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Abstract of course: B16321, Projectmanagement
Based on the textbook:
Meredith, Jack R. and Mantel, Samuel J. (2003) Project management : a managerial approach. John
Wiley & Sons
Chapter 1 Projects in Contemporary Organization
Projects and project management has emerged because the characteristics of our contemporary society
demand the development of new methods of management.
Forces fostering project management
There are three important forces which are fostering Project Management (PM):
1 The exponential expansion of human knowledge
2 The growing demand for a broad range of complex, sophisticated, customized goods and services
3 The evolution of worldwide competitive markets for the production of goods and services.
Other forces are:
1 The intense competention among institutions
2 Projects undertaken are large and getting larger.
Projects that command the most public attention tend to be large, complex, multidisciplinary
endeavours.
Three Project Objectives
1
2
3
Performance (or scope)
Time
Cost
A fourth dimension are the expectations of the client, which tend to increase during project progress,
known as “scope screep”.
The Project Manager
Between Objectives 1-3 exist relationships, called trade-offs. A primary task of the project manager
(PMR) is to manage these trade-offs.
The job of a PMR is not without problems. Problems are caused by:
 PMR lacks full authority to command the requisite resources or personnel
 Parties involved: senior management, client, project team or public. They seem to speak
different languages and have different objectives.
However: PMRship is now regarded as a valuable career path.
Recent changes in managing organizations
Managing organizations has been impacted by three revolutionary changes:
 Replacement of traditional, hierarchical management by consensual management
 Adoption of the “systems approach”( or “systems engineering”)
 Organizations establishing projects as the preferred way to accomplish their goals.
Traditional management is regarded as a major generator of conflict between project team members.
1.1 Definition of a “Project”
Project Management Institute (PMI) defined a project as: ”A temporary endeavour undertaken to create
a unique product or service”.
As the techniques of project management were developed (mostly by the military) the use of project
organization began to spread.
A project organization is divided in: Progam; Project; Tasks; Work packages; Work units.
Attributes that characterize projects:
 One-time activity (singleness of purpose)
 Definite life cycle
 Interaction with other projects and organization’s standard, ongoing operations
 Uniqueness
 Environment of conflict
If a project does not meet these attributes it is a nonproject (all routine).
1.2 Why project management?
The basic purpose for initiating a project is to accomplish specific goals.
The project form of organization allows the PMR to be responsive to:
 The client and the environment
 Identify and correct problems at an early date
 Make timely decisions about trade-offs between conflicting project goals
 Ensure that managers of the separate tasks do not suboptimize their tasks.
Actual experience with PM indicates:
 Better control and customer relations
 Shorter development times
 Lower costs
 Higher quality and reliability
 Higher profit margins
 Sharper orientation toward results
 Better interdepartemental coordination
 Higher worker morale
However, on the negative side:
 Higher organizational complexity
 Violations of organizational policy
 Conflicts
 PMR lacks authority that is consistent with the assigned level of responsibility
 PMR depends on goodwill of managers in the parent organization.
On the whole, the balance weights in favor of project organization if the work to be done is appropriate
for a project. But PM has its limitations! Tough as it may be, it’s all we have – and it works.
1.3 The project life cycle
Projects should have a slow-rapid-slow progress toward the project goal. This is the so-called ‘S-shape
life cycle’.
Stages of projects are: Conception; Selection; Planning, Scheduling,Monitoring, Control; Evaluation
and termination.
Risks during the life cycle
Projectrisks = uncertainties about how the performance, time, and cost goals will be met.
However, the more progress is made on the project, the less uncertainty about achieving the project
goals.
Chapter 2 Strategic and project selection
The accomplishment of important tasks and goals in organizations is more and more achieved through
projects. However, with this rapid adoption of project management it is also true that:
 There are many projects that fall outside the organization’s stated mission
 There are many projects being conducted that are completely unrelated to the strategy and
goals of the organization
 There are many projects with funding levels that are excessive relative to their expected
benefits.
Organizations face problems with trying to manage multiple projects:
 Delays in one project delay other projects because of common resource needs or technological
dependencies
 The inefficient use of corporate resources results in peaks and valleys of resource utilization
 Bottlenecks in resource availability or lack of required technological inputs results in project
delays that depend on those scarce resources or technology.
