Quick Quiz

 W H A T  I S  A  P R O J E C T ? 

To discuss project management, it is important to understand the concept of a project.

A project is a temporary endeavor undertaken to create a unique product, service, or result. 7 Operations, on the other hand, is work done in organizations to sustain the business. Projects are different from operations in that they end when their objectives have been reached or the project has been terminated.

W H A T  I S  P R O J E C T  M A N A G E M E N T ? 

Project management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements. 11 Project managers must not only strive to meet specific scope, time, cost, and quality goals of projects, they must also facilitate the entire process to meet the needs and expectations of the people involved in or affected by project activities. Figure 1-2 illustrates a framework to help you understand project management. Key elements of this framework include the project stakeholders, project management knowledge areas, project management tools and techniques, and the contribution of successful projects to the enterprise. Project Stakeholders Stakeholders are the people involved in or affected by project activities and include the project sponsor, project team, support staff, customers, users, suppliers, and even 9 Knowledge areas Core functions Project integration management Tools and techniques Stakeholders' needs and expectations Facilitating functions Project 1 Project 2 Project 3 Project 4 Project portfolio Enterprise success Time management Cost management Quality management Scope management Human resource management Communications management Risk management Procurement management Project success FIGURE 1-2 Project management framework 10 Chapter 1 opponents of the project. These stakeholders often have very different needs and expectations. For example, building a new house is a well-known example of a project. There are several stakeholders involved in a home construction project. The project sponsors would be the potential new homeowners. They would be the people paying for the house and could be on a very tight budget, so they would expect the contractor to provide accurate estimates of the costs involved in building the house. They would also need a realistic idea of when they could move in and what type of home they could afford given their budget constraints. The new homeowners would have to make important decisions to keep the costs of the house within their budget. Can they afford to finish the basement right away? If they can afford to finish the basement, will it affect the projected move-in date? In this example, the project sponsors are also the customers and users for the product, which is the house. The project manager in this example would normally be the general contractor responsible for building the house. He or she needs to work with all the project stakeholders to meet their needs and expectations. The project team for building the house would include several construction workers, electricians, carpenters, and so on. These stakeholders would need to know exactly what work they must do and when they need to do it. They would need to know if the required materials and equipment will be at the construction site or if they are expected to provide the materials and equipment. Their work would need to be coordinated since there are many interrelated factors involved. For example, the carpenter cannot put in kitchen cabinets until the walls are completed. Support staff might include the buyers employers, the general contractor s administrative assistant, and other people who support other stakeholders. The buyers employers might expect their employees to still complete their work but allow some flexibility so they can visit the building site or take phone calls related to building the house. The contractor s administrative assistant would support the project by coordinating meetings between the buyers, the contractor, suppliers, and so on. Building a house requires many suppliers. The suppliers would provide the wood, windows, flooring materials, appliances, and so on. Suppliers would expect exact details on what items they need to provide, where and when to deliver those items, and so on. There may or may not be opponents of a project. In this example, there might be a neighbor who opposes the project because the workers are making so much noise that she cannot concentrate on her work at home, or the noise might wake her sleeping children. She might interrupt the workers to voice her complaints or even file a formal complaint. Or, the neighborhood might have association rules concerning new home design and construction. If the homeowners did not follow these rules, they might have to halt construction due to legal issues. As you can see from this example, there are many different stakeholders on projects, and they often have different interests. Stakeholders needs and expectations are important in the beginning and throughout the life of a project. Successful project managers develop 11 Introduction to Project Management good relationships with project stakeholders to understand and meet their needs and expectations.

Project Management Knowledge Areas?

