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Wysocki, Ph.D.with contributions by Rudd McGary, Ph.D.,PMP Effective Project Management Traditional, Adaptive, Extreme Third Edition... The material from the second edition of this titl

Robert K Wysocki, Ph.D.

with contributions by Rudd McGary, Ph.D.,PMP

Effective Project

Management Traditional, Adaptive, Extreme

Third Edition

Executive Publisher: Robert Ipsen Vice President and Publisher: Joe Wikert Executive Editor: Robert M Elliott Developmental Editor: Kevin Kent Editorial Manager: Kathryn A Malm Production Editor: Felicia Robinson Media Development Specialists: Megan Decraene and Kit Malone Text Design & Composition: Wiley Composition Services

Copyright © 2003 by Robert Wysocki, Rudd McGary All rights reserved.

Published by Wiley Publishing, Inc., Indianapolis, Indiana Published simultaneously in Canada

No part of this publication may be reproduced, stored in a retrieval system, or transmitted

in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rose- wood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8700 Requests to the Pub- lisher for permission should be addressed to the Legal Department, Wiley Publishing, Inc.,

10475 Crosspoint Blvd., Indianapolis, IN 46256, (317) 572-3447, fax (317) 572-4447, E-mail: permcoordinator@wiley.com.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect

to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may

be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with

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Trademarks:Wiley, the Wiley Publishing logo and related trade dress are trademarks or registered trademarks of Wiley Publishing, Inc., in the United States and other countries, and may not be used without written permission All other trademarks are the property of their respective owners Wiley Publishing, Inc., is not associated with any product or ven- dor mentioned in this book.

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Library of Congress Cataloging-in-Publication Data:

ISBN: 0-471-43221-0 Printed in the United States of America

10 9 8 7 6 5 4 3 2 1

This acknowledgment is really a special acknowledgment to two people who

played a key role in getting this whole project started First, Dave Crane and Ihad cofacilitated a three-day project management course for Boston UniversityCorporate Education Center clients Dave and I honed the course materialsover a three-year period and then decided to turn it into a book At that time,Bob Beck, who was recently retired after 25 years with IBM, was my businesspartner and volunteered to create the CD-ROM that would house the O’Neill

& Preigh Church Equipment Manufacturers case study Dave and Bob devotedmost of their efforts to the case study and the CD-ROM, while I focused on thecontents of the book Our three-person team worked very well together andproduced the first edition In time, and after healthy sales of the first edition,

we decided to do a second edition That has been even more successful thanthe first edition Bob has retired now and spends most of his time fishing andhelping his missionary church build facilities in South America Dave is fullyoccupied delivering training for Boston University I’m still actively involved

in project management consulting and writing We’ve kind of gone our rate ways I owe both of these friends and colleagues my heartfelt thanks forgiving so freely of their time and energies All three of us can look back with

sepa-no regrets and ksepa-now that we have done great work together

Now it’s time for the third edition I’ve decided to retire O’Neill & Preigh; thatcase served us well In its place there is a new case, the Jack Neift TruckingCompany, and a new team member, Rudd McGary I’ve learned a lot workingwith Dave and Bob and would like to think that that learning is reflected inthis third edition

Preface to the Third Edition

Someone once said, “If it ain’t broke, fix it.” The second edition has been very

successful, and for that we are grateful It ain’t broke But so much is ing in the world of projects and project management that it is time to fix it Thethird edition represents a major updating of a very successful second edition.Comments from our readers and the significant changes taking place in theproject management landscape are what prompted the writing of the third edi-tion For those who have followed this book through the previous editions andhave become our loyal readers, we are offering a fresh and greatly expandedthird edition You will find that a few totally new topics are introduced here forthe first time, that a number of contemporary topics have also been added, andthat a number of continuing topics have had a fresh coat of paint applied Wehope that you will be pleased with the results

happen-There are two significant changes on the cover:

■■ First, note the title change We have added Traditional, Adaptive, Extreme as

a subtitle The material from the second edition of this title is mostly tained in the part devoted to the traditional approach to project manage-ment There are now discussions in the book devoted to the adaptive andextreme approaches to project management These discussions are new inthe third edition The part devoted to the adaptive approach is totallynew It has not been published elsewhere

con-■■ Second, note the change in authors Bob Beck and Dave Crane are nolonger listed as authors and have moved on to other adventures and havebeen replaced by Rudd McGary Rudd is a veteran and brings years ofproject management consulting and training experience to the team Welcome aboard, Rudd!

