Pr o jec t M a n a g emen t

THE MANAGERIAL PROCESS

Clifford F. Gray
Eric W. Larson

Chapter 1

Modern Project Management

What is a Project?
Project Defined
A complex, non-routine, one-time effort limited by
time, budget, resources, and performance
specifications designed to meet customer needs.

Major Characteristics of a Project

Has an established objective.
Has a defined life span with a beginning and an end.
Requires across-the-organizational participation.
Involves doing something never been done before.
Has specific time, cost, and performance
requirements.
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Programs versus Projects

Program Defined
A series of coordinated, related, multiple projects that
continue over an extended time and are intended to
achieve a goal.
A higher level group of projects targeted at a common
goal.
Example:
Project: completion of a required course in project
management.
Program: completion of all courses required for a business
major.

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Comparison of Routine Work with Projects

Routine, Repetitive Work

Projects

Taking class notes

Writing a term paper

Daily entering sales receipts into

the accounting ledger

Setting up a sales kiosk for a

professional accounting meeting

Responding to a supply-chain
request

Developing a supply-chain
information system

Practicing scales on the piano

Writing a new piano piece

Routine manufacture of an Apple

iPod

Designing an iPod that is

approximately 2 X 4 inches,
interfaces with PC, and stores
10,000 songs

Attaching tags on a manufactured

product

Wire-tag projects for GE and

Wal-Mart

TABLE 1.1
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Project Life Cycle

FIGURE 1.1
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The Challenge of Project Management

The Project Manager
Manages temporary, non-repetitive activities and
frequently acts independently of the formal
organization.
Marshals resources for the project.
Is linked directly to the customer interface.
Provides direction, coordination, and integration to the project
team.
Is responsible for performance and success of the project.

Must induce the right people at the right time to

address the right issues and make the right decisions.

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The Importance of Project Management

Factors leading to the increased
use of project management:
Compression of the product life cycle
Global competition
Knowledge explosion
Corporate downsizing
Increased customer focus
Rapid development of Third World
and closed economies
Small projects that represent big
problems
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Integrated Project Management Systems

Problems resulting from the use of piecemeal
project management systems:
Do not tie together the overall strategies of the firm.
Fail to prioritize selection of projects by their
importance of their contribution to the firm.

Are not integrated throughout the project life cycle.

Do not match project planning and controls with
organizational culture to make appropriate
adjustments in support of project endeavors.

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Integrated
Management of
Projects

FIGURE 1.2
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The Technical and

Sociocultural
Dimensions
of the Project
Management
Process

FIGURE 1.3
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An Overview of Project Management 3e.

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Pr o jec t M a n a g emen t
THE MANAGERIAL PROCESS

Chapter 2

Clifford F. Gray
Eric W. Larson

Organization Strategy
and Project Selection

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Why Project Managers Need to Understand

the Strategic Management Process
Changes in the organizations mission and
strategy
Project managers must respond to changes with
appropriate decisions about future projects and
adjustments to current projects.
Project managers who understand their organizations
strategy can become effective advocates of projects
aligned with the firms mission.

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Strategic
Management
Process

FIGURE 2.1
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Characteristics of Objectives
S

Specific

Be specific in targeting an objective

Measurable

Establish a measurable indicator(s) of progress

Assignable

Make the objective assignable to one person for

completion

Realistic

State what can realistically be done with available

resources

Time related

EXHIBIT 2.1
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Project Portfolio Management Problems

The Implementation Gap
The lack of understanding and consensus on strategy
among top management and middle-level (functional)
managers who independently implement the strategy.

Organization Politics
Project selection is based on the persuasiveness and
power of people advocating the projects.

Resource Conflicts and Multitasking

The multiproject environment creates interdependency
relationships of shared resources which results in the
starting, stopping, and restarting projects.
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Benefits of Project Portfolio Management

Builds discipline into project selection process.
Links project selection to strategic metrics.
Prioritizes project proposals across a common set of
criteria, rather than on politics or emotion.
Allocates resources to projects that align with strategic
direction.
Balances risk across all projects.
Justifies killing projects that do not support organization
strategy.
Improves communication and supports agreement on
project goals.
EXHIBIT 2.2
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Portfolio of Projects by Type

FIGURE 2.2
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A Portfolio Management System

Selection Criteria
Financial: payback, net present value (NPV), internal
rate of return (IRR)
Non-financial: projects of strategic importance to the
firm.

Multi-Weighted Scoring Models

Use several weighted selection criteria to evaluate
project proposals.

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Project Screening Matrix

FIGURE 2.3
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Applying a Selection Model

Project Classification
Deciding how well a strategic or operations project fits
the organizations strategy.

Selecting a Model
Applying a weighted scoring model to bring projects to
closer with the organizations strategic goals.
Reduces the number of wasteful projects
Helps identify proper goals for projects

Helps everyone involved understand how and why a project is

selected

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Project Proposals
Sources and Solicitation of Project Proposals
Within the organization
Request for proposal (RFP) from external sources
(contractors and vendors)

Ranking Proposals and Selection of Projects

Prioritizing requires discipline, accountability,
responsibility, constraints, reduced flexibility, and loss
of power.

Managing the Portfolio

Senior management input
The priority team (project office) responsibilities
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Major Project
Proposal

FIGURE 2.4A
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Risk
Analysis

FIGURE 2.4B
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Managing the Portfolio

Senior Management Input
Provide guidance in selecting criteria that are aligned
with the organizations goals
Decide how to balance available resources among
current projects

The Priority Team Responsibilities

Publish the priority of every project
Ensure that the project selection process is open and
free of power politics.
Reassess the organizations goals and priorities
Evaluate the progress of current projects
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Project Screening
Process

FIGURE 2.5
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Project Portfolio Matrix

FIGURE 2.7
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Project Portfolio Matrix Dimensions

Bread-and-butter projects
Involve evolutionary improvements to current products and
services.

Pearls
Represent revolutionary commercial advances using proven
technical advances.

Oysters
Involve technological breakthroughs with high commercial
payoffs.

White elephants
Projects that at one time showed promise but are no longer
viable.

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