wiley - project management - a systems approach to planning, scheduling, and controlling (2001)

Share recognition for project success with the entire project team and line management.. During the past several years, management's knowledge and understanding of project management has

TE AM

Team-Fly®

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Project Management

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Dr Kerzner's 16 Points to Project Management Maturity

1 Adopt a project management methodology and use it consistently

2 Implement a philosophy that drives the company toward project management maturity and

communicate it to everyone

3 Commit to developing effective plans at the beginning of each project

4 Minimize scope changes by committing to realistic objectives

5 Recognize that cost and schedule management are inseparable

6 Select the right person as the project manager

7 Provide executives with project sponsor information, not project management information

8 Strengthen involvement and support of line management

9 Focus on deliverables rather than resources

10 Cultivate effective communication, cooperation, and trust to achieve rapid project management maturity

11 Share recognition for project success with the entire project team and line management

12 Eliminate non-productive meetings

13 Focus on identifying and solving problems early, quickly, and cost effectively

14 Measure progress periodically

15 Use project management software as a tool— not as a substitute for effective planning or

interpersonal skills

16 Institute an all-employee training program with periodic updates based upon documented lessons learned

Page ivCopyright © 2001 by John Wiley & Sons All rights reserved.

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appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA

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This title is also available in print as ISBN 0-471-39342-8 (cloth : alk paper)

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To

Dr Herman Krier,

my Friend and Guru,

who taught me well the

meaning of the word "persistence"

1.17 Concurrent Engineering: A Project Management

Approach

34

1.18 Total Quality Management (TQM): A Project Management

3.4 Line–Staff Organization (Project Coordinator) 109

4.2 Selecting the Project Manager: An Executive

Decision

166

Team-Fly®

Problems 357

Case Studies

7.5 Understanding Superior, Subordinate, and Functional Conflicts 402

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Case Studies

8

Special Topics

423

8.3 Effective Project Management in the Small Business

Case Studies

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11.18 Handling Project Phaseouts and Transfers 595

Crosby Manufacturing Corporation 722

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15.6 Recording Material Costs Using Earned Value Measurement 848

17.10 The Monte Carlo Process 927

Page xvi

19.5 Managing during Political, Social, and Economic Reform 1000

19.8 External Factors Affecting Project Management 1003

20.11 Why does strategic planning for project management fail? 1040

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Appendix A Solutions to the Project Management Conflict Exercise 1165

Page xix

Preface

As we enter the twenty-first century, our perception of project management has changed Project management, once considered nice to have, is now recognized as a necessity for survival

Organizations that were opponents of project management are now advocates Management

educators of the 1970s and 1980s, who preached that project management could not work, are now staunch supporters Project management is here to stay

This text discusses the principles of project management Students who are interested in advanced topics in project management, as well as in best practices in implementation, may wish to read one

of my others texts, Applied Project Management, (New York: Wiley, 2000).

This book is addressed not only to those undergraduate and graduate students who wish to

understand and improve upon their project management skills, but also to those functional managers and upper-level executives who must provide continuous support to all projects During the past several years, management's knowledge and understanding of project management has matured to the point where almost every company and industry is using project management in one form or another These companies have come to the realization that project management and productivity are related Project management coursework is now consuming more and more of training budgets than ever before

General reference is provided in the text to engineers However, the reader should not consider project management as strictly engineering-related The engineering examples are the result of the fact that project management first appeared in the engineering disciplines, and we should be willing

to learn from their mistakes, regardless of the industry that we are in

Page xxThe textbook is designed for undergraduate and graduate courses in both business and engineering The structure of the text is based upon my belief that project management is much more behavioral than quantitative The first five chapters are part of the basic core of knowledge needed to

understand project management Chapters 6 through 8 deal with the support functions of time

management, conflicts, and other special topics Chapters 9 and 10 describe executive involvement and the critical success factors for predicting project success It may seem strange that ten chapters

on organizational behavior and structuring are needed prior to the ''hard-core" chapters of planning, scheduling, and controlling These first ten chapters are framework chapters needed to develop the cultural environment for all projects and systems These chapters are necessary for the reader to understand the difficulties in achieving cross-functional cooperation on projects and why the people involved, all of whom may have different backgrounds, cannot simply be forged into a cohesive work-unit without any friction Chapters 11 through 15 are the quantitative chapters on planning, scheduling, cost control, and estimating Chapter 16 deals with trade-offs on time, cost, and

performance Chapters 17 through 24 cover the more advanced topics in project management, as well as future trends

The text contains forty-six case studies, and more than 340 discussion questions In addition, there is

a supplemental workbook that contains more than 600 multiple choice questions, additional case studies, challenging problems, and cross-word puzzles The workbook and the textbook are ideal as

a self-study tool for the Project Management Institute's Certification Exam An instructor's manual is

available only to college and university faculty members by contacting your local Wiley sales

representative or by visiting the Wiley web site at www.wiley.com/kerzner

One-day, two-day, and three-day seminars on project management and PMI certification training using the text are offered by contacting me at 216-765-8090 (E -mail address:

