Project Management Ninth Edition doc

1 Introduction to Project Management Project management has evolved to plan, coordinate and control the complex and diverse activities of modern industrial, commercial and management cha

Project

Management

Ninth Edition

DENNIS LOCK

1 Introduction to Project

Management

Project management has evolved to plan, coordinate and control the complex and diverse

activities of modern industrial, commercial and management change and IT projects All projects share one common characteristic – the projection of ideas and activities into new endeavours The ever-present element of risk and uncertainty means that the events and tasks leading to completion can never be foretold with absolute accuracy Examples abound of projects that have exceeded their costs by enormous amounts, finishing late or even being abandoned before completion Such failures are far too common, seen in all kinds of projects in industry, commerce and (especially, it seems) the public sector

The purpose of project management is to foresee or predict as many of the dangers and problems

as possible and to plan, organize and control activities so that projects are completed successfully

in spite of all the risks This process should start well before any resource is committed, and must continue until all work is finished The primary aim of the project manager is for the result to satisfy the project sponsor or purchaser and all the other principal stakeholders, within the promised timescale and without using more money and other resources than those that were originally set aside or budgeted

Brief history of project management

Clearly, man-made projects are not new: monuments surviving from the earliest civilizations testify

to the incredible achievements of our forebears and still evoke our wonder and admiration Modern projects, for all their technological sophistication, are not necessarily greater in scale than some

of those early mammoth works But economic pressures of the industrialized world, competition between rival companies, and greater regard for the value, well-being and hence the employment costs of working people have all contributed to the development of new project management ideas and techniques Figure 1.1 is a cursory, rather light-hearted romp through the history of project management It makes generalizations and the dates are approximate, but the story is interesting and an appropriate introduction to the fascinating subject of project management Those with the time available to study an authoritative and comprehensive account of project management history should read Morris (1994)

projects from prehistory to Victorian times (before 1900)

Projects from ancient times have left impressive legacies on our architectural and industrial culture

We wonder how some of those early masters managed without the technology that is readily and cheaply available today However, with the exception of a few notable philanthropic employers,

concern for the welfare and safety of workers was generally lacking and many early project workers actually lost their lives through injuries, disease and sheer physical exhaustion People were often regarded as a cheap and expendable resource

Formal management organization structures have existed from early times, but these flourished

in military, church and civil administrations rather than in industry Industrial organization came much later I have an organization chart showing a Chinese bridge-building team that is reputed to date back to the Ming dynasty (1368–1644) but that was an army team

Projects before 1900 were generally managed by the creative architects and engineers themselves Many of us are familiar with stories of the giants who flourished in the latter part of this historical period; people such as Sir Christopher Wren (1632–1723), Thomas Telford (1757–1834) and Isambard Kingdom Brunel (1806–59) You can read about Brunel in Vaughan (1991) There was no separately recognized profession of project management Commonsense, determination, hard work (sometimes at the expense of neglecting personal health) usually got the job done The time had not yet come for the industrial engineers and behavioural scientists who would eventually study working practices, organization theory and people at work

Before 1900

Wonderful projects People cheap, even expendable Urgency not driven by the rat-race Management organization structures seen in the church and the military

No management scientists

No project management profession

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1900 – 1949

Emergence of management science

People begin to study work and people at work

Henry Gantt introduces his famous planning charts

Early development of critical path networks

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1950 – 1969

US defense projects exploit critical path network analysis

Mainframe computers can run project management software in batch mode

Project management becomes a recognized profession More concern for people at work

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1970 – 1979

Project management has two meanings:

- industrial project management

- IT project management Creation of professional associations More project management software Legislation for health and safety Anti-discrimination laws introduced

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1980 – 1989

Desktop computers can run powerful project management software Better graphics, with colour Managers less dependent on IT experts

Computers cannot now run arrow networks and precedence becomes the norm

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1990 – 2000+

PCs and notebooks can run all applications

More interest in project risk

IT and industrial project management no longer considered

so differently Project management is a respected profession, with flourishing associations

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• Wider acceptance of project management as

a profession

• Worldwide communication by satellite and the Internet

figure 1.1 Whistle-stop journey through project management history

1900 to 1949

Rapid industrialization and the demands of munitions production in World War 1 saw the emergence

of management scientists and industrial engineers such as Elton Mayo and Frederick Winslow Taylor, who studied people and productivity in factories (Kanigel, 1997) Henry Ford made production-line manufacture famous with his Model T automobile and, especially important for project managers, Henry Gantt (1861-1919), who worked for Taylor, developed his now-famous charts which are still popular and used universally today