It is expected by the authors that the Project Management Office (PMO) of an organization promote
those projects that capitalize on the organization’s strenghts, offer a competitive advantage, and
mutually support each other, while avoiding those with resource or technology needs in areas where the
organization is weaker. Challenges are how to tie projects more closely to the organization’s goals and
strategy, and the matter of project management maturity (PMM).
2.4 Project Management Maturity
Project management maturity deals with:
 How to handle the growing number of ongoing projects
 And how to make these projects more successful.
A model for PMM has been developed by R. Remy (1997). The PMM of an organization is assessed
being at one of five levels:
 Ad-hoc
 Abbreviated
 Organized
 Managed
 Adaptive
It appears that most organizations do not score very well in terms of maturity.
2.2 Project selection and criteria of choice
The authors recommend the process of project selection: evaluating individual projects or groups of
projects, and then choosing to implement some set of them so that the objectives of the parent
organization will be achieved.
Project selection is only one of many decisions associated with PM. To deal with, we use decisionaiding models. A model is an idialized version of a problem and comes as a stochastic (use of
probabilistic information) or deterministic one. Project selection models tend to be stochastic.
When choosing a project selection model the following criteria (Souder, 1973) are important:
 Realism
 Capability
 Flexibility
 Ease of use
 Cost
 Easy computerization (added by Meridith and Mantel)
2.3 The nature of project selection models
There are two basic types of project selection models:
Nonnumeric OR Numeric
Don’t forget:
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Models do not make decisions – people do
All models, however sophisticated, are only partial representations of the reality they are
meant to reflect.
A model of some sort is implied by any consicious decision.
A list of objectives (‘factors’, ‘elements’) should be generated by the organization’s top management.
Objectives should be weighted and can be related to:
 Production
 Marketing
 Financial
 Personnel
 Administrative and miscellaneous
A model can also be helpful as project improvement. This regards the difference between the actual
criterion’s score and the highest possible score on that criterion.
2.4 Types of project selection models
Nonnumeric models
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The Sacred Cow
In this case the project is suggested by senior and powerful officials in the organization.
Added feature: supported by “the powers that be”.
The Operating Necessity
The project is required in order to keep the system operating, with one question to be
answered: is the system worth saving at the estimated costs of the project?
The Competive Necessity
The project is untertaken based on a desire to maintain the company’s competitive position.
The Product Line Extension
Project is judged on the degree to which it fits the firm’s existing product line, fills a gap,
strengthens a weak link, or extends the line in a new, desirable direction.
Comparative Benefit Model (CBM)
Members of senior management thinks that some projects will benefit the firm more than
others, even if they have no pricise way to define or measure ‘benefit’. However, several
techniques are existing for ordering and comparing projects. An example is Q-sort (Helin and
Souder, 1974). CBM are goal-oriented and directly reflect the primary concerns of the
organization.
Numeric models: Profit/Profitability
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Payback Period
The payback period for a project is the initial fixed investment in the project divided by the
estimated annual net cash inflows from the project. Widely used but not recommended.
Average Rate of Return
The average rate of return is the ratio of the average annual profit to the initial or average
investment in the project. Not recommended.
Discounted Cash Flow
Determines the net present value of all cash flows by discounting them by the required rate of
return (know as hurdle rate, cutoff rate). Net present value (NPV) should be positive to deem
the project acceptable.
Internal Rate of Return
Discount rate that equates the present values of the cash inflow and cash outflow.
Profitability Index (Benefit-Cost ratio)
Is the net present value of all future expected cash flows divided by the initial cash
investment. Ratio should greater than 1.0 for acceptation.
Avantages of Profit/Profitability Numeric models
 The undistcounted models are simple to use and understand
 All use readily available accounting data to determine the cash flows
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Model output is in terms familiar to business decision makers
With a few exceptions, model output is on an “absolute”profit/profitability scale and allows
“absolute”go/no-go decisions
Some profit models account for project risk
Disadvantages of Profit/Profitability Numeric models
 These models ignore all nonmonetary factors except risk
 Models that do not include discounting ignore the timing of the cash flows and the time-value
of money
 Models that reduce cash flows to their present value are strongly biased toward the short run
 Payback-type models ignore cash flows beyond the payback period
 The internal rate of return model can result in multiple solutions
 All are sensitive to errors in the input data for the early years of the project
 All discounting models are nonlinear, and the effects of changes (or errors) in the variables of
parameters are generally no obvious to most decision makers
 All these models depend for input on a determination of cash flows, but it is not clear exactly
how the concept of cash flow is properly defined for the purpose of evaluating projects.
