Project Management Midterm

Risk Management:

- A proactive attempt to recognize and manage internal events and external threats that affect the likelihood of a project's success. • What can go wrong (risk event). • How to minimize the risk event's impact (consequences). • What can be done before an event occurs (anticipation). • What to do when an event occurs (contingency plans).

Functional organization

- Different segments of the project are delegated to respective functional units. - Coordination is maintained through normal management channels. - Used when the interest of one functional area dominates the project or one functional area has a dominant interest in the project's success. •Advantages 1. No structural change 2. Flexibility 3. In-depth expertise 4. Easy post-project transition •Disadvantages 1. Lack of focus 2. Poor integration 3. Slow 4. Lack of ownership

Matrix Structure

- Hybrid organizational structure (matrix) is overlaid on the normal functional structure. • Two chains of command (functional and project) • Project participants report simultaneously to both functional and project managers. - Matrix structure optimizes the use of resources. • Allows for participation on multiple projects while performing normal functional duties. • Achieves a greater integration of expertise and project requirements. •Advantages 1. Efficient 2. Strong Project Focus 3. Easier Post-Project Transition 4. Flexible •Disadvantages 1. Dysfunctional Conflict 2. Infighting 3. Stressful 4. Slow

Dedicated Teams

- Teams operate as separate units under the leadership of a full-time project manager. - In a projectized organization where projects are the dominant form of business, functional departments are responsible for providing support for its teams. •Advantages 1. Simple 2. Fast 3. Cohesive 4. Cross-Functional Integration •Disadvantages 1. Expensive 2. Internal Strife 3. Limited Technological Expertise 4. Difficult Post-Project Transition

Guidelines for work package estimates: 131/133

1. Have people familiar with the tasks make the estimate. 2. Use several people to make estimates. 3. Base estimates on normal conditions, efficient methods, and a normal level of resources. 4. Use consistent time units in estimating task times. 5. Treat each task as independent, don't aggregate. 6. Do not make allowances for contingencies. 7. Add a risk assessment to avoid surprises to stakeholders.

Project Network 162

A flow chart that graphically depicts the sequence, interdependencies, and start and finish times of the project job plan of activities that is the critical path through the network. • Provides the basis for scheduling labor and equipment. • Enhances communication among project participants. • Provides an estimate of the project's duration. • Provides a basis for budgeting cash flow. • Identifies activities that are critical. • Highlights activities that are "critical" and cannot be delayed. • Help managers get and stay on plan.

Methods of macro estimating - Delphi Method:

A group decision process about the likelihood that certain events will occur. Uses a panel of experts familiar with the project in question. Top-down: Usually done by senior management, derived from analogy, group consensus, and mathematical relationships. Rough estimates that use surrogates to estimate project time and cost (also called macro estimates). • Consensus methods • Ratio methods • Apportion method • Function point methods for software and system projects • Learning curves

WBS:

A hierarchal method that successively subdivides the work of the project into small details. The WBS is used to identify each project deliverable and the organization unit responsible for its accomplishment within budget and within time duration. The WBS provides a framework for tracking costs to deliverables and organization units responsible

Critical Path Method (CPM

A scheduling method based on the estimates of time required to complete activities on the critical path. The method computes early, late, and slack times for each activity in the network. It establishes a planned project duration, if one is not imposed by the project.

Work package:

A task at the lowest level of the WBS. Responsibility for the package should be assigned to one person and, if possible, limited to 80 hours of work. Short-duration tasks that have a definite start and stop point, consume resources, and represent costs. It is output-oriented in that it: 1. Defines work (what). 2. Identifies time to complete a work package (how long). 3. Identifies a time-phased budget to complete a work package (cost). 4. Identifies resources needed to complete a work package (how much). 5. Identifies a person responsible for units of work (who). 6. Identifies monitoring points (milestones) for measuring success.

Project definition: 6

A temporary endeavor undertaken to create a unique product, service or result. Not routine or everyday work.

Risk Severity Matrix- 213

A tool used to assess the impact of risk on a project.

Methods of micro estimating:

Bottom-up: Typically done by the people doing the work, based on estimates of elements found in the work breakdown structure. Detailed estimates of work packages usually made by those who are most familiar with the task (also called micro estimates). • Template methods • parametric procedures applied to specific tasks • Range estimates for the WBS work packages • Phase estimating: A hybrid

Strategic management—description/process/activities: 26/32

Is the process of assessing "what we are" and deciding and implementing "what we intend to be and how we are going to get there." Strategy describes how an organization intends to compete with the resources available in the existing and perceived future environment. Responding to changes in the external environment. Allocating scarce resources of the firm to improve its competitive position. 1. Review and define the organizational mission. 2. Analyze and formulate strategies 3. Set objectives to achieve strategy 4. Implement strategies through projects Strategic Management - Requires every project to be clearly linked to strategy. - Provides theme and focus of firm's future direction. • Responding to changes in the external environment— environmental scanning • Allocating scarce resources of the firm to improve its competitive position—internal responses to new programs - Requires strong links among mission, goals, objectives, strategy, and implementation.

