Lecture 1

Introduction Each week, you will learn more about the class topics in the weekly lecture. This week, we will focus on TCO A and learn some Project Management basics. First, let's define a project. Determining when work is a project can be the cause of much discussion in the workplace. Many organizations are beginning to utilize the PMI definition. The key to understanding what a project represents is that a project is unique. If the endeavor is something that you do often, and that is repeatable, then it is a process. In other words, a project has a finite duration. The length of the duration may be short, a few days, or long, several years. "A temporary endeavor undertaken to create a unique product, service, or result." - PMI Projects have specific attributes: Has a well-defined objective Composed of a series of interdependent tasks Utilizes various resources Has a specific time frame Has a customer Involves a degree of uncertainty

Project Life Cycle

Most projects go through similar stages (or phases) from beginning to end. If you do a search on the Internet, you will find literally hundreds of Project Life Cycles. There are some areas of commonality: The level of effort starts slow, comes to a peak, and then drops back off at the end of the project. The project selection process varies greatly, but typically includes needs identification and developing a proposed solution. These two phases are often grouped together and called initiation. Most project teams focus on the last two phases, Perform the Project and Terminate the Project. That will be our focus in PM586, too.

Project Initiation: Lets look at that first phase of a project: initiation. Its important to know when you have a project so that you can treat it as one, and so that you know when the project is completed. Initiation is the process of formally recognizing that resources will be expended on a new project. Its the go-ahead to expend corporate resources (dollars or the time of the project team). This formal initiation links the project to the ongoing work of the company which keeps projects from working in a vacuum. Some organizations may require a feasibility study prior to formal initiation - separately initiated.

Projects are typically authorized as a result of one or more of the following:

Market Demand - response to market conditions Business Need - new products to increase revenue Customer Request - response to specific customer need Technological Advance - capitalize on new ideas Legal Requirements - regulatory, ISO

Selecting the right projects for initiation is a key to corporate success. Project Selection: When organizations undertake projects, they invest resources - time, people, equipment, and money, hoping to generate future returns. These future returns must be compared with other available investment options. Project selection is the process of evaluating individual projects or groups of projects, and then choosing those that best further organizational objectives.

Note In a successful project, the Benefits of the Project should Exceed the Costs.

Costs and benefits can be tangible (i.e. financial) or intangible. Effective project evaluation has the potential to enhance a corporation's success. A primary cause of project failure is poor evaluation (or no evaluation at all) that results in selecting projects that are not a profitable alternative.

Project selection involves evaluating various needs or opportunities, and then deciding which of those should be selected and executed. The selection criteria can be quantitative and qualitative, as well as tangible and intangible. For example: Expand companys operating space to increase output per worker. Project A: Build by expanding to the existing building. Project B: Purchase new building that is available nearby. Project C: Increase automation, reduce number of workers, and respective space. Qualitative and Quantitative Criteria Is it a strategic fit? What is the duration for implementation? What is the cost/benefit analysis? ROI, NPV, payback period, IRR Is it technically feasible? What are the risks and respective levels? Are there regulatory or other external considerations? Weight Project A Project B Project C 0.25 0.20 0.30 0.10 0.10 0.05 xx 10.00 01.00 01.00 10.00 05.00 01.00 04.55 10.00 09.00 04.00 10.00 09.00 03.00 07.55 10.00 07.00 10.00 08.00 03.00 07.00 08.35

Selection Criteria Strategic Fit Project Duration Costs/Benefit Analysis Technical Feasibility Risk Regulatory and Licensing Total Weighted Score

A score of 1 denotes least desirable. A score of 10 denotes most desirable.

From the total weighted score, we can see that Project C is selected because it has the highest value and the best fit for the organizations project selection criteria. If a company was risk averse, the regulatory and licensing would be weighted heavier, and the result might be different. If the weighting for the project duration was heavier, another outcome would be likely. Intangible concerns and biases can impact decisions. It is best to evaluate both intangible and tangible benefits to determine if all of the organizations goals are met. It is obvious from the comparison to see that if more accurate data is used, a better decision will be made, and therefore, data gathering is an important part of determining which project best matches the organizations needs and goals. Steps: Develop a set of criteria against which each opportunity will be evaluated.

1. List the assumptions. 2. Gather data and information for each opportunity. 3. Evaluate each opportunity against the criteria.
Building a Model: The project selection model should be created before decisions are made. It is the criteria against which each alternative is evaluated. Decision makers should build the models based on company objectives. Projects are evaluated based on expected results relative to the objectives success factors. Project success factors can be grouped into several categories, such as marketing, finance, and quality. Factors will vary with industry, company, and project.

Constraints Every project must address: Costs & Resources Schedule & Time Scope & Quality (customer satisfaction)

Triple Constraint: The primary goal of project management is the achievement of 3 key objectives, often called the "Triple Constraint." Projects must be completed on schedule, at the planned cost with performance that meets functional and quality specifications.