‘Simplicity as only virtue, is a dubious virtue’.
Numeric models: scoring
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Unweighted 0-1 factor model
The factor Qualifies OR Does not Qualify
Unweighted factor scoring model
Constructs a simple linear measure of the degree to which the project being evaluated meets
easch of the critera contained in the list.
Weighted Factor Scoring Model
When numeric weights reflecting the relative importance of each individual factor are added,
we have a weighted factor scoring model. An example of a technique is Delphi. Delphi
develops numeric values that are equivalent to subjective, verbal measures of relative value.
Resist the temptation to include marginally relevant criteria along with the obviously
important items!
Constrained Weighted Factor Scoring Model
The temptation to include marginal criteria can be partially overcome by allowing additional
criteria to enter the model as constraints rather than weighted factors. Constraints represent
characteristics that must be present or absent in order for the project to be acceptable.
However, exercise care when adopting contrainsts.
Other Scoring Models
Example: Goal programming, which is a variation of the general linear programming method
that can optimize an objective function with multiple objectives.
Avantages of Scoring models
 These models allow multiple criteria to be used for evaluation and decision making, including
profit/profitablility models and both tangible and intangible criteria
 They are structurally simple and therefore easy to understand and use
 They are a direct reflection of managerial policy
 They are easily altered to accommodate changes in the environment or managerial policy
 Weighted scoring models allow for the fact that some criteria are more important than others
 These models allow easy sensitivity analysis. The trade-offs between the several criteria are
readily observable.
Disavantages of Scoring models
 The output of a scoring model is strictly a relative measure. Project scores do not respresent
the value or “utility”associated with a project and thus do not directly indicate whether or not
the project should be supported.
 In general, scoring models are linear in form and the elements of such models are assumed to
be independent
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The ease of use of these models is conducive to the inclusion of a large number of criteria,
most of which have such small weights that they have little impact on the total project score.
Unweighted scoring models assume all criteria are of equal importance, which is almost
certainly contrary to fact
To the extent that profit/profitability is included as an element in the scoring model, this
element has the advantages and disadvantages noted earlier for the profitablity models
themselves.
Choosing a Project Selection Model
By the authors Weighted Scoring models are favored for 3 fundamental reasons:
 They allow the the multiple objectives of all organizations to be reflected in the important
decision about which projects will be supported and which will be rejected
 Scoring models are easily adapted to changes in managerial philosophy or changes in
enviroment
 They do not suffer from the bias toward the short run that is inherent in profitability models
that discount future cash flows.
2.5 Analysis under uncertainty – the management of risk
Uncertainty affects the selection process. Thus it is important to understand the nature of the
uncertainties. Risk management tries to reduce uncertainty by procedures (pro-forma documents) and
risk analysis.
This can be done analytically or by Monte Carlo simulation. Result will be a forecast but remember:
precise forecasts will be precisely wrong!
Window-of-Opportunity Analysis (WOOA)
This method is specially used for R & D and innovation projects. The reason is that not can be assumed
that these kind of projects will be successful. The WOOA approach is about looking for baseline data.
2.6 Comments on the information base for selection
There are three special problems affecting the data used in project selection models:
 Accounting Data
 Measurements
 Uncertain Information
Accounting Data
 Accountants live in a linear world. Cost and revenue data are assumed to vary linearly with
associated changes in inputs and outputs
 The accounting system often provides cost-revenue information that is derived from standard
cost analysis. The standards may or may not be accurate representations of the cost revenue
structure of the physical system they purport to represent
 Data furnished by the accounting system may or may not include overhead costs.
Measurements
 Subjective versus Objective
 Quantitative versus Qualitative
 Reliable versus Unreliable
 Valid versus Invalid
‘GIGO – garbage in, gospel out’
Uncertain Information
Use methods like Delphi for finding the numeric weights and criteria scores when they take the form of
verbal descriptors rather than numbers.
