PROJECT MANAGEMENT

Asisstant Prof. Dr. Ufuk Kula ufukkula @gmail.com

GENERAL INFORMATION
Grading Homework (4-5) 20% Project 20% Midterm 25% Final 35% Attendance +5pts (Added to the overall grade)
Reference Books
ANSI/PMI 99-001-2004, A Guide to Project Management Body of Knowledge (PMBOK Guide), Third Edition, Project Management Institute Global Standard. Meredith, Jack R., Mantel, Samuel J., Project Management- A managerial approach, Fifth Edition, John Wiley&Sons, Inc., 2003. Kerzner, Harold, Project Management A systems approach to planning, scheduling and controlling, Ninth Edition, John Wiley&Sons, Inc., 2006.

COURSE CONTENTS
1. Introduction to Project Management 2. Project Management Processes 3. Project Integration Management 4. Project Scope Management 5. Project Time Management 6. Project Cost Management 7. Project Risk Management 8. Project Quality Management 9. Project Human Resources Management 10. Project Communications Management 11. Project Procurement Management

Lecture 1 Introduction to Project Management

What is a project? What is project management? Understanding the project environment Project life cycle Project stakeholders and project organization Project selection Project management processes and knowledge areas

Definition of a Project
A project is a temporary endeavor undertaken to create a unique a product, service or result

(deliverable).
History:
Military Projects Construction Projects Automobile and Jet Manufacturerers Software Projects

Definition of a Project
Temporary every project has a definite beginning and a definite end.

Unique products, service or results

a product: a quantifiable item Projects create; a service: a capability to perform a service

A result: outcomes or documents

Progressive Elaboration: Developing in steps and continuing by increments

Why Project Management?

The basic purpose of project management is to accomplish specific goals The reason for organizing the task as a project is
To focus the responsibility and authority for the attainment of goals on an individual or small group
Lead by the Project Manager (PM)

Why Project Management

Project Manager (PM) never has the sufficient authority that matches his/her responsibilty Organizing a task as a project allows PM to be responsive to
1. The client and the environment 2. Identify and correct problems early 3. Make timely decisions about conflicting project goals 4. Does not allow suboptimization

Three Project Objectives

All projects have the same general objectives:
1. Performance (Scope) 2. Time 3. Cost

Remark. A project should not be thought only in terms of the outcome (scope)

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Projects vs. Operational Work

Organizational work can be categorized as
Operational work (ongoing and repetative) Projects (temporary and unique) The common characteristics of operational work and projects are: Performed by people Constrained by limited resources Planned, executed, and controlled

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Examples of Projects
Developing a new product or service Effecting a change in structure or staffing of an organization Designing a new transportation vehicle

Developing a new information system

Constructing a building Running a campaign for political office Implementing a new business procedure or process Responding to a contract

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Purpose

Common Characteristics of Projects

A project is a one-time activity with a well-defined set of desired end results

Life Cycle
Projects born, mature, and terminated, i.e. die. ( Just like humans they resist the death!)

Interdependences
Projects interact with the parent organizations ongoing operations

Uniqueness
Every project has some degree of customization

Conflict
Projects compete for resources and personnel

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Projects and Strategic Management

Projects are a means of organizing activities that cannot be addressed within the organizations normal operational limits Projects are typically authorized as a result of one or

more of the following strategic considerations;

A market demand An organizational need

A customer request
A technological advance A legal requirement

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Projects and Strategic Management

A business strategy defines the path to accomplish long term company goals Since strategic plans usually developed at the executive levels, some projects are not in line with the company strategy When a project is offered ask yourself the question: Does the project serve the long-term company goals?

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Projects and Strategic Management

A common challange for companies are
How to tie their prjects more closely to the goals and the strategy How to handle growing number of projects How to make projects more successful

Last two points are about project management maturity A structered process called project portfolio selection process is used to directly tie projects to organizations goals and strategy

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What is Project Management?

Project management is the application of knowledge, skills, tools and techniques to project activities in order to meet project requirements.

Project management is accomplished through the application and integration of project management processes.

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What is Project Management? (contd.)

Managing a project includes;
Identifying requirements Establishing clear and achievable objectives Balancing the competing demands for quality, scope, time and cost (project management tradeoffs) Adapting the specifications, plans Balancing the different expectations of the various stakeholders.

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Project Management Tradeoffs

Scope Time

S
T

Triple constraints of a project Fig. 1.1: Project targets- performance, cost, time

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The Technical and Socio-cultural Dimensions of Project Management

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Project Environment
The project should be considered in its environmental contexts; Cultural and social environment
economic, demographic, educational, ethnic, religious aspects of

human characteristics affects/affected by the project

International and political environment applicable international, national, regional laws, customs regulations, time-zone differences, national and regional holidays, etc. Physical environment local ecology and physical geography

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Project Life Cycle

Projects can be divided into phases to provide better management control. Collectively these phases are known as the project life cycle.

Fig. 1.2: Resource level accross the project life cycle

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Project Life Cycle (contd.)

The transition from one phase to another within a project life cycle is usually defined by some form of technical output.

Fig. 1.3: Typical sequence of phases in a project life cycle

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Project Stakeholders
Project stakeholders are individuals and organizations,

that are actively involved in the project or,

whose interests may be affected as a result of project.
Customers Organization Suppliers Society Environmental

groups
etc.

Fig. 1.4. The relationship between project stakeholders and the project

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Organizational influences
Project will be influenced by the organization that initiated it;
Maturity of the organization with respect to the project management system Culture and style Organizational structure

Project Management Office (PMO)

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Project Selection
Project selection is the process of evaluating projects,
and then choosing to implement one (or sometimes more), so that the objectives of the parent organization will be achieved. Managers often use decision-aiding models.

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Project Selection (contd.)

Alignment of Projects with Organization Strategy

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Project Selection

(contd.)

What are firmss objectives

Whether the required competence exists in the organization

How profitable the offering is likely to be How risky the project is If there is a potential partner to help with the project If the right resources are available at right times If the project is a good technological/knowledge fit with the organization.

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Project Selection Models

2 Basic Types of Models: 1. Numeric Profit/Profitability, Scoring 2. Nonnumeric

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Numeric Models: Profit/Profitability

Payback period - initial fixed investment is divided by the
estimated annual cash inflows from the project

Average Rate of Return - the ratio of average annual

profit to the average investment in the project

Discounted Cash Flow - Net Present Value Method

Internal Rate of Return - Finds rate of return that equates
present value of inflows and outflows

Profitability Index Benefit cost ratio: Net Present Value of

all future expected cash flows divided by initial cash investment

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Numeric Models: Scoring

Unweighted 0-1 Factor Model factors are rated either 0 or 1 Unweighted Factor Scoring Model factors are rated on a
scale (eg.1-5)

Weighted Factor Scoring Model numeric weights are added

to the factors, factors are not assumed to be equal importance

Constrained Weighted Factor Scoring Model criteria is

added to the model as constraints which represent project characteristics that must be present/absent for the project to be acceptable.

Goal Programming with Multiple Objectives a

variation of the general linear programming method

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Nonnumeric Models
Sacred Cow - project is suggested by a senior and powerful
official in the organization

Operating Necessity - the project is required to keep the

system running

Competitive Necessity - project is necessary to sustain a

competitive position

Product Line Extension - projects are judged on how they

fit with current product line, fill a gap, strengthen a weak link, or extend the line in a new desirable way.

Comparative Benefit Model - several projects are

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