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CE 4101W-01 Project Management and Economics

Fall 2005 Tim Eiler

Class Roll
If you are NOT officially enrolled in this class, see me at break or at end of class tonight All students sign the sheet being passed around All students obtain and complete an information sheet turn in at class end

Agenda
Why are we here tonight? Expectations of the class, of me, of you Course mechanics how it all will work What is PM and Why is it important? Starting out with basic PM Homework 1 assigned

Open PM Discussion
Why are you in this class?

What questions do you have about PM?

Whats The Point of This Class?


For those of you who see themselves as future PMs Figure out what PM is and isnt More importantly, figure out why PM is important to your businesses and careers For those who see themselves as engineers, but not PMs Its the soft stuff thats hard, the hard stuff is easy
(Doug Wilde, quoted in Leifer, 1997)

Those organizations that take project management seriously as a discipline, as a way of life, are likely to make it into the 21st century. Those that do not are likely to find themselves in good company with dinosaurs. (Tom Peters) In the new economy, all work is project work.
(Tom Peters; The Wow Project ;Fast Company, 24, 116)

Why is any business in business?

Why Project Management (PM)?


Increases profit (margin) by reducing cost/unit output
Increasing work output by the same resources Reducing cost of work done

Drives Innovation
In how individual contributor & management (mgmt) work is done In product

Why PM?
Increases sales
Improved quality Ability to be a price leader Differentiates your company The difference between a company and its competitor is the ability to execute. If your competitors are executing better than you are, theyre beating you in the here and nowExecution is the great unaddressed issue in the business world today. Its absence is the single biggest obstacle to success
Ram Charan & Larry Bossidy, Execution: The Discipline of Getting Things Done, 2002, Crown Business

Why PM?
In short:
Project Management (PM) strives to achieve success from entropy-driven chaos

Why Is PM Important?
A recent survey of technology projects in the United States by the Project Management Institute reveals some startling percentages:

Close to half of the projects started were


never finished 30% were completed but took at least twice as long - some took 5 times as long Only 10% of the projects were finished on time

Secret 1 About This Course


This course has wide breadth with less topic depth

Secret 2 About This Course


Project Management (PM) isnt rocket science

Secret 3 About This Course


This class is yours if you choose to own it.
If you choose not to get involved in it, you only have yourself to blame at the end for not getting something from it. Being involved means joining in discussions, doing the work, understanding why things are done the way they are "Learning occurs when people engage in complicated undertakings and find a way to reflect on how they're doing it - and perhaps engage a coach or mentor who has some tools and methods for learning. Those tools are different from answers. Answers are for lazy people who don't want to learn how to use a thinking method to learn how to deal with a practical problem. I have zero respect for trying to find an "answer". There is a profound difference between having an answer and having an approach you can use to deal with a complicated and difficult practical problem. " Peter Senge

Secret 4 About This Course


Simple is Sexy. Complex Sucks.
Rob Thomsett, Radical Project Management

The Story of The Skilcraft Method

What You Can Expect


This is an application-level course
Needs critical thinking not just formulaic regurgitation

5th - Explain Process: 3rd Apply 2nd Practice 1st Know 4th - Synthesize 3rd - Challenge 2nd - Listen 1st - Read

What You Can Expect


Getting new knowledge
Interactive, Socratic-style Lecture
Listen Ask questions Answer questions Discuss topics

Examples
The right way (we hope) first One planned for crucial or difficult topics More as you require

What You Can Expect


Practicing to solidify new knowledge
Facilitated Practice
Use the knowledge you have Apply it to new situation

In class assignment
Given information Do (use a tool, create a document, etc.)

Group-style work
Ask questions Help each other

What You Can Expect


Applying what you know
Requires melding of appropriate concepts
Given in the class Common sense and practical experience Readings

You WILL NOT always have everything spelled out to you in checklist format Sometimes you will have to MAKE ASSUMPTIONS to fill in the missing pieces

What You Can Expect


This is a Civil Engineering course It will use mostly examples and homework related to Civil Engineering It is also a course in Project Management It is not exclusive to Civil Engineering Not all the examples, homework, etc will be exactly in the CE domain You are to focus on PM 1st and CE secondI will not be evaluating you on your CE prowess

I Expect of You
Do the readings Attend class

Be An Active Learner

Ask questions & challenge the instructor Actively participate in discussions & groups Speak up when you have a question or concern Satisfactorily complete (on time) all writing assignments, examinations, projects, homeworks & exams.

Syllabus Review
Syllabus is posted at course site on WebCT You are responsible for printing it if you want a printout You are responsible to keep up with revision updates

Syllabus Review
Course Objectives Teaching Team Textbook(s) Computer Use Homework Grading Calendar Attendance Academic Honesty Etc READ THE SYLLABUS

Syllabus Review - Slide Decks


Available via WebCT
You are responsible for printing if you want a printout All slides are posted already

Syllabus Contd
Demonstrate knowledge of the concepts and principles of project management and economics Formulate and analyze project management and engineering economics problems Use project management and communications software Demonstrate knowledge of teamwork and interpersonal skills Process group work and the overall functioning of the course Demonstrate written and verbal skills Actively reflect on and process your learning in the course Apply concepts, principles, methods, algorithms, and heuristics

Syllabus Contd
Teaching Team
Office Hours: As Needed Instructor: Tim Eiler Office: CE 147 Phone 1: 612.327.1553 (cell) Phone 2: 952.446.1615 (home) Email 1: eiler012@umn.edu Email 2: timothy.eiler@gmacrfc.com
Teaching Assistant: Ryan Owen

Rhetoric Consultant: Dave Kmiec

Office: Office: Phone: 612.379.3251, 919.749.5580 (c Phone: 952.239.9349 ) Email: kmiec004@umn.edu Email: owen0138@umn.edu

Teaching Team Tim Eiler


Program Manager GMAC-RFC, Bloomington, MN (current) U of MN, Minneapolis, MN (current)
Manage software development program office and staff of project managers and technical resources (6)

Adjunct Professor of Project Management Partner

Manage and deliver project management course content

RocketScienz Group LLC, Rosemount, MN Tellabs, Plymouth, MN igi International, Minnetonka, MN

Graphic Design, Web Development and Hosting, Software Development, Training, PM Consulting

Release Manager

Led $300M, 36-month project to develop optical broadband switch

Manager of Project Management Project Manager Project Manager

Managed project management office/project management staff

ADC Telecommunications, Minnetonka, MN Microwave Network Systems, Houston, TX Rockwell Space Operations, Houston, TX

Managed broadband access equipment product development projects Managed microwave radio/radio network equipment development projects

Astronaut Instructor

Provided multi-discipline technical training to US & foreign astronauts

PMP (Project Mgmt Professional) Certification Project Mgmt Institute (PMI) MBA University of Houston BS ME/IEOR University of Minnesota CTM Certification Toastmasters International National Board of Directors Triangle Fraternity

Syllabus Contd
Computer Use WebCT This course uses WebCT for disseminating and collecting information If you dont know how to use WebCT, contact the department office for further instructions MS-Project and Other Tools You will be required to perform work using MS-Project and other software applications If you do not now have access to MS-Project, please arrange to get it

Syllabus Contd
Calendar See Syllabus Shows week numbers and date of Monday of each week Explains lecture material to be covered in class week Identifies prep. reading assignments for each class: PMBOK 2004 edition Other Note that reading assignments and/or homework assignments may not seem 100% synchronous with lecture material Identifies work to be assigned in each class Identifies work to be submitted in each class (or week)

Academic Honesty
Expectation: All students are expected to complete coursework responsibilities with fairness and honesty. Definition: Scholastic dishonesty means plagiarizing; cheating on assignments or examinations; engaging in unauthorized collaboration on academic work; taking, acquiring, or using test materials without faculty permission; submitting false or incomplete records of academic achievement; acting alone or in cooperation with another to falsify records or to obtain dishonestly grades, honors, awards, or professional endorsement; altering forging , or misusing a University academic record; or fabricating or falsifying data, research procedures, or data analysis. Consequences: Scholastic dishonesty WILL result in disciplinary action. Within this course, a student responsible for scholastic dishonesty can be assigned a penalty up to and including an "F" or "N" for the course.

Reasonable Accommodation
If you have a special need that requires any additional reasonable accommodation, I encourage you to please see or contact me at any time

Contract Grading
To Receive an A To Receive a B To Receive a C

Abide by all Class Policies Actively engage in class discussions small group and whole class Submit 100% of homework Receive P grade on Problem/Solution Memo Receive P grade on Project Proposal Receive P grade on 100% quizzes and assignments given in class Receive a cumulative mean score of >= 90% for 2 exams Receive P grade on Project Plan Complete Writing Interview Form

Abide by all Class Policies Actively engage in class discussions small group and whole class Submit 100% of homework Receive P grade on Problem/Solution Memo Receive P grade on Project Proposal Receive P grade on 90% quizzes and assignments given in class Receive a cumulative mean score of >= 80% for 2 exams Receive P grade on Project Plan

Abide by all Class Policies Actively engage in class discussions small group Submit 100% of homework Receive P grade on Problem/Solution Memo Receive P grade on Project Proposal Receive P grade on 80% quizzes and assignments given in class Receive a cumulative mean score of >= 70% for 2 exams

NOTE: In cases of conflict between these slides and the syllabus, the syllabus will have precedence

Grading Contd
Assignments Exams 3 Quality Quantity

Out of class assignments In class assignments Quizzes TBD TBD

Mastery Learning you may, at my discretion only, resubmit homework NLT one week following receipt of graded work

Attendance
Incredibly important in a class of this type You lose much more than your grade by not coming I will be flexible with attendance and assignments IFF

Class Groups
Form groups of 6 Each person to collect contact information (phone, email, etc) from ALL 5 other people on the team also submit your groups info to me Class Group is your first line of defense. Call them 1st to:
Get info you need if you missed class Get help obtaining or using a tool Etc.

Class Group is your team for assignments If your group shrinks < 4 people, see me

Breaks
The literature says that classes should be broken up to have a break after roughly every 45-50 minutes of class. I assume youre all adults, though, and you can make your own choices and follow through on those choices. Do you want 1 or 2 breaks during each class period?

General Course Organization


1. PM Planning 2. PM Execution 3. PM Leadership and Ethics 4. Project Closure

What Is Project Management?


Project Management is the application of knowledge, skills, tools, and techniques to project activities to meet project requirements. It is accomplished through the use of processes such as initiating, planning, executing, controlling, and closing.
(PMBOK, 2000, PMI)

Project Management is the intersection of: Tools People Systems


(Lewis, James P. 2000. Project Planning, Scheduling & Control, 3rd ed. McGraw-Hill)

Why Is PM Important To You?


What Employers Want Learning to Learn Listening and Oral Communication Competence in Reading, Writing, and Computation Adaptability: Creative Thinking and Problem Solving Personal Management: Self-Esteem, Goal Setting/Motivation, and Personal/Career Development Group Effectiveness: Interpersonal Skills, Negotiation, and Teamwork Organizational Effectiveness and Leadership
Workplace basics: The skills employers want. 1988. American Society for Training and Development and U.S. Department of Labor.

Why Is PM Important To You?


Employers Checklist C: Boeing Company[1]
A good grasp of these engineering fundamentals: Mathematics (including statistics), Physical & life sciences, Information technology A good understanding of design & manufacturing processes (i.e. understanding of engineering concepts and practice) A basic understanding of the context in which engineering is practiced, including: Economics and business practice, History, The environment, Customer and societal needs A multidisciplinary systems perspective Good communication skills: Written, Verbal, Graphic, Listening High ethical standards An ability to think critically, creatively, and independently & cooperatively Flexibility--an ability and the self-confidence to adapt to rapid/major change Curiosity and a lifelong desire to learn A profound understanding of the importance of teamwork
[1]ASEE

Prism, December 1996, p. 11.

Why Is PM Important To You?


Desired Attributes of a Global Engineer A good grasp of these engineering science fundamentals, including:
Mechanics & dynamics, Math (including statistics), Physical & life sciences, Information science/technology

A good understanding of the design & manufacturing process


(i.e., understands engineering and industrial perspective)

A multidisciplinary, systems perspective, along with a product focus A basic understanding of the context in which engineering is practiced, including:
Customer & societal needs/concerns, Economics & finance, The environment & its protection, The history of technology & society

Awareness of the boundaries of ones knowledge, along with an appreciation for other areas of knowledge & their interrelatedness with ones own expertise Awareness & appreciation of other cultures & their diversity, distinctiveness, & inherent value Commitment to teamwork, including extensive experience/understanding with team dynamics Good communication skills, including written, verbal, graphic, and listening High ethical standards (honesty, sense of personal and social responsibility, fairness, etc) An ability to think both critically and creatively, in both independent and cooperative modes Flexibility: the ability and willingness to adapt to rapid and/or major change Curiosity and the accompanying drive to learn continuously throughout ones career An ability to impart knowledge to others
[1]A Manifesto

for Global Engineering Education, Summary Report of the Engineering Futures Conference, January 22-23, 1997. The Boeing Company & Rensselaer Polytechnic Institute.

Why Writing In this Course?


Professional skills memos, reports, directives, plans, proposals, etc. Critical element of engineering and project management
Key to project management effectiveness (90% rule) Employers concerned about communication skills

Writing Intensive Curriculum Requirement

Why Writing Intensive?


ABET Criteria 2004-2005 Criteria for Accrediting Engineering Programs Engineering programs must demonstrate that their graduates have: (a) ability to apply knowledge of mathematics, science, and engineering (b) ability to design and conduct experiments, & to analyze and interpret data (c) ability to design a system, component, or process to meet desired needs (d) an ability to function on multi-disciplinary teams (e) an ability to identify, formulate, and solve engineering problems (f) an understanding of professional and ethical responsibility (g) an ability to communicate effectively (h) the broad education necessary to understand the impact of engineering solutions in a global and societal context (i) a recognition of the need for, and an ability to engage in life-long learning (j) a knowledge of contemporary issues (k) an ability to use the techniques, skills, and modern engineering tools necessary for engineering practice.
Source: ABET. 2004-2005 Criteria for Accrediting Engineering Programs. Accessed June 12, 2004. available: <http://www.abet.org/images/Criteria/E001%2004-05%20EAC%20Criteria%2011-20-03.pdf>

Meeting the ABET criteria


Interviewing a Practicing Engineer in your Area (f) an understanding of professional and ethical responsibility (g) an ability to communicate effectively Writing and Peer Reviewing a Problem-Solution Memo (d) an ability to function on multi-disciplinary teams (f) an understanding of professional and ethical responsibility (g) an ability to communicate effectively Writing a Proposal in a Collaborative Team (d) an ability to function on multi-disciplinary teams (g) an ability to communicate effectively

Writing as a Process
To succeed in these assignments, you will need to think of writing as a process, not a product. Be sure to follow the steps specified in the assignment for the purposes of this course. As you write in your career, you can find ways to adapt this basic process to the needs in your organization.

- Your writing assignments are graded pass/fail based on whether you:


* follow the writing process * apply the writing process effectively to your subject

Why Engineering Economics?


Critical element of project management
economics used in making decisions
related to engineering projects

Even if you arent the decision maker, you will be a participant in some form same principles are used for many other types of decisions

Life skills loans, mortgages, etc. FE, PE Exam

Engineering Econ - Examples


Is a 3-year payback on your project sufficient to meet company objectives? If you have competing repeatable projects with different lives, you can use the lowest common multiple of their project lives as the period of analysisTrue or False? You just heard through the grapevine that the company is changing the way it handles depreciation expense. You shouldnt worry about how that will affect how your project is acceptedTrue or False? (FE exam problem) A bank uses the following formula to compound interest in a passbook savings account F = P (1 + i/4)4n. Interest is stated as an annual rate. How are they compounding? (1) Daily, (2) Weekly, (3) Monthly, (4) Quarterly, (5) Annually

What Is Project Management?


Earlier, we saw these definitions: Project Management is the application of knowledge, skills, tools, and techniques to project activities to meet project requirements. (PMBOK, 2000) Project management focuses on a project. Management, bringing together and optimizing the resources necessary to successfully complete the project. These resources include the skills, talents, and cooperative efforts of a team of people; facilities, tools and equipment; information, systems and techniques; and money. (Haynes, 1989)

So, if Project Management (PM) focuses on a project, what is a project?

What Is A Project?
A temporary endeavor undertaken to create a unique product or service
A Guide to the Project Management Body of Knowledge, Project Management Institute

A project is a one-time, multitask job with a definite starting point, definite ending point, a clearly defined scope of work, a budget, and (usually) a temporary team. Lewis (2000). a combination of human and nonhuman sources pulled together in a temporary organization to achieve a specified purpose. (Cleland and Kerzner, 1985; Nicholas, 1990)

Characteristics Of A Project?
Temporary, with specific endpoint Unique Specific Deliverable Specific Spending Limit Element of Risk (Typically) Involve groups, across organizational lines

Defining a Project - Old

TRIPLE CONSTRAINT

Defining a Project Current


Budget = Cost Schedule = Time Performance = Itself Client Acceptance a.k.a Customer Satisfaction

QUADRUPLE CONSTRAINT

Is PM Art, Science, or Both?