2.7 Project Portfolio Process (PPP)
A PPP is an eight-step process that holds promise for improving an organization’s project management
maturity. Important is that the goals and strategies of the organization have been well articulated. PPP
attempt to link the organization’s projects directly to the goals and strategy of the organization.
Step 1: Establish a Project Council
Main purpose of the project council is to establish and articulate a strategic direction for those projects
spanning internal or external boundaries of the organization. Senior managers must play an important
role in the council.
Step 2: Identify Project Categories and Criteria
In this step, various project categories are identified so the mix of projects funded by the organization
will be spread appropriately across those areas making major contributions to the organization’s goals.
Wheelwright and Clark (1992) identified four separate categories of projects:
 Derivative projects
 Platform projects
 Breakthrough projects
 R&D projects
Next, the council must develop separate criteria and cost ranges for each category. The outcome should
be a Weighted Factor Scoring model.
Step 3: Collect Project Data
For each existing and proposed project, assemble the data appropiate to that category’s criteria.
Step 4: Assess Resource Availability
Next, assess the availability of both internal and external resources, by type, department, and timing.
Step 5: Reduce the Project and Critera Set
This step tries to narrow down the number of competing projects.
Step 6: Prioritize the Projects within Categories
Apply the scores and criterion weights to rank the project within each category.
Step 7: Select the Projects to be Funded and Held in Reserve
The first step is determining the mix of projects across the various categories. Result of step 7 (and
mostly the PPP) should be a Plan of Record. Here, the mix across categories is listed, priorities and
resource needs of each project are given, the timing of each project over the PPP cycle (6 months for
example) is shown.
Step 8: Implement the Process
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Make results of PPP widely known
Senior management should fully fund the selected projects
Process will be repeated on a regular basis.
2.8 Project Proposals
Documentation is needed to evaluate a project that is being considered. This set of documents is called
the project proposal.
Proposals should content:
 Executive summary (in non-technical language)
 The Technical Approach
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The Implementation Plan
The Plan for Logistics Support and Administration
Past Experience (full resume for each principal).
Chaper 3 The Project Manager
PM = this person takes responsibility for organizing, staffing, budgetting, directing, planning and
controlling the project.
3.1 Project management and the project manager
The Functional Manager versus the Project Manager
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Project manager must be more skilled at synthesis, functional manger at analysis.
Functional manager uses the analytic approach, the PM uses the systems approach.
A system can be defined as a set of interrelated components that accepts inputs and produces
outputs. The analytic method focuses on breaking the components of a system into smaller
and smaller elements.
The functional manager is a direct, technical supervisor. The projectmanager is a facilitator
and generalist.
Three major questions face the PM in the synthesis with functional managers:
 What needs to be done?
 When must it be done?
 How are the resources required to do the job to be obtained?
PM works normally without close supervision from his boss. If so, this condition is known as
micromanagement.
Project responsibilities
Areas of PM’s responsibilities:
 Parent organization
 Project and client
 Members of project team
A PM should keep senior management of the parent organization fully informed about the project’s
status, cost, timing and prospects. Never allow senior management to be surprised!
Recommended managementstyle for the PM: caring and supportive.
PM Career paths
Projects provide an excellent growth environment for future executives and for developing managerial
skills.
Career paths starts with participation in small projects, later larger projects, after given command over
small then larger projects.
3.2 Special demands on the project manager
The success of the PM depends to a large extent on how capably special demands are handled:
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Acquiring Adequate Resources
Problem: win-lose propositions between project and functional managers.
Aquiring and Motivating Personnel
Problem: the PM is usually trying to borrow precisely those people the functional manager
would most like to keep.
Problem: the voluntary commitments of project members, there is the assumption that they
must be managed “delecately”.
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The most effective team mebers have some common characteristics:
* High-quality technical skills * Political sensivity* Strong problem orientation *Strong goalorientation * High self-esteem.
Dealing with obstacles
Problem: crisis appear without warning.
Problem: discipline-oriented people want to stick to the tasks for which they have been
prepared and to which they have been assigned
Communication is the key solving problems.
Making Project Goal Trade-offs
The first set of trade-offs are made between the project goals of cost, time and performance.