Rudd’s major contribution is the replacement of the O’Neill & Preigh casestudy from the second edition with a fresh new case, Jack Neift Trucking Com-pany The CD-ROM that accompanies this book still contains the exercisesmuch like the second edition, but the text itself also contains a number of dis-cussion questions related to the chapter materials and to the case study as well

This material is also new with the third edition Much to our surprise the bookhas been widely adopted in undergraduate, graduate, and continuing educa-tion programs The second edition was not written as a college text, butbecause of the numerous college adoptions, we have decided to write the thirdedition as both a reference and as a text Many college faculty have written andasked for our support We were cognizant of that need as we prepared this edition That is why we’ve added more exercises and thought-provoking discussion questions that should add a bit of excitement to class lectures.Additionally, many of the requests for help asked for copies of the figures, sothe CD-ROM contains PowerPoint slides of every figure and table in the book.

We would like to think that this edition offers you a complete view of effectiveproject management as it is now practiced and how it should be practiced inthe very near future

Thank you again for adding our book to your project management library Ifyou have any questions or would just like to comment, you may contact me atrkw@eiicorp.com and Rudd at rmcgary@hotmail.com

Enjoy!

Robert K Wysocki, Ph.D.

Rudd McGary, Ph.D.

Classification by Project Characteristics 13

Putting It All Together 15Discussion Questions 16

Chapter 2 What Is Traditional Project Management? 17

Principles of Traditional Project Management 17

Defining 18Planning 19Executing 20Controlling 21Closing 21

Traditional Project Management Life Cycle 22

Phases of Traditional Project Management 23Levels of Traditional Project Management 28

Procurement Management 38

Relationship between Traditional Project Management and Other Methodologies 43

Putting It All Together 48Discussion Questions 48

Defining the Project 49Managing Client Expectations 50

Developing Conditions of Satisfaction 51

Creating the Project Overview Statement 55

Attachments 64

Using the Joint Project Planning Session

Submitting a Project for Approval 67

The Project Definition Statement 71Putting It All Together 72Discussion Questions 72

The Work Breakdown Structure 75

Six Criteria to Test for Completeness in the WBS 84

Bounded 85Deliverable 86

Using a Joint Project Planning Session to Build the WBS 87

Approaches to Building the WBS 88

Representing the WBS 91Putting It All Together 95Discussion Questions 95

Chapter 5 Estimating Duration, Resource Requirements, and Cost 97

Estimating Duration 97

Resource Loading versus Activity Duration 99

Six Methods for Estimating Activity Duration 102

Estimating Resource Requirements 106

Estimating Duration as a Function of Resource Availability 109

Assign as a Total Work and a Constant Percent/Day 109Assign as a Duration and Total Work Effort 110

Assign as a Duration and Percent/Day 110

Chapter 6 Constructing and Analyzing the Project Network Diagram 117

The Project Network Diagram 117

Envisioning a Complex Project Network Diagram 118

Building the Network Diagram Using the Precedence Diagramming Method 121

Dependencies 123Constraints 125

Creating an Initial Project Network Schedule 129

Analyzing the Initial Project Network Diagram 135

Using the JPP Session to Construct and Analyze the Network 139Putting It All Together 141Discussion Questions 142

Chapter 7 Finalizing the Schedule and Cost Based on

Considering Resource Availability 143Leveling Resources 144Acceptably Leveled Schedule 146Resource-Leveling Strategies 147

Smoothing 148Alternative Methods of Scheduling Activities 148

Cost Impact of Resource Leveling 150Implementing Micro-Level Project Planning 151

Work Packages 153

Putting It All Together 157Discussion Questions 157

Chapter 8 Organizing and Conducting the Joint Project

Joint Project Planning Sessions 159

Attendees 161Facilities 164Equipment 164

Deliverables 165

Putting It All Together 168Discussion Questions 168

Chapter 9 Recruiting, Organizing, and Managing the Project Team 169

Project Manager vis-à-vis the Functional Manager 170Projects as Motivation and Development Tools 171

Motivators 172

Recruiting the Project Team 175

Organizing the Project Team 185

Authority 185Responsibility 186

Developing a Team Deployment Strategy 187

Establishing Team Operating Rules 188

Situations Requiring Team Operating Rules 189

Managing Team Communications 200

Managing Communications Timing, Content, and Channels 200Managing Communication Beyond the Team 203

