Engineering Management Midterm 1

Question 18: Discuss how the following project selection models are used in real-world applications. (a) Capital investment with discounted cash flow. (b) Simulation models

) Capital Investment with Discounted Cash flow: For short-term capital projects, the impact of discounting rates may be insignificant to the overall project. Discounting is a nonlinear algorithm that increases its impact as the duration of a project increases. On long-term capital projects, the discounting models can be quite elaborate and may even drive work plans by delaying one or more expenditures to increase return on investment. 2) Simulation Models: Simulation models are easy to misuse, but when used properly can be very helpful. For most applications suitable for such an analysis, the project manager should seek competent advice from someone who has demonstrated expertise in creating and manipulating these models. Simulation models (discussed later) can also be used to estimate the probability of completing the project within a given time frame at a given cost. Some organizations will require that such analysis be included in proposals they receive from prospective bidders.

What are some sources of conflict?

- Scheduling - Priority placement - Allocation of resources (staffing) - Technical opinions - Costs and budgets - Personality

Matrixed organization

- combination of functional and projectized -

where do conflicts arise

- different goals and expectations - uncertainty about who has authority - interpersonal conflicts between stakeholders

Developing agreement/solution

- establish you have common interest - eliminate reference to personality - best sol satisfies both parties

Project characteristics that predict commercial success

- expected profitability - technological opportunity - development risk - appropriateness

What does a team want from the team leader?

- honesty: do you do what you say you will do -competence: does the leader know what they're doing? - sense of direction: concern about future of enterprise - inspiration: energetic, enthusiastic, and positive about project

What can PPM do?

- identify proposed project that isnt project and should be handled differently - prioritize projects - limit number of overall projects for better resource allocation - identify real options - identify projs that fit org's goals - identify codependent projs - eliminate projs with high risk - balance resources with needs - balance short/medium/long term returns ATTEMPTS TO LINK ORG'S PROJS DIRECTLY TO GOALS OF ORG occurs throughout proj life cycle

misaligned portfolio

- more projects than expected - inconsistent determination of benefits - competing projects - interesting projs that dont contribute to strategy - cost exceed benefits - high risk - no identified client

Identify project categories and criteria

- project spreads across categories to make contributions to org's goals - in each category: criteria established to distinguish level of importance and value -prevents projects from competing

7 common chars of highly successful projects

- unique competitive adv - long period of proj DEFINITION - revolutionary project culture - highly qualified proj leader who has support from top mgmt - maximizes use of existing knowledge - integrated development teams with fast problem solving and improvisation - strong sense of partnership and pride in proj team

What calls for the highest level of negotiation?

- use of subcontractors - input from 2+ functional units to design and develop proj mission - changes ordered in proj's deliverables after proj is underway

What are some sources of power?

-Reward power: difficult to use - Coercive: cannot develop commitment, can be form of positive discipline - legitimate power: has legit right to request actions -referent power: developed through respect and good example - expert power: perceived as credible source of info

Question 14: Which of the many purposes of project portfolio management are most important to a firm with a low project management maturity? Which to a firm with high maturity?

1) Low project management maturity: a) To make managers aware of the number of projects both proposed and underway. b) To identify proposed projects that are not really projects and that should be handled using other processes. c) To have managers achieve consensus on what criteria should be used to select projects. d) To limit the number of projects so the important projects can get the resources and attention they need for success. e) To eliminate projects that bypassed a formal selection process and may not provide benefits corresponding to their risks and/or costs. f) To keep from overloading the organization's available capacity. g) To balance short-, medium-, and long-term returns. 2) High project management maturity: a) To prioritize the list of available projects. b) To limit the number of projects so the important projects can get the resources and attention they need for success. c) To identify projects that best fit the organization's goals and strategy. d) To identify projects that support multiple organizational goals and cross-reinforce other important projects. e) To eliminate projects that incur excessive risk and/or cost. f) To balance short-, medium-, and long-term returns. g) To balance the resources with the needs of the organization

Disadvantages of using functional placement

1. Client is not focus of activity and concern 2. functional division oriented towards activities of own function 3. no indiv is given full responsibilty of proj 4. lack of coordinated effort leads to slow response time to client 5. subotimize proj - one part of org optimized while overall org goes down 6. weak motivation from people in proj 7. not a holistic approach

What are the 4 project categories?

