Chapter 1

The World of Project Management

MEM 612 Project Management

WHAT IS A PROJECT?

MEM 612 Project Management

Why the emphasis on project
management?
Many tasks do not fit neatly into business-
as-usual.
Need to assign responsibility and authority
for achievement of organizational goals.

MEM 612 Project Management

Characteristics of Projects
Unique
Specific Deliverable
Specific Due Date

MEM 612 Project Management

Other Common Characteristics of
Projects
Multidisciplinary
Complex
Conflict
Part of Programs

MEM 612 Project Management

PMI Definition
A temporary endeavor undertaken to create
a unique product or service

Project Management Institute, 2000

MEM 612 Project Management

PROJECT MANAGEMENT VS.
GENERAL MANAGEMENT

MEM 612 Project Management

Skill Requirements for Effective
Project Management
Conflict Resolution
Creativity and Flexibility
Ability to Adjust to Change
Good Planning
Negotiation
win-win versus win-lose

MEM 612 Project Management

 WHAT IS MANAGED? THE
THREE GOALS OF A PROJECT

MEM 612 Project Management

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

MEM 612 Project Management

THE LIFE CYCLES OF
PROJECTS

MEM 612 Project Management

Figure 1-2 The Project Life Cycle

MEM 612 Project Management

Figure 1-3 An Alternate Project
Life Cycle

MEM 612 Project Management

SELECTING PROJECTS

MEM 612 Project Management

Nonnumeric Selection Methods
The Sacred Cow
The Operating/Competitive Necessity
Comparative Benefits

MEM 612 Project Management

Figure 1-4 The Q-Sort Method

MEM 612 Project Management

Numeric Selection Methods
Financial Assessment Methods
payback period
discounted cash flow
Scoring Methods
unweighted 0-1 factor method
weighted factor scoring method

MEM 612 Project Management

Payback Period

Initial Fixed Investment

Annual Net Cash Inflows

MEM 612 Project Management

Discounted Cash Flow

n
Ft
NPV (project) - I 0
t 1 (1 k )
t

where
I0 = the initial investment
Ft = the net cash flow in period t
k = the required rate of return or hurdle rate

MEM 612 Project Management

The Weighted Scoring Model

n
Si sij w j
j 1

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

MEM 612 Project Management

Confronting Uncertainty The
Management of Risk

MEM 612 Project Management

What uncertainties are encountered
in project management?
Time required to complete a project
Availability of key resources
Cost of resources
Timing of solutions to technological
problems
Actions taken by competitors

MEM 612 Project Management

Can uncertainty surrounding
projects ever be eliminated?
No, but it can be managed

MEM 612 Project Management

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

MEM 612 Project Management

Risk Analysis with Crystal Ball
Assumption Cells
Distribution Gallery
Forecast Cells

MEM 612 Project Management

THE PROJECT PORTFOLIO
PROCESS

MEM 612 Project Management

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

MEM 612 Project Management

The Aggregate Project Plan

MEM 612 Project Management

Figure 1-12 An Example
Aggregate Project Plan

MEM 612 Project Management

Copyright
Copyright 2005 John Wiley & Sons, Inc.
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MEM 612 Project Management