Project Management

Framework

Section Overview and Objectives

Definition of project

Project Manager Skill Set

Examples of projects

General Management and Interpersonal

Skills

Projects versus Operations

Program and Portfolio Management

What is Project Management

Project Management Office (PMO)

Enterprise Environmental Factors

Organizational Influences

The Triple Constraints

Organizational Types

Characters of a Project Phase

Project Management Process Groups

Who are the Stakeholders

Process Group Interactions

Business Cases / Why Do a Project

Knowledge Areas

Project Selection Method

Definition of Project

A project is a temporary endeavor undertaken to create a

unique product or service.
A temporary endeavor means that every project has a definite beginning and
end.
Unique means that the product or service or result is different from other product
or service or result.
Progressively elaborated - proceeding in steps

Examples of Projects

Designing a new bridge / highway

Developing a new Drug
Conduct Elections for the State / Country
Managing Marriage
Designing a new Automobile
Building hospital for the community

Project Vs Operation

Project

Operation

Temporary

Ongoing

Unique

Repetitive

Closes after attaining the

objectives
Prototyping the new Car
Model

Objective is to sustain
business
Assembly line production

What is Project Management?

Project Management is the application of knowledge, skills, tools

and techniques to project activities to meet the project requirements
Accomplished through the application and integration of PM
processes Initiating, Planning, Executing, Monitoring and
Controlling and Closing

Establishing clear project objectives and requirements

Balancing the competing demands of scope, time, cost and quality

Manage uncertain events

Enterprise Environmental Factors

Internal an external factors that may influence the projects success

Not tangible items
Examples:

Culture
Industry standards
Infrastructure
Market conditions
Political climate

The Triple Constraint

Typical Project Life Cycle

Projects are divided into phases

The project will have at least a beginning, intermediate and ending
phase
Number of phases depends on complexity and size of the project.
Phase Examples - Analysis, Development
Reviews are conducted at the end of each phase to measure
performance
Phase end reviews allows to decide if the project should continue
The collection of phases is called project life cycle
The project life cycle defines the beginning and end of a project
Fast tracking is running the project phases concurrently. Example
of phases Analysis, Design etc.

Characteristics of Project Phase

Project Phase are marked by completion of one or more

deliverables
Deliverables are reviewed and formally accepted by customer
at phase end
Phase end reviews are also called phase exits, stage gates
or kill points
Rolling wave planning summarizes the future phases at high
level
Project phases are collectively called project life cycle

Project Phase Relationships

Sequential: a phase can only start once the previous phase has
completed.
Overlapping: a phase starts prior to the completion of the previous
phase.
Iterative: only one phase is planned out at any given time and the
planning for the next phase is carried out as work progresses on the
current phase.

Project Stakeholders

Individuals and organizations involved in the project

Those who will be directly or indirectly impacted
Stakeholders should be identified throughout the project
They may have a positive or negative influence on the outcome
Stakeholder influence goes down as the project progresses

Key stakeholders include

Project Manager
Customer / User
Performing organization
Project team members
Project management team
Sponsor
Influencers
PMO

Business Case / Why Do a Project?

Market Demand
Strategic opportunity or business need
Customer request
Technological advance
Legal requirement
Ecological impact
Social Need

Project Selection Method (1 of 5)

Mathematical Approach (Constrained Optimization Methods)

Linear Programming
Integer Programming
Dynamic Programming
Multi-objective Programming

Cooperative Approach (Benefit Measurement Methods)

Scoring models
Peer review
Murder Boards (panel that tries to poke holes in your argument)
Economic models

Benefit-Cost Analysis
Payback period
Discounted cash flows
Net Present Value
Internal Rate of Return (IRR)

Project Selection Method (2 of 5)

Benefit-Cost Analysis
Compares the project benefit to the costs to derive a ratio from which a
decision can be made. Ex: if a project generates $125,000 in profits and costs
$50,000, the benefit-cost ratio would be 2.5 (also written as 5:2)

Payback period
Number of periods to pay back a projects cost. Ex: if a project costs $1 million
and will generate revenue of $100,000 per year, then the payback period
would be 10 years.

