Project Manager Street Smarts Second Edition
Project Manager Street Smarts A Real World Guide to PMP ® Skills Second Edition
Linda Kretz Zaval, PMP® Terri Wagner, MA, PMP®
Senior Acquisitions Editor: Jeff Kellum Development Editor: Richard Mateosian Technical Editors: Susan Weese and Brett Feddersen Production Editor: Dassi Zeidel Copy Editor: Liz Welch Editorial Manager: Pete Gaughan Production Manager: Tim Tate Vice President and Executive Group Publisher: Richard Swadley Vice President and Publisher: Neil Edde Book Designers: Judy Fung and Bill Gibson Compositor: Craig Woods, Happenstance Type-O-Rama Proofreader: Jen Larsen, Word One New York Indexer: Ted Laux Project Coordinator, Cover: Katherine Crocker Cover Designer: Ryan Sneed Copyright © 2011 by John Wiley & Sons, Inc., Indianapolis, Indiana Published simultaneously in Canada ISBN: 978-1-118-09392-4 ISBN: 978-1-118-17316-9 (ebk) ISBN: 978-1-118-17317-6 (ebk) ISBN: 978-1-118-17319-0 (ebk) No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 7486011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: The publisher and the author make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation warranties of fitness for a particular purpose. No warranty may be created or extended by sales or promotional materials. The advice and strategies contained herein may not be suitable for every situation. This work is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If professional assistance is required, the services of a competent professional person should be sought. Neither the publisher nor the author shall be liable for damages arising herefrom. The fact that an organization or Web site is referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or Web site may provide or recommendations it may make. Further, readers should be aware that Internet Web sites listed in this work may have changed or disappeared between when this work was written and when it is read. For general information on our other products and services or to obtain technical support, please contact our Customer Care Department within the U.S. at (877) 762-2974, outside the U.S. at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats and by print-on-demand. Not all content that is available in standard print versions of this book may appear or be packaged in all book formats. If you have purchased a version of this book that did not include media that is referenced by or accompanies a standard print version, you may request this media by visiting http://booksupport.wiley.com. For more information about Wiley products, visit us at www.wiley.com. Library of Congress Cataloging-in-Publication Data is available from the publisher. TRADEMARKS: Wiley, the Wiley logo, and the Sybex logo are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates, in the United States and other countries, and may not be used without written permission. PMP is a registered trademark of Project Management Institute, Inc. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc. is not associated with any product or vendor mentioned in this book. 10 9 8 7 6 5 4 3 2 1
Dear Reader, Thank you for choosing Project Manager Street Smarts: A Real World Guide to PMP ® Skills, Second Edition. This book is part of a family of premium-quality Sybex books, all of which are written by outstanding authors who combine practical experience with a gift for teaching. Sybex was founded in 1976. More than 30 years later, we’re still committed to producing consistently exceptional books. With each of our titles, we’re working hard to set a new standard for the industry. From the paper we print on, to the authors we work with, our goal is to bring you the best books available. I hope you see all that reflected in these pages. I’d be very interested to hear your comments and get your feedback on how we’re doing. Feel free to let me know what you think about this or any other Sybex book by sending me an email at
[email protected]. If you think you’ve found a technical error in this book, please visit http://sybex.custhelp.com. Customer feedback is critical to our efforts at Sybex.
Best regards,
Neil Edde Vice President and Publisher Sybex, an Imprint of Wiley
To Eldred, my forever love, for his patience and support, and Bud B., for believing that I could do anything I set out to do. —Linda To my mother, who always told me I should write a book someday, and to Von, who taught me how to breathe life into dreams and watch them come true. —Terri
Acknowledgments It takes a village … to write a book. We are continuously amazed at the dedication of the tireless team of folks supporting this effort. First to Neil Edde for his suggestion we venture down this path. Next, thanks go out to Acquisitions Editor Jeff Kellum for grabbing his book-publishing compass and mapping the course. Another shout-out to Editorial Manager Pete Gaughan for gathering an awesome team. A special thank-you also to Kim Heldman for walking the path before us, setting the example, and inspiring this work; we love you, Kim. Dassi Zeidel, our production editor, did a wonderful job. Thanks also to Liz Welch, the copy editor, for grammatical help and suggestions. Hats off to Development Editor Richard Mateosian for keeping the project on track and offering helpful recommendations along the way. A special thank-you to Susan Weese, our technical editor, for reviewing every word and every exercise for clarity, usefulness, and accuracy in the best possible way, with good suggestions and helpful dialogue. Our technical proofreader is the best! Thank you, Brett Feddersen. And of course, we wish to acknowledge the unflagging work of the entire Sybex editorial staff, but especially Jenni Housh and Conner O’Brien and those who are unintentionally not named here; they are as strongly focused on our success as they are their own. Finally, a very special thank-you to the community of project managers who have taught us throughout our careers by words and by action, and who continue to lend wisdom to the profession.