1. Derivative - objectives or deliverables are only slightly different from what is existing 2. Platform - next gen, very different outputs from existing offerings. 3. Breakthrough - newer technology 4. R&D - towards new tech

What are the steps in the PPM process?

1. Establish Project council 2. Identify Project categories and criteria 3. collect project data 4. assess resource availability 5. reduce project and criteria set 6. prioritize the projs within categories 7. select projs to be funded and held in reserve 8. implement the process 9.

Characteristics of effective team members

1. High Quality technical skills 2. political sensitivity 3. strong problem orientation(adopt helpful problem solving technique) 4. strong goal orientation 5. High self-esteem

Advantages of using functional placement for proj

1. Max flexibility in staff allocation 2. Individual experts can be utilized for diff projs 3. Specialists can be grouped to share knowledge and experience 4. Base of tehnological continuity 5. contains path of advancement for indivs

Advantages of Projectized organization

1. PM has full authority over proj 2. all members of proj are responsible to PM directly 3. lines of communication are shortened 4. develop experts who are very specialized 5. high level of member commitment 6. Swift decision making 7. unity of command 8. simple and flexible - easy to implement 9. holistic approach

How do we overcome barriers?

1. Package your ideas to be understood 2. Make people feel that they should listen to your message 3. Keep data flowing - keep team updated, give regular feedback - it prevents last min surprises 4. communicate assertively - make sure ideas are heard but also listen to others

What are the two types of barriers for PMs?

1. Personal - past experience, hidden agenda, stereotyping 2. organizational - team structure, language barriers, status in functional group, time pressure

Adv of matrix approach

1. Project is emphasized 2. access to all func divisions 3. less anxiety about what happens after proj 4. rapid response to clients needs 5. consistent policies and procedures 6. balance of resources to achieve targets of indiv projects 7. very flexible organization

Disadv of projectized org

1. Projects are fully staffed, leading to double the effort 2. surplus of stock because it needs to be available 3. so specific they fall behind in other fields 4.inconsistency in policy and procedures 5. project takes own life 6. life after project ends

Negotiation requirements

1. Separate people from problem 2. Focus on interest not position 3. before reaching agreement, invent options for mutual gain 4. insist on using objective criteria

How do you get people excited/motivate them?

1. create challenge - stress goal and support it 2. inspire shared vision 3. increase visibility of teams effort - share schedules and project plans 4. empower people to use their nat. drive - let them do their thing 5. show people they can win and spread good word

4 criteria to select projs for further analysis

1. strategic importance to org 2. outcome contributes to performance of organization and clients substantially and for a long time 3. highly innovative from different perspectives 4. outcome has major impact on industry and has caused others to follow

4 prime sources of CSF

1. structure of industry 2. competitive strategy: industry position and geographical location 3. Environmental factors 4. Temporal factors

PM's responsibilities

1. to parent org: conservation of resources, timely/accurate communication (especially viability) , and mgmt of proj 2. to project and client: making sure clients goals are still met; client must submit formal request for change 3. to members of proj team: help transition back to functional dept

Give an example of a Pareto-optimal solution in a conflict

A client and a vendor are renegotiating a contract for software development. The client wants to cut costs while continuing everything else as it was in the existing contract that is about to expire. The vendor is willing to work with the client, but can't cut costs within making other changes. After several rounds of negotiations, the solution was to reduce costs by replacing some of the higher-paid developers with less experienced developers at a much lower salary. Although the client realizes that the speed and service level may decrease, that was the best option for lowering costs.

Disadv of matrix approach

CONFLICT between func group and PM 1. power is balanced - doubt about authority 2. projects has to be a set tough job - fighting over resources 3. strong matrices - shutting down proj 4. negotiating is a big must 5. no unity of command - more than one boss

Numeric model for proj selection

Cash flow profitability scoring risk analysis info needed for proj selection measuring projects worth

: Given that many conflicts are the result of different parties having different interests, is it possible to achieve a win-win situation?

Clearly there are some situations where a win-win solution is impossible. For example, in an athletic competition, the outcomes are simple and mutually exclusive; somebody has to win and somebody has to lose. There is no win-win at the World Series. Virtually all business transaction, however, are win-win transactions, which are the basis for most viable economies; we trade the goods we have in excess for those that others have in excess but we need. Winwin situation are also relevant in project management because the situations in question are much more complex, and options exist that are not mutually exclusive in terms of their benefits to the parties involved.