Science Tools-based Process-based Some things are essentially same across projects & time Art Relies on Heuristics (Rules of Thumb) Many aspects not consistent across time or projects Critical decisions require experience basis

Fundamental Tools
Fundamental tools for the new generation of engineers and project managers
Basic Thinking (Occams Razor) Systems/ systems thinking/ systems engineering Models Teamwork Quality

PM Process at the High-Level


Customer Request Planning

Execution
customer internal

Closure

The PM Process Detail Level


SOW Project Charter
Requirements Document
WBS
customer internal

Stakeholder Analysis

Network Diagram

Critical Path Assessment

Duration Estimation

Resource Assignment

Schedule

Comm Plan

Budget

Quality Plan

Admin Plan

Project Plan

Predictors of Lowered Project Success


Unrealistic project work plans Inability to deal early with suspected problem issues Technical complexities not well communicated to team members Conflict between client expectations and the state of deliverables Insufficient involvement on the part of senior management early in the life cycle

Project Management
Project

Function 1

Function 2

Function n

Other

Program Management
Program

Project 1
Function 1

Project 2
Function 2

Project n
Function n

Other

Other

Project Life Cycle


Wild enthusiasm Disillusionment Total confusion Search for the guilty Punishment of the innocent Praise and honors for the non-participants
Its only funny because its so true

Project Life Cycle

Feasibility,

Planning/Design,

Construction,

Turnover/Startup

Project Life Cycle

PM Attention/Methods over PLC


Early: ensure project is defined correctly to: Meet the needs of the client Fit the abilities of the team Be consistent with goals, objectives, values of the firm Speculation Middle: keeping project on triple constraint targets, negotiating project trade-offs End: Punch list mentalityensuring everything is done and done correctly

PMs Role Over PLC


Planning Organizing Staffing Directing Controlling

PM Role Over PLC - Planning


Planning Establish project objectives and performance requirements Involve key participants in the process Establish well-defined milestones with deadlines Build in contingencies to allow for unforeseen problems Prepare formal agreements to deal with changes Clearly define responsibilities, schedules, and budgets
1Oberlender,

G.D. 1993. Project management for engineering and construction. New York: McGraw-Hill.

PM Role Over PLC Organizing/Staffing


Organizing Develop a WBS that divides project into units of work Create a project organization chart Clearly define responsibilities, schedules, and budgets Staffing Select team members using work requirements and input from appropriate managers input Orient team members to overall project Seek each team members input to define & agree upon scope, budget, and schedule Set specific performance expectations with each team member

PM Role Over PLC Directing/Controlling


Directing Coordinate all project components
Display positive attitude Be available to team members Investigate potential problems as soon as they arise Research and allocate necessary resources Recognize good work of team members & guide necessary improvement

Controlling
Measure project performance using record of planned & completed work Chart planned and completed milestones chart Chart monthly project costs Document agreements, meetings, telephone conversations Communicate regularly with team members

The PM Process Planning Detail


SOW Project Charter
Requirements Document
WBS
customer internal

Stakeholder Analysis

Network Diagram

Critical Path Assessment

Duration Estimation

Resource Assignment

Schedule

Comm Plan

Budget

Quality Plan

Admin Plan

Project Plan

The Process Steps - Overview


SOW what the customer wants Charter turns the project ON, identifies project rules Requirements Doc Details of the customer wants WBS breaks work into manageable packages Stakeholder Analysis identifies who can impact project Network Diagram identifies dependencies of tasks Duration Estimation estimates task length Critical Path Assessment finds the longest schedule Resource Assignment assigning the right people to tasks Schedule ND + Duration Estimates + Resources Communication Plan who needs to know what, when, how Budget based on estimates, how many & for project Quality Plan how quality of project output will be ensured Admin Plan how mundane aspects of the project will be handled Project Plan single location of most of the above (and more)

What it takes to be successful PM


Relentless Planning Vision Servant Leadership Approach
Delegation Communication Support Optimism Tenacity Balance Listening

Accountability

PM: A Different Way of Thinking Required


PM (indeed, management in general) requires a different way of thinking that most engineers are taught to use. YOU have to figure out how to make the transition . The good thing is that the shift is not as difficult as it might first seem.

Where Do Projects Come From? It is not only all about the customer It all starts with the customer!
Customers need Internal vs external customer

Where Do Projects Come From? So how does the customer tell the do-er what is needed (and constraints)? The Statement of Work (SOW)

Statement of Work (SOW)


What is the purpose of an SOW?
Narrative description of the work/deliverables required for the project contract

Is an SOW created before or after charter?


Before OR Afterdepends on type of project and who the vendor is

Who is accountable for creating the SOW?


The customer who requires the final output

What are the typical contents of a SOW?


User-level requirements

SOW
Constraints
Procedural Methodology Materials

Documentation Rules
What documentation is required
Testing results Manufacturers literature Samples Product data Color selections Etc.

When documentation is required Format required for documentation

Statement of Work (SOW)


There is no official standard version of an SOW An example (paper airplane)

Where Do Projects Come From?


1. Every project a company executes either contributes to that company's success of that company's failure. There is no in-between. A project that "does no harm" uses resources that could be better spent on a project that contributes to the company's objectives All projects are not created equal. Every project contributes differently. In is not in the company's best interests to treat projects equally. There are more good projects than there are resources with which to accomplish them. The corollary is "you can not do them all." Many foolish companies try to do too much and the result of this is poor quality, missed dates, cost overruns, and dissatisfied customers. Not all projects contribute to all corporate objectives. It would be nice if everything we did contributed to every company objective, but the do not and will not. It is acceptable to have a project that does not contribute to one or more company objectives. It is even acceptable from time to time to have a project that actually goes against an objective!

2.

3.

4.

Case Study Used In Course


The Situation:
The Avanti Motors Corporation of Norcross, GA, has begun production of the Studebaker XUV and needs a new parts warehouse (depot) in the midwest. Theyve chosen Bloomington, MN, have purchased the land, and have solicited bids. Your company (your group) submitted a bid and won.

Further Definition To Be Available In:


SOW Homework Instructions

Case Study Used In Course


Statement Of Work Parts Depot 333 W 78th St Bloomington, MN

Avanti Motor Corporation of America 19740 Inglewilde Dr Norcross, Georgia Mark Ross, Customer Representative

Case Study Used In Course


1. General Requirements
Not Applicable

2.

Site work
2.1 Excavation Flat and compacted to support slab foundation and building 2.2 Landscaping Turf

3.

Concrete
3.1 Footing and Slab Poured, reinforced concrete 3.2 Parking lot and street edging Curb and gutter 3.3 Walls Precast, reinforced concrete

Typical Project Documents


Request For Information (RFI)
A memo requesting specific information from someone

Transmittal
A memo that introduces/outlines/explains the material being sent (much like a fax cover sheet)

Homework 1
1. Genuinely and sincerely thank at least one person who performs routine cleaning maintenance on a building in which you work or live. Doing this activity in person is strongly recommended. If you choose to do this activity other than in person, you must include a copy of any correspondence you use to accomplish it. You must provide the name of this person and the building in which s/he works. You must also provide me with some way of remotely contacting this person (phone number or email address preferred). Submit via hardcopy Submit in next class (no late homework accepted) Your signature must be on the submitted version

Homework 1
2. Find 2 examples of SOWs to study and submit as part of the assignment. Answer the following questions: What is the expected outcome required by each SOW (describe briefly)? Were the formats similar? If not, what were some of the major differences between them? Was the content of each similar even if the formats were not? What were some of the similar content items? What were some of the different content items? Who (organization) wrote each SOW? Who was the SOW being given to do the work to develop the expected outcome (if you can tell)? Submit by hardcopy a copy of each SOW and the answers to the questions. Submit in next class (no late homework accepted)

Statement of Work (SOW)


What is the purpose of an SOW?
Narrative description of the work/deliverables required for the project contract

Who is accountable for creating the SOW?


The customer who requires the final output

What are the typical contents of a SOW?


User-level requirements

User-Level Requirements
What is a User-Level Requirement?
I (the customer) want the output to do x I (the customer) want the output to be like y

How is a User-Level Requirement different than other requirements?


Focus on the need rather than the how need fulfilled Often less detailed than requirements used to design/develop output

The Project Charter


Who is accountable for creating project charter? The Project Sponsor What does charter tell the project team & others?
There is a project (formal authorization) The projects output will be x (product description) The business need fulfilled by the project is y The project manager will be <name> The project manager has accountability & responsibility The project will have listed constraints & assumptions

Project Charter
Break into support groups In 10 minutes, create a project charter for the paper airplane project If you have a question the answer to which all groups might need to know, please ask it Turn in a copy of the charter with all group members names affixed

Requirements
Detailed description of the external perceptions of the desired outcome of project (triple constrainttransforming into quadruple constraint) Can be several levels or layers of requirements, each with successive levels of detailed (recommended) or tailored to a different audience (be careful). One of most reliable methods of ensuring project success is to have (& widely communicate) correctly & fully documented requirements

Requirements
Need to be clear, complete, reasonably detailed, cohesive, attainable, and testable Take care to involve as many of a projects stakeholders in requirements development as feasible. Anyone who could later derail the project should her/his expectations not be met should be included as a customer here. Quality Function Deployment (QFD) is a good tool for requirements development if you have available time to use it

Requirements Semantics
Will:
Used to indicate a factual statement or assumption This class will end This class will end on time

Shall:

Used to direct mandatory action The student shall complete the homework Synonyms include must, required to, necessary to

Should:

Used to request non-mandatory work The student should purchase supplementary reading materials

Statement of Work (SOW)


Your design/build firm has been contracted to act as general contractor design and install a new parts depot at 333 W 78th St in Bloomington, MN for the Avanti Corporation of America. The company is based in Norcross, GA and has just launched the Studebaker XUV into the American automobile market. It also currently sells two models of the Avanti sports car originally introduced in 1963 by the original Studebaker Corporation of South Bend, IN. At the initial meeting with your team, the client told you that it already has chosen the site. The rough particulars of site and building are: Facility to be used for automobile parts (14,000 parts) warehousing & some light assembly 100,000 total square feet 200 x 500 (lot size is 500 x 1000, details as attached) One story Steel frame Concrete pre-fabricated exterior Steel stud & drywall interior Two closed offices (each 15 x 15) One conference room (20 x 20) Lunch room (20 x 20) Restrooms (1 each for male and female) Loading dock (2 delivery stalls) Air conditioning & heating plant required to support entire space Security & fire suppression systems required to support entire space On-site parking required 2 visitor spaces, 5 employee spaces

Statement of Work (SOW)


Break into support groups In 5 minutes, create as detailed an SOW as possible for building a 3-car residential garage

Project Evaluation Criteria


These are the measurements which the Project Manager (and hopefully others) will use to judge whether the project has been successful:
Along the way When the project is complete

Why is this important? If you have:


a car that gets 30 mpg, 10 gallons of gas in the car $50 for gas @ $2/gallon One day

How far could you go?

To what city could you get?

Project Evaluation Criteria


To be manageable, criteria must originate from project goals & objectives (there is an important difference between those concepts, by the way)
Goal Objective

From where do the goals and objectives and then eval criteria - come? What manageable targets should the evaluation criteria cover? (hint: TC) Do they need to be approved once theyve been identified? If so, by whom?

Small Team Kickoff Meeting


PM gather personnel on the internal team Meet to discuss the initial requirementsgeneration part of the project (a mini-project of its own, for the most part)
Establish objectives Review the process to be followed Determine the information to be obtained Establish team member data-gathering/other roles to perform

Goals, Objectives (and Tasks)


Whats the difference?
Goal: very broad in scope, only the final outcome measurable Objective: a clearly measurable outcome, typically related to triple/quadruple constraint Task: A specific, measurable activity required to accomplish the objective(s)

Determining which is which is often as much art as science

Defining Requirements
Requirements are the detailed description of the external perceptions of the desired outcome of the project (triple constrainttransforming into quadruple constraint) Requirements need to be clear, complete, reasonably detailed, cohesive, attainable, and testable

Defining Requirements
One of the most reliable methods of ensuring project success is to have (and widely communicate) correctly and fully documented requirements Take care to involve as many of a projects stakeholders in requirements development as feasible. Anyone who could later derail the project should her/his expectations not be met should be included as a customer here. Quality Function Deployment (QFD)

Project Planning Project Planning is Extremely

ITERATIVE
Why? Because projects are progressively elaborated!

Concept Note: Rolling Wave Planning

Reflective Listening
SOW, Requirements Documents, and charter (and other documents) talk to each other Acceptance Criteria how will the customer/you know when the project is done?

Requirements Analysis/Agreement
Review SOW, specs, drawings for completeness Document issues in Requests For Information (RFI) Get customer addendums and do it all again until youre satisfied

Reflective Listening Example


SOW says: 3.0 No more than three folds Requirements Document (Rdoc) says: Requirement 3.0: No more than three folds
3.1 Direction of folds not specified 3.2 That any/all folds must be in parallel direction not specified 3.3 That folds must be all in same direction not specified

From where did the Rdoc get the added detail?

Organization Types
Differentiated by:
Whether PM coordination is vertical or horizontal How much authority a PM has

On a linear continuum from functional to projectized


Functional: silos, staff reports to a mgr, PM reports to a mgr Matrix: staff report to both mgr and PM
Weak Matrix Balanced Matrix Strong Matrix

Composite: same as matrix, but there is a functional PM group Projectized: everyone reports to a PM (but) Mixed: Some projectized, some matrix

Important because it affects how a PM manages

Organization Types - Functional


CEO
Engineering Staff Staff Manufacturing Staff Staff Human Resources Staff Staff Finance Staff Staff

Staff

Staff

Staff

Staff

Project control

Organization Types - Functional


Advantages
technological depth High degree of standardization and control in each silo

Drawbacks
lines of communication outside functional department slow technological breadth project rarely given high priority

Organization Types - Matrix


CEO
Engineering Staff Staff Manufacturing Staff Staff Human Resources Staff Staff Finance Staff Staff

Staff

Staff

Staff

Staff

Project control
In a Balanced Matrix, one staff is replaced by a PM In a Composite Matrix, PM has its own functional organization

Organization Types - Matrix


Advantages
flexibility in way it can interface with parent organization strong focus on the project itself contact with functional groups minimizes projectitis ability to manage fundamental trade-offs across projects

Drawbacks
violation of the Unity of Command principle complexity of managing full set of projects conflict

Organization Types - Projectized


CEO
PM 1 Staff Staff PM 2 Staff Staff PM 3 Staff Staff PM 4 Staff Staff

Staff

Staff

Staff

Staff

Project control
There is likely to be a separate network of functional managers A Mixed Organization is a mix of projectized, matrix/functional

Organization Types - Projectized


Advantages
Effective and efficient for large projects Resources available as needed Broad range of specialists short lines of communication May require high levels of duplication for some specialties Expensive for small projects Specialists may have limited technological depth No home for staff at end of project

Drawbacks

Organization Types - PMO


Project Management Office (PMO)
Not very standard in objective/work May be responsible for providing support functions (project coordination, other admin functions), to providing process ownership and training, to actually being responsible for project results

Sometimes known by other names


Project Management Process Group Project Management Center Of Excellence

Organization Types - Summary


Functional Weak Matrix Balanced Matrix
Low/Moderate

Strong Matrix

Projectized

PM Authority

Little/None

Limited

Moderate/High

High/Total

% assigned personnel full-time on project work PM Role

Virtually None

0-25%

15-60%

50-95%

85-100%

Part-time

Part-time

Full-time

Full-time

Full-time

Common PM Titles

Project Coordinator/ Project Leader

Project Coordinator/ Project Leader

Project Manager/ Project Officer

Project Manager/ Program Manager

Project Manager/ Program Manager

PM Admin Staff

Part-time, if any

Part-time, if any

Part-time, if any

Full-time

Full-time

Project Management Institute, 2000, PMBOK, p. 19

Organization Types - Selection


Organization types typically evolve,
rather than get selected

Some factors influencing the evolution


1. 2. 3. 4. 5. 6. Technology Finance and accounting Communication Responsibility to a project/product Coordination Customer relations

Organization Types - Selection


Why would an organization choose functional form over projectized form? Why would an organization choose strong matrix from the matrix options?

Project Plan
Once the SOW and charter are available, PM begins the process of creating the Project Plan. The Project Plan is a document that essentially: Helps organize the project planning process Helps communicate project planning information Puts all project planning information into one, easily-obtained location Why is is important to have a PM process?

Elements of a Project Plan


Overview
brief description of project deliverables milestones expected profitability and competitive impact intended for senior management

General Approach
technical and managerial approaches relationship to other projects deviations from standard practices

Contractual Aspects
agreements with clients and third parties reporting requirements technical specifications project review dates

Objectives
detailed description of projects deliverables project mission statement

Project Plan
Now that you know what a Project Plan is, is for, and what specific concept areas make up its contents, were going to move on. Keep those concepts in mind, however, as we move along. The tools you learn during the next few weeks feed the Project Plan (they become the contents).