The majority of the articles on project management that have become classics have been referenced

in the textbook throughout the first eleven chapters These articles were the basis for most of the modern developments in project management and are therefore identified throughout the text

Valuable criticism was made by many colleagues In particular, I am indebted to those

industrial/government training managers whose dedication and commitment to quality project management education and training have led to valuable changes in this edition

To Dr Mark Collier, President of Baldwin-Wallace College, I again express my deepest

appreciation and respect for his never-ending support and encouragement toward conducting

meaningful research for this text

HAROLD KERZNER BALDWIN -WALLACE COLLEGE

Team-Fly®

In the past, executives have attempted to ease the impact of these environmental conditions by embarking on massive cost-reduction programs The usual results of these programs have been early retirement, layoffs, and a reduction in manpower, through attrition As jobs become vacant,

executives pressure line managers to accomplish the same amount of work with fewer resources, either by improving efficiency or by upgrading performance requirements to a higher position on the learning curve Because people costs are more inflationary than the cost of equipment or facilities, executives are funding more and more capital equipment projects in an attempt to increase or

improve productivity without increasing labor

Unfortunately, modern executives are somewhat limited in how far they can go to reduce manpower without running a high risk to corporate profitability Capital equipment projects are not always the answer Thus, executives have been forced to look elsewhere for the solutions to their problems.Almost all of today's executives are in agreement that the solution to the majority of corporate problems involves obtaining better control and use of existing corporate resources Emphasis is being placed on looking internally rather than externally for the solution to these problems As part

of the attempt to achieve an internal solution, executives are taking a hard look at the ways corporate activities are being managed Project management is one of the techniques now under consideration.The project management approach is relatively modern It is characterized by new methods of restructuring management and adapting special management techniques, with the purpose of

obtaining better

con-Page 2trol and use of existing resources Thirty years ago project management was confined to U.S

Department of Defense contractors and construction companies Today, the concept behind project management is being applied in such diverse industries and organizations as defense, construction, pharmaceuticals, chemicals, banking, hospitals, accounting, advertising, law, state and local

governments, and the United Nations

The rapid rate of change in both technology and the marketplace has created enormous strains on existing organizational forms The traditional structure is highly bureaucratic, and experience has shown that it cannot respond rapidly enough to a changing environment Thus, the traditional

structure must be replaced by project management, or other temporary management structures that are highly organic and can respond very rapidly as situations develop inside and outside the

company

Project management has long been discussed by corporate executives and academics as one of several workable possibilities for organizational forms of the future that could integrate complex efforts and reduce bureaucracy The acceptance of project management has not been easy, however Many executives are not willing to accept change and are inflexible when it comes to adapting to a different environment The project management approach requires a departure from the traditional business organizational form, which is basically vertical and which emphasizes a strong superior–subordinate relationship

1.1—

Understanding Project Management

In order to understand project management, one must begin with the definition of a project A project can be considered to be any series of activities and tasks that:

• Have a specific objective to be completed within certain

specifications

• Have defined start and end dates

• Have funding limits (if applicable)

• Consume human and nonhuman resources (i.e., money, people, equipment)

• Be multifunctional (i.e., cut across several functional lines)

Project management, on the other hand, involves project planning and project monitoring and includes such items as:

• Project planning

• Definition of work requirements

• Definition of quantity and quality of work

• Definition of resources needed

• Project monitoring

• Tracking progress

• Comparing actual outcome to predicted outcome

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• At the desired performance/technology level

• While utilizing the assigned resources effectively and efficiently

• Accepted by the customer

The potential benefits from project management are:

• Identification of functional responsibilities to ensure that all activities are accounted for, regardless

of personnel turnover

• Minimizing the need for continuous reporting

• Identification of time limits for scheduling

• Identification of a methodology for trade-off analysis

• Measurement of accomplishment against plans

• Early identification of problems so that corrective action may follow

• Improved estimating capability for future planning

• Knowing when objectives cannot be met or will be exceeded

Unfortunately, the benefits cannot be achieved without overcoming obstacles such as:

• Forward planning and pricing

Project management can mean different things to different people Quite often, people

misunderstand the concept because they have ongoing projects within their company and feel that they are using project management to control these activities In such a case, the following might be considered an appropriate definition:

Project management is the art of creating the illusion that any outcome is the result of a series of predetermined, deliberate acts when, in fact, it was dumb luck.

Although this might be the way that some companies are running their projects, this is not project management Project management is designed to make better use of existing resources by getting work to flow horizontally as well as vertically within the company This approach does not really destroy the vertical, bureaucratic flow of work but simply requires that line organizations talk to one another horizontally so work will be accomplished more smoothly throughout the organization The vertical flow of work is still the responsibility of the line managers The horizontal flow of work is the responsibility of the project managers, and their primary effort is to communicate and coordinate activities horizontally between the line organizations

Figure 1–1 shows how many companies are structured There are always "class or prestige" gaps between various levels of management There are also

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Figure 1–1

Why are systems necessary?

functional gaps between working units of the organization If we superimpose the management gaps on top of the functional gaps, we find that companies are made up of small operational islands that refuse

to communicate with one another for fear that giving up information may strengthen their opponents The project manager's responsibility is to get these islands to communicate cross-functionally toward common goals and objectives

The following would be an overview definition of project management:

Project management is the planning, organizing, directing, and controlling of company resources for a relatively

short -term objective that has been established to complete specific goals and objectives Furthermore, project

management utilizes the systems approach to management by having functional personnel (the vertical hierarchy) assigned to a specific project (the horizontal hierarchy).