About the Authors Linda Kretz Zaval (PMP®)╇╇ has successfully managed several multimillion-dollar projects within the telecommunications, cable, and IT industries. Her most recent assignments have included training for many government agencies, including the Department of Defense, the Department of Energy, the National Park Service, and the National Security Agency. During her 40-year working career, Zaval held a variety of positions at US WEST, including director of Project Management. She was a member of the core team that developed the Center for Program Management at the University of Denver. She has also served as Vice President of Training and Product Development for the International Institute for Learning in New York City and managed a global team of project managers for IBM. Zaval is the owner/managing member of 20/20 Solutions, LLC, an Idaho-based project management, consulting, and training company. She is also an active member of the Project Management Institute (PMI®) and is the author of The Project Manager’s Toolkit. She has taught several university-level seminars as well as public and custom programs in project management, finance, and systems development. She is an internationally sought-after public speaker and consultant known for her ability to establish real-world methodologies for implementing project management in a corporate environment. Terri Wagner (PMP®)╇╇ has managed multimillion-dollar project management office portfolios for international consulting clients. Wagner has also led teams of project managers, business analysts, process specialists, operational groups, and trainers in the planning, design, development, and deployment of system and operational enhancements, as well as client-based initiatives. She has been awarded honors for being a creative thinker with the ability to successfully apply technology for the advancement of internal and external operational efficiencies and quality. She has taught project management, portfolio management, program management, business leadership, quality management, and other topics to state agencies, governmental entities, corporate clients, and at the graduate level in the university system. Wagner has delivered training, consulting, and project management in the United States, Canada, the Caribbean, and Europe while continuing to both run projects and consult with organizations on project management methodologies and strategies. Wagner is owner and managing member of Mentor Source, Inc., a Colorado-based project management consulting and training company. She is an active member of Project Management Institute (PMI®) and technical editor for several textbooks on the topic of project management.
Contents at a Glance Introduction
xix
Phase 0
Professional Responsibility
Phase 1
Initiating Process
11
Phase 2
Planning Process
81
Phase 3
Executing Process
181
Phase 4
Monitoring and Controlling Process
237
Phase 5
Closing Process
295
Appendix
Solutions
327
Index
1
393
Contents Introduction Phase
Phase
0
1
xix Professional Responsibility
1
How This Relates to Project Management Practitioners Responsibility Aspirational Standards of Conduct for the Value of Responsibility Mandatory Standards of Conduct for the Value of Responsibility Respect Aspirational Standards of Conduct for the Value of€Respect Mandatory Standards of Conduct for the Value of Respect Fairness Aspirational Standards of Conduct for the Value of Fairness Mandatory Standards of Conduct for the Value of€Fairness Honesty Aspirational Standards of Conduct for the Value of€Honesty Mandatory Standards of Conduct for the Value of Honesty
3 3 3 4 5 5 6 7 7 7 8 8 9
Initiating Process
11