Work Breakdown Structure


What is a WBS?
deliverable-oriented grouping of project components that organizes and defines the total scope of the project

What is a DELIVERABLE?

Work Breakdown Structure


What a WBS does:
Break the work down into smaller, more manageable parts (what does more manageable mean?) Clearly/visually show the full scope of the project
Work not in the WBS is OUTSIDE scope of the project Aids development/confirmation of common scope definition/understanding

Work Breakdown Structure


Break down the project level either by functional area/activity or by timeline area/activity (Gozinto Analysis) Can be graphical or numbered text (outline) format Each descending level represents an increasingly detailed description of project deliverables

Work Breakdown Structure


How to create it:
Break the work down (decompose the work) into smaller, more manageable parts (Identify deliverables)
Until sub/deliverables are defined in sufficient detail to support mgmt (can adequate duration & cost estimates be developed?) Each descending level represents an increasingly detailed description of project deliverables

ID tangible, verifiable constituent components of deliverables (to facilitate performance measurement) Verify correctness of the decomposition

WBS Exercise

Create a WBS using this information

WBS Exercise
1. Create a WBS 2. Is this (at right) organized by project life cycle phase or by function?
1.0 Office Remodel Project 1.1 Procure
1.1.1 Procure Paint 1.1.2 Procure New Carpet 1.1.2.1 Request Bids 1.1.2.2 Purchase 1.1.2.3 Receive Carpet 1.1.3 Procure New Furniture

1.2 Prepare 3. What would 1.2.1 Remove Old Furniture happen when 1.2.2 Remove Old Carpet 1.2.3 Scrub Walls decomposing deliverables far in the 1.3 Install future? 1.3.1 Paint Walls
1.3.2 Install New Carpet 1.3.3 Move in New Furniture

WBS Exercise
1.0 Office Remodel Project

1.1 Procure
1.1.1 Procure Paint 1.1.3 Procure New Furniture

1.2 Prepare
1.1.1 Remove Old Furniture 1.1.3 Scrub Walls

1.3 Install
1.1.1 Paint Walls 1.1.3 Move In New Furniture

1.1.2 Procure New Carpet 1.1.2.1 Request Bids 1.1.2.2 Purchase 1.1.2.3 Receive Carpet

1.1.2 Remove Old Carpet

1.1.2 Install New Carpet

Network Diagrams
Ok, up to now youve learned to:
1. 2. 3. 4. 5. Receive the customer specification Officially start the project Get the requirements right Figure out who the project stakeholders are and what they want Break the work down

So now what?

Put the work into a flow/logical sequence Identify and assign resources Create a schedule plan

Network Diagrams
How does PM put activities in logical order?
Activities progressively dependent upon each other Start at the project end and work backward Start at the project start and work forward

Purpose
Gives schematic display of the logic relationships of project activities
Note: Sequence order NOT time order

Helps find which activities most important according to current plan

Network Diagrams
The Language of Network Diagrams:
Task: specific work items that require resources Activity: Synonymous with task, but may also be task groups Event: Zero-time, zero-resource state resulting from completion of one or more predecessor activities Milestone: Zero-time, zero-resource marking point (significant progress, etc) Network: Diagram of nodes & lines (arrows) showing work flow logic Path: Series of connected activities between 2 or more nodes

Network Diagrams
Dependencies
Finish-Start: successor cant start until predecessor finishes Finish-Finish: successor cannot finish until predecessor finishes Start-Start: successor cant start until predecessor starts Start-Finish: successor cant finish until predecessor starts

AON vs AOA
AON = Activity on Node (Precedence Diagramming PDM) AOA = Activity on Arrow (Arrow Diagramming ADM)

Network Diagram Example - AON

Network Diagram Example - AOA

Sticky Note Project Planning


It really ISNT project planning, but
It is what is often done in practical settings It is network diagramming It leads to the initial stages of scheduling

How To:
Group (project team) activity One task per sticky note
Task name Task description Estimated duration (see estimating duration)

Arrange sticky notes in network diagram form Draw/string arrows to indicate dependencies Rearrange, add tasks as required

Network Diagram Example

Estimating Activity Duration


THE WORK: Tim shall walk across the room, turning off the projector along the way, & then write The Instructor Is Only As Good As His or Her Students on the chalkboard YOUR TASK:
A) Individually estimate (write it) how long (seconds) the work will take (30 seconds)

B) In Groups, estimate (write it) how long the work will take
(3 minutes)

How did your individual estimates compare to group estimates? Why? What strategies did you use to derive the estimates? Consistency of estimate

Estimating Activity Duration


1. Heuristic: Activity length between 0.5% and 2% of project duration. E.G. If an activity takes a year, each activity should be between a day and a week. 2. Critical activities that fall below this range should be included. 3. If the number of activities is very large (say, above 250), consider dividing the project into subprojects, and individual schedules developed for each. Why?

Responsibility Assignment
A next step beyond WBS for process of assignment of resources Must have a good catalog or database of resource capabilities Use functional managers to assign resources

Network Diagrams - CPM


CPM = Critical Path Method
- Method used to determine the longest time for the project to take according to plan

Critical Path
Path that, if delayed, will delay completion of project The series of activities that determines project duration The longest path through the project Change in start or finish time of a critical task will affect project end

Critical Time
Time required to complete all activities on the critical path

Network Diagrams - CPM


Calculate float to determine which activities have the least scheduling flexibility Float = amount of time a task may be delayed without impacting project finish date
(a/k/a total slack)

Visual Method:
Find EVERY path Add each path Longest path is critical path

CPM Example
Task
a b c d e f g

Predecessor
--a b b c, d e

Duration
4 6 3 4 5 2 7

Find the critical path and the critical time

CPM - Practice

Slack
Since critical path activities cannot be delayed without causing the project to be delayed, it follows that activities not on the critical path CAN be delayed without delaying the project.

BUT only within limits.

Slack
Critical Path activities have 0 slack The amount of time a non-critical path task may be delayed without delaying the project end (or internally to the network, a later task) is called slack or float.
Star t End 3 Task 1 3 Task 3 3 Task 2

Slack
Calculated by:
LST EST = LFT EFT = slack
Where:
LST = Latest Start Time EST = Earliest Start Time LFT = Latest Finish Time EFT = Earliest Finish Time

Displayed by:
EST EFT

Task
LST LFT

0
S T A R T

5 5 5

5 5

6
Task B

11 11
E N D

Forward Pass

Task A

0 5

6 11

Task C

Backward Pass
0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 10 9 11 10 12 11

Number Convention

PERT
PERT = Program Evaluation Review Technique Formula calculation using std dev of project completion date using weighted averages of the durations Uses 3 input estimates of duration to counter uncertainty in the individual activity durations (CPM only uses 1)
Low duration (fastest likely) Medium duration (most likely) High duration (longest likely)

PERT
Sometimes called Method of Moments Network Diagrams often mistakenly called PERT Charts Examples of projects in which PERT is good?

Network Diagrams - PERT


MS Project PERT representation

Questions
Knowing what you have learned up to this point in the course: What are some likely things that can cause project failure? (Impact, Probability) What are some things you can try as PM to overcome the possible, typical causes of project failure?

Scheduling
What is scheduling?
Bringing together as much information as is known at a given time regarding tasks, tasks sequence, and task durations

Scheduling
What is the purpose of scheduling?
Helps PM/Team determine project task order, time requirements, personnel requirements/choices, budget, etc. Whole project big picture Visual representation One Stop Convenience Monitor/Control
What If? Analysis Risk ID/Assessment

Scheduling
How is scheduling done?
What do we know already? What do we need to find out? How should we go about getting that info?

Scheduling
What do we know already?
Activities Identified (WBS) Activities Sequenced (Network diagram)

Scheduling
What do we need to find out?
Estimates of how long the tasks will take

How should we go about getting the info?


Personnel assignments Expert input Historical information

Can/should PM do this on her/his own?

Resource Planning
Who/What else could/should be involved?
Impacted by Organizational Structure Functional Managers? Expert Staff? Resource skills database? Other PMs? Historical records?

Scheduling
At what level should PMs schedule be?
Top-down estimation Bottom-up estimation

How do you think the organizational structure of the company affects this effort?

Responsibility Assignment
A next step beyond WBS for process of assignment of resources Must have a good catalog or database of resource capabilities Use functional managers to assign resources

Milestone Chart
Used as a high-level summary Typically Zero-Time Events Easier to understand for managers Sometimes also called Waterfall Diagram because of the way the milestones tend to flow downward over time in the chart Milestones may be events inside or outside schedule

Milestone Chart
CE 4101W-01: Spr 2005
Class start

Exam 1

Exam 2

Exam 3 Grades posted

Jan

Feb

Mar

Apr

May

Milestone Chart
CE 4101W-01: Fall 2003
Labor Day Class start 9/3 9/4

Exam 1

10/7

Exam 2

11/4 12/9

Exam 3 Grades posted

12/19

Sep

Oct

Nov

Dec

Jan

Milestone Chart - Example


Break into support groups 5 minutes Using the course syllabus, create a milestone chart of the course assignments and exams

Gantt Chart
Used to represent the timing of tasks Column 1 = task, each additional column is a time period Each task on its own row Expected time for each task represented by a horizontal bar < Left end of the bar marks the expected beginning of the task > Right end of the bar marks the expected end of the task Tasks may run sequentially, in parallel, or overlapping Milestones (tasks with no time) may be included (represented by diamonds, triangles, etc)

Gantt Schedules
Task 1 Task 2 Task 3 Task 4 Task 5
10/7

t1

t2

t3

Gantt Schedules
Project progress is marked by filling in a task bar
Task 1 Task 2 Task 3 Task 4 Task 5
10/7 75%

t1

t2

t3

Modified Gantt Chart


Possible Show dependencies (this example) Modifications: Show resource assignments Task roll-ups (this example)

Modified Gantt Chart


Better way to do task ID notation

Scheduling - Practice
Break into support groupsIn 10 minutes: Draw two network diagrams (AON, AOA) Determine the critical path (CPM) Draw a Gantt AND a Modified Gantt chart
Project Management Resource Leveling Task 1 2 3 4 5 6 Duration 7 5 4 2 3 1 Resources 8 6 4 4 6 6 2 1, 3 2 5 Predecessor

Assume resources are transferrable. Determine the smoothest distribution of resources.

Scheduling Computer Tools


Which ones are there?
Microsoft Project Scitor Project Scheduler ABT Project Manager Workbench Primavera Tools (SureTrak, Expedition, etc) Artemis MS-Office tools (Exel, Word, Access, etc) Many Others Power to handle complex tasks What if Analysis AMS RealTime

What are they good for?


Automation of tasks Handling large numbers of tasks

Resource leveling
Any form of network analysis in which scheduling decisions are driven by resource management concerns (e.g. limited resource availability or difficult to manage changes in resource levels). Resource Histogram

Scheduling Computer Tools


Example Schedule in Microsoft Project Use information from previous exercise

Project Calendars
Project Scheduling Tools have the option of setting project calendars
Number of hours/workday Number of workdays/week Default setting is *usually* 7 8-hour days/week

Project Calendars
1. Why is it important to set your calendar for the correct days of the week, correct hours per day, and correct holidays? 2. How should overtime be factored into the project (tool) calendar?

Theory Of Constraints
What is it (TOC)?
Real systems must have at least one constraint a factor that limits the system from getting more of whatever it is trying to achieve To achieve more, one must manage the constraint(s) TOC models system as a chain. To improve strength of a chain, must identify weakest link & concentrate efforts on strengthening weakest link

Acrobat Docu

Theory Of Constraints
TOC Goals:
Increase system throughput Reduce work in process (WIP) Decrease costs Reduce lost income by achieving schedule prediction 90+% of time

Theory Of Constraints
Processes & Tools
Problem-solving tools - the Thinking Processes (TP) logically/systematically answer 3 questions needed for process of ongoing improvement: "What to change?", "To what to change?" & "How to cause the change?"; Daily management tools - taken from Thinking Processes - can be used to significantly improve vital management skills, such as communication, effecting change, team building and empowerment Proven solutions - created by applying Thinking Processes to specific application areas, such as production (as introduced in The Goal), distribution (Its Not Luck), Marketing/Sales (Its Not Luck), project management, & setting company direction, to name only a few.

Theory Of Constraints
How does it work?
1. Identify the System's constraints.
Analyze process to identify task/activity limiting system productivity

2. Decide how to exploit the system's constraints.


Modify/redesign task/activity to perform work more effectively/efficiently

3. Subordinate everything else to the step 2 decision.


Direct all efforts to improving performance of constraining task/activity & other tasks/activities directly affecting constraining task/activity

4. Elevate the system's constraint.


Add capacity to increase (elevate) output of constraining task/activity

5. If a constraint has been broken in previous step, go back to step 1 but do not allow inertia to cause a new constraint
This sets up a process of ongoing improvement

Theory Of Constraints
How to identify constraints?
1. Look for bottlenecks 2. Can stem from physical constraints or policy constraints Physical: Machine, people, facilities, tangible sources Easier to identify and break Policy: Rules, training, measures (RTM) More difficult to identify and break

Identify possible constraints in a building project

Critical Chain
Get realistic Commitments

Eliminate multi-tasking

Manage constraints

Manage Uncertainty

Critical Chain
Rules:
Aggressive estimates
Planned pad hierarchy Parkinsons Law Student Syndrome

Include dependencies other than time in management focus No multi-tasking on critical chain Relay-runner ethic/system Report early finishes Aggregate safety (buffers) and manage to the buffers

Planned Pad Hierarchy


Feeder Task 1 Feeder Task 2 Feeding Buffer

C.C. Task 1

C.C. Task 2

C.C. Task 3

C.C. Task 4

Project Buffer

End

crobat Docume

Communication Planning
What is Project Communication?
Exchanging project-specific information from sender to recipient Communication is best done when it is: Recipient-focused Done to serve an end

Communication Planning
What is Communications Planning?
Determining the information and communications needs of the stakeholders:
Who needs information? What information do they need? When will they need that information? What options do you have to give them the information and which way(s) are best?

Communication Planning
Whats the purpose of it? How is it done? Why not just do it on the fly instead of early/in the project planning stages? Does it change with scale (duration, cost, complexity) of project? Other scales?

Communication Planning
Who needs information?

Do internal stakeholders need more or different information than external stakeholders? Explain

Communication Planning
What data/information do they need?

Whats the difference between data and information?

Communication Planning
Communication Management Plan:
Methods/procedures for info collection/storage structure Details of data/info distribution structure for various data/info types Description of data/info to be distributed Schedules showing when each type of communication is anticipated to be produced Methods for accessing data/info between scheduled communications Methods for updating/refining the CMP over time

Review PMBOK Chapter 10!

Communication Planning
When will they need that information? Before event During event After event Periodically vs. ad hoc

Communication Planning
What options do you have to give them the information and which way(s) are best? Reports Briefings Status meetings Email Others?

Communication Planning
What options do you have to give them the information and which way(s) are best? Reports Briefings Status meetings Email Others?

Communication Planning - Example


Project: Student going to school
Stakeholder 1 2 3 n Data/Info Needed? Main Distrib Method(s)? When Distrib? How Distrib? Methods/Procedures for info collection/storage Methods for data access between scheduled communications Methods for updating/refining CMP over time Who is responsible? When will it be done?

Typical Project Documents


Submittal
A specific artifact/item to be reviewed for approval, archived, etc.

Transmittal
A memo that outlines/explains submittals included with the transmittal and the actions required by the recipient

Typical Project Documents


There are no world-wide formats for these documents. Formats will be:
Company specific Recipient specific Industry specific Project specific

Procurement Planning
Is it likely that you will be able to do all the work with internal resources?

How do you decide what to outsource?

How do you procure the outsourced work?

Procurement Planning
Procurement Management Plan: Describes
how procurement process from solicitation planning through contract closeout will be managed
Types of contracts to be used If independent estimates to be used, who will prepare them and when If there is a procurement organization in your company, what actions PM/Project Team can take independently Where procurement documents can be found How each contractor will be managed How procurement processes will coordinate with other PM processes

Includes your SOW to the contractor

Make or Buy Analysis


Expert Judgment
Do you have the right resources for the job? Do you have the right skills to do a quality job? Experts might include: internal experts, other units, consultants, professional and technical associations, other industry groups, etc.

Opportunity Cost Analysis & Cost/Benefit Analysis


Can we use internal resources more productively than this job?

Lease vs. Buy Analysis

Opportunity Cost
What is it?
The cost of making a trade-off

Why is important?
A well run business or project doesnt have a great deal of excess (i.e. unallocated) cash/other resources lying around Projects compete with one another for resources Goal is to optimize use of limited supply Requires making trade-offs

Cost/Benefit Analysis
Cost Benefit Analysis is a tool to evaluate options
Is it worth spending $5000 to crash a schedule and gain 5 days? Is it worth dropping a product feature from this software release in order to be able to achieve the baseline schedule release or would it be better to keep the feature and slip the scheduled release by 20 days?

