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INTRODUCTION TO PROJECT

MANAGEMENT FOR BUSINESS


CHAPTER – I
Chapter Aims
 At the end of the session Student will be:
 TO UNDERSTAND WHAT IS A PROJECT?
 TO REALIZE WHY ARE PROJECTS IMPORTANT?
 TO DEMONSTRATE PROJECT LIFE CYCLES
 TO IDENTIFY DETERMINANTS OF PROJECT SUCCESS
 TO DEVELOP PROJECT MANAGEMENT MATURITY
 TO IDENTIFY PROJECT ELEMENTS AND TEXT
ORGANIZATION

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WHAT IS A PROJECT?
 According to the Project Management Body of
Knowledge (PMBOK):
 “application of knowledge, skills, tools, and techniques to
project activities to meet the project requirements.
 Project management is accomplished through the application
and integration of the 42 logically grouped project
management processes comprising the 5 Process Groups:
 Initiating
 Planning
 Executing
 Monitoring
 Controlling, and Closing”

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GENERAL PROJECT CHARACTERISTICS

 Projects are ad hoc endeavors with a clear life


cycle.
 Projects are building blocks in the design and
execution of organizational strategies.
 Projects are responsible for the newest and most
improved products, services, and organizational
processes.
 Projects provide a philosophy and strategy for the
management of change.
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GENERAL PROJECT CHARACTERISTICS

 Project management entails crossing functional and


organizational boundaries.
 The traditional management functions of planning,
organizing, motivation, directing, and control apply
to project management.
 The principal outcomes of a project are the
satisfaction of customer requirements within the
constraints of technical, cost, and schedule
objectives.
 Projects are terminated upon successful completion
of performance objectives
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PROCESS Vs PROJECT MANAGEMENT

PROCESS PROJECT

 Repeat process or product  New process or product


 Several objectives  One objective
 On-going  One shot - limited life
 People are homogenous  More heterogeneous
 Well established systems in  Systems must be created to
place to integrate efforts integrate efforts
 Greater certainty of  Greater uncertainty of
performance, cost, schedule performance, cost, schedule
 Part of line organization  Outside of line organization
 Bastions of established  Violates established practice
practice  Upsets status quo
 Supports status quo
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WHY ARE PROJECTS IMPORTANT?

 Shortened product life cycles.

 Narrow product launch windows

 Increasingly complex and technical products

 Emergence of global markets

 An economic period marked by low inflation

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The Steps in Managing a Project

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The Steps in Managing a Project

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Define the Problem
 Problem need to be identify and to be solved by
the project. It helps to visualize the desired end
result.
 What will be different?

 What will you see, hear, taste, touch, or smell? (Use


sensory evidence if things can’t be quantified.)

 What client need is being satisfied by the project?

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Develop Solution Options
 How many different ways might you go about
solving the problem?
 Brainstorm solution alternatives (you can do this
alone or as a group).
 Of the available alternatives, which do you think
will best solve the problem?
 Is it more or less costly than other suitable choices?
 Will it result in a complete or only a partial fix?

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Plan the Project
 Planning is answering questions:
 what must be done, by whom, for how much, how, when,
and so on.
 Naturally, answering these questions often requires a
crystal ball.

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Execute the Plan
 Once the plan is drafted, it must be implemented.
Interestingly.
 We sometimes find people going to great effort to
put together a plan,
 Then failing to follow it.
 If a plan is not followed, there is not much point in
planning,

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Monitor and Control Progress
 Plans are developed so that you can achieve your
end result successfully.
 Unless progress is monitored, you cannot be sure
you will succeed.
 It would be like having a roadmap to a destination
but not monitoring the highway signs along the way.
 If a deviation from the plan is discovered, you must
ask what must be done to get back on track, or—if
that seems impossible—how the plan should be
modified to reflect new realities.
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Close the Project
 Once the destination has been reached, the project is
finished, but there is a final step that should be taken.
 Some people call it an audit, others a post-mortem.
 Whatever you call it, the point is to learn something from
 What you just did.
 What was done well?
 What should be improved?
 What else did we learn?
 We can always improve on what we have done.
 However, asking “What did we do wrong?” is likely to make
people a bit defensive, so the focus should be on
improvement, not on placing blame.

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PROJECT SUCCESS - THE QUADRUPLE
CONSTRAINT

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PMBoK KNOWLEDGE AREAS

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PMBoK KNOWLEDGE AREAS
 Project integration management ensures that the project is
properly planned, executed, and controlled, including
the exercise of formal project change control.
 Project Scope Management includes authorizing the job,
developing a scope statement that will define the
boundaries of the project, subdividing the work into
manageable components with deliverables, verifying
that the amount of work planned has been achieved,
and specifying scope change control procedures.

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PMBoK KNOWLEDGE AREAS
 Project time management specifically refers to
developing a schedule that can be met, then
controlling work to ensure that this happens! It’s that
simple.
 Project cost management involves estimating the cost
of resources, including people, equipment, materials,
and such things as travel and other support details.
After this is done, costs are budgeted and tracked
to keep the project within that budget.

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PMBoK KNOWLEDGE AREAS
 Project quality management includes both quality
assurance (planning to meet quality requirements)
and quality control (steps taken to monitor results to
see if they conform to requirements).
 Project human resources management, often
overlooked in projects, involves identifying the
people needed to do the job; defining their roles,
responsibilities, and reporting relationships;
acquiring those people; and then managing them as
the project is executed.