How does the type of project organization affect each of the types of conflict that occur over the project life cycle?

Different project organizations influence the types of conflicts primarily in two ways: 1) The project organization, at least on paper, strongly influences the PM's control over resources. For example, in the weak matrix, the PM is begging to get work done by someone, anyone in the functional organization. In the pure project, by contrast, the resources are assigned full time to the project. 2) Similarly the project organization influences how technical decisions are made. In the weak matrix, the PM is completely reliant on the functional organization making technical decisions and resolving conflicts in a way that may be invisible to him/her. In the pure project, the technical decisions are all within the project, and the conflicts will be generally between project members.

Differences between FM and PM

FM - analytic approach: breaking components into smaller elements - direct technical supervisor PM - systems approach: understand environ to understand system to understand its component - facilitator and generalist

How to select project selection model

Favor weighted scoring models - multiple objectives to be reflected; easily adaptable; arent bias to short term gain. scoring models arent that easy to use project selection can involve a lot of external factors (i.e politics, ethics..)

How is conflict related to project life cycle?

Formation - schedules, costs, priorities staffing, buildup - schedules, priorities, staffing, tehnical Main program - schedules and technical phase out - schedules cost

Importance of Project objectives during life cycle

Formation: cost, schedule, scope are equal Buildup: schedule most, then scope, then cost Main: sched and scope are most and cost least Phaseout: scope most, then sched, then cost

Four development phases for team

Forming - members learn about role and responsibilities Storming - initially team works independently which leads to conflict norming - establish team norms and cohesiveness develops, trust developments performing - norms and trust established

What is an objective?

Gen statements about direction a firm intends to go without stating specific targets to be reached at specific times

Leadership aspects and competencies

IQ 1. critical analysis and judgement 2. vision and imagination 3. strategic perspective MQ 4. Engaging communication 5. Managing resources 6. Empowering 7. Developing 8. Achieving EQ 9. Self awareness 10. Emotional resilience 11. motivation 12. sensitivity 13. influence 14. intuitiveness 15. conscientiousness

The critical term in the concept of principled negotiation is "position." Elaborate on the multiple meanings of this term relative to negotiation. Can you think of a better term?

In this context, a position is the data, issue or solution asserted by a party to a negotiation. The significance of the "position" is, of course, that it may have no bearing on any verifiable fact or rational logic. It is what the party asserts is true in order to achieve their desired outcome in the negotiation. Better terms may include "assertion" or "basic wishes."

Question 15: On what basis does the real options model select projects?

It attempts to estimate the opportunity cost of implementing the project now versus deferring its execution to sometime in the future. The decisions, once made, are often very expensive to reverse so caution should be exercised when making final decisions. The cost of the project reduced by deferring it.

Profitability models

NPV calculations benefits: simple to use data is available account for project risk disadv: ignore nonmonetary factors -'discounting': includes time value of money (mostly for short term - early years of projects: lots of errors)

Project

One time activity with one or more CLEARLY IDENTIFIED products or results

What does a good PM rely on?

Past experience, data, expert opinions - in order to derive risk factors

Question 16: What is the difference between profitability and scoring models? Describe a model that could fit both categories

Profitability models focus on financial considerations only. The scoring models evaluate multiple criteria by converting their values to a normalized scale that facilitates making a holistic decision capable of using both numeric and nonnumeric variables. Any scoring model can include profitability as a criterion, thus getting the best of both worlds.

Projectized organization

Projects are standalone self contained unit with own team staff etc.

Criteria for proj selection models

Reality capaility cost flexibility user friendliness accuracy of results

Nonnumeric models for proj selection

Sacred cow operating necessity competitive comparison model productive line extension comparative benefit

Goals

Specific targets intended to be reached at specific time

Question 21: Recent research on strategic projects has found that "scope" is much more important than either time or cost. Why do you think so?

Student answers will vary. Scope creep, or the tendency for projects to increase in size and complexity, is a common issue that project managers must deal with. In many cases, scope creep occurs because there isn't enough planning, especially related to requirements gathering from users, and it isn't until the project is underway that project team members realize that changes must be made to the plan.