Critical path 164--description, importance, identifying (finding) -

It means the path(s) with the longest duration through the network, if an activity on the path is delayed, the project is delayed the same amount of time. The longest activity path(s) through the network. The critical path can be distinguished by identifying the collection of activities that all have the same minimum slack. The longest path through the activity network that allows for the completion of all project related activities; the shortest expected time in which the entire project can be completed. Delays on the critical path will delay completion of the entire project.

Project priorities 106 Classifications-

Managing the Priorities of Project Trade-offs: Constrain: a parameter is a fixed requirement. Enhance: optimizing a criterion over others. Accept: reducing (or not meeting) a criterion requirement. Project priority matrix: Determining what criterion is constrained (has to meet original requirements), which should be enhanced and which can be accepted. Trade-offs - Shifts in the relative importance of criterions related to cost, time, and performance parameters --- Budget-Cost - Schedule-Time - Performance-Scope

The Payback Model

Measures the time the project will take to recover the project investment. - Uses more desirable shorter paybacks. - Emphasizes cash flows, a key factor in business. • Limitations of Payback: - Ignores the time value of money. - Assumes cash inflows for the investment period (and not beyond). - Does not consider profitability

Risk responses: 214/216

Mitigating Risk • Reducing the likelihood an adverse event will occur. • Reducing impact of adverse event. Avoiding Risk • Changing the project plan to eliminate the risk or condition. Transferring Risk • Paying a premium to pass the risk to another party. • Requiring Build-Own-Operate-Transfer (BOOT) provisions. Retaining Risk • Making a conscious decision to accept the risk.

SMART objectives 31

S Specific be specific in targeting an objective M Measurable Establish a measurable indicator(s) of progress A Assignable Make the objective assignable to one person for completion R Realistic State what can realistically be done with available resources? T Time related State when the objective can be achieved, that is, duration

Crashing 305 describe/process:

Shortening the duration of an activity or project beyond when it can normally be done. Unconstrained Adding resources Outsourcing project work Scheduling overtime Establishing a Core Project Team Do it Twice- Fast and Correctly Constrained Fasts-tracking Critical- Chain Reducing project scope Compromise quality

Slack: 173

Tells us the amount of time and activity can be delayed and not delay the project. - Is the amount of time an activity can be delayed after the start of a longer parallel activity or activities - Is how long an activity can exceed its early finish date without affecting early start dates of any successor(s) - Allows flexibility in scheduling scarce resources.

Risk-

The chance that an undesirable project event will occur and the consequences of all its possible outcomes. Uncertain or chance events that planning cannot overcome or control.

Steps/process to find critical path and info generated

The longest path through the activity network that allows for the completion of all project related activities; the shortest expected time in which the entire project can be completed. Delays on the critical path will delay completion of the entire project.

Two approaches to estimating time/cost

Top-down: Top-down (macro) estimates: analogy, group consensus, or mathematical relationships A group decision process about the likelihood that certain events will occur. Uses a panel of experts familiar with the project in question. Usually done by senior management, derived from analogy, group consensus, and mathematical relationships. Rough estimates that use surrogates to estimate project time and cost (also called macro estimates). - Are usually derived from someone who uses experience and/or information to determine the project duration and total cost. - Are made by top managers who have little knowledge of the processes used to complete the project. Bottom-up: typically done by the people doing the work, based on estimates of elements found in the work breakdown structure. Detailed estimates of work packages usually made by those who are most familiar with the task (also called micro estimates). Can serve as a check on cost elements in the WBS by rolling up the work packages and associated cost accounts to major deliverables at the work package level. Bottom-up (micro) estimates: estimates of elements of the work breakdown structure.

The Net Present Value (NPV) model

Uses management's minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows. • Positive NPV: project meets minimum desired rate of return and is eligible for further consideration. • Negative NPV: project is rejected.

5. Types of activities 164

a. Critical: b. Merge: This is an activity that has more than one activity immediately preceding it (more than one dependency arrow flowing to it). c. Burst: This activity has more than one activity immediately following it (more than one dependency arrow flowing from it). d. Parallel: These are activities that can take place at the same time, if the manager wishes. However, the manager may choose to have parallel activities not occur simultaneously.

Stages of the project life cycle : 8/9

a. Defining stage: specifications of the project are identified, objectives are established, teams are formed, major responsibilities are assigned b. Planning stage: Level of effort increases, plans are developed to determine what the project will entail, when it will be scheduled, whom will benefit, what quality level will be maintained, what the budget will be. c. Executing stage: Where the major portion happens, both physical and mental. The physical product is produced. Time, cost and specification measures are used for control. Is the project on schedule, on budget, and meeting specifications? What are the forecasts of each of these measures? What revisions/changes are necessary? d. Closing stage: Includes three activities, delivering the product to the customer, redeploying project resources, and post-project review. Delivery may include customer training and transferring documents. Redeployment involves releasing equipment, materials to other projects and finding new assignments for team members. Post-report reviews include not only assessing performance but also capturing lessons learned.