This is required by the need to preserve some balance between the project time, cost and
performance goals. The second set of trade-offs are made between technical and managerial
functions. This concerns sacrifing smoothness of running the project team for technical
progress.
Failure and the Risk and Fear of Failure
Breadth of Communication
Most of the PM’s time is spent communicating with the many groups interested in the project.
The PM is the project’s liaison with outside world.
Negotiation
There is almost no aspect of the PM’s job that does not depend directly on this skill.
3.3 Selecting the project manager
The best PM is the one who can get the job done!
There are four categories of skills that are required for the PM and serve as the key criteria.
 Credibility
PM needs two kinds of credibility: technical and administrative credibility.
Technical: PM must be perceived by client, senior executives, functional departments and the
project team as possessing sufficient technical knowledge to direct the project.
Administrative: PM has several key administrative responsibilities that must be performed
with apparently effortless skill.
 Sensitivity
This regards mostly to political sensitivity. However, PM must keep project team member
“cool”. Finally, PM needs a set of technical sensors.
 Leadership and Management Style
PM must be a leader.
 Ability to Handle Stress
There are four factors causing stess in PM’s life:
* no set of procedure and techniques available to manage their work * “too much on their
plate”* high need to achieve that consistently frustrated * parent organization in the throes of
major change.
3.4 Problems of cultural differences
A PM must cope with multiple cultures and different environments. It follows that more than one
organization is involved in the project. Further there are culture differences between the stakeholders of
the project: project team, client, senior management and the public.
Culture has four elements: Technology; Institutions, Language and Art.
Culture and the Project
In Western industrialized nations, time is highly valued as a resource. In other nations, it isn’t.
Other problems deal with staffing the project, like the Latin American comprade system.
Microcultures and the Project
A microculture is ‘corporate culture’. The impact of this on the PM is important.
3.5 Impact of institutional environments
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Socioeconomic environment
The job description of any PM should include responsibility for acquiring a working
knowledge of the culture of any country in which he or she is to conduct a project.
Legal environment
For the PM, there is no substitute for qualified legal assistance.
The Business Cycle as an Environment
The PM must be aware of the general level of business conditions in the nation hosting the
project. PMs must be sensitive to economic problems in the host country and be willing to
adapt as far as possible, to local commercial customs.
Technological Environment
The ability to complete a project with success is often dependent on the PM’s ability to plan
the project in such a way as to be compateble with the technology available in the host
country.
3.5 Multicultural communications and managerial behavior
It is recommended to the PM to learn the language of the host country, even haltingly, to please the
citizens. For precise communication, a skilled translator can be used. More aspect of the
communication process are:
 Structure and Style of Communications
Cultural difference cause problems. The manager of an international project cannot count on
being voluntarily informed of problems and potential problems by his or her subordinates.
 Managerial and Personal Behavior
”Going native”is not helpful
Final Comments on Multicultural Projects
Lack of preparation is apt to cultural shock.
Willingness to speak in the hostnation’s tongue on social occasion and for routine business will be
appreciated.
Multicultural management does take effort, but is do-able.
Chapter 4 Project Organization
Organizations are more and more project-oriented. Reasons are:
 Speed and market response (first-to-market)
 Development of new products, processes or service requires input from diverse areas of
spezialized knowledge
 Rapid expansion of technological possibilities in almost every area of enterprise tends to
destabilize the structure of organizations.
 Senior management rarely feel much confidence in their understanding of and control over a
great many of the activities going on in their organizations.
This chapter focuses on the interface between the project and its parent organization. There are three
major organizational forms to house projects in the parent organization.
4.1 The Project as part of the Functional Organization
As one alternative for giving the project a “home”, it is made a part of one of the functional divisions of
the firm. Major advantages are:
 Maximum flexibility
 Individual experts can be utilized by many different projects
 Specialists in the division can be grouped to share knowledge and experience
 The functional division also serves as a base of technological continuity when individuals
choose to leave the project
 The functional divisions contains the nromal path of the advancement for individuals whose
expertise is in the functional area.
Disadvantages:
 Client is not the focus of activity and concern
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Functional division tends to be oriented toward the activities particular to its function. It is not
usually problem oriented
No individual is given full responsibility to the project
Lack of coordinated effort tends to make response to client needs slow and arduous
There is a tendency to suboptimize the project
The motivation of people assigned to the project tends to be weak
No holistic approach to the project.