Performance = Scope + Quality These three, interrelated parameters are at EQUILIBRIUM. If one parameter changes, one or both of the other 2 will have to change. For example, if your customer wants to add functionality (performance) after your project has been baselined, the schedule and/or cost will be affected.

Managing Project Trade-offs In this tutorial, you will explore the visual metaphor of a triangle to organize the concept of managing project trade-offs. The primary role of the project manager is to manage these trade-offs and balance project constraints. This tutorial does not include sound.

Types of Organizations Project teams are formed in many ways by different organizations. PMI defines 3 major organizational structures: functional, matrix, and pure project. Those 3 types exist along a continuum. In this course, we will discuss the 3 main types. In some companies, project managers have the luxury of building a project team. However, in most organizations, project teams are built based upon who is available, along with people who have specific skill sets. For example, an IT project team may include a database administrator, 2 application programmers, 1 systems programmer, a business analyst, and a quality assurance tester. If all of those team members are housed in the IT department, that team would be defined as a Functional Project Organizational structure. Definitions Functional-Type Organization Project manager may be the functional manager of the team. Typically housed in and staffed by one department in an organization such as IT, Finance, or Networking. Most projects are in-house. Team members continue regular functional jobs. Project manager does not have complete authority over the team except when the project manager is also the functional manager of the team members.

Project-Type Organization Team members are hired or transferred to the project as employees of the project. Team members do not have duties outside the project. Team members work only on the project and are employed for the life of the project. Project manager has complete authority over team. Project teams are isolated, rarely integrated into an organization.

Matrix-Type Organization In the middle with characteristics of the functional and pure project organizational structures. Team members report to both a functional manager and a project manager. Typically, the project manager manages the project and the functional manager manages the people. The project manager manages the project objectives and the functional manager is responsible for the technical objectives.

Functional Manager Specialist Analytical Approach Technical Decisions Authority Supervisor

Project Manager Generalist Systems Approach Project Decisions Control Facilitator

FMs have authority over their subordinates based on the corporate structure. PMs must control their project using an entire arsenal of management and facilitation skills. It may sound difficult, but if you have the right personality, its a very rewarding challenge! For example, on a building site in the construction of walls for a bridge, the foreman (functional manager) of the brick crew knows: the number of workers required the quantity of bricks and mortar necessary how long it will take to build the walls

While the project manager for the construction project coordinates: the delivery of materials, scheduling the rough grading with the landscaping crew so there will be a site for the walls scheduling the bridge crew scheduling the landscaping after the walls are completed, etc.

Organizational Type Functional

Advantages

Disadvantages Team can be isolated. Teamwork is de-emphasized. Customer is not the focus of the team. It's difficult for a customer to get a project status/update. When more than one functional group works on the same project,

Reduces duplication and overlap of activities. Provides specialization and functional excellence.

communication is inefficient.

Project

Project manager can respond to customer queries quickly. Project manager has complete authority over project team. However, team members may be shared between projects, but not at the same time.

Team members may not be fully utilized when peaks and valleys in the work occur, which can increase the overall cost of the project. The same work might occur on more than one project at the same time. Team members don't have a good career path. They may not be considered for promotions in their old organization. In addition, they may not have a job when the project ends. Knowledge transfer between project teams may not be adequate.

Matrix

Team members are utilized more efficiently than with the pure project organizational structure. It is easier to share resources between projects. Information flows easily between projects and the organization. Customer is the focus.

Team members report to more than one manager at the same time - the project manager and the functional manager which can result in some confusion and conflict regarding work, time, and priorities.

Summary

Summary Questions
What is a project? (Click to Hide.) A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources. What is a Project Life Cycle? What are its phases? (Click to Hide.) The project life cycle is the four phases through which a project moves. The four phases are: identification of a need, problem, or opportunity; development of a proposed solution; implementation of the proposed solution; and termination of project. How do projects begin?

(Click to Hide.) Projects begin in the Initiation phase. The Initiation phase is the process of formally recognizing that resources will be expended on a new project. How are projects selected? (Click to Hide.) Projects are selected by evaluating various needs and opportunities and then deciding which of those should be selected and executed. The selection criteria can be quantitative or qualitative, as well as tangible or intangible. What is the Triple Constraint? (Click to Hide.) The triple constraint is the pull between costs & resources, schedule & time, and scope & quality. What are the three most common types of organizational structures that can be used to organize people to work on projects? (Click to Hide.) Functional, project, and matrix What type of business typically uses the functional organization structure? (Click to Hide.) The functional organization structure is typically used in businesses that primarily sell and produce standard products and seldom conduct external projects. Why is a project-type organization sometimes considered to be expensive? (Click to Hide.) There can be under-utilized resources. With individuals assigned full-time to the project, there may be times when things are slow and team member are not working at a high level of productivity. If some people do not have any to do for temporary periods, their unapplied time is still a cost to the company. Keller