PM theory

Program management vs portfolio mng vs project mng

Project Program Portfolio
Vision Short/middle term operation Long term vision Corporate vision
Organization Ad-hoc org Matrix org
Structure May have sub-projs Group of multiple related Collection of projs &
projs programs
Scope Progressively elaborated Larger scope Business scope that
throughout the proj life cycle changes with the strategic
goals of the organization
Change PM expects change & PrM expects change from PoM continually monitor
implements processes to both inside & outside the changes in the broad
keep change managed & program & be prepared to environment
controlled manage it
Planning PM progressively elaborate PrM develops the overall PoM create & maintain
high-level information into prog plan & create high- necessary processes &
detailed plans throughout level plans to guide communication relative to
the proj life cycle detailed planning at the the aggregate portfolio
component level
Management Manage proj team, provide Manage prog staff & PM, Coordinate portfolio
proj leadership to meet proj’s provide vision & overall management staff
objs leadership
Success Measured by product & proj Measured by the degree to Measured in terms of
quality, timeline, budget & which the prog satisfies aggregate performance of
cust satisfaction the needs & benefits portfolio components
undertaken
Monitoring PM monitor & control the PrM monitor the progress PoM monitor aggregate
work of producing products of prog to ensure overall performance & value
& services & results of the goals, budget, schedules indicators
proj & benefits of the prog

Project characteristics
1. Temporary
2. Uncertainty
3. New vs. routine process
4. Inter dependant activities
5. Negative cash-flow
6. Open process
7. Instrument of change
8. Technical Complexity
9 areas of project management
Proj integraT Plan dev/Plan execution/Change control
Scope Planning/definiT/verificaT/Change control
Time Acvt definiT/Acvt sequencing/DuraT estimating/Scheduling developM/Schedule control
Cost Resource planning/Cost estimating/Cost budgeting/Cost control
Quality Quality planning/Quality assurance/Quality control
HR Organizational planning/Staff acquisition/Team develop
Comm Comm planning/InformaT distribuT/Performance reporting/AdministraT closure
Risk Risk mng planning/Risk identificaT/Risk analysis/Response planning/Monitoring & control
ProcureM ProcureM planning/SolicitaT planning/Source select/Contract administraT/Contract control

Project life cycle

Project stakeholders

What to put in a business case

1. Obj, scope
2. Existing solutions limits
3. (General) Requirements
4. Client
5. Strategy compliancy
6. Value creaT & financial evaluaT (NPV, IRR)
7. Possible solutions
8. DuraT, Risk, constraint

Project IntegraT

Develop project charter –document of initial requirements that satisfy the stakelholders’ needs &
expectations
Dev proj mng plan – actions necessary to define, prepare, integrate & coordinate all subsidiary
plans
Direct & manage proj execuT - Perform work defined in Proj plan
Monitor & control proj work – Tracking, reviewing, regulating the progress to meet the objs
defined in proj mng plan
Perform integrated change control – review all changes request, approve changes, manage
changes to the deliverables, assets, proj docs, proj mng plan
Close project / phase – finalize all activities to formally complete the proj or phase

Proj scope/time/cost
Scope: the work that needs to be done to deliver a product, service or result with the specified
features & functions
 Tools: WBS
Lowest level: work package (can be scheduled, cost estimated, monitored & controlled)

Time Actvt definiT => Actvt sequencing (actvt resources estimaT) => Actvt duration estimaT =>
Schedule dev => Schedule control => Critical path with critical tasks

Cost Resource planning => Cost estimating => Cost budgeting => Cost control
Cost estimate = Total (chargeable time x variable cost rate + fixed cost)
Initial budget = cost estimate / actvt
Revised budget = initial budget + authorized change cost
Estimate cost at terminaT = cost of ended actvt + cost of to do actvt
 S curve

However, as Global estimate is usually difficult to get, we use Earned Value approach.
Time variance TG = EV – PV PV = budget
Cost variance CG = EV – RV EV = budget of work at date
Time progress = EV/PV RV = actual cost for task done
Cost progress = EV/RV

Project team org chart & Operating difference

Tribal: Strong relationship, Challenged oriented, Oral

comm., quality 1st => Consultancy

Holomorphic: Shared vision, goals & methods,

individual initiaves, customer oriented => Start up

Mecanisthic: centralized power, process, control,

written comm., effectiveness => manufacturer

Individualistic: Mercenaries, high turnover, tailored

prod, individual procedure & tools => Consultancy

Crisis process (*early warnings)

Pbm analysis process:
Identify pbm -> find the cause -> set solution requireM -> generate alternatives -> select an
alternative -> cost-benefit-risk analysis ->make decision & action plan
Crisis process
Change management
Change management life cycle

Frequent approaches: pressure, persuasion, recogniT, regulaT, motivaT

3 key actors: Target to change/Sponsor to justify/Allies to support

7 forces levers

Vision: communicaT about target & roadmap

Necessity: comm. about risks of “non-doing” + influential’s
involveM
Success: quick wins + comm.
Ability: training progr
RecogniT: Empowerment + comm. + support
Systems: Method + tools
Structures: Procedures (migraT, operaT, change, control)