 Project management knowledge areas describe the key competencies that project managers must develop. The center of Figure 1-2 shows the nine knowledge areas of project management. The four core knowledge areas of project management include project scope, time, cost, and quality management. These are core knowledge areas because they lead to specific project objectives. Project scope management involves defining and managing all the work required to complete the project successfully. Project time management includes estimating how long it will take to complete the work, developing an acceptable project schedule, and ensuring timely completion of the project. Project cost management consists of preparing and managing the budget for the project. Project quality management ensures that the project will satisfy the stated or implied needs for which it was undertaken. The four facilitating knowledge areas of project management are human resource, communications, risk, and procurement management. These are called facilitating knowledge areas because they are the processes through which the project objectives are achieved. Project human resource management is concerned with making effective use of the people involved with the project. Project communications management involves generating, collecting, disseminating, and storing project information. Project risk management includes identifying, analyzing, and responding to risks related to the project. Project procurement management involves acquiring or procuring goods and services for a project from outside the performing organization. Project integration management, the ninth knowledge area, is an overarching function that affects and is affected by all of the other knowledge areas. Project managers must have knowledge and skills in all nine of these areas. This text includes an entire chapter on each of these knowledge areas because all of them are crucial to project success.

Project Management Tools and Techniques?

 Thomas Carlyle, a famous historian and author, stated, Man is a tool-using animal. Without tools he is nothing, with tools he is all. As the world continues to become more complex, it is even more important for people to develop and use tools, especially for managing important projects. Project management tools and techniques assist project managers and their teams in carrying out work in all nine knowledge areas. For example, some popular time management tools and techniques include Gantt charts, project network diagrams, and critical path analysis. Table 1-1 lists some commonly used tools and techniques by knowledge area. You will learn more about these and other tools and techniques throughout this text.

Project Success?

How do you define the success or failure of a project? There are several ways to define project success. The list that follows outlines a few common criteria for measuring the success of a project using the example of upgrading 500 desktop computers within three months for $300,000: 1. The project met scope, time, and cost goals. If all 500 computers were upgraded and met other scope requirements, the work was completed in three months or less, and the cost was $300,000 or less, you could consider it a successful project based on this criterion. The Standish Group studies used this definition of success. Several people question this simple definition of project success and the methods used for collecting the data. (See the references by Glass on the companion Web site for this text to read more about this debate.) 2. The project satisfied the customer/sponsor. Even if the project met initial scope, time, and cost goals, the users of the computers or their managers (the main customers or sponsors in this example) might not be satisfied. Perhaps the project manager or team members never returned calls or were rude. Perhaps users had their daily work disrupted during the upgrades or had to work extra hours due to the upgrades. If the customers were not happy with important aspects of the project, it would be deemed a failure. Conversely, a project might not meet initial scope, time, and cost goals, but the customer could still be very satisfied. Perhaps the project team took longer and spent more money than planned, but they were very polite and helped the users and managers solve several work-related problems. Many organizations implement a customer satisfaction rating system for projects to measure project success instead of only tracking scope, time, and cost performance. 3. The results of the project met its main objective, such as making or saving a certain amount of money, providing a good return on investment, or simply making the sponsors happy. Even if the project cost more than estimated, took longer to complete, and the project team was hard to work with, if the users were happy with the upgraded computers it would be a successful project, based on this criterion. As another example, suppose the sponsor really approved the upgrade project to provide a good return on investment by speeding up work and therefore generating more profits. If those goals were met, the sponsor would deem the project a success, regardless of other factors involved. Why do some IT projects succeed and others fail? Table 1-2 summarizes the results of the 2001 CHAOS study, describing, in order of importance, what factors contribute most to the success of information technology projects. The study lists executive support as the most important factor, overtaking user involvement, which was ranked first in earlier studies. Also note that several other success factors can be strongly influenced by executives such as encouraging user involvement, providing clear business objectives, assigning an experienced project manager, using a standard software infrastructure, and following a formal methodology. Other success factors are related to good project scope and time management such as having a minimized scope, firm basic requirements, and reliable estimates. In fact, experienced project managers, who can often help influence all of these factors to improve the probability of project success, led 97 percent of successful projects. It is interesting to compare success factors for information technology projects in the U.S. with those in other countries. A 2004 study summarizes the results of a survey of 247 information systems project practitioners in mainland China. One of the study s key findings is that relationship management is viewed as a top success factor for information systems in China, while it is not mentioned in U.S. studies. The study also suggested that having competent team members is less important in China than in the U.S. The Chinese, like the Americans, included top management support, user involvement, and a competent project manager as vital to project success.

P R O G R A M  P R O J E C T  P O R T F O L I O  M A N A G E M E N T?