Project Selection Method (3 of 5)

Discounted cash flows

Calculates in todays (discounted) terms what the value of a project would be given cash
inflows and/or outflows over a period of time

Net Present Value (NPV)

A formula that calculates the value today of a future cash flow

Ex: if you will receive a future cash flow in 3 years of $1,157.62, what would that be worth
today if the interest rate is 5%?
PV = FV / (1 + i) n
PV = $1,157.62 / (1 + .05)3
PV = $1,000
*Always choose projects with the biggest positive NPV, reject negative NPV

Internal Rate of Return (IRR)

The discounted interest rate when NPV equals zero

Always choose the project with the highest IRR
Assumes that cash flows are reinvested at the IRR value

Project Selection Method (4 of 5)

Example:
A project costs $10,000 today and will return $2,500 per year for 5 years. Assume
your required return on investment is 10%. Should you do the project?
Benefit-Cost Ratio
(5 x $2,500) / $10,000 = 1.25 or 5:4

Payback Period
$10,000 / $2,500 = 4 years

Net Present Value

NPV p = Sum of [Future Cash Flows / (1 + i) n]
- $10,000 + [$2,500 / (1.10)1] + [$2,500 / (1.10)2] + [$2,500 / (1.10)3] + [$2,500 / (1.10)4] +
[$2,500 / (1.10)5] = -$523.03

IRR
The value of I where NPV equals zero = 7.93%

Project Selection Method (5 of 5)

Terminology:
Opportunity Costs: the opportunity given up by choosing another project
Sunk Costs: costs spent to date, these costs are already spent
Law of Diminishing Returns: adding more resources doesnt proportionately
increase productivity
Working Capital: current assets minus current liabilities
Depreciation: straight-line (same amount each year), accelerated (ex. Doubledeclining balance and sum of years digits)
Assumptions: something that is believed to be true or something that is taken
for granted. *Needs to be continually evaluated throughout the project
Constraints: a factor that limits the project teams options; any restriction
placed on the project

Project Manager Skill Set

PMBOK
GUIDE

PROJECT
ENVIRONMENT

Areas of
Expertise

PERSONAL
SKILL

KNOWLEDGE

PERFORMANCE

General Management and Interpersonal Skills

Motivating
Leadership

Problem Solving

General
Management
Skills

Negotiating
Communicating
IT

Organizing

Influencing

Accounting

Purchasing

Program & Portfolio Management

Programs

Collection of related projects

Controls are implemented and managed in a coordinated way
Collective benefits are realized
Each project has a project manager
Projects share resources and depends on the outcomes of other projects

Portfolios

Collection of programs and projects

Projects meet a specific business goal or objective
Includes weighing the value of each project against the portfolios strategic objective
Ensures efficient use of resources

PMO Project Management Office

Centralized and coordinated management of projects

Key stakeholder and decision maker
Primary functions of PMO:

Manage shared resources

Maintain project management best practices and standards
Policies, procedures, templates, etc.
Coordinated communication
Coaching, mentoring, training, oversight, and monitoring
Governance organization

Organization Influence

Functional
Organization

Weak Matrix
Organisation

Balanced Matrix
Organisation

Strong Matrix
Organisation

Projectized
Organisation

PMs Title

Expediter

Expediter/
Coordinator

Project Manager

Project Manager

Project Manager

Decision Making Power

Functional
manager

Functional manager
plays a major role,
but PM will make
decisions

PM and the
Functional Manager
will have equal power

Project Manager

Project Manager

Resources

From within a
Dept.

Project members are

from different
departments

Project members are

from different
departments

Project members are

from different
departments

Project based only

Resource Allocation

As needed

Only 25% will be

assigned to the
projects

About 50% will be

assigned to the
projects

About 80% will be

assigned to the
projects

About 100% will be

assigned to the
projects

Resources Reports to

Functional
manager

Functional manager

Two manager (FM

and PM)

Project Manager

Project Manager

PM Reports to

Functional
manager

Functional manager

Functional manager
and his/her senior
manager

Company Senior
manager

Company senior
manager/ higher
authority

After Project Completion

Team go back
to their Dept.
(home)

Team go back to their

Dept. (home)

Team go back to their

Dept. (home)

Team go back to their

Dept. (home)

No home move to
different project or
get laid off

Organization Types Advantages & Disadvantages

Org. Type

Matrix

Functional

Projectized

Advantages

Disadvantages

Highly visible project objectives

Not cost effective because of extra administrative

personnel

Better Project Manager control over

resources

More than ONE boss for project teams

Better coordination

More complex to monitor and control

Team members maintain a home

Higher potential for conflict and duplication of effort and

functional managers have different priorities

Team members report to one supervisor and

clearly defined career paths

No career path in Project Management

Easier management specialists

People place more emphasis on their functional specialty

to the determent of the project

Efficient project organization

No Home when project is completed

More effective communication than

functional

Duplication of facilities and job functions

Loyalty to the project

Lack of professionalism in disciplines and less efficient use

of resources

Project Management Process Groups

Project Management Process Groups

Initiating process group authorizes the project

Planning process group plans the course of action to achieve objectives
Executing process group uses the resources to carry out project tasks
Monitoring process group measures progress to identify variances
Closing process group formalizes product acceptance and closure
Concept of PLAN-DO-CHECK-ACT cycle
Determine what processes within the process groups are applicable
The Process Groups are not Project Phases
The result of one process becomes input to another