4.2 Pure Project Organization
The other end of the organizational spectrum is pure project organization. The project is separated from
the rest of the parent system. It becomes the self-contained unit with is own technical staff and
administration.
Advantages:
 PM has full authority over the project
 All members of the project are directly responsible to the PM
 Lines of communication are shortenend
 Existence of ‘skill pools’
 Strong and separate identity of team
 Ability to make swift decisions is enhanced
 Unity of command exists
 Simple and flexible
 Holistic apporach is supported
Disadvantages:
 Duplication of organizational effort and man power = expensive
 People tend to be maintained on the project longer than needed = expensive
 Functional division is not readily accessible to project team members
 Inconsistency in the way in which policies and procedures are carried out
 Project takes on a life of its own --- projectitis
 Worries about life after the project ends.
4.3 The MatrixOrganization
The matrix organization is a combination of the functional and project organization. It is a pure project
organization overlaid on the functional divisions of the parent firm. It comes as a “strong”, “balanced”
or “weak” matrix. It should be emphasized that the PM controls when and what people do, while the
functional mangers control who will be assigned to the project and what technology will be used.
Advantages:
 The project is the point of emphasis
 Project has reasonable acces tot the entire reservoir of technology in all functional divisions
 There is less anxiety about what happens when the project is completed
 Response to client needs is as rapid as in the pure project case
 Project will have access to the administrative units of the parent firm
 Holistic approach
 Matrix organization cover a wide range in between pure project and functional.
Disadvantages:
 Power is more balanced, but fairly delicate
 To balance time, cost, and performance between several projects is an advantage, however the
dark side is tha tprojects must be carefully monitored as a set, a tough job.
 Projectitis is a serious danger
 Succes is doubtful for a PM without strong negatiating skills
 Matrix mangement violates the management principle of unity of command.
4.4 Mixed organizational systems
Other ways of organizing project can be ‘mixed’
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Organizing projects by product = example: software projects
Organizing projects by territory
Mixed: pure functional and pure project coexist in a firm.
4.5 Choosing an organizational form
In general, the functional form is apt to be the organizational form of choice for projects where the
major focus must be on the in-depth application of a technology. If a firm engages in a large number of
similar projects the pure project form of organization is preferred. The matrix organization is the only
satisfactory solution when the project requires the integration of inputs from several functional areas
and involves reasonably sophisticated technology.
Procedure for choosing a project organization:
1) Define the project with a statement of the objectives that identifies the major outcome disired
2) Determine the key tasks associated with each objective an locate the units in the parent organizaiton
that serve as functional “homes” for these types of tasks
3) Arrange the key tasks by sequence and decompose them into work packages
4) Determine which organizational units are required to carry out the work packages and which units
will work particularly closely which others
5) List any special characteristics or assumptions associated with the project
6) In light of the above, and with full cognizance of the pros and cons assoicated with each structural
form, choose a structure.
4.6 Two special cases – risk management and the project office
Dealing with uncertainties has come to be known as risk management.
Organizing for risk management
The process of managing risk has six steps:
1) Risk management planning
2) Risk identification
3) Qualitative risk analysis
4) Quantitive risk analysis
5) Risk response planning
6) Risk monitoring and control
The Project Management Office (PMO)
The PMO is an entity to help manage projects. The role is that of an enable/facilitator.
Reasons for intiating a PMO are:
Need for establishing consistent project management standards and methods
Initated by senior management
PMO’s can offer a variety of services, for example portfolio management
Purposes of the PMO
1) Establish and promulgate good project management processes throughout the organization and be a
respository of good project management practice
2) To transfer project management lessons learned to the rest of the organization
3) To improve the success rate of projects
4) To reduce development project lead times and get products/services to market sooner
5) To consolidate and simplify project data and provice consistent information on project progress
6) To develop and maintain an “enterprise project management”system.
4.7 The Project Team
Project People are:
 Project Engineer
The PE is in charge of product design and development and is resposible for functional
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analysis, specifications, drawings, cost estimates, quality/reliability, engineering changes, and
documentation.