Task 1.1: Perform Project Assessment Scenario Scope of Task Procedure Task 1.2: Creating the Scope Statement Scenario Scope of Task Procedure Task 1.3: Understanding Your€Stakeholders Scenario Scope of Task Procedure Task 1.4: Identify Project Limitations and Propose an Implementation Approach Scenario Scope of Task Procedure Task 1.5: Develop the Project Charter Scenario Scope of Task Procedure
12 13 14 15 35 36 37 37 47 47 49 49 67 67 68 68 70 70 70 70
xiiâ•…
Phase
Contents
2
Task 1.6: Obtain Project Charter Approval Scenario Scope of Task Procedure
77 77 77 78
Planning Process
81
Task 2.1: Establishing the Project€Deliverables Scenario Scope of Task Procedure Task 2.2: Creating the Work Breakdown€Structure Scenario Scope of Task Procedure Task 2.3: Developing a Budget Plan Scenario Scope of Task Procedure Task 2.4: Developing the Project Schedule Scenario Scope of Task Procedure Task 2.5: Developing the Human Resource Plan Scenario Scope of Task Procedure Task 2.6: Developing the Communication Plan Scenario Scope of Task Procedure Task 2.7: Developing the Procurement€Plan Scenario Scope of Task Procedure Task 2.8: Developing the Quality Management Plan Scenario Scope of Task Procedure Task 2.9: Developing the Change Management Plan Scenario Scope of Task Procedure
83 83 83 84 87 88 88 88 94 95 95 95 99 99 99 99 120 120 120 121 124 125 125 125 134 134 134 134 143 143 143 143 147 148 148 148
Contentsâ•…
Phase
Phase
3
4
xiii
Task 2.10: Developing the Risk Management Plan Scenario Scope of Task Procedure Task 2.11: Documenting and Presenting the Master Project Management Plan Scenario Scope of Task Procedure Task 2.12: Conducting the€Kickoff€Meeting Scenario Scope of Task Procedure
154 156 157 158
Executing Process
181
Task 3.1: Obtaining Project Resources Scenario Scope of Task Procedure Task 3.2: Directing and Managing Project Execution Scenario Scope of Task Procedure Task 3.3: Implementing the Quality Plan Scenario Scope of Task Procedure Task 3.4: Performing Quantitative Risk€Assessment Scenario Scope of Task Procedure Task 3.5: Conducting Procurements Scenario Scope of Task Procedure Task 3.6: Developing and Managing the€Project Team Scenario Scope of Task Procedure
182 182 182 183 184 185 185 185 201 201 202 202 204 205 205 205 211 211 211 211 221 221 222 222
Monitoring and Controlling Process
237
Task 4.1: Measuring Project Performance Scenario Scope of Task Procedure
170 170 172 172 175 175 175 175
238 238 239 239
xivâ•…
Contents
Task 4.2: Implementing Approved€Changes Scenario Scope of Task Procedure Task 4.3: Ensuring Project Deliverables Conform to Quality Standards Scenario Scope of Task Procedure Task 4.4: Managing Risk Events Scenario Scope of Task Procedure Task 4.5: Administering Procurements Scenario Scope of Task Procedure Task 4.6: Assessing Corrective Action€on€the Issues Log Scenario Scope of Task Procedure Task 4.7: Communicating Project Status Scenario Scope of Task Procedure Phase
5
Closing Process Task 5.1: Formalizing Project€Acceptance Scenario Scope of Task Procedure Task 5.2: Transferring Ownership of€Deliverables Scenario Scope of Task Procedure Task 5.3: Obtaining Final Legal and€Administrative Closure Scenario Scope of Task Procedure Task 5.4: Distributing Final Reports Scenario Scope of Task Procedure
254 254 254 254 257 257 258 258 272 273 274 274 275 276 276 276 283 284 284 284 286 286 286 288 295 296 296 297 297 299 299 299 300 303 303 303 303 306 306 306 307
Contentsâ•…
Task 5.5: Collating Lessons Learned Scenario Scope of Task Procedure Task 5.6: Archiving Project Documents Scenario Scope of Task Procedure Task 5.7: Measuring Project Team Performance Scenario Scope of Task Procedure Appendix