Gantt Chart vs project network 177

a. Gantt chart: A graphic representation of project activities depicted as a time-scaled bar line. b. Project network: Depicts activities to be completed, logical sequences, and interdependencies and in most cases the time of start and finish along with the longest paths (critical path).

Characteristics of a Project 7

a. It has an established objective b. A defined life span with a beginning and an end c. Usually, the involvement of several departments and professionals d. Typically, doing something that has never been done before e. Specific time, cost, and performance requirements

Dependency relationships 166/167

a. Predecessor- An activity which must be completed immediately before the activity. Ex. A before B b. Successor - An activity that must immediately follow after an activity. Ex B after A

Scope checklist:

a. Project objective: defining the overall objective to meet your customer's needs. b. Deliverables: The expected measurable outputs over the life of the project. c. Milestones: Significant event in a project that occurs at a point in time d. Technical requirements: Typically clarify either the deliverables or define the performance specifications. e. Limits and excursions: The limits of scope should be defined to limit false expectations and expending resources and time on the wrong problem. f. Review with customers: Completion of the scope checklist ends with a review with your customer internal or external. To verify understanding and agreement of expectations.

Dimensions of the project management process: 17 Ying and Yang

a. Technical: (Science) Consists of formal, disciplined, purely logical parts of the process. Includes planning, scheduling and controlling projects. Includes scope, WBS, schedules, resource allocation, baseline budgets and status reports. b. Sociocultural: (Art) This dimension involves the much messier, often contradictory and paradoxical world of implementation. It centers on creating a temporary social system with a larger organizational environment that combines the talents of a divergent set of professionals working to complete the project. Includes, leadership, problem solving, teamwork, negotiation, politics and customer expectations.

Time constrained vs resource constrained scheduling problems 255

a. Time constrained: A project that assumes time is fixed and, if resources are needed, they will be added. b. Resource constrained: A project that assumes resources are limited (fixed) and therefore time is variable. Is one in which the level of resources available cannot be exceeded. • Resources are fixed, time is flexible: inadequate resources will delay the project.

Project priorities

a. classification, b. Tradeoffs: Among time, cost, and performance. c. Project priority matrix: Determining what criterion is constrained (has to meet original rqmts), which should be enhanced and which can be accepted.

Cost slope

is defined as the ratio of difference between Crash cost & Normal cost and difference between Normal Time & Crash Time. Crash Time is time taken by the activity when additional resources, overtime and other special measures are taken to speed up (crash) the activity.

Implementation gap: 32/33

the lack of consensus between the goals set by top management and those independently set by lower levels of management. This lack of consensus leads to confusion and poor allocation of organization resources

Scope creep: 105

the tendency for the project scope to expand over time, usually by changing requirements, specifications, and priorities

Program Evaluation Review Technique (PERT):

• Assumes each activity duration has a range that statistically follows a beta distribution. • Uses three time estimates for each activity: optimistic, pessimistic, and a weighted average to represent activity durations. - Knowing the weighted average and variances for each activity allows the project planner to compute the probability of meeting different project durations.

Cost types/classifications 144/145

• Direct Costs - Costs that are clearly chargeable to a specific work package. Labor, materials, equipment, and other • Direct (Project) Overhead Costs - Costs incurred that are directly tied to an identifiable project deliverable or work package. Salary, rents, supplies, specialized machinery • General and Administrative Overhead Costs - Organization costs indirectly linked to a specific package that are apportioned to the project

Laddering/lag - 180/181

• Laddering - Activities are broken into segments so the following activity can begin sooner and not delay the work. • Lags - The minimum amount of time a dependent activity must be delayed to begin or end. • Lengthy activities are broken down to reduce the delay in the start of successor activities. • Lags can be used to constrain finish-to-start, start-to-start, and finish-to-finish, start-to-finish, or combination relationships

Classification/types of project costs 313/314

• Project Indirect Costs - Costs that cannot be associated with any particular work package or project activity. • Supervision, administration, consultants, and interest - Costs that vary (increase) with time. • Reducing project time directly reduces indirect costs. • Project Direct Costs - Normal costs that can be assigned directly to a specific work package or project activity. • Labor, materials, equipment, and subcontractors - Crashing activities increases direct costs.

Three elements--referred to as constraints in the text---used to measure success of a project

• Technical or Logic Constraints - Constraints related to the networked sequence in which project activities must occur. • Physical Constraints - Activities that cannot occur in parallel or are affected by contractual or environmental conditions. • Resource Constraints - The absence, shortage, or unique interrelationship and interaction characteristics of resources that require a particular sequencing of project activities • Kinds of Resource Constraints - People, materials, equipment

Importance of estimating costs/time 129

• To support good decisions. • To schedule work. • To determine how long the project should take and its cost. • To determine whether the project is worth doing. • To develop cash flow needs. • To determine how well the project is progressing. • To develop time-phased budgets and establish the project baseline.