You first need to have the costs and benefits


Costs and benefits must be in a quantifiable unit (dollars, production units gained or lost, days, etc.) Costs do NOT have to be in equivalent units to Benefits

You also need to know the acceptable target tradeoff range(s) if there are absolute values (otherwise, rely on relative comparisons)
I once caught a fish this big |

Buy vs. Lease


Lessor: The one who owns the capital Lessee: The one receiving the capital A lease acts like an amortized purchase for both lessor and lessee Why lease instead of buying? Avoid technical obsolescence Tax advantages Asset/payment flexibility

Why buy instead of leasing? Possibility of salvage value + value obtained from asset use being greater than amortized cost Tax advantages

Main Types of Contract


Firm Fixed Price
Buyer pays seller a set amount regardless of seller costs

Fixed Price Incentive Fee


Buyer pays seller a set amount & seller can earn additional fee if performance criteria are met

Cost Plus Fixed Fee


Buyer reimburses seller costs plus a fixed profit fee

Cost Plus Incentive Fee


Buyer reimburses seller costs & seller earns profit if performance criteria met

Time & Material (T&M) Hybrid of cost reimbursement and fixed fee Purchase Order

Who has the risks in each type?

Solicitation
1. Send bid/proposal request documents to prospective vendors
o Presumes you have a sufficient list of applicable vendors o Distribution may be direct, via bidder conference, via advertising, etc. o Bid & Quote used when selection based on price o Proposal used when other than price (tech skills, etc) paramount o Request for Bid (RFB), Invitation to Bid (IFB) o Request for Quote (RFQ), Invitation to Quote (IFQ) o Request for Proposal (RFP), Invitation for Proposal (IFP) o Include SOW, description of required response/response format, explanation of pro forma contract terms and agreement structure

Solicitation
2. Obtain bids/proposals from sellers 3. Evaluate bids/proposals & cycle thru SOW updates 4. Select bidder (based on criteria), negotiate, & award contract

Contracts
You are the owner of a small excavation contracting business that has a multi-year T&M contract with a customer. The contract specifies the rate of pay for personnel types on the project. 1. Qualify the risks you face related to management of the contract. 2. Qualify the risks the buyer faces.

Quality For Project Managers


What does the word quality mean?
Features and functionality
Scope requirements filled and working properly Conformance to specification or design

Fitness for use


Degree of excellence at an acceptable price Control of variability at an acceptable cost How well the product fits patterns of user preferences

Why is it important for the PM to focus on quality?


Driver of customer satisfaction: Triple/Quadruple Constraint
Time (schedule) Cost (budget)

Performance (specifications/quality)

Quality For Project Managers


What is the cost of quality?
Prevention costs costs incurred to prevent failure and minimize appraisal costs Appraisal costs discovering the condition of the process or product Internal Failure costs costs due to raw materials, WIP, or finished goods not being manufactured right 1st time External Failure costs costs from customer discovering a lack of product quality

Quality For Project Managers


Managements Role:
Ask questions:
o What is next? o What can I do?

Preach Teach Be an example Provide resources Seek never-ending improvement Follow Demings 14 points

It is the PMs role to be a leader of quality in your projects

Quality Systems You Can Use


Quality Systems
TQM (Kaizen/Continuous Improvement) Six Sigma ISO standards Quality Circles Minnesota Quality Award Baldrige Award Deming Prize

Total Quality Management


TQM (Total Quality Management)
Objective: Improve quality by analyzing the whole production process using quantitative and qualitative information Method:
Clear, visible leadership from top Ensure that the system is known Use statistical measurements to monitor the system Use statistical measurements to make changes only when needed and relatively predictable Use statistical measurements to monitor the changes

(PLAN, DO, CHECK, ANALYZE)

Fourteen Points of Quality


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Create constancy of purpose toward improvement Adopt the new philosophy Cease dependence on inspection. Minimize total costs Constant and perpetual improvement Institute training Institute leadership Drive out fear Break down internal barriers Eliminate slogans, targets etc. Eliminate management by objective Remove barriers Institute program of education and self-improvement. Everybodys job is to accomplish the transition.
- W. Edwards Deming

Demings 7 Deadly Diseases


1. Lack of constancy of purpose to improve products & services by providing resources for long-term planning, for research, & for training An emphasis on short-term profits & quarterly dividend Individual performance evaluations through merit ratings & annual reviews Managers who are highly mobile & hop from company to company Management use of numbers & figures that are visible & available with no thought of info that may be needed, but unknown or hidden Excessive medical costs Excessive legal liability costs, which can be swelled by lawyers who work on contingency fees 2. 3. 4. 5. 6. 7.

Continuous Quality Improvement


Four Basic Principles

1. 2.

Develop a Strong Customer Focus Continually Improve All Processes Identify Them Improve Them (Plan, Do Check, Act) Involve Employees Mobilize Both Data & Team Knowledge to Improve Decision Making

3. 4.

(The Memory Jogger: A Pocket Guide of Tools for Continuous Improvement and Effective Planning)

Six Sigma
Six Sigma
Objective:
A comprehensive and flexible system for achieving, sustaining, and maximizing business success. Six Sigma is uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis, and diligent attention to managing, improving, and reinventing business processes. Encompasses a broad array of business best practices and skills (some advanced, some common sense) that are essential ingredients for success and growth. Applicable to all types of organizations As much about people excellence as technical excellence

Method:
There are many Six Sigma Ways. there is no fixed prescription Sort of a culmination/combination of various other systems

Six Sigma Essential Themes


1. A genuine focus on the customer 2. Data- and fact-driven management 3. Process focus, management & improvement as an engine for growth & success 4. Proactive management 5. Boundaryless collaboration 6. A drive for perfection, and yet a tolerance for failure

Six Sigma

Mc-Graw Hill, 2000

Six Sigma Roadmap


1. Identify core processes & key customers 2. Define customer Requirements 3. Measure current Performance 4. Prioritize, analyze & implement improvements 5. Expand & integrate six sigma system

DMAIC: Define, Measure, Analyze, Improve, Control

Six Sigma Methods/Tools


Continuous Improvement Process Design/Redesign Analysis of Variance Balanced Scorecard Voice of the Customer Creative Thinking Design of Experiments Process Management Statistical Process Control

ISO Standards
ISO standards (900x, 1400x, etc.) Objective:
Improve processes & reduce process variation

Method:
Tell me what youre going to do. Do it. Show me that you did it. Set requirements for process performance in various operational areas Company establishes process to comply with the ISO specifications Registrar evaluates company ISO system
ISO system meets/exceeds ISO standard, company is certified/registered ISO system does not meet/exceed, company goes back to previous step

Company uses periodic audits to validate process validity and adherence


Internal External (registrar)

Failures found during audits must be dealt with via a process established as part of the companys ISO system

Quality Circles
Objective:
Improve product quality by soliciting group input from workers (and sometimes customers and/or users) in order to improve product process, features, etc.

Method:
Bring teams together to brainstorm solutions to a problem, then implement the ones that seem logical, are generally desirable, and are economically feasible and see what happens.

Quality Tools
Quality Tools
Inspection Benchmarking Process flowcharting Run chart Histogram Scatter diagram Ishikawa Diagram Pareto analysis Fault-tree analysis/FMEA Control Charts (X-bar, R) Auditing Simulation (Monte Carlo, What-if) QFD

Procurement Planning
Is it likely that you will be able to do all the work with internal resources?

How do you decide what to outsource?

How do you procure the outsourced work?

Procurement Planning
Procurement Management Plan: Describes
how procurement process from solicitation planning through contract closeout will be managed
Types of contracts to be used If independent estimates to be used, who will prepare them and when If there is a procurement organization in your company, what actions PM/Project Team can take independently Where procurement documents can be found How each contractor will be managed How procurement processes will coordinate with other PM processes

Includes your SOW to the contractor

Make or Buy Analysis


Expert Judgment
Do you have the right resources for the job? Do you have the right skills to do a quality job? Experts might include: internal experts, other units, consultants, professional and technical associations, other industry groups, etc.

Opportunity Cost Analysis & Cost/Benefit Analysis


Can we use internal resources more productively than this job?

Lease vs. Buy Analysis

Opportunity Cost
What is it?
The cost of making a trade-off

Why is important?
A well run business or project doesnt have a great deal of excess (i.e. unallocated) cash/other resources lying around Projects compete with one another for resources Goal is to optimize use of limited supply Requires making trade-offs

Cost/Benefit Analysis
Cost Benefit Analysis is a tool to evaluate options
Is it worth spending $5000 to crash a schedule and gain 5 days? Is it worth dropping a product feature from this software release in order to be able to achieve the baseline schedule release or would it be better to keep the feature and slip the scheduled release by 20 days?

You first need to have the costs and benefits


Costs and benefits must be in a quantifiable unit (dollars, production units gained or lost, days, etc.) Costs do NOT have to be in equivalent units to Benefits

You also need to know the acceptable target tradeoff range(s) if there are absolute values (otherwise, rely on relative comparisons)
I once caught a fish this big |

Buy vs. Lease


Lessor: The one who owns the capital Lessee: The one receiving the capital A lease acts like an amortized purchase for both lessor and lessee Why lease instead of buying? Avoid technical obsolescence Tax advantages Asset/payment flexibility

Why buy instead of leasing? Possibility of salvage value + value obtained from asset use being greater than amortized cost Tax advantages

Main Types of Contract


Firm Fixed Price
Buyer pays seller a set amount regardless of seller costs

Fixed Price Incentive Fee


Buyer pays seller a set amount & seller can earn additional fee if performance criteria are met

Cost Plus Fixed Fee


Buyer reimburses seller costs plus a fixed profit fee

Cost Plus Incentive Fee


Buyer reimburses seller costs & seller earns profit if performance criteria met

Time & Material (T&M) Hybrid of cost reimbursement and fixed fee Purchase Order

Who has the risks in each type?

Solicitation
1. Send bid/proposal request documents to prospective vendors
o Presumes you have a sufficient list of applicable vendors o Distribution may be direct, via bidder conference, via advertising, etc. o Bid & Quote used when selection based on price o Proposal used when other than price (tech skills, etc) paramount o Request for Bid (RFB), Invitation to Bid (IFB) o Request for Quote (RFQ), Invitation to Quote (IFQ) o Request for Proposal (RFP), Invitation for Proposal (IFP) o Include SOW, description of required response/response format, explanation of pro forma contract terms and agreement structure

Solicitation
2. Obtain bids/proposals from sellers 3. Evaluate bids/proposals & cycle thru SOW updates 4. Select bidder (based on criteria), negotiate, & award contract

Contracts
You are the owner of a small excavation contracting business that has a multi-year T&M contract with a customer. The contract specifies the rate of pay for personnel types on the project. 1. Qualify the risks you face related to management of the contract. 2. Qualify the risks the buyer faces.

Quality For Project Managers


What does the word quality mean?
Features and functionality
Scope requirements filled and working properly Conformance to specification or design

Fitness for use


Degree of excellence at an acceptable price Control of variability at an acceptable cost How well the product fits patterns of user preferences

Why is it important for the PM to focus on quality?


Driver of customer satisfaction: Triple/Quadruple Constraint
Time (schedule) Cost (budget)

Performance (specifications/quality)

Quality For Project Managers


What is the cost of quality?
Prevention costs costs incurred to prevent failure and minimize appraisal costs Appraisal costs discovering the condition of the process or product Internal Failure costs costs due to raw materials, WIP, or finished goods not being manufactured right 1st time External Failure costs costs from customer discovering a lack of product quality

Quality For Project Managers


Managements Role:
Ask questions:
o What is next? o What can I do?

Preach Teach Be an example Provide resources Seek never-ending improvement Follow Demings 14 points

It is the PMs role to be a leader of quality in your projects

Quality Systems You Can Use


(some) Quality Systems
TQM (Kaizen/Continuous Improvement) Six Sigma ISO standards Quality Circles

Total Quality Management


TQM (Total Quality Management)
Objective: Improve quality by analyzing the whole production process using quantitative and qualitative information Method:
Clear, visible leadership from top Ensure that the system is known Use statistical measurements to monitor the system Use statistical measurements to make changes only when needed and relatively predictable Use statistical measurements to monitor the changes

(PLAN, DO, CHECK, ANALYZE)

Fourteen Points of Quality


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Create constancy of purpose toward improvement Adopt the new philosophy Cease dependence on inspection. Minimize total costs Constant and perpetual improvement Institute training Institute leadership Drive out fear Break down internal barriers Eliminate slogans, targets etc. Eliminate management by objective Remove barriers Institute program of education and self-improvement. Everybodys job is to accomplish the transition.
- W. Edwards Deming

Demings 7 Deadly Diseases


1. Lack of constancy of purpose to improve products & services by providing resources for long-term planning, for research, & for training An emphasis on short-term profits & quarterly dividend Individual performance evaluations through merit ratings & annual reviews Managers who are highly mobile & hop from company to company Management use of numbers & figures that are visible & available with no thought of info that may be needed, but unknown or hidden Excessive medical costs Excessive legal liability costs, which can be swelled by lawyers who work on contingency fees 2. 3. 4. 5. 6. 7.

Continuous Quality Improvement


Four Basic Principles

1. 2.

Develop a Strong Customer Focus Continually Improve All Processes Identify Them Improve Them (Plan, Do Check, Act) Involve Employees Mobilize Both Data & Team Knowledge to Improve Decision Making

3. 4.

(The Memory Jogger: A Pocket Guide of Tools for Continuous Improvement and Effective Planning)

Six Sigma
Six Sigma
Objective:
A comprehensive and flexible system for achieving, sustaining, and maximizing business success. Six Sigma is uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis, and diligent attention to managing, improving, and reinventing business processes. Encompasses a broad array of business best practices and skills (some advanced, some common sense) that are essential ingredients for success and growth. Applicable to all types of organizations As much about people excellence as technical excellence

Method:
There are many Six Sigma Ways. there is no fixed prescription Sort of a culmination/combination of various other systems

Six Sigma Essential Themes


1. A genuine focus on the customer 2. Data- and fact-driven management 3. Process focus, management & improvement as an engine for growth & success 4. Proactive management 5. Boundaryless collaboration 6. A drive for perfection, and yet a tolerance for failure

Six Sigma

Mc-Graw Hill, 2000

Six Sigma Roadmap


1.Identify core processes & key customers 2. Define customer Requirements 3. Measure current Performance 4. Prioritize, analyze & implement improvements 5. Expand & integrate six sigma system

Six Sigma Methods/Tools


Continuous Improvement Process Design/Redesign Analysis of Variance Balanced Scorecard Voice of the Customer Creative Thinking Design of Experiments Process Management Statistical Process Control

ISO Standards
ISO standards (900x, 1400x, etc.) Objective:
Improve processes & reduce process variation

Method:
Tell me what youre going to do. Do it. Show me that you did it. Set requirements for process performance in various operational areas Company establishes process to comply with the ISO specifications Registrar evaluates company ISO system
ISO system meets/exceeds ISO standard, company is certified/registered ISO system does not meet/exceed, company goes back to previous step

Company uses periodic audits to validate process validity and adherence


Internal External (registrar)

Failures found during audits must be dealt with via a process established as part of the companys ISO system

Quality Circles
Objective:
Improve product quality by soliciting group input from workers (and sometimes customers and/or users) in order to improve product process, features, etc.

Method:
Bring teams together to brainstorm solutions to a problem, then implement the ones that seem logical, are generally desirable, and are economically feasible and see what happens.

Quality Tools
Quality Tools
Inspection Benchmarking Process flowcharting Run chart Histogram Scatter diagram Ishikawa Diagram Pareto analysis Fault-tree analysis/FMEA Control Charts (X-bar, R) Auditing Simulation (Monte Carlo, What-if) QFD

ISO Standards
ISO standards (900x, 1400x, etc.) Objective:
Improve processes & reduce process variation

Method:
Tell me what youre going to do. Do it. Show me that you did it. Set requirements for process performance in various operational areas Company establishes process to comply with the ISO specifications Registrar evaluates company ISO system
ISO system meets/exceeds ISO standard, company is certified/registered ISO system does not meet/exceed, company goes back to previous step

Company uses periodic audits to validate process validity and adherence


Internal External (registrar)

Failures found during audits must be dealt with via a process established as part of the companys ISO system

Quality Circles
Objective:
Improve product quality by soliciting group input from workers (and sometimes customers and/or users) in order to improve product process, features, etc.

Method:
Bring teams together to brainstorm solutions to a problem, then implement the ones that seem logical, are generally desirable, and are economically feasible and see what happens.

