Download Project Management

Spring, 2007
Project Management
www.izmirekonomi.edu.tr
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
Spring, 2007
Outline
 What is a “project”?
 Project management drivers
 Project objectives and project life cycle
 Organizational aspects
 Planning tools
 Critical Path Method (CPM)
 Program Evaluation and Review Technique (PERT)
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
What Is A Project?
Unique, one-time operation designed to
accomplish a specific set of objectives in a
limited time frame.
 Temporary
 Unique product or service
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Examples of Projects
 Construction projects.
Dams, freeways, houses, etc.
 New product development.
 Marketing campaigns (service).
 Mergers, acquisitions (service).
 Software development.
 Use of a manufacturing line to produce
standard products.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
History
 Large and complex R&D projects by US
military (1930-).
 Manhattan project, Polaris missile program, Apollo space
program, etc.
 Automotive companies, airline industry.
 Since then, non-military public sector, private
and volunteer organizations use project
management to achieve their goals, and to
increase their effectiveness.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Management Drivers
 Expansion of knowledge.
 Different disciplines contribute to the solution of
development, production and distribution of goods and
services.
 Demand for complex, customized products.
 Product design needs to be integrated with the
production and distribution systems.
 Worldwide markets for production and
consumption of goods and services.
 Competition forced by the economic system.
 Decreasing time-to-market.
 Expanding size of projects.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Management Drivers
 These forces increase the complexity of
operations and the knowledge necessary
to answer the questions of what, where,
when to produce and how to distribute
cannot be provided by individuals any
more.
 Teams are used for decision making and
action, and this calls for a high level of
interaction and coordination.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Three Project Objectives
 Performance
(conformance to
specifications)
 Cost
 Time
 Project management is about managing
the trade-offs between these three
Asst. Prof. Dr. Mahmut Ali GÖKÇE,
Izmir University of Economics
objectives.
www.izmirekonomi.edu.tr
Spring, 2007
Project Manager
 The project manager is responsible that
proper knowledge and resources are
available where and when needed, and
that the project is completed on-time and
within budget.
 The rapid growth of project-oriented
organizations leads to a “project manager”
career path.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Manager
 Project Management Institute established
in 1969, had 7,500 members until 1990,
17,000 by 1995 and 86,000 by the end of
2001.
Exponential growth due to a major increase in
project-oriented organizations and number of
projects.
Software industry and IT projects.
 Istanbul Proje Yönetim Derneği has
currently 415 members.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Life Cycle
(% Completion) Vs. (Time)
 Slow start (initial
resources assigned, PM
selected, program
organized).
 Quick momentum.
 Slow finish (many parts
must come together at
the end).
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Life Cycle
Time Distribution of Project Effort
 The slow-finish effect is also a result of
changing the levels of resources dedicated to
the project during successive phases of the
life cycle.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Life Cycle
Time Distribution of Project Effort
 Conception
 Selection
 Planning, scheduling,
monitoring, control
 Evolution and
termination
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Life Cycle
Reducing Uncertainty in Estimates
 At the beginning of the
 Toward the end.
project.
Asst.
Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Attributes
 Purpose
 One time activity with a well-defined set of desired end
results.
 The project is divided into tasks that are complex on
their own.
 The tasks need to be coordinated in terms of timing,
precedence, cost and performance.
 Life cycle
 Slow beginning, buildup, peak, decline and termination.
 Projects are sometimes terminated by being phased
into normal ongoing operations.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Attributes
 Interdependencies
 Projects interact with
 Other projects being carried out in the organization
 Ongoing routine operations
 Uniqueness
 No two construction or R&D projects are the same.
 By the presence of risk (for instance financial volatility,
long project durations), projects cannot be regarded as
routine.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Attributes
 Conflict for resources.
Competition with the regular functional
departments.
Project-to-project competition.
Competition among team members.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Strategic and Organizational Issues
 Key decisions for the organization
Deciding which projects to implement
Selecting a project manager
Selecting a project team
Planning and designing the project
Managing and controlling project resources
Deciding if and when a project should be
terminated
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Selection
 Project selection is the process of evaluating
individual projects or groups of projects and then
choosing to implement some subset of them so
that the objectives of the organization will be
achieved.
 Many projects fall outside the organization’s stated
mission or are unrelated to the organization’s
strategy or goals.
 Excessive costs relative to benefits.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Project Selection Problem
 Multi-objective nature
 Financial, organizational, etc. objectives.
 Types of project selection models
 Simple weighted scoring models
 Financial models (payback period, net present value,
internal rate of return, etc.)
 Goal programming, data envelopment analysis
 Risk analysis and management is essential
 Simulation models
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
The Project Manager
 Takes responsibility for starting, planning,
implementing and completing the project.
 Typically, the PM is chosen as soon as the
project is selected for funding.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Functional and Project Manager
Compared
Functional Manager:
Project Manager:
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
PM’s Project Responsibilities
 Responsibility to the parent organization
The senior management must be fully informed
about status, cost and timing at all times. Risks
need to be communicated properly.
 Responsibility to the client
Performance and time.
 Responsibility to the project team
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Acquiring Personnel
Concerns by Functional Manager:
 PM chooses FM’s best workers for project
 Project more glamorous than steady
functional duties
Concerns by Acquired Team Member:

FM controls evaluation, salary & promotion
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Characteristics of Effective Team
Members
 High-quality technical skills
 Political sensitivity
 Strong problem orientation
 Strong goal orientation
 High self-esteem
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Interfacing a Project
 How to tie the project to the parent organization?
 How to organize the project itself?
 How to organize activities related to other
projects?
 Here, we focus on the interface of the project
with the parent organization.
 This interface is usually determined by senior
management, but affects the work of the PM
significantly.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Functional Organization
Organization chart for a university
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Functional Organization
 A particular functional department is given the
duty of project management.
Typically, the one with the closest interest in the
outcome of the project.
 New product
Either engineering or marketing
 Personnel database development
Either IT or human resources.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Advantages/Disadvantages of
Functional Organization
 Advantages
 Highly flexible staff use. Ease of switching experts
among projects in same functional division.
 Technological continuity
 Quicker career advancement of specialists
 Disadvantages
 Project not client focused. Slow response to client
needs
 Different goals between functional parent division and
project
 PM competes with FM for role of central project
responsibility
 Weaker project team motivation than in pure project
organization
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Pure Project Organization
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Advantages/Disadvantages of Pure
Project Organization
 Advantages
 PM with full project authority. Unity of command.
 Shorter communication lines than in functional organization.
Faster decision making.
 Higher project commitment of team
 Organization is structurally simple and flexible
 Disadvantages
 Duplication of staff among projects
 Experts develop too much depth --- not enough breadth
 Inconsistency in carrying out policies and procedures
 Excessive attachment of team to project
 Team worries of “life after the project ends”
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
The Matrix Organization
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr
Spring, 2007
Advantages/Disadvantages of Matrix
Organization
 This structure is a mix between functional
and pure project organizations.
 So, it balances advantages and
disadvantages of these two types.
Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics
www.izmirekonomi.edu.tr