Manufacturing Engineer
The engineer’s task is the efficient production of the product or process the project engineer
has designed, including responsibility for manufacturing engineering, design and production
of tooling/jigs/fixtures, production scheduling, and other production tasks.
Field Manager
This person is responsible for the installation, testing, and support of the product/process once
it is deliverd to the customer
Contract Administrator
The administrator is in charge of all official paperwork, keeping track of customer changes,
billings, questions, complaints, legal aspects, costs etc.
Project Controller
The controller keeps daily account of budgets, cost variances, labor charges, project supplies,
capital equipment status, etc.
Support Services Manager
This person is in charge of product support, subcontractors, data processing, and general
management support functions.
The engineer and controllor shuld report directly to the PM. This facilitates control over two of the
main goals of the project: technical performance and budget.
4.8 Human factors and the project team
Problems:
 Project professional tend to be perfectionists
PM must continue to stress the due dates
 Motivating project team team members to accomplish the work of the project
Use of participative management style can help: for example Management of Objectives (MBO);
Employee Involvement (EI) or Total Quality Management (TQM); Continuous Improvement
Teams (CIT); Self-directed teams (SDT); Self-directed work teams (SDWT); Self-managed teams
(SMT). Adoption of such methods empowers the team.
 Poor team building
 Interpersonal conflicts
Thamhain and Wilemon (1975) published a definitive work on the focus and nature of conflict in
projects. Conflict avoiders do not make successful project managers!
The average total conflict is at a high level in the early program phases, compared with other parts in
the life cycle.
Chapter 5 Project Planning
Considerable care must be used when planning projects. The primary purpose, is to establish a set of
directions in sufficient etail to tell the project team exactly what must be done. As a result a project
plan will be developed.
5.1 Initial project coordination
A project should be started with a project launch meeting. Senior management should attend the
meeting showing their commitment. The outcome must be that:
 Technical scope is established
 Basic areas of performance resonsibility are accepted by the participants
 Some tentative overall schedules and budgets are spelled out
 A risk management group is created.
Project Plan Elements
The various parts of the project plan are then scrutinized by the group and combined into a composite
project plan. Approvals amount to a series of approvals. Any project plan should contain the following
elements:
 Overview
 Objectives
 General Approach
 Contractual Aspects
 Schedules
 Resources
 Personnel
 Evaluation Methods
 Potential Problems.
An approved plan is also known as the project charter.
Project Planning in Action
Aaron (1993) describe the planning process oriented around the life-cycle events. They divided the
project into nine segments:
 Concept evaluation
 Requirements identification
 Design
 Implementation
 Test
 Integration
 Validation
 Customer test and evaluation
 Operations and maintenance.
5.2 Systems integration
Systems integration (systems engineering or concurrent engineering) is a part of integration
management. Systems integration is concerced with three major objectives:
 Performance (= what the system does)
 Effectiveness. The objective is to design the individual components of a system to achieve the
desired performance in an optimal manner
 Cost
Multifunctional teaming is a way of achieving systems integration.
5.3 Sorting out the project
We need to know exactly what is to be done, by whom, and when.
A conceptually simple method in sorting our and planning all the details is known as a hierarchical
planning system: the even planning process.
The results of this process could be:
 An action plan
 Gozinto chart
 Work Breakdown Structure (WBS)
Remember: a detailed, scheduled plan of the required steps in the implementation process is a strategic
success factor for the project (Pinto, Slevin, 1987) together with a clearly project mission and top
management support.
5.4 The work breakdown stucture and linear responsibility charts
The WBS often appears as an outline with the level 1 tasks on the left and successive levels
appropriately indented. There are 3 general steps in designing a WBS:
 Using information from the action plan, list the task breakdown in successively finer levels of
detail. Continue until all meaningful tasks or work packages have been identified.


For each such work package, identify the data relevant to the WBS. It is helpful to construct a
linear responsibility chart (or .. matrix) to show who is responsible for what.
All work package information should be reviewed with the individuals or organizationss who
have responsibility for doing the work.
5.5 Interface coordination through integration management
The intricate process of coordinating the work and timing of the different work groups is called
integration management. The term interface coordination is used to denote the process of managing this
work across multiple groups. By Bennington (1972) was TREND (Transformed Relationships Evolved
from Network Data) developed. This analysis was designed to illustrate important linkages and
dependencies between work groups. These interfaces can be showed on a map what should be
managed.