Quality Tools
Quality Tools
Inspection Benchmarking Process flowcharting Run chart Histogram Scatter diagram Ishikawa Diagram Pareto analysis Fault-tree analysis/FMEA Control Charts (X-bar, R) Auditing Simulation (Monte Carlo, What-if) QFD

Inspection
Inspection
OLD WAY: Check at the end of a process to see if it meets specified parameters. Throw away or rework (and check again) output that doesnt meet specifications.

YOU CANT INSPECT QUALITY INTO A PRODUCT


NEW WAY: Confirm the process is in statistical control by checking planned random samples of output at planned stages of the process Feedback to the production process to correct the process for future revisions Throw away or rework (and check again) output that doesnt meet specifications

Where will you find inspection during your typical projects?

Benchmarking
Systematized, planned method of looking at processes other than the one in which youre interested to
a) b) Compare the process in question to the comparable processes Find out new ways to make the process in question better (Best Practices)

Be very careful with benchmarkingIt seems easy, but without proper analysis, it is very easy to fool oneself into thinking that a = b = c and that is NOT ALWAYS THE CASE.

Flowcharting
Cant improve a process until all understand and agree what the process actually is Flowchart is a model of the process Improvement can come in the form of:
Whole team working in concert rather than against each other Make changes to the process steps Eliminate Shorten Rearrange Step B Start Step A

No Pass? Yes Step C

End

Pareto Analysis
The 80/20 chart Used to determine priorities May be able to determine what you can do to fix the problem directly from this chart May need to subsequently use other tools to figure out what to fix Once youve corrected the first priority problem, may need to go through subsequent rounds

Defects

Ishikawa Diagram
Also known as Cause & Effect Diagram, Fishbone Diagram
The process of chart creation is itself useful (discussion that causes people to learn) Helps keep focus on issue at hand, reducing complaints & irrelevant discussion Results in an active search for the cause Data often must be collected for study Demonstrates the level of understandingmore complex the diagram, the more sophisticated the users are about the process Problem Agnostic

Major Cause 1 Minor Cause Minor Cause Minor Cause

Major Cause 2 Minor Cause

May also be situation desired

Minor Cause Problem to solve

Major Cause 3

Major Cause 4

Fault Tree Analysis/FMEA


What happens if chart
A.0

Study causes and effects of failures Focuses thinking on system functioning and interaction of system component parts Define all ways that a system can fail

A.1

A.2

A.3

Decomposes potential faults through several fault layers


A.3.1 A.3.2

Allows assignment of risk factors to the possible faults Next probable step is a Pareto

Statistical Process Control


Run Chart
Trend analysis

Histogram
Trend analysis

Scatter Plot
Trend analysis Should use some statistical validation as well as visual

Statistical Process Control


Control Charts
Measurement (# defective, etc) Upper Control Limit (UCL) Sometimes called Statistical Process Control (SQC) or Statistical Quality Control (SQC) Average A run chart with statistically determined upper and lower control limits drawn on either side of the process average. (limits are NOT specifications) Every process has variation. Once the process Lower Control Limit (LCL) is in statistical control (i.e. it is running on its own no special correcting influence from humans and there are very few points beyond the control limits), it is possible to more time economically and scientifically decrease variation in the process output Rule of 7: a process can be out of Special cause: 90%. easier to eliminate. Show up as points outside the limits control even if there are no outliersfor Common cause: 10%. changeable only by instance, when there are 7 contiguous management points on either side of the line.

Youll never eradicate variation(average will get in your way), but see Deming point 5

Process Auditing
Auditing
Independent, objective review of the effectiveness of a system Process Product System Management Identify whether process failure is common cause or special cause Provide for tracking of appropriate corrective actions to process Everyone dislikes being criticized, but REMEMBER that the audit function is intended to help the company be better at what it does.
Being better can mean a competitive advantage (cha-ching) or, as in most cases, it can simply mean that you are able to remain competitive (like the ante into a poker game). Dont hate the auditorunless he comes to deserve it!

Simulation
Set up models of a process or situation and vary parameters to see what outcome will be after simulating what might happen What if Analysis
Once the model is established and verified, varying a parameter by a specified amount and see what happens to the outcome parameter(s)

Monte Carlo Simulation


Once the model is established and verified, vary a parameter or parameters through use of randomized (statistically distributed histogram randomization) trials to see what happens to the outcome parameter(s).

Quality Function Deployment


Focus on creating a connection between quality, from the perspective of the user, through the ENTIRE process of creation QFD matrices are used to show the links between the users quality concepts and technical quality. Successive decompositions of needsrelated quality into quality associated with subsystems allows relation of every important aspect of project quality to competitive quality

Design Requirements Customer Requirements Design Requirements

Component Characteristics Component Characteristics

Key Processes Key Processes

Control Methods

Product Planning

Product Design

Process Planning

Process Control Planning

Quality For Project Managers


Please Remember:
1) No chart or equation will ever improve a process

People improve processes


2) Think before you decide. Numbers are only models of reality. Garbage InGarbage Out (GIGO)

Project Budgeting
Its hard to predict, especially the future Niels Bohr Life is what happens when youre making other plans John Lennon

If its so hard to predict and everything is already obsolete by the time its on paper, why budget?

Project Budgeting
Budgets are plans for allocating organizational resources to project activities
Must forecast required resources, quantities needed, when needed, and costs

Budgets help tie project to organizational objectives


- Requires decisions of priority

Budgets can be used as tool by upper management to monitor and guide projects
- We anticipated spending $100M by this time. How much did we actually spend?

Zero Base Budgeting


Most budgeting is done by multiplying a factor x last years budget data ZBB calls for starting from a clean sheet of paper and then estimating the necessary functions from educated scratch. Often goes hand-in hand with Activity Based Costing Practice. This can be tedious, but is very useful because it requires you to think about each budget line item more clearly

Zero Base Budgeting


Non ZBB:
This years budget had $5000 for employee project management training For next years budget, because we know that we are intending to continuously move toward PM practice at our company (but dont have everything planned out yet), well bump the budget up from last year by 1.5

ZBB:
Throw out last years budget Start over with a total replanning effort using more distinct, factual analysis

Top Down Budgeting


Based on collective judgements and experiences of top and middle managers. Overall project cost estimated by estimating costs of work packages/major tasks from WBS Advantages
Accuracy of estimating overall budget Errors in funding small tasks need not be individually identified

Disadvantages
May miss a material, though small-appearing, item

Project Budgeting
How Top-Down Budgeting works (a very, very basic example): WBS Task 2.0 Design 3.0 Concrete 4.0 Frame 5.0 Electrical Cost $50,000 $500,000 $200,000 $ 75,000

Bottom Up Budgeting
WBS identifies elemental tasks Those responsible for executing these tasks estimate resource requirements Technical Estimation Time & Cost Estimation Advantage
More accuracy from detailed lower-level analysis

Disadvantage
Tedious, long Not focused on larger picture; can get lost in details GIGO

Project Budgeting
How Bottom-Up Budgeting works (a very, very basic example): WBS Task 2.0 Design
2.1 Site Survey 2.2 Architectural Design 2.3 Drafting

Resource Duration (day)


4 1 2 3 20 12

Cost $44,160
$ 7,680 $24,000 $12,480

3.0 Concrete
3.1 Excavation 3.2 Pour Concrete 3.3 Test Concrete

4.0 Frame
4.1 Arrange Materials 4.2 Erect Walls

5.0 Electrical
5.1 Arrange Materials 5.2 Run Circuit Wiring 5.3 Test Electrical Systems

Work Element Costing


Determine resource requirements, then task costs
fixed costs (e.g., materials) labor time & labor rate equipment time & equipment rate Overhead/G&A

Levels of Estimate
ROM = Rough Order of Magnitude (~20% accurate, 10 minutes) System Estimate (~10% accurate, 1 day) Unit Estimate (~5% accurate, 1-3 weeks)

Work Element Costing


Engineering News Record, http//:www.enr.com/cost/cost1.asp
ENR publishes both a Construction Cost Index and a Building Costs Index that are widely used in the Construction Industry. This web site contains an explanation of the indexes methodology and a complete history of the 20-city national average for the CCI and BCI. Both indexes have a material and labor component. In the second issue of each month ENR publishes the CCI and BCI, materials index, skilled labor index and common labor index for 20 cities and the national average. The first issue also contains an index review of all five national indexes for the latest 14 month period. ENR also publishes various materials prices in each issue for the 20 US cities and 2 Canadian cities. The first issue of the month contains prices for paving asphalt, portland cement, ready-mix concrete, concrete block, brick and aggregates. The second issue for the month has prices for various pipe including reinforced concrete pipe, corrugated steel pipe, PVC water and sewer pipe, ductile iron pipe and copper water tubing. The third issue of the month contains prices for lumber, plywood, plyform, particle board and gypsum board. The fourth issue of the month has prices for structural steel reinforcing bar, aluminum, and stainless steel sheet and plate. If a month has 5 Mondays, the fifth issue will have union wage rates for 21 trades in all 20 cities. The 20 US cities that ENR maintains cost data on are: Atlanta, Baltimore, Birmingham, Boston, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Kansas City, Los Angeles, Minneapolis, New Orleans, New York, Philadelphia, Pittsburgh, St. Louis, San Francisco, Seattle. ENR also tracks cost data for Montreal and Toronto, Canada. In addition, ENR publishes four quarterly cost reports in the last issue of March, June, September and December. These issues analyze cost trends from ENRs data base and explain the movement in the indexes. They also contain various other cost data including open-shop wage rates, workers compensation rates and international prices, wages and cost indexes just to name a few. Tim Grogan, Senior Editor, Costs, Data & Material Prices.

ENR - Building Cost Index History How ENR builds the Index: 66.38 hours of skilled labor at the 20-city average of bricklayers, carpenters and structural ironworkers rates, plus 25 cwt of standard structural steel shapes at the mill price prior to 1996 and the fabricated 20-city price from 1996, plus 1.128 tons of Portland cement at the 20-city price, plus 1,088 board.ft of 2X4 lumber at the 20-city price (cwt = hundred weight. 45.36 kg, 0.04536 tons).
YEAR 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 YEAR 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 YEAR JAN 1609 1740 1895 2015 2184 2311 2402 2410 2440 2515 JAN 2574 2615 2664 2720 2784 2886 3071 3112 3127 3332 JAN FEB 1617 1740 1894 2016 2198 2348 2407 2414 2446 2510 FEB 2576 2608 2668 2716 2775 2886 3106 3111 3131 3333 FEB MAR 1620 1750 1915 2014 2192 2352 2412 2406 2447 2518 MAR 2586 2612 2673 2715 2799 2915 3116 3103 3135 3323 MAR APR 1621 1749 1899 2064 2197 2347 2422 2405 2458 2523 APR 2591 2615 2676 2709 2809 2976 3127 3100 3148 3364 APR MAY 1652 1753 1888 2076 2199 2351 2419 2411 2479 2524 MAY 2592 2616 2691 2723 2828 3071 3125 3096 3161 3377 MAY JUN 1663 1809 1916 2080 2225 2388 2417 2429 2493 2525 JUN 2595 2623 2715 2733 2838 3066 3115 3095 3178 3396 JUN JUL 1696 1829 1950 2106 2258 2414 2418 2448 2499 2538 JUL 2598 2627 2716 2757 2845 3038 3107 3114 3190 3392 JUL AUG 1705 1849 1971 2131 2259 2428 2428 2442 2498 2557 AUG 2611 2637 2716 2792 2854 3014 3109 3121 3223 3385 AUG SEP 1720 1900 1976 2154 2263 2430 2430 2441 2504 2564 SEP 2612 2660 2730 2785 2857 3009 3116 3109 3246 3378 SEP OCT 1721 1900 1976 2151 2262 2416 2424 2441 2511 2569 OCT 2612 2662 2728 2786 2867 3016 3116 3117 3284 3372 OCT NOV 1732 1901 2000 2181 2268 2419 2421 2446 2511 2564 NOV 2616 2665 2730 2791 2873 3029 3109 3131 3304 3350 NOV DEC 1734 1909 2017 2178 2297 2406 2408 2439 2511 2589 DEC 2617 2669 2720 2784 2875 3046 3110 3128 3311 3370 DEC AVER 1674 1819 1941 2097 2234 2384 2417 2428 2483 2541 AVER 2598 2634 2702 2751 2834 2996 3111 3111 3203 3364 AVER

Estimating Expertise
There is no evidence of mystical inborn talent for cost- estimating. Expertise is not a universal phenomenon, but rather very project-specific. The most crucial attributes of good estimators are knowledge and care. Good estimators have exactly the same attributes as good gamblers: they research selectively and thoroughly. they weigh each decision against possible outcomes & behave accordingly Different building types demand different approaches. Special attention is required for complexity of the project. The easiest projects to estimate are the industrial factories and residential houses. Office construction projects are hardest to estimate, due to design/option variety
Skitmore, R.M., Stradling, S.G., & Tuohy, A.P. 1994. Human effects in early stage contract price forecasting. IEEE Transactions on Engineering Management, 41 (1), 29-39.

Hybrid Budgeting
Best of both Top-down and Bottom-up mixed Can be conflict (in fact, you want it) If you have the time and the expertise available, this is, IN MY OPINION, the best approach

Future Value (FV)


Find FV of $1 today invested for n years at i%/year Timeline Method FV1 = PV1 (1 + i)
0 i% 1 i% 2 i% 3 i% FV
3

4 i% FV
4

$PV

FV
1

FV2

FV
5

Generic Case Equation FV = PV (1 + i)n

Present Value (PV)


Find PV of $1 today of FV dollars received n years in the future, assuming i%/year

PV =

FV

1 = (1+i)n

FV (1+i)n

Compounding
What is it?

Why is important?

Group Work
Use Timeline Method: How much money will be your return at the end of 5 years with 5% annual interest on a deposit of $500 How would the situation change if you had a second investment of $250 in the third year? How would the formulaic calculation change? Think of 3 specific examples when you might need to know the concept of PV/FV and how to calculate it.

Annuity
What is it?
A series of equal payments at fixed intervals for a specified number of periods E.G. marketing tells you that Project X, of which youll be the PM, will generate $1M per year for 5 years starting at project release in January 2005

How is it calculated?
FVAn = PMT/(1+i) + PMT/(1+i)2 + + PMT/(1+i)t = PMT
n t=1

1/(1+i)t

Annuity
Example
0 i%

Promise to pay $1000/year for 3 years. If you were to receive this money and invest it with a 4% return, how much would you have at the end of 3 years?
1 i% 2 i% 3

$1000

$1000

$1000

i= t= n= PMT =

Are we solving for PV or FV?

Answer?

Why is it important?
Couldnt we just do an FV analysis on a $5M payback at the end of 5 years in the 5 year, $5M project example? In the example above, what amount of money would you want to receive now to be able to turn down the $1000/year for 3 year deal?

Net Present Value (NPV)


NPV =
n t=1

(FVt / (1+i)t) - I

FVt = incremental, after tax net cash flow in year t I = the investment (capital outlay), which is assumed to all happen in year 0) NPV > 0 is good (project or activity may be chosen)

Depreciation
Paying the equipment
Suppose you buy a machine for $100k, use it for 5 years to do your thing, and then scrap it. The cost of the work produced by the machine must include a charge for the machine (depreciation). As depreciation increases, net income decreases Unlike paying the staff, depreciation is NOT a cash charge cash flows are not decreased Depreciation actually increases cash flow!!!

Methods
Straight Line Double declining balance Sum of the years digits Accelerated Cost Recovery System (ACRS) Modified Accelerated Cost Recovery System (MACRS)

Depreciation
Straight Line Method
(Purchase Amount Salvage Value) / Depreciation life Depreciation Life determined by the estimated useful life of the asset Salvage Value = value the asset is expected to have at end of depreciation life

Purchase Value

What is the effect on cash flow of changing the salvage value?


Salvage Value

Year 1

Year 2

Year 3

Year 4

Modified Accelerated Cost Recovery System


MACRS
Sum of purchase price for any year x the depreciation % for that year Depreciation Life determined by Asset Class rules
Class 3 year 5 year 7 year 10 year 27.5 year 31.5 year Asset Type Computers & research equipment Automobiles, tractors, light duty trucks, computers Industrial equipment, furniture, fixtures Certain long-lived equipment Residential rental property Non-residential property

MACRS Continued
21.5 and 31.5 year class property uses straight line method 3, 5, 7, 10 year class property uses accelerated method in table below (or alternative straight line method for very small businesses)
Ownership year 1 2 3 4 5 6 7 8 9 10 11 3 33% 45 15 7 5 20% 32 19 12 11 6 7 14% 25 17 13 9 9 9 4 10 10% 18 14 12 9 7 7 7 7 6 3

MACRS Continued
Half-year convention: Assumes property put in service in middle of first year extends recovery period by one more year (3 year class property is depreciated over 4 years)

Depreciable basis: Purchase price + shipping and installation costs [NOTE: NO classes allow salvage value as part of depreciable basis]

Salvage Value: Add the difference of (actual sale price undepreciated value) to normal operating income for taxation at the normal rate E.G. - $100k equipment with 5 year class life sold at end of year 4 for $25k $25,000 ($100,000(.11+.06)) = $8000 to add to operating income

MACRS Example
Excellanz buys a computer for $150k. It requires an additional $15k for delivery and $15k for installation. The company expects to be able to sell the equipment for $25k at the end of the straight line depreciable life. What is the depreciable basis?

