty ridden and thus, continuing the cycle.
His/her kids are likely to have the same childhood that he/she had.

There are ethical reasons, however, that child labor exists. It is a necessary evil for many families,
who have reached to such depths of poverty, that they can hardly survive. They cannot provide the
essential needs of basic human life without the help of a childs income.

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So where does the line get drawn? How can you restrict a child from working, if it is necessary for
the survival of his/her own life and family? Do you let a child starve for the sake of his childhood
or do you let him work to provide another source of income for his family?

Companies should ask themselves these questions when making these decisions. Unfortunately,
companies typically prioritize their own interests (ethical egoists) over the lives of others overseas,
resulting in a decision influenced by public relations.

This is an ethical debate that will proceed for centuries. No amount of technology or evolution will
be able to change this problem that affects many third world countries. Children have succumb to
lives of labor since the beginning of time for humans.

Children working in unfair conditions can begin at young ages even as young as four. Countries should
implement laws to forbid this in order to protect these childrens lives.

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Ethics in Technology
Example: Volkswagen Case

The rapid state of technological innovation has brought upon many unpredicted ethical situations.
Companies have begun to track massive amounts of data, public and private, to increase their
marketing opportunities. The government has the capability to, and has, probed into the private
lives of many people around the world. Weapons, of many different natures, have been developed
to do harm to the lives of human beings.

A specific case of ethics in technology occurred in September of 2015, when the Environmental
Protection Agency discovered many Volkswagen vehicles had cheated emissions tests. The
vehicles were engineered to detect when the emissions tests were being run and changed their
performance to pass the tests.

This case is particularly interesting because not only is it a matter of ethics in technology, but also
a matter of ethics of business and the environment. Passing the tests in a way that maximized
profits not only damaged the economy of cars but also damaged the environment in a way that was
strictly prohibited. Over 10 million cars were affected, and were producing more emissions than
what was allowed, which affected the atmosphere on a global scale.

Ironically, the company prided itself on its clean, environment friendly vehicles. Their brand was
undoubtedly tarnished. Volkswagen faces a government fine of $18 billion for the

Companies nowadays are such ethical egoists that they will do anything to get ahead, no matter
the consequences. The rapid evolution of technology gives companies competition and more
incentive to get ahead, no matter the cost.

An Ethical Case Study

The Project Manager has been working on a multimillion dollar IT change order for a large retailer
as they are completely revamping the old IT system to include features like real time inventory.
Although this Project Manager did his due diligence during the planning phase, he forgot to work
in parallel with the procurement side of the project.

In order to stay on schedule that the Project Manager has already delivered to all the major
stakeholders, the team must work through the Christmas holiday, including Christmas Day. The
team has been talking all week about how bad they need the break from work, as they have been
working really hard. Many members of the team were planning on spending time outside of the

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state visiting family members that they havent seen in a long time. Knowing all of this, how
would the four different ethical views effect this situation?


If our Project Manager were to take this approach, it would not phase him to not only take his
vacation time he scheduled, but to also make his employees stay and work. He would make them
implement the system now in order to save his reputation and the possibility of having another
project with this big money client.


This approach would drive our Project Manager to see the best possible option available for
everyone on the team. This could lead to a couple options depending on how much he weighed
the importance of his reputation. If he were to be ok with coming in a tad over time on his original
budget, he could sacrifice his reputation because he knew the pros of letting the team go on their
vacations was worth more than his reputation.


By this view, the Project Manager must work to take all biased out of the decision. He must work
to take out his own desire to make sure his reputation is upheld while also trying to not let the
opinions of his team effect his decision-making process. If he succeeds, he will be able to see how
necessary this system is to company. He will weigh the effects of a late implementation and make
his decision off those pros and cons.


This view would be the hardest to apply to this situation, as Christmas is not a religious holiday
that requires you not to work. The one freedom in this situation that could be in question is the
revocation of the vacation. If these days were already communicated with the main office, the
Project Manager should not be able to make his teamwork. The denial of vacation would be taking
away ones freedoms therefore causing the Project Manager to look at other options.

As we finish up with our example, we can see that sometimes these four can often lead to the same
outcome. The difference is how the Project Manager arrives at this outcome. These four ethical
views were not made to help you arrive at the perfect outcome but rather to help you work through
the different situations that you will experience as a Project Manager.

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Ten project management knowledge areas - Integration Management, Scope Management, Time
Management, Cost Management, Quality Management, Human Resource Management,
Communications Management, Risk Management, Procurement Management and Stakeholder
Management are discussed in detail and various project management processes involved in each
knowledge area are explored. The impact of each knowledge area in the big picture of the project
is explored in this book. Each process group of the five basic process groups of Project
Management - Initiating, Planning, Executing, Monitoring & Executing, and Closing are
elucidated in this book, throwing light on the various project management processes to be followed
in each business process.