The chairman of Cadbury Schweppes PLC, G.A.H. Cadbury suggests (1987) the following test for an ethical action: Would you be embarrassed to have it described in the newspaper? Is this a sufficient test for ethics? Can you think of any others?

Student responses will vary depending on their ethical standards. Mr. Cadbury's test applies if the parties involved are ethical enough or at least sensitive enough to respond to the sanction of negative publicity. Blanchard and Peale in The Power of Ethical Management suggest three others: "Is it legal?"; "Would your mother be ashamed?"; and "Is it fair in both the long and short run?" Both of these tests envision a situation where the parties involved know what they are doing is wrong, and they are thinking that they can "get away" with it. Unfortunately, in today's environment, there are even people who act unethically just to get publicity. There is another issue with ethical decision-making: one set of lawyers may view something as ethical while another set of equally qualified group of lawyers see it as unethical. There are a number of others that could be discussed that relate to cultural variations.

Question 17: Contrast the window-of-opportunity approach with discovery-driven planning

The window of opportunity approach seeks to determine the cost, timing, and performance specification of a new technology in order to determine whether it can be useful to pursue development, while the discovery-driven planning approach funds a portion of the project and determines if the critical assumptions of the project come out to be true. The analysis of these results allows the team to identify flaws in its strategies and make necessary changes before heavy rework has to be done, thus increasing costs and time. The discovery-driven approach is often used in multiple phases of project development to keep the project on track and under control.

Question 19: Why do you think managers underutilize project selection models?

There are several reasons why some managers may underutilize selection models: 1) In many organizations, the project managers are self-taught, so they may be unaware of these techniques. 2) Even if some of the managers are aware, their senior management may not be familiar or comfortable with selection models. 3) The managers may not think the models are worth the time and trouble. They believe that they get adequate results with the techniques they currently use. 4) Managers may believe that using analytic techniques will reduce their personal ability to influence the selection process. They may not want to give up their perceived power.

Project managers are primarily concerned with project interfaces. At what rate do these interfaces increase with increasing project size?

To answer this question, a simple formula is suggested. The number of potential interfaces will be equal to the product of (the number of interfaces) and (the number of interfaces minus one) divided by two. Interfaces = [n(n-1)]/2 For example, with three stakeholders there are (3 X 2)/2 or 3 interfaces to manage. With six stakeholders there would be (6 X 5)/2 or 15 a five-fold increase, even though the number of stakeholders only doubled.

Question 20: Would uncertainty models be classified as profitability models, scoring models, or some other type of model?

Uncertainty models can be classified as one of the variety of models depending on how they are used. "Uncertainty" in this context means that the analyst has not estimated the probability of occurrence of something related to the project. This could be cost, cash flow, schedule, customer satisfaction, or environmental catastrophe. The list is endless. Since any of these factors could be part of a selection model, "uncertainty" and how it is handled could affect them all.

Three questions a PM must ask during synthesis

What needs to be done? When must it be done? How are the resources obtained?

Question 22: Are there certain types of projects that are better suited for nonnumeric selection methods as opposed to numeric ones?

When an organization can describe a project in terms of a compelling need for action, and when the called-for action will produce benefits in rough proportion to the costs of executing the project, nonnumeric selection models will often be adequate to approve the project. The compelling reason may be responding to an emergency situation like a flood. There isn't a lot of need to analyze the necessity for a response so nonnumeric criteria are fine. In other cases, numeric value may not be easily obtained to include in these models. In other cases, numeric methods may be more appropriate as in a case where cost estimates can be obtained.

Charters

agreement between groups partnering on large endeavors (contract between stakeholders, client, PM, senior mgmt, functional managers)

What are critical success factors (CSFs)?

areas in business in which good performance is required to make progress towards company goals (e.g. imagine in financial markets, market success, tech reputation, company morale) each organization will have its own set of CSFs

collaborating strategy

assertive and cooperative achieving your goals with recognition that best soln benefits both parties - needs of both parties are important

Competing strategy

assertive and uncooperative approach - someone must lose in order for the other to win - decision must be made quickly

functional placement

assign work to all relevant func divisions; top mgmt overseeing

Scope creep

change in project scope

The Weighted-Factor Rating Model

commonly used to compare the attractiveness of several locations along a number of quantitative and qualitative dimensions. Criteria are weighted, criteria

Accomodating strategy

cooperating but not assertive focus on other person point of view, i lose you win - when you were wrong or issue more important to them

