LECTURE 1

Understanding the Importance

of Project Management

INTRODUCTION
Approximately $ 2.5 trillion (about 25% of US gross
national product) are spent on projects each year in USA
alone
Millions of people around the world consider project
management the major task in their profession
The rapid expansion of PMP from 93,000 members in 2002
to 230,000 in 2008 and more than 600,000 currently
The purpose of the project management is obtaining better
control and use of existing resource (internally)
A lot of authors and business consultants emphasize the
importance of project management, such as Tom Peters
Reinventing Work: the Project 50:
To win today you must master the art of the project!
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PROJECT DEFINITION
A temporary endeavor undertaken to create a
unique product or service (PMI)
A complex, non routine, one-time effort limited
by time, budget, resources and performance
specifications designed to meet customer
needs

OVERVIEW OF PROJECT MANAGEMENT

RESOURCES

PERFORMANCE/TECHNOLOGY
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UNDERSTANDING PROJECT MANAGEMENT

Project Management definition:

A set of principals, methods, and techniques that

people use to effectively plan and control project work.

The planning, organizing, directing and controlling

company resources for a relatively established shortterm objectives to complete specific goals and
objectives

UNDERSTANDING PROJECT MANAGEMENT

Successful project management when achieving
project objectives:
Within the allocated time period
Within the budgeted cost
At the desired performance level
With acceptance by the customer
With minimum or mutually agreed upon scope changes
Without disturbing the main work flow of company
Without changing the corporate culture

PROJECT CHARACTERISTICS
Have a specific objective to be completed within
certain specifications
Have defined start and end dates
Have funding limits (if applicable)
Consume human and nonhuman resources
(i.e., money, people, equipment)

Be multifunctional (cut across several functional

lines)
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Project Management
Project Planning
Definition of work requirements
Definition of quantity and quality of work
Definition of resources needed

Project monitoring
Tracking progress
Comparing actual outcome to predicted
outcome
Analyzing impact
Making adjustments

The History of Project Management

Ancient Project Management

Military Project Management

Space Exploration

Heavy Construction

Others

Classroom Activity 1a
In your groups please provide examples of the
following:
1. Industries that use Project Management
2. Examples of specific projects in those
industries.

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Understanding the Importance of

Project Management
Why are project management skills important?
Because these skills are key to completing
projects:
On time
On budget, and
On target

This section helps you

understand what project
management is and how it
differs from your normal day to day
office duties.
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Benefits
Identification of functional responsibilities to ensure
all activities are accounted for, regardless of
personnel turnover
Minimizing the need for continuous reporting
Identification of time limits for scheduling
Identification of methodology for trade-off
analysis
Measurement of accomplishment against plans

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Benefits (contd)
Early identification of problems so that
corrective action may follow
Improved estimating capability for future
planning
Knowing when objectives cannot be met or will
be exceeded

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Obstacles
Project complexity
Customers special requirements and scope
changes
Organizational restructuring
Project risks
Changes in technology
Forward planning and pricing

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Classroom Activity 1b

WHY USE PROJECT MANAGEMENT ?

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Why is a Project Management System

Necessary?

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Project Management

Resources

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Maturity in project management is

like a three - legged stool
THE LEGS REPRESENT THE:
Project Manager
Line Manager(s)
Executive Management
(i.e... Project Sponsor)

Maturity cannot exist without stability

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The Three - Legged Stool

Project
Manager

Senior
Management
(I.e. Sponsor)
Line
Management

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Effective project management

ORGANIZATIONAL
STRUCTURE

ORGANIZATIONAL
BEHAVIOR

QUANTITATIVE TOOLS &

TECHNIQUES

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Functional vs Project Work

Functional

Project

Type of work

Repeated, on-going

Focus

Operations, accomplishing
effective work.

Management responsibility

Managing people.

Budgets

On-going operational budgets. Project budgets to fund

specific projects.
Industry standards.
May have few standards
because work is unique.
Varies across cultures.
More constant across
cultures.
On-going work is stable and
Higher risk because work is
less risky.
unique and unknown.

Consistency and standards

Cross-cultural relevance
Risk

Visibility

May have little visibility if

standards are not met.

Unique, no rehearsal. Often

involves change.
Completing the project.

Managing work.

