Project management HAROLD KERNERZ full

1.0 Introduction 11.1 Understanding Project Management 21.2 Defining Project Success 6 1.3 The Project Manager–Line Manager Interface 71.4 Defining the Project Manager’s Role 9 1.5 Defin

PROJECT MANAGEMENT

A Systems Approach to Planning, Scheduling,

John Wiley & Sons, Inc.

PROJECT

Management Maturity

1 Adopt a project management methodology and use it consistently

2 Implement a philosophy that drives the company toward project agement maturity and communicate it to everyone

man-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 agement information

man-8 Strengthen involvement and support of line management

9 Focus on deliverables rather than resources

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

11 Share recognition for project success with the entire project team andline management

12 Eliminate nonproductive meetings

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

ef-14 Measure progress periodically

15 Use project management software as a tool—not as a substitute for fective planning or interpersonal skills

ef-16 Institute an all-employee training program with periodic updates basedupon documented lessons learned

PROJECT MANAGEMENT

A Systems Approach to Planning, Scheduling,

John Wiley & Sons, Inc.

Copyright © 2003 by John Wiley & Sons, Inc All rights reserved

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Library of Congress Cataloging-in-Publication Data:

Kerzner, Harold.

Project management : a systems approach to planning, scheduling, and controlling /

Harold Kerzner. 8th ed.

p cm.

Includes bibliographical references and indexes.

ISBN 0-471-22577-0 (cloth : alk paper)

1 Project management I Title.

HD69.P75 K47 2002

658.4
04 dc21

2002028892 Printed in the United States of America.

10 9 8 7 6 5 4 3 2 1

Dr Herman Krier,

my Friend and Guru, who taught me well the meaning of the word “persistence”

1.0 Introduction 11.1 Understanding Project Management 21.2 Defining Project Success 6

1.3 The Project Manager–Line Manager Interface 71.4 Defining the Project Manager’s Role 9

1.5 Defining the Functional Manager’s Role 111.6 Defining the Functional Employee’s Role 141.7 Defining the Executive’s Role 14

1.8 Working with Executives 151.9 The Project Manager as the Planning Agent 161.10 Project Champions 17

1.11 The Downside of Project Management 181.12 Project-Driven versus Non–Project-Driven Organizations 191.13 Marketing in the Project-Driven Organization 21

1.14 Classification of Projects 231.15 Location of the Project Manager 241.16 Differing Views of Project Management 261.17 Concurrent Engineering: A Project Management Approach 27Problems 27

Case Study

Williams Machine Tool Company 30

vii

2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND

2.0 Introduction 332.1 General Systems Management 342.2 Project Management: 1945–1960 342.3 Project Management: 1960–1985 352.4 Project Management: 1985–2003 472.5 Resistance to Change 51

2.6 Systems, Programs, and Projects: A Definition 552.7 Product versus Project Management: A Definition 582.8 Maturity and Excellence: A Definition 59

2.9 Informal Project Management: A Definition 602.10 The Many Faces of Success 61

2.11 The Many Faces of Failure 642.12 The Stage-Gate Process 672.13 Project Life Cycles 692.14 Project Management Methodologies: A Definition 752.15 Change Management and Corporate Cultures 772.16 Systems Thinking 82

Problems 85

3.0 Introduction 873.1 Organizational Work Flow 903.2 Traditional (Classical) Organization 913.3 Developing Work Integration Positions 943.4 Line–Staff Organization (Project Coordinator) 983.5 Pure Product (Projectized) Organization 993.6 Matrix Organizational Form 102

3.7 Modification of Matrix Structures 1113.8 Center for Project Management Expertise 1153.9 Matrix Layering 115

3.10 Selecting the Organizational Form 1173.11 Structuring the Small Company 1243.12 Strategic Business Unit (SBU) Project Management 1273.13 Transitional Management 128

Problems 130

Case Study

Jones and Shephard Accountants, Inc 136

4 ORGANIZING AND STAFFING THE PROJECT OFFICE AND

4.0 Introduction 1394.1 The Staffing Environment 1404.2 Selecting the Project Manager: An Executive Decision 1424.3 Skill Requirements for Program Managers 148

4.4 Special Cases in Project Manager Selection 1534.5 Selecting the Wrong Project Manager 1544.6 Next Generation Project Managers 1574.7 Duties and Job Descriptions 1594.8 The Organizational Staffing Process 1634.9 The Project Office 168

4.10 The Functional Team 1744.11 The Project Organizational Chart 1764.12 Special Problems 179

4.13 Selecting the Project Management Implementation Team 181Problems 184

5.0 Introduction 1915.1 Controlling 1935.2 Directing 1935.3 Project Authority 1975.4 Interpersonal Influences 2055.5 Barriers to Project Team Development 2085.6 Suggestions for Handling the Newly Formed Team 2135.7 Team Building as an Ongoing Process 215

5.8 Leadership in a Project Environment 2165.9 Life-Cycle Leadership 217

5.10 Organizational Impact 2205.11 Employee–Manager Problems 2215.12 Management Pitfalls 225

5.13 Communications 2275.14 Project Review Meetings 2375.15 Project Management Bottlenecks 2375.16 Communication Traps 238