Why do firms enter partner arrangements?

diversification of technical risk avoidance of capital investment reducing political risk shortening duration of proj pooling of knowledge

Sustainability

environmental concerns social issues quality LONG RUN PROFITABILITY rather than short run payoff

Establishing a project council

establish a strategic direction for all 'boundary' projects i.e cross departmental or joint venture -senior mgmt, program managers, project sponsors, pm office head, general managers involved - resources allocation (funds, skills, people)

real options

financing analysis that recognizes value of positioning organization to capitalize on future opps financial options approach - org acquires right to do something but not required to use that right It attempts to estimate the opportunity cost of implementing the project now versus deferring its execution to sometime in the future. The decisions, once made, are often very expensive to reverse so caution should be exercised when making final decisions. The cost of the project reduced by deferring it.

Weak matrix

functional - functional dept devote capacity to project pm coordinates tasks done by fun dept job added to existing workload of func group

Discovery Driven Planning

funds enough of project to determine if initial assumptions about costs, benefits etc were accurate When funds used up, the assumptions are reevaluated to determine what to do next. mainly to learn about proj.

Window of Opportunity

given idea for a new product or process: cost, timing, performance specs that must be met by this new tech before R&D can be determined

conflict categories

goal oriented authority based interpersonal (conflict highest during project buildup stage)

Program

grouping of projects defined with a common set of goals has a long planning horizon

Product line extension

how they fit with current product line will it fill a gap, strengthen a weak link, or extend the line in desirable way

functional manager

in charge of functional department like marketing or engineering specialists in their area PM usually starts here

Human considerations

mgmt strategies are based on understanding of people -expectations limit our appreciation for tasks that they have to do; they create attitudes towards people

Reducing the project and criteria set

multiple screens used to narrow down number of competing projects 1. is it supporting org's goals? 2. required competence in organization? 3. Is there/will there be a market? 4. how profitable 5. how risky 6. timing 7. good fit for company? can they handle it

Pareto-optimal solution

no one can be made better off without making at least one person worse off

Project portfolio management (PPM)

organization tries to balance their portfolio of projects

What is project selection?

process of eval projects and choosing to implement them to achieve goals of parent org

Interdependencies

project must be defined in terms of the goals and objective of parent enterprise (bc project exists within larger organization) projects interact with other projects carried out by parent org competition for resources functional parts of org interact in regular patterned way - interactions between projects vary

Competitive Necessity

project necessary to sustain competitive position

Operating Necessity

project required to keep system running consider: is the system worth saving at the estimated cost of the project? yes- project funded at low costs

Sacred Cow

project suggested by senior official firm's resources go towards it and is maintained until project completed or boss recognizes it is a failure

comparative benefit model

several projects considered and the one with most benefit to firm is selected

Strong matrix

similar to standalone project not sepaarated from paarent org project managers take people from functional dept to work on their proj sometimes 'half' for people who work on more than one proj meanwhile functional divisions continue with their routine activities PM fully in charge - occasional PROGRAM manager

Project life cycle

slow-rapid-slow (not necessarily recommended)

Characteristics of PMs

strong technical BG hard nosed manager mature individual someone who is available on good terms with senior execs can keep proj team happy worked in several diff depts can walk on the waters

opportunity cost

the loss of potential gain from other alternatives when one alternative is chosen investment in project A will give return of 12% -> opportunity cost of not investing in project B -> 12% but if return of proj B is higher than opportunity cost - more desirable

Why is PPM important?

there are limited resources managers choose between long term v short term projects/safe v risky projects/manufacturing v marketing projects/

Why do we need models?

they aid in understand how company does business by documenting activities, actions, process, and operations identifies needs and requirements helps make decisions (they do not make decisions but help represent)

Can conflict be good?

they can highlight potential problems, create energy, and encourage new/creative ideas

Avoiding strategy

uncooperative and unassertive lose-lose strategy you will not help other achieve their goals and you arent pursuing your goals - not that important to you or the consequences outweigh the benefits

How to effectively select project?

understand critical success factors and goals of company

What are some characteristics of a project

uniqueness conflict interdependencies

When do project teams achieve the best result?

when members have opportunity to contribute best ideas and share responsibility for results

How can a project be broken down?

work tasks -> work packages -> Work units