It is not generally appreciated that early examples of critical path networks were developed before 1950, although their value was not widely appreciated at the time Without the existence

of computers, they were inflexible to change, tedious to translate into working schedules and thus impracticable and difficult to use Gantt’s bar charts were generally preferred, often set up on proprietary charts that allowed rescheduling using movable magnetic or plug-in strips or cards Everything from the allocation of work to people and machines to holiday schedules was controlled

by charts, usually prominently displayed on office walls

1950 to 1969

The emergence of mainframe digital computers made the processing and updating of critical path networks faster and easier The American defence industry and Du Pont were among the organizations quick to exploit this powerful planning and scheduling tool in the 1950s The manufacturing and construction industries soon came to recognize the benefits of these new methods

Computers were large, extremely expensive, and required their own dedicated air-conditioned clean rooms Their capital and operating costs were beyond the budgets of all but the biggest organizations, so that many planners in smaller companies bought their computing time from bureaux, where project schedules were processed in batch mode These bureau facilities were provided both by computer manufacturers and by large companies whose computers had free time

It was at this time that I cut my project management teeth, and I have fond memories of being able to plan and control projects and programmes of multiple projects very successfully, although processing time was measured in days rather than in today’s nanoseconds

Project management became a recognized job description, if not yet a respected profession Companies were showing more concern for the welfare of people at work, although discrimination because of race, sex and age was still too common The year 1968 saw publication of the first edition

of this book, at a time when most other publications dealt with planning and scheduling as separate techniques rather than treating project management holistically as a management discipline

1970 to 1979

This period saw rapid growth in information technology, or ‘IT’ (as it soon became known) Industrial project management continued as before, but with more project management software available and wider recognition of the role However, the spread of IT brought another, different kind of project manager on the scene These were the IT project managers: people who had no project planning or scheduling experience and no interest or desire to learn those methods They possessed instead the technical and mental skills needed to lead teams developing IT projects These IT project managers were usually senior systems analysts, and one of their characteristics was their scarcity High demand for their services led them to make frequent career jumps, moving rapidly up a generous salary scale Development of the professional project management associations grew during this period, which also saw the development of legislation to protect workers’ health and safety Other new laws were intended to discourage unfair discrimination of people because of their race, religious beliefs

or sex

Although project management software became more widely available, processing continued

to be carried out on big expensive mainframe computers in batch mode Graphics were primitive compared with modern equipment Data input was still accomplished by copying data from network diagrams on to coding sheets from which cards had to be punched and verified, sometimes needing two cards for every network activity After sorting, these punched cards had to be taken to trained computer operators, who worked in clean air-conditioned rooms where entry was usually forbidden

to project managers The first process results always seemed to produce a large pile of print-out listing a crop of errors that needed considerable detective work before the faults could be identified, and then corrected by punching several new cards before the computer could produce its practical working schedules

All the output reports in those early computing days came as text from line printers, so that graphics such as bar charts were crudely formed from patterns of alphanumeric characters Yet the process was stimulating, exciting and fun We had our mishaps, for example when over 2000 pre-sorted punched cards were accidentally scattered over the floor of the London taxicab that was transporting them to the computer bureau But we got our schedules calculated, managed our projects and enjoyed ourselves in the process

1980 to 1989

During this decade project managers became far less dependent upon IT experts They now had their own desktop computers that could run most project management software Graphics were greatly improved, with smaller printers available locally in the office that could produce complex charts in many colours However, productivity did not match this growth in technology as quickly as one might have expected because managers became more interested in the technology itself than in the work that it was intended to manage People were frequently seen grouped round each other’s screens asking questions such as ‘What happens if you do this?’ and ‘Have you tried that?’ or ‘Why has it crashed and lost all my data?’ In other words, managers had to learn to become ‘computer literate’ and be far less dependent on IT experts

Software that could run activity-on-arrow networks became obsolete All planners have since had to use activity-on-node (precedence) networks in their computers and adapt to the relatively small areas of network visible on the small screen However, processing times were cut dramatically,

so that schedules could be up and running much faster for new projects Schedules could now be updated almost immediately from the planner’s own keyboard to cope with progress information and project changes

1990 to the present day

Practically all software suppliers recognized the need to make their products compatible with Microsoft Windows Microsoft themselves introduced Microsoft Project into their Office suite of programs One or two operating and plotting faults in very early versions of Microsoft Project were eliminated in later versions, and the program is now by far the most widely used, especially among students who appreciate its user-friendly features (www.microsoft.com/office/project) However, many professionals continue to use programs at the high end of the software market, preferring their greater power, versatility and adaptability for particular project applications