Project Management Process Groups Interaction

Executing
Processes
Initiating
Processes

Planning
Processes
Controlling
Processes

Phase
Start

Time

Phase
Finish

Project Management Process Groups

Knowledge Areas
Integration Management

Initiation

Planning

Develop Project Charter Develop Project Management Plan

Execution

Direct an Manage Project Work

Monitoring & Control

Monitor and Control Project
Perform Integrated Change Control

Close Out

Close Project or Phase

Plan Scope Management

Scope Management

Collect Requirements

Time Management

Define Scope

Validate Scope

Create WBS
Plan Schedule Management

Control Scope

Define Activities
Sequence Activities

Estimate Activity Resources

Estimate Activity Durations
Develop Schedule
Plan Cost Management

Cost Management

Control Schedule

Estimate Costs
Determine Budget
Quality Management

Plan Quality Management

Control Costs
Perform Quality Assurance

Control Quality

Acquire Project Team

Human Resource Management

Develop Project Team

Plan Human Resource Management

Manage Project Team

Communication Management

Plan Communication Management

Manage Communications

Risk Management

Plan Risk Management

Control Communications

Identify Risks
Perform Qualitative Risk Analysis

Perform Quantitative Risk Analysis

Plan Risk Responses
Procurement Management
Stakeholder Management

Identify Stakeholders

Control Risks

Plan Procurement Management

Conduct Procurements

Control Procurements

Plan Stakeholder Management

Manage Stakeholder Engagement

Control Stakeholder Engagement

Close Procurements

Initiating Process Group

Conduct cost-benefit analysis

Determine and define the business needs and the project scope
Know the project boundaries and constraints
Identify high level risks
Understand the required project organization structure
Estimate budget and resource requirements
Assign a project manager
Obtain the project charter approval
Formally authorize to start a new project or phase

Planning Process Group

Determine how to plan and develop the project management plan

Develop the project requirements in detail and agree the final scope
Determine the required project activities and their sequencing
Develop schedule using estimated resources and costs
Agree what quality standards will be met by the project and how
Define how project staffing will be done
Establish the communication requirements and how it will be fulfilled
Identify what can go wrong and the plans to deal with them
Document what products or services will be acquired from outside the
project
Gain formal approval and buy-in from everybody involved in the project

Executing Process Group

Execute activities in the project plan

Procure required project resources

Complete work packages
Document lessons learnt

Implement approved changes, corrective and preventive actions

Ensure processes are followed
Hold team building activities and boost morale and efficiency

Manage resource allocation and utilization

Hold progress review meetings and distribute progress reports
Keep everyone focused on the project goals

Monitoring & Control Process Group

Measure project performance using the documented technique in the plan

Identify variances and recommend corrective actions to get back on track

Approve changes, defect repair, corrective and preventive actions
Resolve conflicts and issues

Manages changes to scope, time and cost

Perform impact analysis to approve or reject changes
Obtain formal acceptance of deliverables from the customer
Monitor the status of risks and identify new risks have emerged
Measure team member performance

Closing Process Group

Confirm all project requirements are met

Obtain formal acceptance of product from the customer

Hand over the completed deliverables to the operations team

Compile lessons learnt

Measure customer satisfaction

Archive project data and information for future reference

Release resources

Professional Responsibility

Covers legal, ethical and professional behavior of a PMP

A PMP must follow the Project Management Institute Code of Ethics and
Professional Conduct

The responsibilities includes: Doing the right things

Making good choices
Keep learning and getting better
Respecting others culture

Knowledge Areas

Project Integration Management

Project Scope Management
Project Time Management
Project Cost Management
Project Quality Management
Project Human Resource Management
Project Communication Management
Project Risk Management
Project Procurement Management
Project Stakeholder Management

Summary

Definition of project

Project Manager Skill Set

Examples of projects

General Management and Interpersonal

Skills

Projects versus Operations

Program and Portfolio Management

What is Project Management

Project Management Office (PMO)

Enterprise Environmental Factors

Organizational Influences

The Triple Constraints

Organizational Types

Characters of a Project Phase

Project Management Process Groups

Who are the Stakeholders

Process Group Interactions

Business Cases / Why Do a Project

Knowledge Areas

Project Selection Method