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Chapter 1

Managing Projects:
What and Why

McGraw-Hill/Irwin 1-1
Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Chapter Learning
Objectives
When you have mastered the material in this chapter, you should be able to:
Define and differentiate among projects, programs, and portfolios, and provide examples of each.
Describe the reasons for the increasing importance of projects in organizations of all types, sizes, and
global locations.
Compare a set of projects based on drivers, sources, customers, degree of uncertainty, expected
outcome, organizational reach, scope, degree of complexity, and strategic level. Describe how these
differences will affect the way projects are managed.
Evaluate a project based on its strengths and deficiencies related to key project success factors.
Describe why each factor was important.
For a given project, develop a list of performance metrics, including those that would be considered
part of the triple constraint, as well as a larger set one might find in a balanced-scorecard approach.
Discuss the benefits teams offer to projects and articulate examples of some challenges teams
present to project managers.
Describe the stages in the project management process and identify the options available to the
project manager in synchronizing them.
Offer arguments supporting the value of systematic approaches for managing projects and describe
examples of implementation challenges.

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Projects, Projects, Projects
If it werent for all these projects, I could get my work done.
Anonymous

If were going to stay alive as a company, we need to find a new market


segment. Id like you to head a task force to change our focus. This is big.
Chief marketing officer of a Fortune 500 company

Weve just been hit with a product recall from the FDA.
I want you to fix the problem and get us back in production.
Vice president of supply chain management for a small, privately held medical devices company

The board of directors meeting is coming up in January.


Id like you to organize it.
President of a not-for-profit organization that provides mentoring services to at-risk youth

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What is a project?

A project is a unique, temporary endeavor


intended to solve a problem, seize an opportunity,
or respond to a mandate.
(Project Management Institute, 2008)
Some projects create or improve products or
services, but others spawn events or produce
information.
All types of organizations engage in project
activities.
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Programs and Portfolios

The term program is sometimes used to describe


an effort that includes several subprojects.
A project portfolio is the set of projects an
organization is undertaking at any given time.
Projects within the portfolio compete for resources
and attention. Successful organizations
continuously review their project portfolio to ensure
that, as a whole, they reflect strategic priorities.

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Exhibit 1.1
Projects, Strategic Goals,
and Organizational Mission
Here, the
organizations
project portfolio
supports its
mission and
strategic goals.

Here, the organization has not


properly aligned its project
portfolio with its strategic goals.

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Exhibit 1.2
Project Attributes

There are many


types of projects.

We can differentiate
them along nine
dimensions.

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Exhibit 1.3
Factors Increasing Project Activity
Project work is on the rise. As shown here, underlying causes include global
competition, shortened product life cycles, and pressures to adopt rapidly
evolving technologies.

These combined forces make many project more complex because of the need fo
coordination across systems, function, continents, languages and cultures.
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Exhibit 1.4
Project Success Factors

10 factors are
essential to
project success.
Think of a recent
unsuccessful
project. Which of
these factors was
missing?

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Exhibit 1.4
Project Success Factors (continued)

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Measuring Project Success:
The Triple Constraint
The most commonly recognized project metrics are time, cost,
and performance.
In combination, they form a set
of potentially competing project
priorities known as the
triple constraint.

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Exhibit 1.6
Triple Constraint Definitions Applied to Chinas
First Manned Space Shot

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Balanced Scorecard

A comprehensive approach to company-wide


performance management that can be applied in
project management. The scorecard identifies four
measurement dimensions: financial, internal
business processes, customer, and learning and
growth.
When key performance indicators (KPIs) are not
balanced, team members may focus on one
aspect of performance to the detriment of others.

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Project Phases
Selection
Initiation
Planning
Delivery and control
Closure and handoff to the customer

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Exhibit 1.7

Graphical Perspectives on the Five


In the waterfall approach,
Phases
one phase must be
complete before the next
one is started.
In the concurrent
approach, the phases
overlap and greater
coordination and
communication is
required. Each phase may
individually take longer,
but the project, overall,
may require less total time
and yield higher quality
output.

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New Models for Concurrent
Development Projects
Agile Software Development: The process of creating
software in a team environment where frequent testing and
consultation with stakeholders allows team members to
grow a functioning system more effectively.
Boehms Spiral Model: An iterative approach to project
control that repeats project phases on a small scale as the
project moves toward completion.
Extreme Programming: New incarnation of agile software
development that includes more structure while retaining
the underlying philosophy of adaptability associated with
agile development.
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Teams in Project Environments

No man will make a great leader


who wants to do it all himself, or get
all the credit for doing it.
Andrew Carnegie

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Exhibit 1.8
Benefits and Challenges Associated with Project
Teams

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What Organizations Can Gain by
Managing Projects Systematically?
Project management maturity: A term that
describes the level of maturity and
sophistication of project management
processes in organizations.
Organizations with systematic project
management processes are more effective and
successful than those lower on the scale of
project management maturity.

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Box 1.4
Quadrant Homes Applies Process
Standardization in a Project Environment
Quadrant Homes, a subsidiary of Fortune 500
Weyerhaeuser Corp., began implementing
standardized methods for custom home-building
projects in 1996. A few examples of the outcomes of
this change are as follows: 1996 2006

Market share 1% 10%


Number of homes sold per year 175 2,000
Referral-based business 8% 36%
Cost per square foot $60 $30
Net margin per home 2% 6%

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Box 1.4
Quadrant Homes Applies Process
Standardization in a Project Environment

Quadrant has developed a process for managing the opening of custom-home


communities as part of a larger-scale, even-flow system. Before adopting its
disciplined project management system, Quadrant treated each new community
opening as a unique project. The most revered community-center managers were
those who could heroically do battle with local jurisdictions and manage crises
effectively. Quadrant recognized that although each new community opening was a
project, successive openings were very similar projects where standard processes
could be used to great advantage. Under Quadrants new system, teams follow a
40-task checklist, with columns for responsibility assignment, due dates, and
progress. These standard procedures have allowed Quadrant to start and finish
community openings more effectively, on-time, and within budget. As one
community is built out and another is opened, intact teams move from one project
to the next, carrying process knowledge and team relationships with them. These
changes represent one aspect of an entire set of processes Quadrant uses to
manage the flow of home-building projects in a standardized way.
Source: K.A. Brown, T.G. Schmitt, R.J. Schonberger and S. Dennis, Quadrant Homes
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Managing Projects: What and
Why - Chapter Summary
Projects are unique endeavors.

An organizations entire set of projects is known as a portfolio. Ideally,


this portfolio is composed of a set of complementary initiatives that
support the organizations mission and strategic goals.

Project-related work is on the rise. Underlying causes of this growth


include global competition, shortened product life cycles, and pressures
to adopt rapidly evolving technologies.

The most successful projects are characterized by clear goals, motivated


teams, strong customer orientation, adequate support, clear roles and
responsibilities, appropriate planning, management of uncertainty,
communication, scope management and effective leadership.

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Chapter Summary

The triple constraint describes three potentially competing priorities and


project success metrics: time, cost, and performance. It has great
conceptual value, but can limit a project teams ability to appreciate a
more complete and balanced set of metrics

The best measurement systems offer timely information about an array of


key performance indicators that focus peoples attention on a full range of
relevant dimensions.

Project management occurs in five phases, which may be managed


sequentially or in a more concurrent manner. Concurrent models offer
advantages in information flow, improved quality, and time reduction, but
are likely to require more coordination.

Most projects are executed in team environments, which present both


opportunities and challenges for the project manager
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