What is the depreciation for each year and the total depreciation?

Baselines
What is a baseline?
snapshot of project schedule, cost (budget), or scope

When are the snapshots taken?


When the plan (schedule, scope (budget), scope) is considered feasible technically and in terms of resources

How are they used?


Used as the basis for measuring and reporting actual performance against the plan (schedule, cost, scope) Used to manage project changes to scope, schedule, cost (i.e. get rid of the creep)

Homework 4
Posted via WebCT Project Control and Configuration Mgmt Risk Mgmt Project Budgeting Due 7/18 via hardcopy Work in support groups (only)

Simulation
Set up models of a process or situation and vary parameters to see what outcome will be after simulating what might happen What if Analysis
Once the model is established and verified, varying a parameter by a specified amount and see what happens to the outcome parameter(s)

Monte Carlo Simulation


Once the model is established and verified, vary a parameter or parameters through use of randomized (statistically distributed histogram randomization) trials to see what happens to the outcome parameter(s).

Risk Management
What is it?
Risk is anything that affects triple constraint objectives

PMBOK: Systematic process of identifying, analyzing, and responding to project risks


AKA: Crossing bridges before you get to them

Risk Management
Why do it?
The future is uncertain When those unplanned, unplannable good or bad things happen to a project, the PM must be ready to deal with them and their consequences in order to meet the triple/quadruple constraint

Risk Management
How do you manage risks?
Initiate the process, Identify the risks, Assess/analyze the risks, Organize (rank) the risks, Plan responses to the important risks, Implement the RMP (Risk Management Plan),
Monitoring Reporting Responding

Review (cyclical)

The RMP Table


How you do it? - The Risk Mgmt Plan table
Risk Identifier Risk Probability of risk occurrence (P) Impact if risk occurs (I) Risk Rank Risk Owner Monitoring Plan Response Strategy Response Plan (outline)

Risk Management
Risk Identifier
Helps you track the risk Helps you communicate the risk May be nothing more than a sequential system May be something other than sequential What do you do with the risk ID when the risk goes away?
Critical person lost time injury Fire damages structure Rain delay to critical path task 1. 2. 3. Fire damages structure

1. 2. 3.

Critical person lost time injury

Risk Management
Risk (Identification)
Something that affects triple constraint objectives
Negative Positive (Examples?)

Measurable/Quantifiable is best, but sometimes there will be qualifiable-only risks Risks can be identified with use of many tools, methods
Project Plan, Network Diagram, Schedule, Policies, Expert Opinion, Historical Information, WBS, FMEA, etc.

Risk identified by a group effort Risk identified


At project start Over and over, repeatedly, again and again, until project end

Risk Management
Probability of risk occurrence (P) How likely is the risk event? Can be classified by judgment Can be classified by statistical tools

Risk Management
Impact if risk occurs (I) What will happen if the risk event occurs? Can be classified by judgment Can be classified by statistical tools

Risk Management
Risk Rank
You cant have everythingwhere would you put it? PxI Group all the equally ranked items together There can be multiple 1, 2, 3, etc. If multiple 1s, 2s, etc, can rank inside each group (use time of likely occurrence, relative impact, etc) May have to go through several rounds of successively detailed analysis to get top (10, 20, 50, 75, 100)

Risk Management
Risk Owner
Handles monitoring & responding (within constraints) Why doesnt the PM just do the risk monitoring? Who can the PM assign to be a risk monitor?

Risk Management
Monitoring Plan
How/what will you/r team watch to see if the risk may be happening? Discuss some examples

Risk Management
Response Strategy
Avoid: Do something to ensure risk wont occur (100% mitigation) Mitigate: Accept that risk might happen, but do something to alleviate the either/both the P or I if it does Accept: Whats left when theres nothing feasible to do

Accept

Mitigate

Avoid

Transfer: Do something to allocate the risk onto someone else

Risk Management
Response Plan
What do you intend to do if the risk starts happening/happens? In outline form things change too rapidly, frequently to warrant more

Who is responsible for keeping the Risk Management Plan (RMP)?

Risk Management
Example:

Project: Create a lighted sign for a new building into which an engineering forensics company will be moving in 2 months. RMP creation example/discussion

Risk Management
In support groups: Project: Build a four-car garage Constraints: Cost not to exceed $10,000, Construction to be completed NLT 2 months from project initiation Complete an RMP with 10 risks. At least 3 must be cost-related, 3 must be qualityrelated, and 4 must be schedule-related

Schedule Management
How can you use a project schedule to actually manage (not just plan) a project?

How do you collect status from the people doing the work? GIGO Reporting/data gathering systems use of % complete

Schedule Compression
Scheduling is extremely iterative process
In fact, changes during last few days are likely! Management always wants it done faster and/or cheaper!

So how can you shorten the schedule?


Scope Modification: Delete task(s) Crashing: Adding more resources to task(s) Fast Tracking: Doing more tasks in parallel

Schedule Compression
Scope Modification
Eliminate task(s) Shrink work required to do particular task(s) Not always viable why not?

Schedule Compression
Crashing
Add more resources to shorten time required to do the work (1+1=2)

Not always feasible/viable option why not?


Appropriate resources may not be available at all or only with equal or worse impact Learning curves can actually result in 1+1=0.5 Can increase cost more than budget allows

Schedule Compression
Fast Tracking
Reworking task sequencing so more activities are done in parallel rather than sequentially

Not always feasible/viable option why not? Often results in rework Increases risk (often dramatically) Increases confusion

Schedule Compression
Can we agree that getting the project done late (after pre-agreed time) is BAD? Is it BAD to come in ahead of schedule:
By a little bit? By a lot? Why/Why not?

Configuration Management
What is it?
Establish revision control and change control methods Similar to baseline

Why is it done?
Communication keeping everyone on the same page Limit unnecessary scope creep Change impact estimation Work billing

Configuration Management
How does it work?
Written process (per project, per company, etc) Identify change possibility (acceptable person?) If CR accepted, evaluate Decide outcome of change If outcome is to proceed,
create/publish ECN Update plan information

Configuration Management
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Management by Stage Gates


What is it? Exception Management for the Manager(s) of the Project Manager
Reqmts Gathering Pre-solicitation Solicitation Bid Award Buildout Project Planning Project Execution Completion

Do you suppose your (PM) manager will just say go at it and let me know when youre done?

Compounding
What is it?

Why is important?

Future Value (FV)


Find FV of $1 today invested for n years at i%/year Timeline Method FV1 = PV1 (1 + i)
0 i% 1 i% 2 i% 3 i% FV
3

4 i% FV
4

$PV

FV
1

FV2

FV
5

Generic Case Equation FV = PV (1 + i)n

Present Value (PV)


Find PV of $1 today of FV dollars received n years in the future, assuming i%/year

PV =

FV

1 = (1+i)n

FV (1+i)n

Group Work
Use Timeline Method: How much money will be your return at the end of 5 years with 5% annual interest on a deposit of $500 How would the situation change if you had a second investment of $250 in the third year? How would the formulaic calculation change? Think of 3 specific examples when you might need to know the concept of PV/FV and how to calculate it.

Annuity
What is it?
A series of equal payments at fixed intervals for a specified number of periods E.G. marketing tells you that Project X, of which youll be the PM, will generate $1M per year for 5 years starting at project release in January 2005

How is it calculated?
FVAn = PMT/(1+i) + PMT/(1+i)2 + + PMT/(1+i)t = PMT
n t=1

1/(1+i)t

Annuity
Example
0 i%

Promise to pay $1000/year for 3 years. If you were to receive this money and invest it with a 4% return, how much would you have at the end of 3 years?
1 i% 2 i% 3

$1000

$1000

$1000

i= t= n= PMT =

Are we solving for PV or FV?

Answer?

Why is it important?
Couldnt we just do an FV analysis on a $5M payback at the end of 5 years in the 5 year, $5M project example? In the example above, what amount of money would you want to receive now to be able to turn down the $1000/year for 3 year deal?

Net Present Value (NPV)


NPV =
n t=1

(FVt / (1+i)t) - I

FVt = incremental, after tax net cash flow in year t I = the investment (capital outlay), which is assumed to all happen in year 0) NPV > 0 is good (project or activity may be chosen)

Depreciation
Paying the equipment
Suppose you buy a machine for $100k, use it for 5 years to do your thing, and then scrap it. The cost of the work produced by the machine must include a charge for the machine (depreciation). As depreciation increases, net income decreases Unlike paying the staff, depreciation is NOT a cash charge cash flows are not decreased Depreciation actually increases cash flow!!!

Methods
Straight Line Double declining balance Sum of the years digits Accelerated Cost Recovery System (ACRS) Modified Accelerated Cost Recovery System (MACRS)

Depreciation
Straight Line Method
(Purchase Amount Salvage Value) / Depreciation life Depreciation Life determined by the estimated useful life of the asset Salvage Value = value the asset is expected to have at end of depreciation life

Purchase Value

What is the effect on cash flow of changing the salvage value?


Salvage Value

Year 1

Year 2

Year 3

Year 4

Modified Accelerated Cost Recovery System


MACRS
Sum of purchase price for any year x the depreciation % for that year Depreciation Life determined by Asset Class rules
Class 3 year 5 year 7 year 10 year 27.5 year 31.5 year Asset Type Computers & research equipment Automobiles, tractors, light duty trucks, computers Industrial equipment, furniture, fixtures Certain long-lived equipment Residential rental property Non-residential property

MACRS Continued
21.5 and 31.5 year class property uses straight line method 3, 5, 7, 10 year class property uses accelerated method in table below (or alternative straight line method for very small businesses)
Ownership year 1 2 3 4 5 6 7 8 9 10 11 3 33% 45 15 7 5 20% 32 19 12 11 6 7 14% 25 17 13 9 9 9 4 10 10% 18 14 12 9 7 7 7 7 6 3

MACRS Continued
Half-year convention: Assumes property put in service in middle of first year extends recovery period by one more year (3 year class property is depreciated over 4 years)

Depreciable basis: Purchase price + shipping and installation costs [NOTE: NO classes allow salvage value as part of depreciable basis]

Salvage Value: Add the difference of (actual sale price undepreciated value) to normal operating income for taxation at the normal rate E.G. - $100k equipment with 5 year class life sold at end of year 4 for $25k $25,000 ($100,000(.11+.06)) = $8000 to add to operating income

SL Example
Excellanz buys a computer for $150k. It requires an additional $15k for delivery and $15k for installation. The company expects to be able to sell the equipment for $25k at the end of the straight line depreciable life. What is the depreciable basis?

What is the depreciation for each year and the total depreciation?

Baselines
What is a baseline?
snapshot of project schedule, cost (budget), or scope

When are the snapshots taken?


When the plan (schedule, scope (budget), scope) is considered feasible technically and in terms of resources

How are they used?


Used as the basis for measuring and reporting actual performance against the plan (schedule, cost, scope) Used to manage project changes to scope, schedule, cost (i.e. get rid of the creep)

Earned Value
Earned Value Management
Performance measurement system:
A methodology used to measure & communicate the real, physical progress of a project.

Integrates scope, cost, & schedule measures:


Takes work complete, time taken, and costs incurred to complete that work into account.

Useful as a risk management monitoring tool


EV helps evaluate & control project risk by measuring project progress using a standard measure (monetary terms).

Earned Value
Earned Value Management
How it works:
We plan how we will accomplish a task(s) How long it will take Resources required Estimated costs We spend time and materials in completing a task. If we are efficient, we complete task with time to spare & minimum wasted materials. If we are inefficient, we take longer than planned and waste materials. Take a snapshot of the project and calculate EV metrics to: Compare planned vs actual and use that to make a subjective assessment of progress Extrapolate the information to estimate future costs & probable completion date

Earned Value
Planned Value (PV aka BCWS)
Budgets for each activity planned (Portion of cost estimate planned to be spent on an activity during a given period)

Actual Cost (AC aka ACWP)


Real, Total cost incurred during work on an activity during a given period Must correspond to budgeted value for the PV and EV

Earned Value (EV aka BCWP)


Value of work actually completed (The planned costs of the work allocated to the completed activities)

Cost Variance (CV) = EV AC Schedule Variance (SV) = EV PV Cost Performance Index (CPI) = EV/AC (CPI < 1 is bad) Schedule Performance Index (SPI) = EV/PV (SPI < 1 is bad) Estimate at Completion (EAC) = ACWP + ((BAC-BWCP)/CPI)

Communications During Execution


Youre having a problem on your project when do you tell the stakeholders? Youre *not* having a problem on your project when do you tell the stakeholders? Is there such a thing as overcommunication? An example of the communication balance

Communications During Execution


From: Eiler, Timothy Sent: Wednesday, August 31, 2003 11:27 AM To: Bob Jones (contractor) Subject: Communication

Bob, When a customer-affecting release does not go as planned, you need to call the appropriate Account Manager to let her know that it failed, even if you don't yet know why that happened. They need to know so that they can decide what communication is needed with the customer's business contacts to smooth feathers, etc. This is particularly critical now as we try to assuage hurt customer feelings so that we can keep relationships with them alive for loan purchases. Depending on the impact scope, of course, you probably don't need to call them seconds after the failure or anything, but they do need to know fairly soon. After you've let them know about the initial failure, as you learn more and have updates to status and correction plans and progress, call them again as judgment dictates. Even if the failure is corrected fairly quickly, you should let them know it occurred so they can be aware of what happened. Essentially, after any customer-affecting release, call them to let them know an executive summary of how it went - success or failure. I'm assuming, given the time of day most releases happen, that they will each want to be called at their desk phones, with you leaving voice mail, but you need to work that out with each of them individually, and probably for individual releases, as well. You also need to call me to let me know of the failure, though I have less need for late night calls about correction plans and progress. I can generally, depending on the impact of the failure, of course, wait until morning to know about correction plans and progress. Calls to my cell, with voice mail left if I don't answer, are what I need. Overall, the goal is to rationally over communicate this information - while not being passive-aggressive, of course. :-) Tim

Storytelling for Communication


Use of examples how could I have used an example to help Bob understand and accept? Use of analogies how could I have used an analogy to help Bob understand and accept? Other ways storytelling can be an aid

Typical Project Documents


Dunning Letter
A memo identifying specific things done wrong/currently late/etc and the ramifications of continuing to fail to address the issues

Transmittal
A memo that outlines/explains submittals included with the transmittal and the actions required by the recipient

Managing
Is the plan right? Are things going as they should? If not, how far off are we? Does it need changes? What do we need to do to be where we need to be? What changes or corrections are needed? When do the changes need to be made? Who on the project team needs to make course corrections in order to achieve the plan?

Iterate!

Managing
What do you watch?

How often?

How?

Managing Project Teams


Design team failure is usually due to failed team dynamics. (Leifer, Koseff & Lenshow, 1995). Its the soft stuff thats hard; the hard stuff is easy. (Doug Wilde, quoted in Leifer, 1997)

In order to make sense out of leading project teams, you need to understand the concept of team, the concept of lead, and the concept of manage.

Seven Habits Of Highly Effective People


Be Pro-Active: Pro-Active:
Take initiative & the responsibility to make things happen.

Begin With an End in Mind: Mind: Put First Things First: First: Think Win/Win: Win/Win:

Start with a clear destination to understand where you are now, where you're going, & what you value most. Manage yourself. Organize & execute around priorities.

See life as a cooperative, not a competitive arena where success is not achieved at the expense or exclusion of the success of others. Understand then be understood to build the skills of empathic listening that inspires openness and trust. Apply the principles of cooperative creativity and value differences.

Seek First to Understand: Understand: Synergize: Synergize: Renewal: Renewal:

Preserving and enhancing your greatest asset, yourself, by renewing the physical, spiritual, mental and social/emotional dimensions of your nature.

Steven Covey, 1989

Managing Project Teams


A team is a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable SMALL NUMBER COMPLEMENTARY SKILLS COMMON PURPOSE & PERFORMANCE GOALS COMMON APPROACH MUTUAL ACCOUNTABILITY (to project, to team, to each other)
--Katzenbach & Smith (1993) The Wisdom of Teams

Leadership vs Management
Is there a difference?