The use of multidisciplinary teams (MT) has a favorable impact on product/service design and
delivery.
Chapter 6 Conflict and negotiation
Negotiation is the skill required to resolve conflicts. Conflicts have their roots in uncertainty.
Uncertainty is also risk so chapter 6 deals also about risk management.
For the PM negotiation is a critical skill.
6.1 The nature of negotiation
Negation is the process through which two or more parties seek an acceptable rate of exchange for
items they own or control. Synonyms for ‘negotiate’are for example ‘mediate’, ‘arbitrate’ or ‘haggle’.
In an organization decisions are made horizontally across lines of authority (laterial relations). This is a
cause of conflicts. Conflicts may be resolved by negotiating as solution. This should be a Paretooptimal one (win-win). For the PM important: win-lose solutions are mostly not helpful for the future
of the project.
6.2 Partnering, chartering, and change
There are three situations during projects that call for the highest level of negotiating skill the PM can
muster:
 Partnering
Outsourcing parts of projects is a potential source of conflicts with the partner(s). In the
multistep process for building partnered projects, commitment and negociation is important.
 Chartering
A project charter is a written agreement between the PM, senior management and the
functional managers whoc are committing resources and/or people to the project. Building a
project charter is a matter of negociating.
 Scope change
Almost every project is to be changed before completion. An important source of change is
the mandate: a change in the environment in which the project is being conducted. Result is
mostly a change of scope. New agreements between the parties-of-interest of the project are
necessary thus negociations.
6.3 Conflict and the project life cycle
Various authors define the stages of the project life cycle. Thaimhain and Wilemon (1975) use a fourstage model with project formation, buildup, main program and phaseout as stages. Adams and Barndt
break the project life cycle into four stages: conceptualization, planning, execution, and termination.
Categories of conflict
All stages of the project life cycle appear to be tipified by conflict. Thaimhain and Wilemon (1975)
examined this matter and found that conflicts center on matters as schedules, priorities, staff and labor
requirements, technical factors, adminstrative procedures, cost estimates, and personality conflicts.
Futher it is clear the average total conflict is the most highest at the early program phases. Conflicts fall
into three fundamental different categories:
 Groups working on the project may have different goals and expectations
 There is considerable uncertainty about who has the authority to make decisions
 There are interpersonal conflicts between people who are parties-at-interest in the project.
Conflicts in chronological perspective of the project life cycle:
Project Formation
For transition to the relatively ordered world of the buildup stage is necessary:
 Technical objectives of the project must specified to a degree that will allow the detailed
planning of the buildup stage to be accomplished
 Commitment of resources from senior management and functional managers
 The priority of the project must be set and communicated
 The organizational structure of the project must be established to and extent sufficient for the
WBS etc.
If these conditions are not sufficiently met, conflict will arise.
Project Buildup
This is the period during which the project moves from a general concept to a highly detailed set of
plans. A typical conflict in this stage is between the PM and functional departments who can claim
more technical expertise than the PM, a generalist. The total level of conflict is at its highest in this
period.
Main Program
Schedules are still a major source of conflict in the main program phase of the project life cycle.
A late activity can delay the entire project. The PM must try to get the schedure back on track. But
catching up is more difficult than falling behind…
Technical conflict are also common. The source of these conflicts are linkages between parts of the
project know as ‘interfaces’. The need to manage these interfaces and to correct incompatibilities is the
key to the technical conflicts in the main program phase.
Project Phaseout
Schedule is the major source of conflict during the phaseout. If schedure slippage has occurred in the
main program stage, the consequences will be felt in the final stage.
Personality conflicts are the second-ranked source of conflict during phaseout.
6.4 Some requirements and principles of negotiation
Requirements for the conflict reduction/resolution methods use by the PM:
 PM must allow the conflict to be settled without irreparable harm to the project’s objectives
 PM allow (and foster) honesty between the negotiators
 Parties-at-interest should search for a win-win solution.
Fisher and Ury have developed a negotiation technique that met these three requirements: principled
negotiation (win-win):
 Separate the people from the problem
 Focus on interests, not positions
 Before trying to reach agreement, invent options for mutual gain
 Insist on using objective criteria