In this book, we begin to discuss what project management basically means and why it is essential.
We discuss a little about how project management has progressed over the years and how it has
become critical to the projects in todays world. Certain challenges that project management might
encounter are discussed which gives an idea for planning the management activities in advance.
Particularly, the book lays emphasis on the crucial aspects of projects that deal with management
information systems and the challenges faced therein. We discuss how IT projects are specifically
managed and the possible issues that may arise for IT projects and the tools and techniques
available to work around them. Project portfolio management and Work Breakdown Structure are
discussed in detail. Special care should also be taken to ensure that IT projects are completed on
time and do not digress in terms of projected schedule. Issues like scope creep and gold plating
should be monitored and controlled proactively throughout the duration of the project.

Project Integration Management, which is one of the most important knowledge areas of Project
Management, is discussed. The various steps in project integration management are Project
Initiation, Project Planning, Project Execution and finally Project Control/Monitoring and Project
Closing. Project scope management covers all the procedures necessary to ensure that the project
achieves the tasks it set out to achieve. The key processes covered include Scope planning, Scope
definition, Work Breakdown Structure definition, Scope Verification and Scope Control. Due to
globalization, the time needs to be managed effectively and hence the need for time management
activities. Although time cannot be stopped or changed, many companies are increasingly working
to mitigate differences through special programs and processes. In a global delivery model, special
measures need to be taken to account for the difference in time zones. There is a critical need to
adopt measures that streamline the coordination between onsite/onshore and offshore teams to
achieve good project health and efficiency with respect to timelines. Cost Management is an
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integral aspect of project management and a critical factor in deciding whether a project is
successful or not. The utilization of proper tools and techniques for cost management streamlines
the estimation, budgeting, and control processes and allows managers to make sound, informed
decisions. Tools like Earned Value Management should be especially encouraged to be taken up
by project managers in the industry to ensure that they are extracting maximum value from their
ongoing projects and have the chance to account for deviations in their time and cost goals. This
can help them to restructure their time and cost baselines to have a more pragmatic expectation
about the outcome going forward and accordingly make changes to all project planning artifacts
by initiating appropriate change management processes.

Having managed the basic components like scope, time and cost, it is now important to focus on
one of the most popular concepts that holds crucial value when considering issues of satisfactory
client delivery . The drive for quality should come from the top management. This book discusses
about one of the most effective methods of Quality Management, 5 why, in detail. Human
Resource Management is the next aspect that is very essential for the projects to be successful.
Communication Management is another important knowledge area which requires due attention.
Project managers should not only focus on improving their own communication, but also
improving the communication amongst the project team and its members. As the PMBOK
mentions it, Risk Management is a process adopted to identify, analyze and respond to the potential
risks that can arise during a project life cycle and prepare mitigation plans for the same. Risk
management enables project managers to evaluate risks and develop a clear plan to overcome them
if and when they occur. Continuous risk evaluation of the project goals, assets and its processes is
also highly important due to the nature of its dynamic and constantly changing environment.
Procurement Management knowledge area is the last knowledge area that we deal with in the book.
Procurement for projects as well as normal business operations is a complex affair and requires
large amounts of time, resources, knowledge and experience. The book delineates various aspects
of Procurement Management like evaluation of potential buyers and sellers, negotiation,
maintaining vendor relations and procurement closure. Not least, it is important to manage the
different stakeholders of a project right from the start. Any project must have a clear roadmap to
identify stakeholders, plan, manage and control stakeholder engagement throughout its duration.
This helps to keep everyone on the same page about the outcome of the project and promotes better
communication and execution in the later stages.

Having discussed the nine knowledge areas, we now come to one of the critical aspects of project
management that need thorough attention, ETHICS. Since a substantial chunk of responsibilities
and decision-making power is vested in them, project managers are the most susceptible to
experiencing ethical dilemmas. Most of the ethical issues revolve around tracking and

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manipulating emotions and most issues concerning ethics are due to mismanagement of ethics.
Most of the project managers fabricate status updates and budget reports in order to save
themselves and their projects as well as to stay away from various situations that embarrass them.

Thus, the nine knowledge areas of project management are discussed in detail in this book which
might provide an insight to the students to learn various aspects of project management activities
in detail. Learning to manage all these knowledge areas can help make great project managers who
can increase the success rates of the projects thus bringing about economic stability. In the end, it
is important to understand that like any other management discipline, Project Management is not
a strict set of commandments to be adhered to but rather a collection of guidelines and best
practices to be leveraged upon at the discretion and judgment of the project manager. The success
or efficacy of a particular technique or methodology is subjective and largely depends on the
complexity of a specific project scenario and the considerations and implications thereof.
Ultimately, what works best for one project setting may not work well for another and it is the task
of the project manager to comprehend the nature and dynamics of their project and leverage on
their expert judgment, past experience and the guidelines provided in this textbook to effectively
and successfully manage a project from its genesis to completion.

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