5.17 Proverbs 2405.18 Management Policies and Procedures 240Problems 243

Case Studies

The Trophy Project 253

Leadership Effectiveness (A) 254Leadership Effectiveness (B) 259Motivational Questionnaire 265

6.0 Introduction 2736.1 Understanding Time Management 2746.2 Time Robbers 274

6.3 Time Management Forms 2766.4 Effective Time Management 2776.5 Stress and Burnout 278

7.5 The Management of Conflicts 2917.6 Conflict Resolution Modes 292Problems 294

8.4 Mega Projects 323

8.5 Morality, Ethics, and the Corporate Culture 3248.6 Internal Partnerships 327

8.7 External Partnerships 3288.8 Training and Education 3308.9 Integrated Product/Project Teams 333Problems 335

9.0 Introduction 3399.1 Predicting Project Success 3409.2 Project Management Effectiveness 3449.3 Expectations 345

9.4 Force Field Analysis 3469.5 Lessons Learned 351Problems 352

10.0 Introduction 35310.1 The Project Sponsor 35410.2 Handling Disagreements with the Sponsor 36310.3 The In-House Representatives 363

11.6 The Statement of Work 38811.7 Project Specifications 39311.8 Milestone Schedules 39511.9 Work Breakdown Structure 39611.10 WBS Decomposition Problems 40211.11 Role of the Executive in Project Selection 406

11.12 Role of the Executive in Planning 41011.13 The Planning Cycle 411

11.14 Work Planning Authorization 41211.15 Why Do Plans Fail? 413

11.16 Stopping Projects 41411.17 Handling Project Phaseouts and Transfers 41511.18 Detailed Schedules and Charts 416

11.19 Master Production Scheduling 41911.20 Program Plan 421

11.21 Total Project Planning 42611.22 The Project Charter 43011.23 Management Control 43111.24 The Project Manager–Line Manager Interface 43411.25 Fast-Tracking 436

11.26 Configuration Management 437Problems 438

12.0 Introduction 44912.1 Network Fundamentals 45212.2 Graphical Evaluation and Review Technique (GERT) 45612.3 Dependencies 456

12.4 Slack Time 45712.5 Network Replanning 46312.6 Estimating Activity Time 46712.7 Estimating Total Program Time 46812.8 Total PERT/CPM Planning 46912.9 Crash Times 471

12.10 PERT/CPM Problem Areas 47512.11 Alternative PERT/CPM Models 47612.12 Precedence Networks 478

12.13 Lag 48112.14 Understanding Project Management Software 48212.15 Software Features Offered 482

12.16 Software Classification 48412.17 Implementation Problems 485Problems 486

Case Study

Crosby Manufacturing Corporation 494

13 PROJECT GRAPHICS 497

13.0 Introduction 49713.1 Customer Reporting 49813.2 Bar (Gantt) Chart 49913.3 Other Conventional Presentation Techniques 50613.4 Logic Diagrams/Networks 509

Problems 510

14.0 Introduction 51114.1 Global Pricing Strategies 51214.2 Types of Estimates 51314.3 Pricing Process 51614.4 Organizational Input Requirements 51914.5 Labor Distributions 520

14.6 Overhead Rates 52414.7 Materials/Support Costs 52614.8 Pricing Out the Work 52914.9 Smoothing Out Department Man-Hours 53014.10 The Pricing Review Procedure 532

14.11 Systems Pricing 53414.12 Developing the Supporting/Backup Costs 53514.13 The Low-Bidder Dilemma 539

14.14 Special Problems 53914.15 Estimating Pitfalls 54014.16 Estimating High-Risk Projects 54114.17 Project Risks 542

14.18 The Disaster of Applying the 10 Percent Solution to Project Estimates 54614.19 Life-Cycle Costing (LCC) 548

14.20 Logistics Support 55314.21 Economic Project Selection Criteria: Capital Budgeting 55414.22 Payback Period 554

14.23 The Time Value of Money 55514.24 Net Present Value (NPV) 55614.25 Internal Rate of Return (IRR) 55714.26 Comparing IRR, NPV, and Payback 55814.27 Risk Analysis 558

14.28 Capital Rationing 559Problems 560

15 COST CONTROL 565

15.0 Introduction 56515.1 Understanding Control 56915.2 The Operating Cycle 57215.3 Cost Account Codes 57315.4 Budgets 580

15.5 Variance and Earned Value 58015.6 Recording Material Costs Using Earned Value Measurement 59815.7 The Material Accounting Criterion 601

15.8 Material Variances: Price and Usage 60215.9 Summary Variances 603

15.10 Status Reporting 60415.11 Cost Control Problems 610Problems 612

Case Study

The Bathtub Period 623

16.0 Introduction 62516.1 Methodology for Trade-off Analysis 62816.2 Contracts: Their Influence on Projects 64516.3 Industry Trade-off Preferences 64616.4 Conclusion 649