Putting It All Together 206Discussion Questions 206

Control versus Risk 207

Control versus Quality 211Progress Reporting System 211

Frequency of Gathering and Reporting Project Progress 216Variances 217

Applying Graphical Reporting Tools 218

Using the WBS to Report Project Status 228

Deciding on Report Level of Detail 230

Managing Project Status Meetings 231

Managing Problem Escalation 237

Putting It All Together 241Discussion Questions 241

Steps in Closing a Project 243Getting Client Acceptance 244

Installing Project Deliverables 245Documenting the Project 245Post-Implementation Audit 246

The Final Report 249Celebrating Success 249Putting It All Together 250Discussion Questions 250

What Is the Critical Chain? 252Variation in Duration: Common Cause versus Special Cause 252Statistical Validation of the Critical Chain Approach 253The Critical Chain Project Management Approach 255

Step 1: Creating the Early Schedule Project Network Diagram 255Step 2: Converting the Early Schedule to the Late Schedule

Step 3: Resolving Resource Conflicts 256

Continuous Questioning and Introspection 277Change Is Progress to a Better Solution 277

Putting It All Together 278Discussion Questions 278

Chapter 14 Version Scope 279

Defining the Version Scope 281

Developing the Conditions of Satisfaction 281Writing the Project Overview Statement 283Holding a Fixed Version Budget and Timebox 285

Planning the Version Scope 286

Prioritizing the Version Functionality 287

Determining the Number of Cycles and Cycle Timeboxes 294

Writing Objective Statements for Each Cycle 295

Putting It All Together 295Discussion Questions 296

Developing a Low-Level WBS for This Cycle Functionality 299Micromanaging an APF Project 300Estimating Task Duration 301Estimating Resource Requirements 302

Determining Resource Requirements in the WBS 303Identifying a Specific Resource Needed 303

Sequencing the Tasks 303Putting It All Together 304Discussion Questions 304

Creating a Micro-Level Schedule and Finalizing Resource Assignments 306Writing Work Packages 309Building Cycle Functionality 310Monitoring and Adjusting the Cycle Build Schedule 311

Putting It All Together 314Discussion Questions 315

Chapter 17 Client Checkpoint 317

Inputs to the Client Checkpoint 319

Planned versus Actual Functionality Added 319

Questions to Be Answered during Client Checkpoint 319

Adjusting Functionality for the Next Cycle Plan 321

Putting It All Together 323Discussion Questions 323

Checking Explicit Business Outcomes 326Reviewing Lessons Learned for Next Version Functionality 327Assessing APF for Improvements 327Putting It All Together 327Discussion Questions 328

Proof-of-Concept Cycle 330Revising the Version Plan 331Extreme Project Management 331

Overview of Extreme Project Management 333

Comparing Project Approaches 346Putting It All Together 347Discussion Questions 348

Introduction to Project Portfolio Management 352

The Major Phases of Project Portfolio Management 354

Establishing a Portfolio Strategy 356

Boston Consulting Group Products/Services Matrix 359

Growth versus Survival Model 363

Choosing Where to Apply These Models 364

Evaluating Project Alignment to the Portfolio Strategy 364Prioritizing Projects and Holding Pending

Funding Authorization 365

Q-Sort 367Must-Haves, Should-Haves, Nice-to-Haves 367

Strategic Alignment Model and Weighted Criteria 374Project Distribution Matrix and Forced Ranking Model 376Graham-Englund Selection Model and the Risk/Benefit Matrix 377Balancing Using Partial Funding or Staffing of Projects 382

Managing the Active Projects 382

Closing Projects in the Portfolio 390

Attainment of Explicit Business Value 390

Preparing Your Project for Submission to the Portfolio Management Process 391

A Revised Project Overview Statement 391

Putting It All Together 396Discussion Questions 396

Background of the Project Support Office 398What Is a Project Support Office? 399

Temporary or Permanent Organizational Unit 400

Naming the Project Support Office 401Establishing Your PSO’s Mission 403Framing PSO Objectives 403Exploring PSO Functions 404

Software Tools 407Training 407

Selecting PSO Organizational Structures 409

Organizational Placement of the PSO 411How Do You Know You Need a PSO? 412

Spotting Symptoms That You Need a PSO 413

Establishing a PSO 415

Challenges to Implementing a PSO 427

Closing Comments by Bob Wysocki 431Closing Comments by Rudd McGary 432

Robert K Wysocki, Ph.D., has over 38 years’ experience as a project

manage-ment consultant and trainer, information systems manager, systems and agement consultant, author, and training developer and provider He haswritten 10 books on project management and information systems manage-

man-ment One of his books, Effective Project Management, 2nd Edition, has been a

best-seller and is recommended by the Project Management Institute for thelibrary of every project manager He has over 30 publications and presenta-tions in professional and trade journals and has made more than 100 presenta-tions at professional and trade conferences and meetings He has developedmore than 20 project management courses and trained over 10,000 projectmanagers