Target diversity
 Aligned: RecogniT, system, structure

Influential: vision, ability

Undecided: necessity

Opponents: success

Heart torn: success , recogniT

Risk: future event that might affect your achieving goals (either opp or threath)
Issues use to have risk: critical tasks, new tech, third party, component based on assumpT,
indirect controlled resources, change in external environM

Risk analysis:
Cause/effect
Qualitative

quantitative (EMV)
Control tools
*7s: Strategy, Systems, Style,Staff,Skills,Structure,Shared values
*Review check-list
*DICE framework score: 7-14/>17: risky
D (duration)
I (integrity of performance)
C (commitment)
E (effort)

Fixed price vs Ad-cost contract

Ad-cost contract or Cost plus contract refer to a contract where the price is based upon the actual cost of
production and any agreed upon rates of profit or fees.

Fixed price is a price that has been set and in most circumstances no bargaining is permitted over that
price. The price is held constant regardless of the cost of production.

• Advantages of Fixed Price

The most significant benefit of a fixed price model is that it allows the buyer to set in advance an exact
budget. The buyer is aware of the total cost before the project even begins. The fixed price model
typically limits the number of changes that occur during the implementation phase of the project.
Contractors know their budget confines and therefore usually deliver detailed plans at the start. The seller
is able to charge a high upfront cost under the fixed price model. Once the price has been agreed upon,
the buyer does not experience sticker shock or contest the amount owed.

• Advantages of Cost Plus

The primary benefit of cost plus pricing is the ease of calculation. Although there are a couple of
calculation methods, the common thread is including the cost of the product and a profit amount. Very
little information is necessary to use this model. Cost plus pricing lets the business owner know
immediately if the product will be profitable. A business that uses cost plus pricing can justify price
increases when costs rise. This method provides an easy and convenient way for businesses to set
product pricing. Cost plus pricing ensures the business, the seller, against unexpected costs. The seller
has the flexibility to increase prices, at the consumer's expense, to cover cost increases.

• Disadvantages of Fixed Price

Fixed price contracts tend to be less flexible for managing changes or requests. Any new requirements
that arise during implementation may lead to price re-negotiation and changes to the project's schedule.
Excessive focus on maintaining a fixed price may come at the expense of quality, creativity and
timeliness. The value of the work often becomes less important than the price. A fixed price model may
cost the buyer more than anticipated, if the job is completed early or if materials cost less than estimated.
 • Disadvantages of Cost Plus/ Ad-cost

Cost plus pricing ignores the role of consumers. If consumers place a higher value on a product than the
set price, then business loses out on profits. In addition, consumer demand and competitive pricing do not
factor into cost plus pricing. Accuracy is a critical component in cost plus pricing. This model relies on
variable cost and sales estimates. If either of these estimates is inaccurate, then the entire cost structure
is also incorrect. Cost plus pricing also requires that business overhead be estimated. The allocation
process, of overhead against products, is always arbitrary. Businesses have little incentive to reduce or
control prices because as prices rise, profits increase. Customers may pay a potentially inflated rate for a
product.

When to use fixed price & when to use ad-hoc price?

Balanced scorecard (BSC):

A scorecard is a way of tracking a firm’s performance. To recap, the BSC looks at the following 4
perspectives of a business:

1> The Financial Perspective or the traditional perspective which focuses on the financial measure such
as ROI, profitability, growth, D/E etc. These are the measures that a shareholder would be interested and
are available via the financial statements released by the company ( if it is a publicly held company).

2> The Process Perspective that looks at the processes of the company, their efficiency and more
importantly their effectiveness.

3> The Development (or Learning) perspective that looks at learning new skills. knowledge enhancement
and improvement of employee morale as a by-product.

4> The Customer Perspective that looks at how the customer perceives the organization: customer
satisfaction, the no. of new clients, customer loyalty et al.

The scorecard is “Balanced” because it combines both external and internal aspects of the business.

So why would Project Management need a scorecard?

As mentioned earlier, scorecards indicate performance & are also a vehicle for communicating
performance, while a project is a temporary organization or endeavor to achieve a defined result or goal
within a specified time.

Therefore, a scorecard that project management would require would need to tackle the following 4
perspectives:

1> Financial: What is the expected ROI from the project? Tangible and intangible benefits. What kind of
measures would be used?
2> Processes: Are the project management processes in place both efficient & effective?
3> Learning: What are the lessons taken from the project? What are the benefits to the project manager &
team members? Can these be quantified? Are lessons learnt incorporated to assist other projects? What
is the effect on morale of the project team members? What is the effect on attrition? Does employee
churn reduce?
4> Customer: What is the customer reaction to the project? How is our organization perceived by our
customer? Is there repeat business? Is customer loyalty inspired?

So yes, a scorecard could be applied to a project and especially a projectized organization.

Book: The Project Management Scorecard: Measuring The Success of Project Management
Solutions by Jack J. Philips, Timothy W. Bothell & G. Lynne Snead .

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