 As mentioned earlier, about one-quarter of the world s gross domestic product is spent on projects. Projects make up a significant portion of work in most business organizations or enterprises, and successfully managing those projects is crucial to enterprise success. Two important concepts that help projects meet enterprise goals are the use of programs and project portfolio management. Programs A program is a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. 17 As you can imagine, it is often more economical to group projects together to help streamline management, staffing, purchasing, and other work. The following are examples of common programs in the IT field. Infrastructure: An IT department often has a program for IT infrastructure projects. Under this program, there could be several projects, such as providing more wireless Internet access, upgrading hardware and software, and developing and maintaining corporate standards for IT. Applications development: Under this program, there could be several projects, such as updating an enterprise resource planning (ERP) system, purchasing a new off-the-shelf billing system, or developing a new capability for a customer relationship management system. User support: In addition to the many operational tasks related to user support, many IT departments have several projects to support users. For example, there could be a project to provide a better e-mail system or one to develop technical training for users. A program manager provides leadership and direction for the project managers heading the projects within a program. Program managers also coordinate the efforts of project teams, functional groups, suppliers, and operations staff supporting the projects to ensure that project products and processes are implemented to maximize benefits. Program managers are responsible for more than the delivery of project results; they are change agents responsible for the success of products and processes produced by those projects. For example, the popular video game Rock Band lists the program manager and team first under the credits section for the game. Program managers often have review meetings with all their project managers to share important information and coordinate important aspects of each project. Many program managers worked as project managers earlier in their careers, and they enjoy sharing their wisdom and expertise with their project managers. Effective program managers recognize that managing a program is much more complex than managing a single project. They recognize that technical and project management skills are not enough program managers must also possess strong business knowledge, leadership capabilities, and communication skills.

Project Portfolio Management?

In many organizations, project managers also support an emerging business strategy of project portfolio management (also called just portfolio management in this text), in which organizations group and manage projects and programs as a portfolio of investments that contribute to the entire enterprise s success. Portfolio managers help their organizations make wise investment decisions by helping to select and analyze projects from a strategic perspective. Portfolio managers may or may not have previous experience as project or program managers. It is most important that they have strong financial and analytical skills and understand how projects and programs can contribute to meeting strategic goals. Figure 1-3 illustrates the differences between project management and project portfolio management. Notice that the main distinction is a focus on meeting tactical or strategic goals. Tactical goals are generally more specific and short-term than strategic goals, which emphasize long-term goals for an organization. Individual projects often address tactical goals, whereas portfolio management addresses strategic goals. Project management addresses questions like Are we carrying out projects well? , Are projects on time and budget? , and Do project stakeholders know what they should be doing? Portfolio management addresses questions like Are we working on the right projects? , Are we investing in the right areas? , and Do we have the right resources to be competitive? Pacific Edge Software s product manager, Eric Burke, defines project portfolio management as the continuous process of selecting and managing the optimum set of project initiatives that deliver maximum business value. 18.

Many Organizations use a more disciplined approach to portfolio management by developing guidelines and software tools to assist in project portfolio management. The Project Management Institute (described later in this chapter) first published the Organizational Project Management Maturity Model (OPM3) Knowledge Foundation in 2003, 19 which describes the importance not only of managing individual projects or programs well, but the importance of following organizational project management to align projects, programs, and portfolios with strategic goals. OPM3 is a standard that organizations can use to measure their organizational project management maturity against a comprehensive set of best practices.