In 1990 he founded Enterprise Information Insights, Inc (EII), a project ment consulting and training practice specializing in project managementmethodology design and integration, Project Support Office establishment, thedevelopment of training curriculum, and the development of a portfolio ofassessment tools focused on organizations, project teams, and individuals Hisclients include AT&T, Aetna, Babbage Simmel, British Computer Society, BostonUniversity Corporate Education Center, Computerworld, Converse Shoes, the Czechoslovakian Government, Data General, Digital, Eli Lilly, Harvard Community Health Plan, IBM, J Walter Thompson, Peoples Bank, Sapient, TheLimited, The State of Ohio, Travelers Insurance, and several others

manage-He is a member of the ProjectWorld Executive Advisory Board, the ProjectManagement Institute, the American Society of Training & Development, andthe Society of Human Resource Management He is past Association Vice Pres-ident of AITP (formerly DPMA) He earned a B.A in Mathematics from theUniversity of Dallas, and an M.S and Ph.D in Mathematical Statistics fromSouthern Methodist University

Rudd McGary, Ph.D., PMP, has worked in the project management arenaboth as an educator and a practitioner Dr McGary brings more than 25 years

of experience in the area to this book In addition to teaching at Ohio State, theUniversity of Iowa, and Indiana University, he has been a guest lecturer atnumerous other nationally known schools

He has worked with major international companies on their business and ect management systems These companies have included DOW Chemical,ITT, and McDonald’s He has also been the author of columns in various busi-ness magazines with readerships of over 100,000 Currently the VP Certifica-tion for the Central Ohio Project Management Institute chapter, McGary hashelped more than 200 people obtain their PMP certification Additionally, hehas been the CEO of two operating companies and consulted with the CEOs of

proj-over 800 privately held organizations McGary is also coauthor of Project

Management Best Practices A-Z.

He lives with his wife, Sharon, sons Clayton and Carter, and the great whitedog, Picasso

Introduction to Effective Project Management

Changes in the Business Environment

Change is constant! We hope that does not come as a surprise to you Change is

always with us and seems to be happening at an increasing rate Every day weface new challenges and the need to improve yesterday’s practices As John

Naisbett says in The Third Wave, “Change or die.” For experienced project

managers as well as “wannabe” project managers, the road to breakthroughperformance is paved with uncertainty and with the need to be courageous,creative, and flexible If we simply rely on a routine application of someoneelse’s methodology, we are sure to fall short of the mark As you will see in thepages that follow, we are not afraid to step outside the box and outside ourcomfort zone Nowhere is there more of a need for change than in theapproach we take to managing projects

Organizational Structures

The familiar command and control structures introduced at the turn of thecentury are rapidly disappearing In their place are task forces, self-directedwork teams, and various forms of projectized organizations In all cases,empowerment of the worker lies at the foundation of these new structures.With structural changes and worker empowerment comes the need for all of

us to have solid project management skills One of our clients is often heardsaying: “We hire smart people, and we depend on them If the project is par-ticularly difficult and complex, we can put five smart people together in aroom and know that they will find an acceptable solution.” While there ismerit to this line of reasoning, we think project management should be basedmore on wisely chosen and repeatable approaches than on the creativity andheroic actions of a room full of smart people

applica-Cycle Time

The window of opportunity is narrowing and constantly moving tions that can take advantage of opportunities are organizations that havefound a way to reduce cycle times Taking too long to roll out a new orrevamped product can result in a missed business opportunity Project man-agers must know how and when to introduce multiple release strategies andcompress project schedules to help meet these requirements Even moreimportantly, the project management approach must support these aggressiveschedules That means that these processes must protect the schedule by eliminating all non-value-added work We simply cannot afford to layer ourproject management processes with a lot of overhead activities that do not addvalue to the final deliverables We will spend considerable time on these strate-gies in later chapters

Organiza-Right-Sizing

With the reduction in management layers, a common practice in many zations, the professional staff needs to find ways to work smarter, not harder.Project management includes a number of tools and techniques that help theprofessional manage increased workloads Our staffs need to have more room

organi-to do their work in the most productive ways possible Burdening them withoverhead activities for which they see little value is a sure way to failure

In a landmark paper “The Coming of the New Organization” (Harvard

Busi-ness Review, January/February 1988), Peter Drucker depicts middle managers

as either those who receive information from above, reinterpret it, and pass itdown or those who receive information from below, reinterpret it, and pass it

up the line Not only is quality suspect because of personal biases and politicalovertones, but also the computer is perfectly capable of delivering that

information to the desk of any manager who has a need to know Given thesefactors, plus the politics and power struggles at play, why employ middlemanagers? As technology advances and acceptance of these ideas grows, wehave seen the thinning of the layers of middle management Do not expectthem to come back; they are gone forever The effect on project managers ispredictable and significant Hierarchical structures are being replaced by orga-nizations that have a greater dependence on project teams, resulting in moreopportunities for project managers.