Obviously noted when project

objectives are not met.
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Relative Influence

Project Vs. Functional Influences

Project Influence
in Decision-Making

Functional
Influence
In Decision-Making

Functional
Organization

Dual Influence

Matrix
Organization

Project
Organization
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THE TIP-OF-THE-ICEBERG SYNDROME

DELEGATION
OF AUTHORITY TO
PROJECT MANAGER
EXECUTIVE
MEDDLING

LACK OF UNDERSTANDING OF HOW PROJECT

MANAGEMENT SHOULD WORK

LACK OF TRAINING IN COMMUNICATIONS /

INTERPERSONAL SKILLS

MANY OF THE PROBLEMS ASSOCIATED WITH PROJECT MANAGEMENT WILL

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SURFACE MUCH LATER IN THE PROJECT AND RESULT IN MUCH HIGHER COSTS

Classical Management
Planning
Organizing
Staffing
Controlling
Directing

Which of the above is Usually NOT

performed by the project manager?24

Resources
Capital
Materials
Equipment
Facilities
Personnel
Information/technology
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The Role of Project Manager

As part of interface management, the project managers
role also includes integration management
Top
management

Functional
managers

Project
team

Government
agencies

Project
manager

Other
organization

Consultants

Client

Sub
contractors

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Integration Management
Integration
Management
Resources

Inputs

Capital
Materials
Equipment
Facilities
Information
Personnel

Integrated
Processes

Products
Services Outputs
Profits

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The Functional Role

The functional manager has the responsibility to
define how the task will be done and where the
task will be done (i.e., the technical criteria)
The functional manager has the responsibility to
provide sufficient resources to accomplish the
objective within the projects constraints (i.e.,
who will get the job done).

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Stakeholders
Stakeholders: individuals or organizations that can be favorably
or unfavorably impacted by the project
Stakeholders may be included:
Organizational stakeholders Capital market stakeholders
Executive officers
Shareholders
Line managers
Creditors
Employees
Banks
Unions
Product/market stakeholders
Customers
Suppliers
Local committees
Governments
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General public

Stakeholders

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Classroom Activity 1c

In a current project of yours, can you clearly

identify internal stakeholders and outside
stakeholders?

Is your relationship with each of these people

or groups clear and functional?

If not, what can you do to

better define these relationships?

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Classroom Activity 1d

How important is Project Management

training?
Part-time Project Management - is it good
or bad?
Why are you studying it?

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Todays Business Trends

Focus on:
high-quality,
speed-to-market and
superior customer satisfaction.
can only be accomplished across functional lines of
authority.

Traditional job of doing the same tasks every day is

disappearing as routine office and factory work become
automated.

Traditional career path is changing. People define their

careers more by professions (Im a computer program
designer) and less by the organization they work for (I
work for Microsoft).
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Classroom Activity 1d

List problems you are currently having

managing projects.

As we continue through the course, we will

identify ways in which you can address
these problems.

We will create a master list of all questions

to be answered from your individual lists.

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Current & Future Trends

in Project Management
Forces for Change:
Global competition, knowledge explosion,
innovation, time to market, and shortened product
life cycles.

Two Major Outcomes for the 21st Century:

An increase in the scope of project management
and system integration.
The focus of projects has shifted from tactical to
strategic.

An increasing discipline in the way projects are

managed.
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Increasing Scope of Project

Management and System Integration
Enterprise Project Management (EPM)
Centralized management of a portfolio of projects
to ensure that the allocation of resources to
projects is directed and balanced toward the
strategic focus of the organization.

Project management office (PMO)

The unit responsible for continued support of
standards, processes, and an information system
that defines project management for the
organization.
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Increasing Discipline in the Way

Projects Are Managed
Training
Uniform training extending across team makeup,
team culture, outside partners, and organization
support allows for standardization in practices and
processes related to projects.

Organization Culture
A system of shared beliefs supports organizational
flexibility in meeting the challenges of managing
projects in globalized competitive environments.

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Increasing Discipline in the Way

Projects Are Managed
Organization
Culture

Training

Outsourcing

Risk
Management

Project
Management
Discipline

Multicultural
Projects

Information
Technology
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Unresolved Issues
How far can virtual project
management evolve?
How do we manage projects
under high levels of
uncertainty?

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Questions?

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