As you can imagine, project portfolio management is not an easy task. Figure 1-4 illustrates one approach for project portfolio management where one large portfolio exists for the entire organization. This allows top management to view and manage all projects at an enterprise level. Sections of that portfolio are then broken down to improve the management of projects in each sector. For example, a company might have the main. Portfolio categories as shown in the left part of Figure 1-4 marketing, materials, IT, and human resources (HR) and divide each of those categories further to address their unique concerns. The right part of this figure shows how the IT projects could be categorized in more detail to assist in their management. In this example, there are three basic IT project portfolio categories: Venture: Projects in this category help transform the business. For example, the large retail chain described in the opening case might have an IT project to provide kiosks in stores and similar functionality on the Internet where customers and suppliers could quickly provide feedback on products or services. This project could help transform the business by developing closer partnerships with customers and suppliers. Growth: Projects in this category would help the company grow in terms of revenues. For example, a company might have an IT project to provide information on their corporate Web site in a new language, such as Chinese or Japanese. This capability could help them grow their business in those countries. Core: Projects in this category must be accomplished to run the business. For example, an IT project to provide computers for new employees would fall under this category. Note on the right part of Figure 1-4 that the Core category of IT projects is labeled as nondiscretionary costs. This means that the company has no choice in whether to fund these projects; they must fund them to stay in business. Projects that fall under the Venture or Growth category are discretionary costs because the company can use its own discretion or judgment in deciding whether or not to fund them. Notice the arrow in the center of Figure 1-4 labeled Risks, Value/Timing. This arrow indicates that the risks, value, and timing of projects normally increase as you move from Core to Growth to Venture projects. However, some core projects can also be high risk, have high value, and require good timing. As you can see, many factors are involved in portfolio management. Overall project portfolio categories IT project portfolio categories Risks Value/Timing Nondiscretionary costs Discretionary costs Venture: Transform the business Growth: Grow the business Core: Run the business Marketing Materials IT HR FIGURE 1-4 Sample project portfolio approach 20 Chapter 1 Many organizations use specialized software to organize and analyze all types of project data into project portfolios. Enterprise or portfolio project management software integrates information from multiple projects to show the status of active, approved, and future projects across an entire organization. For example, Figure 1-5 provides a sample screen from portfolio management software provided by Planview. The charts and text in the upper half of the screen show the number and percentage of projects in this project portfolio that are on target and in trouble in terms of schedule and cost variance. The bottom half of the screen lists the names of individual projects, percent complete, schedule variance, cost variance, budget variance, and risk percentage. The last section in this chapter provides more information on project management software.

T H E  R O L E  O F  T H E  P R O J E C T  M A N A G E R?