The above definition requires further comment Classical management is usually considered to have five functions or principles:

We should also comment on what is meant by a "relatively" short-term project Not all industries have the same definition for a short-term project In engineering, the project might be for six months or two years; in construction, three to five years; in nuclear components, ten years; and in insurance, two weeks

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Figure 1–2

Overview of project management.

Long-term projects, which consume resources full-time, are usually set up as a separate division (if large enough) or simply as a line organization

Figure 1–2 is a pictorial representation of project management The objective of the figure is to show that project management is designed to manage or control company resources on a given activity, within time, within cost, and within performance Time, cost, and performance are the constraints on the project If the project is to be accomplished for an outside customer, then the project has a fourth constraint: good customer relations The reader should immediately realize that

it is possible to manage a project internally within time, cost, and performance and then alienate the customer to such a degree that no further business will be forthcoming Executives often select project managers based on who the customer is and what kind of customer relations will be

necessary

1.2—

Defining Project Success

In the previous section, we defined project success as the completion of an activity within the constraints of time, cost, and performance This was the definition that has pertained for the past twenty years or so Today, the definition of project success has been modified to include

completion:

• Within the allocated time period

• Within the budgeted cost

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• At the proper performance or specification level

• With acceptance by the customer/user

• When you can use the customer's name as a reference

• With minimum or mutually agreed upon scope changes

• Without disturbing the main work flow of the organization

• Without changing the corporate culture

The last three elements require further explanation Very few projects are completed within the original scope of the project Scope changes are inevitable and have the potential to destroy not only

the morale on a project, but the entire project itself Scope changes must be held to a minimum and those that are required must be approved by both the project manager and the customer/user.

Project managers must be willing to manage (and make concessions/trade-offs, if necessary) such that the company's main work flow is not altered Most project managers view themselves as self-employed entrepreneurs after project go-ahead, and would like to divorce their project from the operations of the parent organization This is not always possible The project manager must be willing to manage within the guidelines, policies, procedures, rules, and directives of the parent organization

All corporations have corporate cultures, and even though each project may be inherently different, the project manager should not expect his assigned personnel to deviate from cultural norms If the company has a cultural standard of openness and honesty when dealing with customers, then this cultural value should remain in place for all projects, regardless of who the customer/user is or how strong the project manager's desire for success is

As a final note, it should be understood that simply because a project is a success does not mean that the company as a whole is successful in its project management endeavors Excellence in project management is defined as a continuous stream of successfully managed projects Any project can be driven to success through formal authority and strong executive meddling But in order for a

continuous stream of successful projects to occur, there must exist a strong corporate commitment to

project management, and this commitment must be visible.

1.3—

The Project Manager–Line Manager Interface

We have stated that the project manager must control company resources within time, cost, and performance Most companies have six resources:

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Actually, the project manager does not control any of these resources directly, except perhaps

money (i.e., the project budget).1 Resources are controlled by the line managers, functional

managers, or, as they are often called, resources managers Project managers must, therefore,

negotiate with line managers for all project resources When we say that project managers control project resources, we really mean that they control those resources (which are temporarily loaned to

them) through line managers.

It should become obvious at this point that successful project management is strongly dependent on:

• A good daily working relationship between the project manager and those line managers who directly assign resources to projects

• The ability of functional employees to report vertically to their line manager at the same time that they report horizontally to one or more project managers

These two items become critical In the first item, functional employees who are assigned to a project manager still take technical direction from their line managers Second, employees who report to multiple managers will always favor the manager who controls their purse strings Thus, most project managers appear always to be at the mercy of the line managers

Classical management has often been defined as a process in which the manager does not

necessarily perform things for himself, but accomplishes objectives through others in a group

situation This basic definition also applies to the project manager In addition, a project manager must help himself There is nobody else to help him

If we take a close look at project management, we will see that the project manager actually works for the line managers, not vice versa Many executives do not realize this They have a tendency to put a halo around the head of the project manager and give him a bonus at project termination, when, in fact, the credit should really go to the line managers, who are continually pressured to make better use of their resources The project manager is simply the agent through whom this is accomplished So why do some companies glorify the project management position?

To illustrate the role of the project manager, consider the time, cost, and performance constraints shown in Figure 1–2 Many functional managers, if left alone, would recognize only the

performance constraint: "Just give me another $50,000 and two more months, and I'll give you the ideal technology."

The project manager, as part of these communicating, coordinating, and integrating responsibilities, reminds the line managers that there are also time and cost constraints on the project This is the starting point for better resource control

Project managers depend on line managers When the project manager gets in trouble, the only place

he can go is to the line manager because additional

re-1 Here we are assuming that the line manager and project manager are not the same individual.