17.0 Introduction 65117.1 Definition of Risk 65317.2 Tolerance for Risk 65417.3 Definition of Risk Management 65517.4 Certainty, Risk, and Uncertainty 65617.5 Risk Management Process 66117.6 Risk Planning 662

17.7 Risk Assessment 66317.8 Risk Identification 66417.9 Risk Analysis 66817.10 The Monte Carlo Process 67517.11 Risk Handling 681

17.12 Selecting the Appropriate Response Mechanism 68517.13 Risk Monitoring 686

17.14 Some Implementation Considerations 68717.15 The Use of Lessons Learned 688

17.16 Dependencies between Risks 69217.17 The Impact of Risk Handling Measures 69617.18 Risk and Concurrent Engineering 699Problems 703

18.6 Sources of Experience 72018.7 Developing Slope Measures 72318.8 Unit Costs and Use of Midpoints 72418.9 Selection of Learning Curves 72418.10 Follow-on Orders 726

18.11 Manufacturing Breaks 72618.12 Learning Curve Limitations 72718.13 Prices and Experience 72918.14 Competitive Weapon 730Problems 733

19.0 Introduction 73519.1 The Project Management Maturity Model (PMMM) 73619.2 Developing Effective Procedural Documentation 74019.3 Project Management Methodologies 744

19.4 Continuous Improvement 74519.5 Capacity Planning 75019.6 Competency Models 75119.7 Managing Multiple Projects 75419.8 End-of-Phase Review Meetings 755

20.0 Introduction 75820.1 Definition of Quality 759

20.2 The Quality Movement 76120.3 Comparison of the Quality Pioneers 76420.4 The Taguchi Approach 765

20.5 The Malcolm Baldrige National Quality Award 76820.6 ISO 9000 769

20.7 Quality Management Concepts 77120.8 The Cost of Quality 774

20.9 The Seven Quality Control Tools 777

20.10 Process Capability (C p) 79420.11 Acceptance Sampling 79620.12 Operating Characteristic Curves 79620.13 Implementing Six Sigma 79920.14 Quality Leadership 80220.15 Responsibility for Quality 80320.16 Quality Circles 803

20.17 Just-in-Time Manufacturing (JIT) 80420.18 Total Quality Management (TQM) 806

21.0 Introduction 81121.1 Procurement 81221.2 Requirement Cycle 81321.3 Requisition Cycle 81521.4 Solicitation Cycle 81521.5 Award Cycle 81721.6 Types of Contracts 81821.7 Incentive Contracts 82321.8 Contract Type versus Risk 82521.9 Contract Administration Cycle 82621.10 Using a Checklist 829

21.11 Proposal-Contractual Interaction 83021.12 Summary 833

22.0 Introduction 83522.1 Anatomy of a Task Estimate 83722.2 Task Execution 841

22.3 Protection in a Critical Chain Project 84222.4 Buffer Management 847

22.5 Managing the Execution of a Critical Chain Project 84822.6 Critical Chain Multiproject Problem and Solution 84922.7 Implementing Multiproject Critical Chain 85222.8 How Critical Chain Extends Critical Path 852

Problems 854

Case Studies

Lucent Technologies 855Elbit Systems Ltd 857Seagate Technology 860

advo-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 other texts, Applied Project Management (New York: Wiley,

2000)

This book is addressed not only to those undergraduate and graduate students whowish to understand and improve upon their project management skills, but also to thosefunctional managers and upper-level executives who must provide continuous support toall projects During the past several years, management’s knowledge and understanding ofproject management has matured to the point where almost every company is using proj-ect management in one form or another These companies have come to the realization thatproject management and productivity are related Project management coursework is nowconsuming more of training budgets than ever before

General reference is provided in the text to engineers However, the reader should notconsider project management as strictly engineering-related The engineering examplesare the result of the fact that project management first appeared in the engineering disci-plines, and we should be willing to learn from their mistakes

The textbook is designed for undergraduate and graduate courses in both business andengineering The structure of the text is based upon my belief that project management ismuch more behavioral than quantitative The first five chapters are part of the basic core

xix

of knowledge needed to understand project management Chapters 6 through 8 deal withthe support functions of time management, conflicts, and other special topics Chapters 9and 10 describe executive involvement and the critical success factors for predictingproject success It may seem strange that ten chapters on organizational behavior andstructuring are needed prior to the “hard-core” chapters of planning, scheduling, and con-trolling These first ten chapters are framework chapters needed to develop the cultural en-vironment for all projects and systems These chapters are necessary for the reader to un-derstand the difficulties in achieving cross-functional cooperation on projects and why thepeople involved, all of whom may have different backgrounds, cannot simply be forgedinto a cohesive work-unit without any friction Chapters 11 through 15 are the quantitativechapters on planning, scheduling, cost control, and estimating Chapter 16 deals withtrade-offs on time, cost, and performance Chapters 17 through 22 cover the more ad-vanced topics in project management, as well as future trends.