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PMBoK KNOWLEDGE AREAS
 Project Communications Management involves planning,
executing, and controlling the acquisition and
dissemination of all information relevant to the needs of
all project stakeholders.
 Project risk management is the systematic process of
identifying, quantifying, analyzing, and responding to
project risk.
 Project procurement management involves deciding what
must be procured, issuing requests for bids or
quotations, selecting vendors, administering contracts,
and closing them when the job is finished.
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PROJECT SELECTION
MODELS
CHAPTER - I
Project Selection
 Project selection is the process of evaluating
individual projects or groups of projects, and
then choosing to implement some set of them so
that the objectives of the parent organization
will be achieved
 Managers often use decision-aiding models to
extract the relevant issues of a problem from the
details in which the problem is embedded
 Models represent the problem’s structure and
can be useful in selecting and evaluating projects
Project Management – Managerial Approach, 4th Edition, by Jack R. Meredith and Samuel J. Mantel, Jr.
Published by John Wiley & Sons, Inc.
Criteria for Project Selection Models

 Realism - reality of manager’s decision


 Capability- able to simulate different scenarios and
optimize the decision
 Flexibility - provide valid results within the range of
conditions
 Ease of Use - reasonably convenient, easy execution, and
easily understood
 Cost - Data gathering and modeling costs should be low
relative to the cost of the project
 Easy Computerization - must be easy and convenient to
gather, store and manipulate data in the 4/8/2019
model
Nature of Project Selection Models

2 Basic Types of Models


 Numeric
 Nonnumeric

Two Critical Facts:


 Models do not make decisions - People do!
 All models, however sophisticated, are only
partial representations of the reality the are
meant to reflect
Project Management – Managerial Approach, 4th Edition, by Jack R. Meredith and Samuel J. Mantel, Jr.
Published by John Wiley & Sons, Inc.
Nonnumeric Models
 Sacred Cow - project is suggested by a senior and powerful official
in the organization
 Operating Necessity - the project is required to keep the system
running
 Competitive Necessity - project is necessary to sustain a
competitive position
 Product Line Extension - projects are judged on how they fit
with current product line, fill a gap, strengthen a weak link, or
extend the line in a new desirable way.
 Comparative Benefit Model - several projects are considered
and the one with the most benefit to the firm is selected
Project Management – Managerial Approach, 4th Edition, by Jack R. Meredith and Samuel J. Mantel, Jr.
Published by John Wiley & Sons, Inc.
Nonnumeric Models
 Q-Sort Method Of the several techniques for ordering
projects, the Q-Sort is one of the most straightforward.
 First, the projects are divided into three groups—good,
fair, and poor—according to their relative merits.
 If any group has more than eight members, it is
subdivided into two categories, such as fair-plus and fair-
minus.
 When all categories have eight or fewer members, the
projects within each category are ordered from best to
worst.
 Again, the order is determined on the basis of relative
merit.
 The rater may use specific criteria to rank each project, or
may simply use general overall judgment.
Project Management – Managerial Approach, 4th Edition, by Jack R. Meredith and Samuel J. Mantel, Jr.
Published by John Wiley & Sons, Inc.
The Q-Sort Method
Numeric Models: Profit/Profitability
 Payback period - initial fixed investment/estimated annual
cash inflows from the project
 Average Rate of Return - average annual profit/average
investment
 The Net Present Value of an investment it is simply
the difference between cash outflows and cash
inflows on a present value basis.
 Discounted Cash Flow - Present Value Method
 Internal Rate of Return - Finds rate of return that equates
present value of inflows and outflows
 Profitability Index - NPV of all future expected cash
flows/initial cash investment
Numeric Models: Scoring
 Unweighted 0-1 Factor Model
 Unweighted Factor Scoring Model
 Weighted Factor Scoring Model
 Constrained Weighted Factor Scoring Model
 Goal Programming with Multiple Objectives

Project Management – Managerial Approach, 4th Edition, by Jack R. Meredith and Samuel J. Mantel, Jr.
Published by John Wiley & Sons, Inc.
Risk Versus Uncertainty
 The difference between risk and uncertainty
 Risk - when the decision maker knows the
probability of each and every state of nature and
thus each and every outcome. An expected value
of each alternative action can be determined
 Uncertainty - when a decision maker has
information that is not complete and therefore
cannot determine the expected value of each
alternative
Project Management – Managerial Approach, 4th Edition, by Jack R. Meredith and Samuel J. Mantel, Jr.
Published by John Wiley & Sons, Inc.
Risk Analysis

 Principal contribution of risk analysis is to


focus the attention on understanding the
nature and extent of the uncertainty
associated with some variables used in a
decision making process
 Usually understood to use financial

measures in determining the desirability


of an investment project
Project Management – Managerial Approach, 4th Edition, by Jack R. Meredith and Samuel J. Mantel, Jr.
Published by John Wiley & Sons, Inc.
Risk Analysis
 Probability distributions are determined or
subjectively estimated for each of the
“uncertain” variables
 The probability distribution for the rate of
return (or net present value) is then found
by simulation
 Both the expectation and its variability are
important criteria in the evaluation of a
project
Project Management – Managerial Approach, 4th Edition, by Jack R. Meredith and Samuel J. Mantel, Jr.
Published by John Wiley & Sons, Inc.