Project risk is taken seriously and people pay more attention to predicting risk events so that contingencies and risk mitigation strategies can be planned

Of immense importance is the power of communication made possible by satellites and the Internet, effectively shrinking the world and making it possible to transmit drawings, reports and other documents almost instantaneously to almost anywhere

Project management is no longer considered as two separate branches (one for industrial projects and another for IT projects) There is wider and welcome acceptance that managing company changes as projects can bring faster and better results

Many good books dealing comprehensively with all aspects of project management (except purchasing) are now available in most languages, and there is no shortage of training courses Well-regarded professional qualifications awarded by universities, management schools and the professional organizations can be gained by those who follow the appropriate training and can demonstrate competence With this wealth of knowledge and experience we might ask why so many modern projects fail so dramatically Eurotunnel, for example, operates at the time of writing with

an unmanageable debt burden exceeding £6.5 billion The new Wembley Stadium project finished late and cost twice its original budget Government IT projects are not exempt from spectacular failure We hear of projects that suffer ‘soaring costs’, yet the UK annual cost inflation is at the very low rate of around 2 per cent

In spite of the failures, we should be proud of the many successful modern projects, in aviation, aerospace, construction, medicine and all other branches of human industry Apart from the threat

of hostilities and terrorism, it seems certain that climate change and the exhaustion of natural fossil fuel resources will provide the biggest challenges in the future We shall need effective project managers to deal with these challenges if humankind is to survive

Different types of projects

The principal identifying characteristic of a project is its novelty It is a step into the unknown, fraught with risk and uncertainty No two projects are ever exactly alike: even a repeated project will differ from its predecessor in one or more commercial, administrative or physical aspects However,

I have found it possible and convenient to classify projects as four different general types These are shown in Figure 1.2

figure 1.2 four project types

type 1 projects: civil engineering, construction, petrochemical, mining and quarrying

Projects in this category are those which spring most readily to mind whenever industrial projects are mentioned One common feature is that the actual work (the fulfilment phase) must be conducted

on a site that is exposed to the elements, and usually remote from the contractor’s head office As such they are often open to the public gaze

These projects incur special risks and problems of organization They may require massive capital investment, and they deserve (but do not always get) rigorous management of progress, finance and quality Operations are often hazardous so that health and safety aspects demand special attention, particularly in heavy work such as construction, tunnelling and mining

For very large industrial projects the funding and resources needed can be too great for one contractor to risk or even find The organization and communications are therefore likely to be complicated by the participation of many different specialists and contractors, possibly with the main players acting together through a consortium or joint venture company established specifically for the project

type 2 projects: manufacturing

Manufacturing projects result in the production of a piece of mechanical or electronic equipment, a machine, ship, aircraft, land vehicle, or some other product or item of specially designed hardware The finished product might be purpose-built for a single customer but internal research and development projects for products to be sold in all market sectors also fall into this manufacturing category

Manufacturing projects are usually conducted in a laboratory, factory or other home-based environment, where the company should easily be able to exercise on-the-spot management and provide an optimum environment in which to do and manage the work Of course, these ideal conditions do not always apply Some manufacturing projects involve work away from the home base, for example in installing and commissioning a machine or equipment on a customer’s premises, customer training and post-project service and maintenance

More difficult is the case of a complex product that is developed and manufactured by a consortium of companies, sometimes with members based in different countries A common example

is aircraft production, where the engines might be developed and manufactured in one country, the wings in another and the final assembly taking place in a third country Such international manufacturing projects are prone to higher risk and difficulties in control and coordination arising through organizational complexity, national rivalries, contracts, long-distance communications, multiple languages and conflicting technical standards

type 3 projects: it projects and projects associated with management change

This class of project proves the point that every company, whatever its size, can expect to need project management expertise at least once in its lifetime These are the projects that arise when companies relocate their headquarters, develop and introduce a new computer system, launch a marketing campaign, prepare for a trade exhibition, produce a feasibility or other study report, restructure the organization, mount a stage show, or generally engage in any operation that involves the management and coordination of activities to produce an end result that is not identifiable principally as an item of hardware or construction

Not all projects are conducted commercially or for profit Most not-for-profit organizations, including national and local government departments, professional associations, charities and disaster relief agencies conduct projects that fall into this category of management projects

Although management projects do not usually result in a visible, tangible creation such as a piece of hardware, much often depends on their successful outcome and they can require enormous investment There are several well-known cases where, for instance, failure to implement a new computer system correctly has caused serious operational breakdown, exposing the managers responsible to public discredit Effective project management is at least as important for these projects as it is for the largest construction or manufacturing project