The text contains 14 case studies, and nearly 400 discussion questions In addition, there

is a supplemental workbook (Project Management Workbook to Accompany Project agement, 8th Edition, ISBN: 0-471-22579-7) that contains more than 600 multiple choice

Man-questions, additional case studies, challenging problems, and crossword puzzles There is

also a separate book of cases (Project Management Case Studies, ISBN: 0-471-22578-9) that

provides real-world examples This text, the wookbook, and the book of cases are ideal asself-study tools for the Project Management Institute’s Certification exam Because of thisthere are tables of cross references on each chapter-opening page detailing the sections fromthe book of cases, the workbook, and the Project Management Body of Knowledge(PMBOK®) that apply to that chapter’s content 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 This web site includes not onlythe instructor’s manual but also over 500 PowerPoint slides that follow the content of thebook and help organize and execute classroom instruction and group learning

One-day, two-day, and three-day seminars on project management and PMI tion training using the text are offered by contacting me at 216-765-8090 (E-mail address:hkerzner@hotmail.com)

certifica-The problems and case studies at the ends of chapters cover a variety of industries.Almost all of the case studies are real-world situations taken from my consulting practice.Feedback from colleagues who are using the text has provided me with fruitful criticism,most of which has been incorporated into the eighth edition

The majority of the articles on project management that have become classics havebeen referenced in the textbook throughout the first eleven chapters These articles werethe basis for most of the modern developments in project management and are thereforeidentified throughout the text

Valuable criticism was made by many colleagues In particular, I am indebted to thoseindustrial/government training managers whose dedication and commitment to qualityproject 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 est appreciation and respect for his never-ending support and encouragement toward con-ducting meaningful research for this text

deep-Harold Kerzner

Baldwin-Wallace College

1

Related Workbook Exercises and Related Case Studies Case Studies (from Kerzner/Project PMBOK ® Reference

(from Kerzner/Project Management Workbook to Accompany Section for the PMP ®

Management Case Studies) Project Management, 8th Edition) Certification Exam

• Kombs Engineering • Garcia Sciences Corporation • Integration

• Williams Machine • Multiple Choice Exam • Management

Executives will be facing increasingly complex challenges during the next decade These challenges will

be the result of high escalation factors for salaries and raw materials, increased union demands, pressurefrom stockholders, and the possibility of long-term high inflation accompanied by a mild recession and alack of borrowing power with financial institutions These environmental conditions have existed before,but not to the degree that they do today

1

*Case Study also appears at end of chapter.

In the past, executives have attempted to ease the impact of these environmental conditions by barking on massive cost-reduction programs The usual results of these programs have been early retire-ment, layoffs, and a reduction in manpower through attrition As jobs become vacant, executives pressureline managers to accomplish the same amount of work with fewer resources, either by improving efficiency

em-or by upgrading perfem-ormance requirements to a higher position on the learning curve Because people costsare more inflationary than the cost of equipment or facilities, executives are funding more and more capi-tal equipment projects in an attempt to increase or improve productivity without increasing labor

Unfortunately, executives are somewhat limited in how far they can go to reduce manpower withoutrunning 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 lems involves obtaining better control and use of existing corporate resources, looking internally rather thanexternally for the solution As part of the attempt to achieve an internal solution, executives are taking ahard look at the ways corporate activities are managed Project management is one of the techniques underconsideration

prob-The project management approach is relatively modern It is characterized by methods of restructuringmanagement and adapting special management techniques, with the purpose of obtaining better control anduse of existing resources Thirty years ago project management was confined to U.S Department of Defensecontractors and construction companies Today, the concept behind project management is being applied insuch 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 isting organizational forms The traditional structure is highly bureaucratic, and experience has shown that

ex-it cannot respond rapidly enough to a changing environment Thus, the tradex-itional structure must be placed by project management, or other temporary management structures that are highly organic and canrespond very rapidly as situations develop inside and outside the company

re-Project management has long been discussed by corporate executives and academics as one of severalworkable possibilities for organizational forms of the future that could integrate complex efforts and reducebureaucracy The acceptance of project management has not been easy, however Many executives are notwilling to accept change and are inflexible when it comes to adapting to a different environment The proj-ect management approach requires a departure from the traditional business organizational form, which isbasically 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 ect A project can be considered to be any series of activities and tasks that:

proj-● 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)

● Are multifunctional (i.e., cut across several functional lines)

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

moni-● Project planning

● Definition of work requirements

● Definition of quantity and quality of work

● Definition of resources needed

● Within time

● Within cost

● At the desired performance/technology level

● While utilizing the assigned resources effectively and efficiently

● Accepted by the customerThe potential benefits from project management are:

● Identification of functional responsibilities to ensure that all activities are counted for, regardless of personnel turnover

ac-● 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 exceededUnfortunately, the benefits cannot be achieved without overcoming obstacles such as:

feel that they are using project management to control these activities In such a case, thefollowing might be considered an appropriate definition:

Project management is the art of creating the illusion that any outcome is the sult 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 isnot project management Project management is designed to make better use of existing re-sources by getting work to flow horizontally as well as vertically within the company Thisapproach does not really destroy the vertical, bureaucratic flow of work but simply requiresthat line organizations talk to one another horizontally so work will be accomplished moresmoothly throughout the organization The vertical flow of work is still the responsibility ofthe 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 theline organizations

re-Figure 1–1 shows how many companies are structured There are always “class or tige” gaps between various levels of management There are also functional gaps betweenworking units of the organization If we superimpose the management gaps on top of thefunctional gaps, we find that companies are made up of small operational islands that refuse

pres-to communicate with one another for fear that giving up information may strengthen theiropponents The project manager’s responsibility is to get these islands to communicatecross-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 ofcompany resources for a relatively short-term objective that has been established

to complete specific goals and objectives Furthermore, project management lizes the systems approach to management by having functional personnel (thevertical hierarchy) assigned to a specific project (the horizontal hierarchy)

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

We should also comment on what is meant by a “relatively” short-term project Notall industries have the same definition for a short-term project In engineering, the projectmight be for six months or two years; in construction, three to five years; in nuclear com-

ponents, ten years; and in insurance, two weeks Long-term projects, which consume sources full-time, are usually set up as a separate division (if large enough) or simply as aline organization.

re-Figure 1–2 is a pictorial representation of project management The objective of thefigure is to show that project management is designed to manage or control company re-sources 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 Thereader should immediately realize that it is possible to manage a project internally within

TOP MANAGEMENT:

POLICY

MIDDLE MANAGEMENT:

time, cost, and performance and then alienate the customer to such a degree that no furtherbusiness will be forthcoming Executives often select project managers based on who thecustomer 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 withinthe constraints of time, cost, and performance This was the definition used for the pasttwenty years or so Today, the definition of project success has been modified to includecompletion:

● Within the allocated time period

● Within the budgeted cost

● At the proper performance or specification level

● With acceptance by the customer/user

● With minimum or mutually agreed upon scope changes

● Without disturbing the main work flow of the organization

● Without changing the corporate cultureThe last three elements require further explanation Very few projects are completedwithin the original scope of the project Scope changes are inevitable and have the poten-

tial to destroy not only the morale on a project, but the entire project 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 essary) such that the company’s main work flow is not altered Most project managersview themselves as self-employed entrepreneurs after project go-ahead, and would like todivorce their project from the operations of the parent organization This is not always pos-sible The project manager must be willing to manage within the guidelines, policies, pro-cedures, rules, and directives of the parent organization

nec-All corporations have corporate cultures, and even though each project may be ently different, the project manager should not expect his assigned personnel to deviatefrom cultural norms If the company has a cultural standard of openness and honesty whendealing with customers, then this cultural value should remain in place for all projects, re-gardless of who the customer/user is or how strong the project manager’s desire for suc-cess is

inher-As a final note, it should be understood that simply because a project is a success doesnot 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 man-aged projects Any project can be driven to success through formal authority and strong ex-ecutive 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 commit-

ment 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:

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

perhaps money (i.e., the project budget).1Resources are controlled by the line managers,functional managers, or, as they are often called, resources managers Project managersmust, therefore, negotiate with line managers for all project resources When we say thatproject managers control project resources, we really mean that they control those re-

sources (which are temporarily loaned to them) through line managers.

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

● A good daily working relationship between the project manager and those linemanagers who directly assign resources to projects

● The ability of functional employees to report vertically to line managers at thesame time that they report horizontally to one or more project managers

These two items become critical In the first item, functional employees who are signed 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 controlstheir purse strings Thus, most project managers appear always to be at the mercy of theline managers

as-Classical management has often been defined as a process in which the manager doesnot 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, aproject 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 tually works for the line managers, not vice versa Many executives do not realize this Theyhave a tendency to put a halo around the head of the project manager and give him a bonus

ac-at project terminac-ation, when, in fact, the credit should go to the line managers, who are tinually pressured to make better use of their resources The project manager is simply theagent through whom this is accomplished So why do some companies glorify the projectmanagement position?

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

To illustrate the role of the project manager, consider the time, cost, and performanceconstraints shown in Figure 1–2 Many functional managers, if left alone, would recognizeonly the performance constraint: “Just give me another $50,000 and two more months, andI’ll give you the ideal technology.”

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

re-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 resources are almost al-ways required to alleviate the problems When a line manager gets in trouble, he usuallygoes first to the project manager and requests either additional funding or some type of au-thorization for scope changes

To illustrate this working relationship between the project and line managers, considerthe following situation:

Project Manager (addressing the line manager): “I have a serious problem I’m looking at

a $150,000 cost overrun on my project and I need your help I’d like you to do the sameamount of work that you are currently scheduled for but in 3,000 fewer man-hours Sinceyour organization is burdened at $60/hour, this would more than compensate for the costoverrun.”

Line Manager: “Even if I could, why should I? You know that good line managers can

al-ways make work expand to meet budget I’ll look over my manpower curves and let youknow tomorrow.”

The following day

Line Manager: “I’ve looked over my manpower curves and I have enough work to keep

my people employed I’ll give you back the 3,000 hours you need, but remember, you owe

me one!”