Changes in the Project Environment

Traditional project management (TPM) practices were defined and matured inthe world of the engineer and construction professional where the teamexpected (and got) a clear statement from clients as to what they wanted, whenthey wanted it, and how much they were willing to pay for it All of this wasdelivered to the project manager wrapped in a neat package The i’s were alldotted, and the t’s were all crossed All the correct forms were filed, and all theboxes were filled with the information requested Everyone was satisfied thatthe request was well documented and that the deliverables were sure to bedelivered as requested The project team clearly understood the solution theywould be expected to provide, and they could clearly plan for its delivery Thatdescribes the world of the project manager until the 1950s By the mid-1950sthe computer was well on its way to becoming a viable commercial resource,but it was still the province of the engineer Project management continued as

it had under the management of the engineers

The first sign that change was in the wind for the project manager arose in theearly 1960s The use of computers to run businesses was now a reality, and webegan to see position titles like programmer, programmer/analyst, systemsanalyst, and primitive types of database architects emerging These profes-sionals were really engineers in disguise, and somehow, they were expected tointeract with the business and management professionals (who were totallymystified by the computer and the mystics that could communicate with it) todesign and implement business applications systems to replace manualprocesses This change represented a total metamorphosis of the businessworld and the project world, and we would never look back

In the face of this transformation into an information society, TPM wasn’tshowing any signs of change To the engineers, every IT project managementproblem looked like a nail, and they had the hammer In other words, they hadone solution, and it fit every problem One of the major problems that TPM

faced, and still faces, is the difference between wants and needs If you

remem-ber anything from this introduction, rememremem-ber that what the client wants isprobably not what the client needs If the project manager blindly accepts whatthe clients say they want and proceeds with the project on that basis, the proj-ect manager is in for a rude awakening Often in the process of building thesolution, the client learns that what they need is not the same as what they

requested Here we have the basis for rolling deadlines, scope creep, and anendless trail of changes and reworks It’s no wonder that 70-plus percent ofprojects fail That cycle has to stop We need an approach that is built aroundchange—one that embraces learning and discovery throughout the project lifecycle It must have built-in processes to accommodate the changes that resultfrom this learning and discovery.

We have talked with numerous project managers over the past several yearsabout the problem of a lack of clarity and what they do about it Most wouldsay that they deliver according to the original requirements and then iterateone or more times before they satisfy the client’s current requirements Weasked them: “If you know you are going to iterate, why don’t you use anapproach that has that feature built in?” The silence in response to that question is deafening All of the adaptive and agile approaches to project man-agement that are currently coming into fashion are built on the assumptionthat there will be changing requirements as the client gains better focus onwhat they actually need Sometimes those needs can be very different than theoriginal wants

Obviously, this is no longer your father’s project management The Internet and

an ever-changing array of new and dazzling technologies have made a nent mark on the business landscape Technology has put most businesses in astate of confusion How should a company proceed to utilize the Internet andextract the greatest business value? Even the more basic questions—”Whatbusiness are we in?” “How do we reach and service our customers?” “What doour customers expect?”—had no answers in the face of ever-changing technol-ogy The dot.com era began quickly with a great deal of hyperbole and fadedjust as quickly A lot of companies came into existence on the shoulders ofhighly speculative venture capital in the 1990s and went belly up by the end ofthe century Only a few remain, and even their existence is tenuous The current

perma-buzzwords e-commerce and e-business have replaced B2B and B2C, and

busi-nesses seem to be settling down But we are still a long way from recovery As

we write this book, few forecasters would say that the precipitous drop in thebusiness world has bottomed out

The question on the table is this: “What impact should this have on ourapproach to project management?”

Where Are We Going?—A New Mind-set

We are not in Kansas anymore! The discipline of project management has morphed to a new state, and as this book is being written, that state is not yet

a steady one It may never be What does all of this mean to the struggling ect manager?

proj-To us the answer is obvious We must open our minds to the basic principles

on which project management is based so as to accommodate change andavoid wasted dollars and wasted time For as long as we can remember, we