 You have already read that project managers must work closely with the other stakeholders on a project, especially the sponsor and project team. They are also more effective if they are familiar with the nine project management knowledge areas and the various tools and techniques related to project management. Experienced project managers help projects succeed. But what do project managers do exactly? What skills do they really need to do a good job? The next section provides brief answers to these questions, and the rest of this book gives more insight into the role of the project manager. Even if you never become a project manager, you will probably be part of a project team, and it is important for team members to help their project managers. Project Manager Job Description A project manager can have many different job descriptions, which can vary tremendously based on the organization and the project. For example, Monster.com includes thousands FIGURE 1-5 Sample project portfolio management screen showing project health 21 Introduction to Project Management of job listings for project managers. They even have a job category for project/program managers. Here are a few edited postings: Project manager for a consulting firm: Plans, schedules, and controls activities to fulfill identified objectives applying technical, theoretical, and managerial skills to satisfy project requirements. Coordinates and integrates team and individual efforts and builds positive professional relationships with clients and associates. IT project manager for a financial services firm: Manages, prioritizes, develops, and implements information technology solutions to meet business needs. Prepares and executes project plans using project management software following a standard methodology. Establishes cross-functional end-user teams defining and implementing projects on time and within budget. Acts as a liaison between third-party service providers and end-users to develop and implement technology solutions. Participates in vendor contract development and budget management. Provides post implementation support. IT project manager for a nonprofit consulting firm: Responsibilities include business analysis, requirements gathering, project planning, budget estimating, development, testing, and implementation. Responsible for working with various resource providers to ensure development is completed in a timely, high quality, and cost-effective manner. The job description for a project manager can vary by industry and by organization, but there are similar tasks that most project managers perform regardless of these differences. In fact, project management is a skill needed in every major information technology field, from database administrator to network specialist to technical writer. Suggested Skills for Project Managers In an interview with two chief information officers (CIOs), John Oliver of True North Communications, Inc. and George Nassef of Hotjobs.com, both men agreed that the most important project management skills seem to depend on the uniqueness of the project and the people involved. 23 Project managers need to have a wide variety of skills and be able to decide which particular skills are more important in different situations. As you can imagine, good project managers should have many skills. A Guide to the Project Management Body of Knowledge the PMBOK® Guide recommends that the project management team understand and use expertise in the following areas: The Project Management Body of Knowledge Application area knowledge, standards, and regulations Project environment knowledge General management knowledge and skills Soft skills or human relations skills This chapter introduced the nine project management knowledge areas, as well as some general tools and techniques project managers use. The following section focuses on the IT application area, including skills required in the project environment, general management, and soft skills. Note that the PMBOK® Guide, Fourth Edition describes three dimensions of project management competency: project management knowledge and performance competency (knowing about project management and being able to apply that 22 Chapter 1 knowledge) as well as personal competency (attitudes and personality characteristics). Consult PMI s Web site at www.pmi.org for further information on skills for project managers and PMI s Career Framework for Practitioners. The project environment differs from organization to organization and project to project, but some skills will help in almost all project environments. These skills include understanding change, and understanding how organizations work within their social, political, and physical environments. Project managers must be comfortable leading and handling change, since most projects introduce changes in organizations and involve changes within the projects themselves. Project managers need to understand the organization in which they work and how that organization develops products and provides services. The skills and behavior needed to manage a project for a Fortune 100 company in the United States may differ greatly from those needed to manage a government project in Poland. Chapter 2, The Project Management and Information Technology Context, provides detailed information on these topics. Project managers should also possess general management knowledge and skills. They should understand important topics related to financial management, accounting, procurement, sales, marketing, contracts, manufacturing, distribution, logistics, the supply chain, strategic planning, tactical planning, operations management, organizational structures and behavior, personnel administration, compensation, benefits, career paths, and health and safety practices. On some projects, it will be critical for the project manager to have a lot of experience in one or several of these general management areas. On other projects, the project manager can delegate detailed responsibility for some of these areas to a team member, support staff, or even a supplier. Even so, the project manager must be intelligent and experienced enough to know which of these areas are most important and who is qualified to do the work. He or she must also make and/or take responsibility for all key project decisions. Achieving high performance on projects requires soft skills, otherwise called human relations skills. Some of these soft skills include effective communication, influencing the organization to get things done, leadership, motivation, negotiation, conflict management, and problem solving. Why do project managers need good soft skills? One reason is that to understand, navigate, and meet stakeholders needs and expectations, project managers need to lead, communicate, negotiate, solve problems, and influence the organization at large. They need to be able to listen actively to what others are saying, help develop new approaches for solving problems, and then persuade others to work toward achieving project goals. Project managers must lead their project teams by providing vision, delegating work, creating an energetic and positive environment, and setting an example of appropriate and effective behavior. Project managers must focus on teamwork skills to employ people effectively. They need to be able to motivate different types of people and develop esprit de corps within the project team and with other project stakeholders. Since most projects involve changes and trade-offs between competing goals, it is important for project managers to have strong coping skills as well. It helps project managers maintain their sanity and reduce their stress levels if they cope with criticism and constant change. Project managers must be flexible, creative, and sometimes patient in working toward project goals; they must also be persistent in making project needs known. Lastly, project managers, especially those managing IT projects, must be able to make effective use of technology as it relates to the specific project. Making effective use of technology often includes special product knowledge or experience with a particular industry

Project Manager?

Must make many decisions and deal with people in a wide variety of disciplines, so it helps tremendously to have a project manager who is confident in using the special tools or technologies that are the most effective in particular settings. Project managers do not normally have to be experts on any specific technology, but they have to know enough to build a strong team and ask the right questions to keep things on track. For example, project managers for large information technology projects do not have to be experts in the field of information technology, but they must have working knowledge of various technologies and understand how the project would enhance the business. Many companies have found that a good business manager can be a very good information technology project manager because they focus on meeting business needs and rely on key project members to handle the technical details. All project managers should continue to develop their knowledge and experience in project management, general management, soft skills, and the industries they support. Non-IT business people are now very savvy with information technology, but few information technology professionals have spent the time developing their business savvy. 24 IT project managers must be willing to develop more than their technical skills to be productive team members and successful project managers. Everyone, no matter how technical they are, should develop business and soft skills.