Several months later

Line Manager: “I’ve just seen the planning for your new project that’s supposed to start

two months from now You’ll need two people from my department There are two ployees that I’d like to use on your project Unfortunately, these two people are availablenow If I don’t pick these people up on your charge number right now, some other projectmight pick them up in the interim period, and they won’t be available when your projectstarts.”

em-Project Manager: “What you’re saying is that you want me to let you sandbag against one

of my charge numbers, knowing that I really don’t need them.”

Line Manager: “That’s right I’ll try to find other jobs (and charge numbers) for them to

work on temporarily so that your project won’t be completely burdened Remember, youowe me one.”

Project Manager: “O.K I know that I owe you one, so I’ll do this for you Does this make

us even?”

Line Manager: “Not at all! But you’re going in the right direction.”

When the project management–line management relationship begins to deteriorate,the project almost always suffers Executives must promote a good working relationshipbetween line and project management One of the most common ways of destroying thisrelationship is by asking, “Who contributes to profits—the line or project manager?”Project managers feel that they control all project profits because they control the budget.The line managers, on the other hand, argue that they must staff with appropriately bud-geted-for personnel, supply the resources at the desired time, and supervise performance.Actually, both the vertical and horizontal lines contribute to profits These types of con-flicts can destroy the entire project management system

The previous examples should indicate that project management is more behavioralthan quantitative Effective project management requires an understanding of:

● Quantitative tools and techniques

● Organizational structures

● Organizational behaviorMost people understand the quantitative tools for planning, scheduling, and control-ling work It is imperative that project managers understand totally the operations of eachline organization In addition, project managers must understand their own job description,especially where their authority begins and ends During an in-house seminar on engi-neering project management, the author asked one of the project engineers to provide a de-scription of his job as a project engineer During the discussion that followed, several proj-ect managers and line managers said that there was a great deal of overlap between theirjob descriptions and that of the project engineer

Organizational behavior is important because the functional employees at the face position find themselves reporting to more than one boss—a line manager and oneproject manager for each project they are assigned to Executives must provide propertraining so functional employees can report effectively to multiple managers

inter-1.4 DEFINING THE PROJECT MANAGER’S ROLE

The project manager is responsible for coordinating and integrating activities across tiple, functional lines The integration activities performed by the project manager include:

mul-● Integrating the activities necessary to develop a project plan

● Integrating the activities necessary to execute the plan

● Integrating the activities necessary to make changes to the planThese integrative responsibilities are shown in Figure 1–3 where the project manager mustconvert the inputs (i.e., resources) into outputs of products, services, and ultimately profits

In order to do this, the project manager needs strong communicative and interpersonalskills, must become familiar with the operations of each line organization, and must haveknowledge of the technology being used.

An executive with a computer manufacturer stated that his company was looking ternally for project managers When asked if he expected candidates to have a command

ex-of computer technology, the executive remarked: “You give me an individual who hasgood communicative skills and interpersonal skills, and I’ll give that individual a job I canteach people the technology and give them technical experts to assist them in decisionmaking But I cannot teach somebody how to work with people.”

The project manager’s job is not an easy one Project managers may have increasingresponsibility, but very little authority This lack of authority can force them to “negotiate”with upper-level management as well as functional management for control of companyresources They may often be treated as outsiders by the formal organization

In the project environment, everything seems to revolve about the project manager.Although the project organization is a specialized, task-oriented entity, it cannot exist apartfrom the traditional structure of the organization The project manager, therefore, must

walk the fence between the two organizations The term interface management is often

used for this role, which can be described as managing relationships:

● Within the project team

● Between the project team and the functional organizations

● Between the project team and senior management

● Between the project team and the customer’s organization, whether an internal orexternal organization

To be effective as a project manager, an individual must have management as well astechnical skills Because engineers often consider their careers limited in the functional

Products

Profits Services Outputs

IntegratedProcesses

Inputs

FIGURE 1–3. Integration management.

disciplines, they look toward project management and project engineering as career pathopportunities But becoming a manager entails learning about psychology, human behav-ior, organizational behavior, interpersonal relations, and communications MBA programshave come to the rescue of individuals desiring the background to be effective projectmanagers.

In the past, executives motivated and retained qualified personnel primarily with nancial incentives Today other ways are being used, such as a change in title or thepromise of more challenging work Perhaps the lowest turnover rates of any professions inthe world are in project management and project engineering In a project environment, theproject managers and project engineers get to see their project through from “birth todeath.” Being able to see the fruits of one’s efforts is highly rewarding A senior projectmanager in a construction company commented on why he never accepted a vice presi-dency that had been offered to him: “I can take my children and grandchildren into tencountries in the world and show them facilities that I have built as the project manager.What do I show my kids as an executive? The size of my office? My bank account? Astockholder’s report?”

fi-The project manager is actually a general manager and gets to know the total tion of the company In fact, project managers get to know more about the total operation

opera-of a company than most executives That is why project management is opera-often used as atraining ground to prepare future general managers who will be capable of filling top man-agement positions

1.5 DEFINING THE FUNCTIONAL MANAGER’S ROLE

Assuming that the project and functional managers are not the same person, we can tify a specific role for the functional manager There are three elements to this role:

iden-● The functional manager has the responsibility to define how the task will be done and where the task will be done (i.e., the technical criteria).