Type 3 projects may be associated with or even depend upon Type 1 or Type 2 projects For example, if a company decides to relocate to a new, purpose-built office, the overall relocation project is itself a Type 3 management project but its success will depend also on the Type 1 project needed to construct the new building Thus projects of different types may be associated with each other in a company’s project programme or project portfolio

Type 4 projects: projects for pure scientific research

Pure scientific research projects (not to be confused with research and development projects) are truly a special case They occasionally result in dramatically profitable discoveries On the other hand, they can consume vast amounts of money over many years, yet yield no practical or economic result Research projects carry the highest risk because they attempt to extend the boundaries of current human knowledge The project objectives are usually difficult or impossible to define and there may be no awareness of the possible outcome Therefore, pure research projects are not usually amenable to the project management methods that can be applied to industrial, manufacturing or management projects

Some form of control over pure research projects must, however, be attempted Money and other resources cannot be spent without any form of monitoring or restraint Budgets have to be set

in line with available funding

A sensible method for controlling a pure scientific research project is to conduct regular management reviews and reassessments of the potential value of the project At each of these reviews,

a decision can be taken to stop the project (known colloquially as pulling the plug) or release new funding to allow it to continue at least until the next review Although this can be unsettling for the scientists involved, the project sponsor is not expected to pour money for ever into a vast hole This procedure, where continued project funding is dependent upon the outcome of regular reviews, is

known as stage-gate control

Although the research activities might themselves lie outside the scope of familiar project management methods, the provision of accommodation, communications, equipment and research materials might well constitute Type 1, 2 or 3 capital investment projects to which proper project management can and must be applied

project life cycles anD life histories

Some projects come into being gradually, and others fade out slowly, so that their precise beginning and end dates can be difficult to recognize However, most projects have not only actual beginning and end dates but also one or more significant dates between these can be identified as key events

or ‘milestones’

The period between the beginning and end of a project is usually referred to as the project life cycle It is convenient and necessary here to introduce three key players in the project life cycle:

The customer (in some projects known as the client) is the person or organization that

wants to buy the project and put the end product to use in its own business or sell (or lease)

it on to a third party

The contractor is the organization principally responsible to the customer for carrying out

the project work

The project manager is a person employed by the contractor (or occasionally by the customer)

to plan and manage all the project activities so that the project is finished on time, within budget and within its specification

These definitions do not apply strictly to all projects, but they are adequate for the purposes of this introductory chapter In a Type 3 management project, the customer and the contractor might reside within the same company, so that the company’s executives (who represent the customer in this case) instruct a departmental manager (the contractor) to carry out a project for the company’s own use However, such complexities can be disregarded for the moment: organization patterns and roles will be discussed more exhaustively in Chapters 9, 10 and 11

life cycle of small projects

Consider, first, the typical life cycle of small projects: projects that have relatively short duration,

do not involve large amounts of capital expenditure and are relatively straightforward to manage Most authorities and writers, when they talk about the life cycle of a project, refer to the period that begins with the authorization of work on the project (or signing of a customer-contractor contract)

up to the handover of the desired product to the customer This can be a view that is too simplistic, but it is the part of projects that is of most concern to their project managers Figure 1.3 shows that the activities which take place during this period do form a true cycle, because they begin and end with the customer

Travelling clockwise round the cycle reveals a number of steps or phases, each of which is

represented by a circle in the diagram The boundaries between these phases are usually blurred in

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figure 1.3 project life cycle

practice, because the phases tend to overlap For example, some project purchasing and fulfilment work can usually start before well before design is complete

This view of a project life cycle is, in very many cases, too simplistic because it ignores everything that happens before the start of actual work, and also takes no account of what happens to the project after its delivery to the customer For a more complete picture, we really have to consider not only the project life cycle as seen by the project manager, but also the entire life history of the project from its conception to death and disposal

more comprehensive view of the project life cycle or history

The simple life cycle shown in Figure 1.3 holds good for small, relatively simple projects but for most capital projects many more phases can usually be identified For example, the six phases of Figure 1.3 have grown to 15 separately identifiable phases in Figure 1.4, which represents the life history

of a fairly large capital project Projects differ so greatly that there is no such thing as a typical life history pattern but the sequence in Figure 1.4 is broadly applicable to capital projects that involve many stakeholders and public interests (stakeholders are discussed in Chapter 2)

figure 1.4 more comprehensive view of a project life history