Hey!!! Wrong Forest!!!

http://www.see.ed.ac.uk/~gerard/MENG/ME96/Documents/Intro/leader.html http://www.bus.ualberta.ca/rfield/papers/LeadershipDefined.htm http://www.lazarusconsulting.com/company/hot_topics/leadership_vs_management.html

Leadership vs Management
LEADERSHIP FUNCTIONS MANAGEMENT FUNCTIONS Assessing Organizational Performance Aligning Organizational Practices with Values & Vision Altering Organizational Practices & Standards Initiating Organizational Improvements Facilitating Quality Interactions Integrating Organizational Systems & Processes Educating for Quality Performance Tracking Operational Performance Aligning Operations with Customers' Values Maintaining Operational Practices & Standards Implementing Operational Plans & Projects Solving Operational Problems Procuring Operational Resources Accounting for Resource Performance

Leadership vs Management

Author(s) Bennis & Nanus (1985)

Czarniawska-Joerges & Wolff (1991) Spreitzer & Quinn (1996) Zaleznik (1977, 1992)

Leaders do the right things people as great assets commitment outcomes what and why things could be done sharing information networks Symbolic performance, expressing the hope of control over destiny Transformational Energize the system, their working environment is often chaotic Provide proper conditions for the people to manage themselves. Vision, inspiration, courage, human relationships, profound knowledge. Give people purpose, push the boundaries, need vision and ability to articulate it. Create change and ensure that others embrace it. The word lead means to go from leaders tend to take their followers from one place to another. Help others do the things they know need to be done to achieve a common vision. Innovation Leadership is a relationship selecting, motivating, coaching, building trust.

Managers do things right people as liabilities control rules how things should be done compliance secrecy formal authority (hierarchy) Introducing order by coordinating flows of things & people toward collective action Transactional Ensure the stability of the system

McConkey (1989) McConnell (1994)

Buhler (1995) Sanborn (1996)

Concerned with controlling conditions and others. Allocate resources, design work methods, create procedures, set objectives and create priorities. Accomplish work through others, follow the rules, rely on legitimate power. Change when they have to. The word manage means to handle.

Fagiano (1997) Sharma (1997) Maccoby (2000)

Get things done through other people. Conformity Management is a function planning, budgeting, evaluating, facilitating.

http://www.bus.ualberta.ca/rfield/papers/LeadershipDefined.htm

Managing Project Teams


Six Basic Principles of Team Discipline
1. 2. 3. 4. 5. 6. Have and develop a common purpose Keep team membership small Ensure team members have complementary skills Set common goals Establish agreed-upon ground-rules and approach Integrate team and individual accountability
Katzenbach & Smith (2001) The Discipline of Teams

Leading Project Teams


Leadership is any action that helps a group achieve its goals AND maintain cooperative relationships among members of the group.
List as many characteristics in 2 minutes that come to find for followers you admire List as many characteristics in 2 minutes that come to mind for followers you admire

New Leadership Competencies


1. Ability to think in terms of systems & knowing how to lead systems.
2. Ability to understand the variability of work in planning & problem solving. 3. Understanding how people learn, develop, & improve; leading true learning and improvement. 4. Understanding people & why they behave as they do. 5. Understanding the interaction & interdependence between systems, variability, learning, and human behavior; knowing how each affects the others. 6. Giving vision, meaning, direction, & focus to the organization.

The Leader's Handbook (Scholtes, 1998)

Ten Commandments of Leadership

8 Crucial Elements of System Leadership


1. Quality information must be used for improvement, not to judge or control people 2. Authority must be equal to responsibility 3. There must be rewards for results 4. Cooperation, not competition, must be the basis for working together 5. Employees must have secure jobs 6. There must be a climate of fairness 7. Compensation should be equitable 8. Employees should have an ownership stake

Managing Project Teams


Whats involved in managing teams? What are the obstacles a PM must overcome to create and manage a successful project team?

Managing Project Teams


Team Charter Team name, membership, roles Team Mission Statement Anticipated results (goals) Specific tactical objectives Ground rules/guide principles for team participation Shared expectations/aspirations

Managing Project Teams


What it takes to be a good project manager (Posner, 1987)
Communication Skills (84%) Listening Persuading Organizational skills (75%) Planning Goal-setting Analyzing Team Building Skills (72%) Empathy Motivation Esprit de Corps Leadership Skills (68%) Sets Example Energetic Vision (big picture) Delegates Positive Coping Skills (59%) Flexibility Creativity Patience Persistence Technological Skills (46%) Experience Percentages represent the percentage of Project Knowledge respondents to a Posner survey who included the
skill in the list of importance

Managing Project Teams


Skills necessary for effective project managers
Planning

Work breakdown Project scheduling Knowledge of PM software Budgeting and costing

Pinto and Kharbanda (1995):

Organizing

Team building Establishing team structure and reporting assignments Define team policies, rules and protocols Motivation Conflict management Interpersonal skills Appreciation of team members' strengths and weaknesses Reward systems Project review techniques Meeting skills

Leading

Controlling

James M. Kouzes & Barry Z. Posner. 1993. Credibility: How leaders gain and lose it, why people demand it. San Francisco: Jossey-Bass.

Managing Project Teams

Managing Project Teams


Five Top Criteria of a Competent Project Manager

1. They have enthusiasm 2. They have high tolerance for ambiguity 3. They possess high coalition and team-building skills 4. They have client-customer orientation 5. They have a business orientation
Graham, Robert J. & Englund, Randall L. 1997. Creating an environment for successful projects. San Francisco: Jossey-Bass

Power Tools
5 Types of Power for Leaders and Managers
Type Formal Expert Referent Reward People do what you ask because Organization tells them to You are perceived as an expert in x They like or trust you You can give them something in return

Coercive You can take something from them/hurt them

Situational!!

Keys For PM Success


Communicate regularly in person with key team members Keep management informed Keep informed on all aspects of the project Delegate tasks to team members Listen to input from team members Be able to take criticism Respond to and/or act on suggestions for improvement Develop contingency plans Address problems Make decisions --Lientz and Rea (1996) Learn from past experience Run an effective meeting Set up and manage the project file Use project management tools to generate reports Understand trade-offs involving schedule and budget Have a sense of humor

Meetings and More Meetings


I used to think, oh no, not another meeting until I worked for you.
- A former employee of mine

People hate meetings. People think meetings are a waste of time The sad part is that most of them are

You will spend a good portion of your work in meetings. Fool people make them gain respect for you by making your meetings an EFFECTIVE use of their time

Meetings and More Meetings


Some reasons that people think badly of meetings:

Purpose is unclear Participants are unprepared Key people are absent or missing The conversation veers off track Participants dont discuss issue but instead dominate, argue, or take no part at all Meeting decisions not followed up

Guidelines for Holding Meetings


Hold meetings for group decision making
avoid weekly progress report meetings

If meeting is held to address a specific issue, restrict meeting to this issue alone Ensure everyone properly prepared
Distribute written agenda in advance of meeting Tell where and when State and repeat the objective of the meeting

Avoid excessive formality Chair and participants control Meeting use groundrules

Meetings The Right Way


BEFORE Plan: Clarify meeting purpose & outcome, Identify meeting participants,
Select methods to achieve purpose, Develop & distribute agenda, Set up room

DURING Start: Check-in, Review agenda, Set/review ground rules, Clarify roles Conduct: Cover one item at a time, Manage discussions,
Maintain focus & pace Close: Summarize decisions, Review action items, Solicit agenda items for next meeting, Review time & place for next meeting, Evaluate the meeting, Thank participants

AFTER Follow-up: Distribute or post meeting notes promptly, File agendas, notes,
& other documents, Do and/or check up on action items/assignments.

Meetings The Right Way


Five Meeting Roles Chair Recorder Timekeeper Presenter Participant
NO ONE SHOULD PLAY MORE THAN ROLES AT ONCE!!!!!

Meetings and More Meetings


Virtual PM whats different?
Virtual Project Teams Use of the Technology to meet Use of Software Programs

How does the new situation change PM processes?


The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again.

Groupthink Groups without conflict where there is a strong norm of Concurrence Seeking

Avoiding Groupthink
1. Know the Symptoms of Groupthink
Overestimation of the Group
Illusion of invulnerability Belief in group morality

Closed Mindedness
Rationalization Stereotyping Outgroups

Pressures Toward Uniformity


Self-censorship Direct pressure Mindguards Illusion of unanimity

Avoiding Groupthink
2. Strategies for avoiding Groupthink Promote an open climate Avoid the isolation of the team Appoint critical evaluators Avoid being too directive

Controversy
Controversy exists when one persons ideas, information, conclusions, theories, and opinions are incompatible with those of another person and the two seek to reach an agreement.

Controversy
. . . Controversy is a great thing. Unfortunately, controversy gets a bad rap. Most people scurry about their lives trying to avoid controversy, avoiding disagreements with others, avoiding messy debates. . .Our world is awash in controversy. And rightly so. . . We need it. We need to discuss controversial subjects. We need to settle differences of opinion. . . Acknowledging and resolving issues that divide us is a good thing. Its what separates us from the apes. . .
Vernon Felton, Frame of Mind -- Bike, 8 (4), May 2001

Managing Conflict
The work life of a project manager is a life of conflict. Although conflict is not necessarily bad, it is an issue that has to be resolved by the project manager. Without excellent negotiation skills, the project manager has little chance for success.
Taylor, J. 1998. A survival guide for project managers. AMACON.

Managing Controversy
Mitigating The Bad Effects of Controversy

Cooperative Context
Positive Interdependence Commitment to a
Common Goal Individual and Group Accountability Face-to-Face Promotive Interaction Teamwork Skills Group Processing

Heterogeneity Among Members Distribution of Information Skilled Disagreement

Managing Controversy
Rules for Constructive Controversy
1. I am critical of ideas, not people. I challenge & refute the ideas of the opposing group, but I do not personally reject them. 2. I remember that we are all in this together, sink or swim. I focus on coming to the best decision possible, not on winning. 3. I encourage everyone to participate & to master all relevant info. 4. I listen to everyones ideas, even if I dont agree. 5. I restate what someone has said if it is not clear. 6. I first try to bring out all the ideas & facts supporting both sides, and then I try to put them together in a way that makes sense. 7. I try to understand all sides of the issue. 8. I change my mind when evidence clearly indicates I should

BOEING Code of Cooperation


EVERY member is responsible for the teams progress and success. Attend all team meetings and be on time, Come prepared. Carry out assignments on schedule. Actively listen to & show respect for contributions of other members CONSTRUCTIVELY criticize ideas, not persons. Resolve conflicts constructively, Pay attention, avoid disruptive behavior like holding side conversations Only one person speaks at a time. Everyone participates, no one dominates. Be succinct, avoid long anecdotes and examples. No rank in the room. Respect those not present. Ask questions when you do not understand. Attend to your personal needs at any time but minimize team disruption. HAVE FUN!! ?
Adapted from Boeing Aircraft Group Team Member Training Manual

FORD Code of Cooperation


Help each other be right, not wrong.
Look for ways to make new ideas work, not for reasons they won't. If in doubt, check it out! Don't make negative assumptions about each other. Help each other win, and take pride in each other's victories. Speak positively about each other & your organization at every chance. Maintain positive mental attitude no matter what the circumstances. Act with initiative and courage, as if it all depends on you. Do everything with enthusiasm; it's contagious. Whatever you want; give it away. Don't lose faith. Have fun

Managing Conflict
Strategies for Dealing With Conflict Withdrawing: Neither the goal nor the relationship are important
- withdraw from the interaction.

Forcing: The task is important but not the relationship


- use all your energy to get the task done.

Smoothing: The relationship is more important than the task.


- work to be liked and accepted.

Compromising: Both task & relationship important but there is lack of time - you both gain and lose something. Confronting: Task & relationship are equally important.
- define conflict as a problem-solving situation and resolve through negotiation.

Managing Conflict
Which strategies do effective team members use? Ineffective team members? Under what conditions are each of these conflict strategies important? What words and phrases are needed to set up each strategy?

Managing Conflict
Blake & Mouton Conflict Model
- Importance of the Goal - Importance of the Relationship

Managing Conflict
Heuristics for dealing with conflicts: 1. Do not withdraw from or ignore the conflict. 2. Do not engage in "win-lose" negotiations. 3. Assess for smoothing. 4. Compromise when time is short. 5. Confront to begin problem-solving negotiations. 6. Use your sense of humor.

Managing Conflict
A confrontation is the direct expression of one's view of the conflict and one's feelings about it while inviting the opposition to do the same. Suggested guidelines for confrontation are: 1. No "hit-and-run": confront only when there is time to jointly define the conflict and schedule a negotiating session. 2. Openly communicate: express feelings about & perceptions of issues involved in the conflict, & try to do so in minimally threatening ways. 3. Seek 1st to understand: accurately & fully comprehend opponent's views of the feelings about the conflict. A successful confrontation sets up opportunity to negotiate.

Managing Conflict
Skilled Disagreement
1. Define Decision as a mutual problem, not as a winlose situation. 2. Be critical of ideas, not people (Confirm others' competence while disagreeing with their positions). 3. Separate one's personal worth from others' reactions to one's ideas. 4. Differentiate before trying to integrate. 5. Take others' perspectives before refuting their ideas. 6. Give everyone a fair hearing. 7. Follow the canons of rational argument.

Managing Conflict
Escalation of Conflicts Strategies for Resolving

Informal Negotiation Formal Negotiation Mediation Third-Party Mediation Arbitration Binding Arbitration Litigation

Managing Conflict
Negotiation is a conflict resolution process by which people who want to come to an agreement, but disagree about the way to resolve, try to work out a settlement.

Managing Conflict
Recommended steps in conflict negotiation: 1. Define the conflict mutually. 2. Communicate feelings and positions. 3. Communicate cooperative intentions. 4. Take the other person's perspective. 5. Coordinate the motivation to negotiate. 6. Reach agreement satisfactory to both sides -SEEK WIN-WIN OR DONT NEGOTIATE.

Managing Conflict
Negotiating Guidelines 4 Steps in Principled Negotiation

1. Separate the people from the problem 2. Focus on interests, not positions 3. Create options 4. Insist on standards
Fisher & Ury - Getting to Yes

Managing Conflict
1.
Promoting Controversy Present Viewpoints. 2. Highlight Disagreements. 3. Be Impartial and Rational. 4. Require Critical Evaluation. 5. Assign Devils Advocate Role. 6. Use Advocacy Subgroups 7. Have Second Chance Meetings

Star Tribune 12/3/98

Star Tribune 12/3/98

Health & Safety


Job-related fatalities up in '04
http://www.bizjournals.com/twincities/stories/2005/08/22/daily40.html?hbx=e_du

John Vomhof Jr. Staff Writer, The Business Journal 8/25/2005 There were 80 fatal work-related injuries recorded in the state in 2004, the Minnesota Department of Labor & Industry reported Thursday. That is up from 72 in 2003, and one less than in 2002. The state averaged 74 work-related deaths from 1999 to 2003. In 2004, the agriculture industry recorded the most worker fatalities, with 18; the industry had 19 deaths in 2003 and 21 in 2002. Construction had 16 fatalities in 2004, an increase from 10 in 2003 and 15 in 2002. Nine government workers were fatally injured in 2004, up from three in 2003, but down from 12 in 2002. Transportation incidents accounted for 29 of the 80 work-related deaths in 2004. That compares to 30 in 2003 and 44 in 2002. Contact with objects and equipment led to 18 fatalities in 2004, while assaults and violent acts killed 11. Falls also led to 11 work-related deaths. Women accounted for seven of the 80 people fatally injured on the job in 2004. The Census of Fatal Occupational Injuries is conducted annually by the U.S. Department of Labor's Bureau of Labor Statistics. There were a total of 5,703 fatal work injuries recorded nationwide in 2004.

Causes of Constr. Deaths


Cause Deaths
Other

Falls Transportation Contact with Objects, Equipment Harmful Substances, Environment Violence Other

377
V iolence

283
Harm ful

200
C ontact

186
Transp.

32
Falls

29

100

200

300

400

Source : U.S. Department of Labor, Star Tribune 12/3/98

Health & Safety


Star Tribune, 12/3/98, Two killed in accident at Piper Site, By Joy Powell Two electricians were killed at a downtown Minneapolis construction site on 12/2/98, after a 10,000-pound steel column being moved by a crane slipped off its mark and slammed into a beam. That apparently dislodged a storage bin weighing more than a 1,000 pounds that was resting on the beam. The bin, full of nuts and bolts and studs, crashed through eight floors to the ground. Darryl J. Hilgendorf, 49, of Minneapolis, and a second worker whose name wasnt released died in the 9:20 a.m. accident. They were working on the 6th floor of the Piper Jaffray Center under construction at S. 8th St. and Nicollet Mall when they were either hit by the bin or fell through the hole alongside it. Were just sick about this, said Robert Cutshall, vice president of construction for Ryan Companies, the general contractor. We feel terrible, and our hearts go out to the families of these two men killed today. A Minneapolis building inspector is also expected to tour the site today, and state investigators will continue to look into the case. Workers were building the 8th story of a 30 story tower. They had laid decking, sheets of corrugated steel 1/16th of an inch thick, that will have concrete poured on them to make floors.