● The functional manager has the responsibility to provide sufficient resources to

ac-complish the objective within the project’s constraints (i.e., who will get the job

done)

● The functional manager has the responsibility for the deliverable

In other words, once the project manager identifies the requirements for the project (i.e.,what work has to be done and the constraints), it becomes the line manager’s responsibility

to identify the technical criteria Except perhaps in R&D efforts, the line manager should bethe recognized technical expert If the line manager believes that certain technical portions

of the project manager’s requirements are unsound, then the line manager has the right, byvirtue of his expertise, to take exception and plead his case to a higher authority

In Section 1.1 we stated that all resources (including personnel) are controlled by theline manager The project manager has the right to request specific staff, but the final

appointments rest with line managers It helps if project managers understand the linemanager’s problems:

● Unlimited work requests (especially during competitive bidding)

● Predetermined deadlines

● All requests having a high priority

● Limited number of resources

● Limited availability of resources

● Unscheduled changes in the project plan

● Unpredicted lack of progress

● Unplanned absence of resources

● Unplanned breakdown of resources

● Unplanned loss of resources

● Unplanned turnover of personnelOnly in a very few industries will the line manager be able to identify to the projectmanager in advance exactly what resources will be available when the project is scheduled

to begin It is not important for the project manager to have the best available resources.Functional managers should not commit to certain people’s availability Rather, the func-tional manager should commit to achieving his portion of the objective within time, cost,and performance even if he has to use average or below-average personnel If the projectmanager is unhappy with the assigned functional resources, then the project managershould closely track that portion of the project Only if and when the project manager isconvinced by the evidence that the assigned resources are unacceptable should he confrontthe line manager and demand better resources

The fact that a project manager is assigned does not relieve the line manager of hisfunctional responsibility to perform If a functional manager assigns resources such that

the constraints are not met, then both the project and functional managers will be blamed.

One company is even considering evaluating line managers for merit increases and motion based on how often they have lived up to their commitments to the project man-agers Therefore, it is extremely valuable to everyone concerned to have all project com-

pro-mitments made visible to all.

Some companies carry the concept of commitments to extremes An aircraft ponents manufacturer has a Commitment Department headed by a second-level man-ager The function of the Commitment Department is to track how well the line man-agers keep their promises to the project managers The department manager reportsdirectly to the vice president of the division In this company, line managers are ex-tremely careful and cautious in making commitments, but do everything possible to meetdeliverables This same company has gone so far as to tell both project and line person-nel that they run the risk of being discharged from the company for burying a problem

com-rather than bringing the problem to the surface immediately.

Project management is designed to have shared authority and responsibility betweenthe project and line managers Project managers plan, monitor, and control the project,whereas functional managers perform the work Table 1–1 shows this shared responsibil-

ity The one exception to Table 1–1 occurs when the project and line managers are the sameperson This situation, which happens more often than not, creates a conflict of interest If

a line manager has to assign resources to six projects, one of which is under his direct trol, he might save the best resources for his project In this case, his project will be a suc-cess at the expense of all of the other projects

con-The exact relationship between project and line managers is of paramount importance

in project management where multiple-boss reporting prevails Table 1–2 shows thatthe relationship between project and line managers is not always in balance and thus,

of course, has a bearing on who exerts more influence over the assigned functionalemployees

TABLE 1–1 DUAL RESPONSIBILITY

Responsibility

Rewards Give recommendation: Informal Provide rewards: Formal

TABLE 1–2 REPORTING RELATIONSHIPS

Project Manager (PM)/Line Manager (LM)/Employee Relationship

Employee Employees Take PM Receives Performance Type of Project Type of Matrix Technical Direction Functional Progress Evaluations

input from PM Heavyweight Strong People who report PM and LMs Assigned employees LMs with input

but formally to LMs Tiger teams Very strong People who report PM only Assigned employees PM only

duration of project

*The types of organizational structures are discussed in Chapter 3.

1.6 DEFINING THE FUNCTIONAL EMPLOYEE’S ROLE

Once the line managers commit to the deliverables, it is the responsibility of the assignedfunctional employees to achieve the functional deliverables For years the functional em-ployees were called subordinates Although this term still exists in textbooks, industry prefers

to regard the assigned employees as “associates” rather than subordinates The reason for this

is that in project management the associates can be a higher pay grade than the project ager The associates can even be a higher pay grade than their functional manager

man-In most organizations, the assigned employees report on a “solid” line to their tional manager, even though they may be working on several projects simultaneously Theemployees are usually a “dotted” line to the project but solid to their function This placesthe employees in the often awkward position of reporting to multiple individuals This sit-uation is further complicated when the project manager has more technical knowledgethan the line manager This occurs during R&D projects

func-The functional employee is expected to accomplish the following activities when signed to projects:

as-● Accept responsibility for accomplishing the assigned deliverables within theproject’s constraints

● Complete the work at the earliest possible time

● Periodically inform both the project and line manager of the project’s status

● Bring problems to the surface quickly for resolution

● Share information with the rest of the project team

1.7 DEFINING THE EXECUTIVE’S ROLE

In a project environment there are new expectations of and for the executives, as well as anew interfacing role.2Executives are expected to interface a project as follows:

● In project planning and objective-setting

2 The expectations are discussed in Section 9.3.

3 The role of the project sponsor is discussed in Section 10.1.

1.8 WORKING WITH EXECUTIVES

Success in project management is like a three-legged stool The first leg is the project ager, the second leg is the line manager, and the third leg is senior management If any ofthe three legs fail, then even delicate balancing may not prevent the stool from toppling.The critical node in project management is the project manager–line manager inter-face At this interface, the project and line managers must view each other as equals and

man-be willing to share authority, responsibility, and accountability In excellently managedcompanies, project managers do not negotiate for resources but simply ask for the linemanager’s commitment to executing his portion of the work within time, cost, and perfor-mance Therefore, in excellent companies, it should not matter who the line manager as-signs as long as the line manager lives up to his commitments

Since the project and line managers are “equals,” senior management involvement isnecessary to provide advice and guidance to the project manager, as well as to provide en-couragement to the line managers to keep their promises When executives act in this ca-pacity, they assume the role of project sponsors, as shown in Figure 1–4,4which also showsthat sponsorship need not always be at the executive levels The exact person appointed asthe project sponsor is based on the dollar value of the project, the priority of the project, andwho the customer is

PRIORITY PROJECTS

MAINTENANCE PROJECTS

PROJECT MANAGER

PROJECT SPONSOR

PROJECT MANAGER

FIGURE 1–4. The project sponsor interface.

4 Section 10.1 describes the role of the project sponsor in more depth.

The ultimate objective of the project sponsor is to provide behind-the-scenes assistance

to project personnel for projects both “internal” to the company, as well as “external,” asshown in Figure 1–4 Projects can still be successful without this commitment and support,

as long as all work flows smoothly But in time of crisis, having a “big brother” available

as a possible sounding board will surely help

When an executive is required to act as a project sponsor, then the executive has the sponsibility to make effective and timely project decisions To accomplish this, the executiveneeds timely, accurate, and complete data for such decisions Keeping management informedserves this purpose, while the all-too-common practice of “stonewalling” prevents an execu-tive from making effective project decisions

re-1.9 THE PROJECT MANAGER AS THE PLANNING AGENT

The major responsibility of the project manager is planning If project planning is formed correctly, then it is conceivable that the project manager will work himself out of

per-a job becper-ause the project cper-an run itself This rper-arely hper-appens, however Few projects per-are evercompleted without some conflict or trade-offs for the project manager to resolve

In most cases, the project manager provides overall or summary definitions of thework to be accomplished, but the line managers (the true experts) do the detailed planning.Although project managers cannot control or assign line resources, they must make surethat the resources are adequate and scheduled to satisfy the needs of the project, not viceversa As the architect of the project plan, the project manager must provide:

● Complete task definitions

● Resource requirement definitions (possibly skill levels)

● Major timetable milestones

● Definition of end-item quality and reliability requirements

● The basis for performance measurementThese factors, if properly established, result in:

● Assurance that functional units will understand their total responsibilities towardachieving project needs

● Assurance that problems resulting from scheduling and allocation of critical sources are known beforehand

re-● Early identification of problems that may jeopardize successful project completion

so that effective corrective action and replanning can be taken to prevent or resolvethe problems

Project managers are responsible for project administration and, therefore, must havethe right to establish their own policies, procedures, rules, guidelines, and directives—provided these policies, guidelines, and so on, conform to overall company policy.Companies with mature project management structures usually have rather loose company

guidelines, so project managers have some degree of flexibility in how to control theirprojects However, project managers cannot make any promises to a functional employeeconcerning:

Establishing project administrative requirements is part of project planning.Executives must either work with the project managers at project initiation or act as re-sources later Improper project administrative planning can create a situation that requires:

● A continuous revision and/or establishment of company and/or project policies,procedures, and directives

● A continuous shifting in organizational responsibility and possible unnecessaryrestructuring

● A need for staff to acquire new knowledge and skills

If these situations occur simultaneously on several projects, there can be confusionthroughout the organization

1.10 PROJECT CHAMPIONS

Corporations encourage employees to think up new ideas that, if approved by the ration, will generate monetary and nonmonetary rewards for the idea generator One suchreward is naming the individual the “project champion.” Unfortunately, the project cham-pion often becomes the project manager, and, although the idea was technically sound, theproject fails

corpo-Table 1–3 provides a comparison between project managers and project champions Itshows that the project champions may become so attached to the technical side of the proj-ect that they become derelict in their administrative responsibilities Perhaps the projectchampion might function best as a project engineer rather than the project manager