Health & Safety


History: Other Construction Fatalities in the Twin Cities
June 1992, Minnesota Zoo: A worker on the zoos amphitheater was fatally injured when a 400-pound fixture holding 8 bird cages fell on him. May 1991, Mall of America: One man died and another was injured when scaffolding they were on collapsed. April 1991, Mall of America: One man died and two other workers were injured when concrete flooring collapsed in a mall parking garage. April 1990, Lake St. Marshall Av. bridge: A worker fell 90 feet to his death when a concrete arch span of the new bridge collapsed into the Mississippi river. April 1990, Minneapolis Veterans Medical Center: A construction worker was killed when a section of crane he was helping dismantle collapsed on him October 1989, Cray Research, Inc.: A fall from a scaffold killed a worker at the Eagan site of a Cray building.
Star Tribune 12/3/98, by Linda Scheimann and James Walsh

Health & Safety


Injury and F atality S tatistics
100 80 60 40 20 0 Y ears 1 6 11 16 21 26 31 36 W orkers (millions /10) Deaths Death Rate* Dis abling Injury Rate **

Workers 100,000s Deaths 100s

Death rate per 100,000 workers Disabling injury rate per 1,000 workers

Health & Safety


What responsibilities do engineers and PMs have for health and safety?

What can PMs do to minimize risks and make the workplace safer?

Ethics Outline
What is ethics?
Definition Fundamentals Codes of ethics

Why do we care about ethics?

What Is Ethics??
Ethics provide a systematized framework for making decisions where values conflict

Differentiating the Confusion


Ethical decision-making in a systemic manner that conforms to accepted professional standards of conduct Moral decision-making based on principles of right and wrong behavior Legal decision-making conforming to rules of the law
Source: WWWebster Dictionary

Why Is Ethical Behavior Important??


Trust is defined as certainty based on past experience . ethics concerns concepts of the individual or group by which actions are judged right or wrong.
Source: J Campbell Martin

Systems of ethics are used to guide our decision-making and behavior in human-to-human relationships

Systems of Ethics
There are many systems of ethics The two major theories:
Decisions are made on the basis of the consequences of an act or decision Decisions are made on the basis of the morality of acts (is act right or wrong?)

Ethics What Guides Your Choices?


Is the commonly made decision always the right one ? Is the legal decision always the morally right decision? Is the morally right decision always the one in your best interest? Is the morally right decision always the most economical? Is following orders that are not proper a legal or a moral defense?

Fundamentals Moral Development


Attributed to Kohlberg Preconventional level - Moral behavior or actions are judged by the person the behavior or actions benefits. e.g. to a child taking a toy from another child is moral (ethical.) Behavior can be modified by desire to avoid punishment or to seek approval.

Fundamentals Moral Development


Conventional level - behavior is based on the norms of the family, group or society that are accepted. Most adults do not go beyond this level. Postconventional level - At this level the individual is autonomous and can ask what is best? Individuals are guided by integrity, self respect and respect for others.

Utility Theory
Attributed to Mill Balance between good and bad consequences. Utilitarianism - acts should always maximize utility.

Duty Theory
Attributed to Kant Duties - honesty, fairness, commitment, gratitude, ...... Duties
show respect for others, express moral imperatives, and are universal.

Human Rights Theory


Attributed to Kant. Duties exist because of the rights of others. Rights are to
life, liberty, and property gained by ones labor.

Virtues Theory
Attributed to Aristotle Moral virtues represent a balance between extremes between excess and deficiency in conduct, emotion, desire and attitude.

Ethics The Dilemma


A dilemma is a choice between two (or more) options that are fundamentally opposed and which carry generally equal weight. Engineers are always confronted with two ideals, efficiency and economy, and the worlds best computer could not tell them how to reconcile the two. There is never one best way. Like doctors or politicians or poets, engineers face a vast array of choices every time they begin work, and every design is subject to criticism and compromise.
Source: Billington, D.P., 1986, In defense of engineers, The Wilson Quarterly, January.

Ethics in Practice
Treat others as you would want them to treat you Engineering ethics is important in
interpersonal relationships developing products and facilities impacting future generations......

Ethics in Practice
If a builder builds a house for man and does not make its construction firm and the house collapses and causes the death of the owner of the house - that builder shall be put to death. it destroys property, he shall restore whatever is destroyed, and because he did not make the house firm he shall rebuild the house which collapsed at his own expense. If a builder builds a house for a man and does not make its construction meet the requirement and a wall falls - that builder shall strengthen the wall at his own expense.
The Code of Hammurabi (2250 BCE)

University of MN Honor Code


I recognize academic integrity as essential to the University of Minnesotas and its students equitable and uncompromised pursuit of their joint endeavors. As a student I promise to practice it to the best of my ability and to do nothing that would give me unfair advantage at the expense of my fellow students. If I cheat in spite of making this declaration, I expect to be penalized according to the offense, up to and including notation of cheating recorded on my transcript and permanent expulsion from the University of Minnesota.
http://www1.umn.edu/usenate/reports/saicrept.html (accessed 4/25/00)

Our Ethical Values (Lockheed-Martin)


HONESTY: to be truthful in all our endeavors; to be honest and forthright with one another and with our customers, communities, suppliers and shareholders. INTEGRITY: to say what we mean, to deliver what we promise, and to stand for what is right. RESPECT: to treat one another with dignity and fairness, appreciating the diversity of our workforce and the uniqueness of each individual. TRUST: to build confidence through teamwork and open, candid communication. RESPONSIBILITY: to speak up without fear of retribution and report concerns in the work place, including violations of laws, regulations and company policies, and seek clarification and guidance whenever there is doubt. CITIZENSHIP: to obey all the laws of the United States and the foreign countries in which we do business and to do our part to make the communities in which we live a better place to be.

PM Ethics
Preamble: In the pursuit of the PM profession, it is vital that PMI
members conduct their work in an ethical manner in order to earn & maintain the confidence of team members, colleagues, employees, employers, clients, the public, & the global community

Member Code of Ethics: As a professional in the field of PM, I pledge


to uphold and abide by the following: I will maintain high standards of integrity & professional conduct I will accept responsibility for my actions I will continually seek to enhance my professional capabilities I will practice with fairness & honesty I will encourage others in the profession to act in an ethical & professional manner

Project Management Institute

Engineering Ethics
Engineers, in the fulfillment of their professional duties, shall:
Hold paramount the safety, health and welfare of the public. Perform services only in areas of their competence. Issue public statements only in an objective and truthful manner. Act for each employer or client as faithful agents or trustees. Avoid deceptive acts. Conduct themselves honorably, responsibly, ethically, and lawfully so as to enhance the honor, reputation, and usefulness of the profession.

National Society of Professional Engineers (NSPE) http://www.nspe.org/ethics/eh1-code.asp

Ethical Decision Evaluation


Possible Process 1. Problem Definition Identify ethical issues Determine relevant facts Identify/Gather required missing data Determine relevant ethical principles Discuss practical constraints Identify possible solutions Seek ways to avoid the original problem List action items Make preliminary judgments (apply evaluation tests) Review decisions and synthesize discussion into a solution

2. 3. 4.

5. 6.

Ethics Evaluation Tests


Harm Test: Does this option do less harm? Publicity Test: Would I want my choice to appear in the newspaper next to my name? Mother Test: What if my mom knew about the choice I made? Defensibility Test: Could I defend my choice before a committee of my peers (or others)? Reversibility Test: Would I think the choice was good if I were the one affected by it? Colleague Test: What do my colleagues say when I describe the problem and my solution? Professional/Organizational Test: What might ASCE (IIE, IEEE, ASME, etc) say about my choice?

Ethics EvaluationTests
Is it honorable (would you hide this action from anyone)? Is it honest (does it betray a trust)? Does it fall within your area of competence? Does it avoid a conflict of interest (will your judgment be biased)? Is it fair (does it violate the legitimate interests of others)? Is it considerate (does it violate privacy or confidentiality)? Is it conservative (in terms of time and resources required)?

You're sitting across from a peer of yours, who is also a good friend on a professional level, who you know is trying to get a small business up and running "on the side." You already have recognized that he is, frankly, not the highest performer. Over the past several weeks, you have also noticed that he is doing things for his business while at work. Today, you notice that he has been holding a phone call with someone about his side business (not chatting, but actually conducting business) and that call is now just into the start of the second hour. What do you do?

You are attending a conference in the U.S. as a representative of your company. A supplier passes out a small electronic gadget, valued at about $40, to everyone at the meeting. What do you do? 1. Accept the thoughtful gesture since the gift is valued under $50, there is no need to report it. 2. Accept the gift, but be sure and report it to your manager. If your manager tells you to return it, you are required to comply. 3. Accept the gift, if declining puts you or the company in a awkward position. Then, immediately consult the Ethics Office for disposition. 4. Politely refuse to accept the gift.
(Ethics Challenge -- Case 6)

You work in Quality Assurance. You rejected some parts as nonconforming to specifications, but your manager told you to accept the part As Is. You dont agree with the decision. What do you do? a) Do nothing. Its the managers decision to make. b) Discuss it with your manager. c) Call the Ethics HelpLine. d) Ask the engineers who are responsible for the specification to clarify the situation.
(Ethics Challenge -- Case 18)

Employees in the department have noticed that your supervisor spends a good portion of his day doing homework for a company-sponsored college course. He also spends a significant amount of time making phone calls that they suspect are personal, and may be made a company expense. What should you do? a) Tell the employees to just do their work & mind their own business. b) Tell the employees that you dont want to risk your job by becoming involved. c) Suggest that your fellow employees contact the Ethics Officer or another company official. d) Raise the issue directly with your supervisor.
(Ethics Challenge -- Case 24)

In a department meeting, your supervisor takes credit for some excellent work done by an absent colleague. What do you do? a) Put the word out to your fellow workers as to who really did the work. b) Seek a private meeting with the supervisor in order to make sure your colleague gets proper credit. c) During an informal conversation with the big boss, casually let it slip that your colleague did not get the credit he deserved on a recent project. d) Inform your colleague as to what took place, and let him take whatever action he desires.
(Ethics Challenge -- Case 29)

A co-worker is injured on the job. You are a witness and what you saw reflects poorly on the company. What do you do? a) Dont get involved b) Contact the injured co-worker and offer to testify on her behalf. c) Report what you saw to the company. d) Protect the company by refusing to testify as a witness for the injured person.

(Ethics Challenge -- Case 30)

When a particular male supervisor talks to any female employee, he always addresses her as Sweetie. You have overheard him use this term several times. As the supervisors manager, what should you do? a) Nothing, since no one has complained. b) Talk to the supervisor and explain that, while he may have only good intentions, his use of Sweetie could be offensive to employees and must stop. c) Order the supervisor to call an all-hands meeting to discuss the company policy on sexual harassment. d) At the next staff meeting, remind all supervisors of their obligation to maintain a professional work environment, free of discrimination or harassment of any kind.
(Ethics Challenge -- Case 42)

You work in Production Control. You plan to add a porch to your house, and you visit a lumberyard to get ideas and a price. During the discussion, the sales manager says, Oh, you work for the XYZ company. They buy a lot from us, so Im going to give you a special discount. What do you do? a) Like finding a $20 bill on the street, take the discount. When you get back to the office on Monday, ask the supervisor if all employees were eligible for the discount. b) Say I work for a different division of the XYZ Company am I still eligible for the discount? c) Ask for clarification Is that special discount available to all XYZ employees? d) If a deal sounds too good to be true, it probably is.
(Ethics Challenge -- Case 44)

A subordinate (direct report) on one of your projects has trouble getting along with others. What do you do? a) Dont get involved. b) Confront the worker, indicating what needs to change, how it needs to change, how you will monitor for improvement, and working with the employee to come up with solutions, etc. c) Report what you saw to your manager. d) Protect the company by documenting the problem.

As a senior research scientist, you receive a research paper for peer review. The paper essentially duplicates research you are writing for publication. If this paper is published before your paper you will be scooped in the profession. Christmas holidays are coming and you had planned to use the free time to complete your paper and submit it for open literature review. Reviewing the competing paper will take valuable time, and allowing it to be published first will drastically affect your career. What do you do? a) Without reading the paper, and knowing its contents could affect your conclusions, you return the manuscript to the journal editor, explaining your situation. Then you quickly finalize your paper and submit it. Let Christmas holidays conveniently delay the review, then provide negative review comments, knowing that this will delay publication. With the editors permission, contact the other author to see if you might combine efforts and produce an even better paper. Review the paper, provide objective comments and return it promptly.

b) c) d)

(Ethics Challenge -- Case 47)

Ethics Summary
As an engineer, you have a duty to protect the safety of workers and the public As an engineer, you also have a duty to respect the interests/desires of your employer or client At times, these two goals may be at odds Having a basis on which to evaluate the ethics of decisions is extremely important

Project Closure
Also known as:
    Project Termination Project Administrative Closure Project Feedback Project Audit

Why should this be a formal, pre-planned activity rather than just an ad hoc, deal with it as it happens situation?

Project Closure
Closure activities?
      Verify product/service output Closeout financial system Gather lessons learned Update records Complete final project performance reporting Archive records

Closure results/outputs?
Project Closure/Formal Acceptance Lessons Learned Documents Project Archives Released Resources

Project Closure
Verify product/service output Does/Did it do everything you said it would? As judged by the CUSTOMER Partly objective judgment based on hard metrics Is the customer satisfied? As judged by the CUSTOMER Partly subjective judgment What might make customer dissatisfied even though the objective evidence says it was good?

Project Closure - Financial


Closeout financial system Collect revenue
What do you do if revenue is to be paid you over a time period?

Pay final bills


How do you close out a long term bill?

Complete cost records


What records? How does organization structure affect how this is handled?

Project Closure Post Mortem


Gather lessons learned
Sometimes called post mortem Analyze what went right and what went wrong on project Analyze what would have been done differently in hindsight Quite a few companies fail to do this at all Most companies try to do this in one meeting at the end Best practice: Plan for interim evaluation along the way Have the meetings necessary to evaluate outcome Get information via non meetings also

Project Closure - Archiving


Update and Archive records Finalize project records Put all files, letters, correspondence, and other records of the project into an ORGANIZED file Ensure the organized file is in a place that is accessible by the appropriate people for future projects How would you protect the records for future use? Update skill set information for resources

Project Closure
Complete final project performance reporting Analyze, document, and report success and effectiveness of project

Project Closure
Closure results/outputs?
Project Closure/Formal Acceptance
 Last minute documents to customer
  As Builts Manuals

A formal document of acceptance

Lessons Learned Documents Project Archives Released Resources  Final resources need formal leave from the project  The PM can check out but can never leave

Project Management Office


Project Management Office (PMO)
Not very standard in objective/work May be responsible for providing support functions (project coordination, other admin functions), to providing process ownership and training, to actually being responsible for project results

Sometimes known by other names


Project Management Process Group Project Management Center Of Excellence Program Management Office

PM Miscellaneous - PMI
Project Management Institute (PMI) and Various Engineering Discipline Institutes Valuable education and extra insight Help make you that extra bit competitive Benchmarking opportunity Networking, Networking, Networking

PM Miscellaneous - PMMM
Project Management Maturity Model (PMMM) Organizations with a solid project management infrastructure achieve an average of 20 % improvements in productivity, customer satisfaction, cost reductions, & ROI.

From "The Value of Project Management in Organizations," a report based on research conducted by Project Management Solutions Inc. & The Center for Business Practices

PM Miscellaneous - PMMM
Project Management Maturity Model (PMMM)
Progressive development of an enterprise-wide project management approach, methodology, strategy, and decision-making process. Appropriate level of maturity will vary by organization based on specific goals, strategies, resource capabilities, scope, needs, etc. Maturity to which an organization should strive is determined during a detailed assessment conducted by a professional PM consulting team. The organization has achieved full project management maturity when it has met the requirements and standards for project management effectiveness as defined by the Project Management Maturity Model and can demonstrate improvements like organizational efficiency, on-time project delivery, cost control/controlled cost reductions, and profitability.

My PM Words To Live By
Learn how your business works!
How the business makes money How what you do contributes to making money How you can do things better to make money How you can avoid doing things that will hurt other parts of the business ability to make money

My PM Words To Live By
In order to win the game, you must score more than your opponent. Knowing that even the best athlete only scores a certain percentage of the times s/he makes an attempt, to increase the number of points s/he scores, s/he must take more shots and/or improve her/his skills. Those are the only choices available. A new player, particularly one without a great deal of natural talent, can improve his/her percent of shots scored to shots taken through diligent practice. Practice with the help of an experienced coach can increase the percentage even further. There comes a point where the athlete will score fewer and fewer additional points for every hour spent practicing (the law of diminishing returns). Her/his gains from learning fall off more and more drastically. That doesnt mean the athlete should stop practicing! It only means s/he needs to find another way of increasing the chances of scoring. Short of cheating or only playing against drastically inferior opponents, the sole, honest remaining other way to score more is to make more attempts!

My PM Words To Live By
Be honest, always Be straightforward, always Dont be afraid to admit youre wrong Take your work seriously, not yourself Dont let your fears get in the way of progress Learn to understand and be proficient at politics Remember *everyone* on your team even a small, innocuous thing like a piece of foam can destroy a complex machine like the space shuttle

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