Solutions Phase 1 Solutions Hands-on 1.1: Testing Your Knowledge of Corporate€Strategy Hands-on 1.2: Testing Your Knowledge of€ Finance€Principles Hands-on 1.3: Testing Your Knowledge of NPV Hands-on 1.4: Testing Your Knowledge of Benefit Measurement Methods—Scoring Models Hands-on 1.5: Testing Your Knowledge of Business Cases Hands-on 1.6: Testing Your Knowledge of€Goals€ and€Objectives Hands-on 1.7: Testing Your Knowledge of€the€ Product€Scope Description Hands-on 1.8: Testing Your Knowledge of Requirements Hands-on 1.9: Testing Your Knowledge of€ Organizational€Structures Hands-on 1.10: Testing Your Knowledge of€Project€ Scope€Statements Hands-on 1.11: Testing Your Knowledge of€ Leadership€Analysis Hands-on 1.12: Testing Your Knowledge of€ Identifying€Team Members Hands-on 1.13: Testing Your Knowledge of€Roles€ and€Responsibilities Hands-on 1.14: Testing Your Knowledge of€ Stakeholder€Analysis Hands-on 1.15: Testing Your Knowledge of€ Stakeholder€Mapping
xv
312 312 312 313 315 318 318 318 319 319 319 320 327 328 328 328 329 330 332 332 333 334 334 335 336 336 337 339 341
xviâ•…
Contents
Hands-on 1.16: Testing Your Knowledge of€Project€ Organizational Structures Hands-on 1.17: Testing Your Knowledge of€ Project€Limitations Hands-on 1.18: Implementation Approaches Hands-on 1.19: Testing Your Knowledge of Milestones Hands-on 1.20: Testing Your Knowledge of€an€ Estimated€Budget Hands-on 1.21: Testing Your Knowledge of High-Level Project Risks Hands-on 1.22: Testing Your Knowledge of€ Project€Assumptions Hands-on 1.23: Testing Your Knowledge of Project Constraints and Response Strategies Hands-on 1.24: Testing Your Knowledge of€ Putting€It€All€Together Hands-on 1.25: Testing Your Knowledge of Phase 1 Professional Responsibility Phase 2 Solutions Hands-on 2.1: Testing Your Knowledge of Deliverables Hands-on 2.2: Testing Your Knowledge of€Product€ Acceptance Criteria Hands-on 2.3: Testing Your Knowledge of€Creating€a€ List€of Work Hands-on 2.4: Testing Your Knowledge of Organizing€ Tasks into Logical Groupings Hands-on 2.5: Testing Your Knowledge of€ Reviewing€and€Adjusting a WBS Hands-on 2.6: Testing Your Knowledge of Cost Budgeting Hands-on 2.7: Testing Your Knowledge of Network Logic Hands-on 2.8: Testing Your Knowledge of Network Logic Hands-on 2.9: Testing Your Knowledge of PERT Hands-on 2.10: Testing Your Knowledge of€Reducing€a€ Project’s Duration Hands-on 2.11: Testing Your Knowledge of Staffing Risks Hands-on 2.12: Testing Your Knowledge of€ Communications Hands-on 2.13: Testing Your Knowledge of Contract Types Hands-on 2.14: Testing Your Knowledge of€ Contract€Calculations Hands-on 2.15: Testing Your Knowledge of€ Quality€Planning
341 342 343 343 344 344 345 345 345 348 348 348 348 349 351 353 355 356 356 358 359 360 361 362 363 364
Contentsâ•…
Hands-on 2.16: Testing Your Knowledge of Identifying€ and Qualifying Risk Events Hands-on 2.17: Professional Responsibility in€the€ Planning Phase Phase 3 Solutions Hands-on 3.1: Testing Your Knowledge of€ Acquiring€Resources Hands-on 3.2: Testing Your Knowledge of Expertise Hands-on 3.3: Testing Your Knowledge of PMIS Hands-on 3.4: Testing Your Knowledge of€Expectations€ and Commitments Hands-on 3.5: Testing Your Knowledge of€ Listening€Habits Hands-on 3.6: Testing Your Knowledge of€ Quality€Assurance Hands-on 3.7: Testing Your Knowledge of€Expected€ Value and NPV Hands-on 3.8: Testing Your Knowledge of€ Obtaining€Sellers Hands-on 3.9: Testing Your Knowledge of€ Selecting€Sellers Hands-on 3.10: Testing Your Knowledge of€ Awarding€Contracts Hands-on 3.11: Testing Your Knowledge of€Developing€ Your Project Team Hands-on 3.12: Testing Your Knowledge of€Managing€ Your Project Team Hands-on 3.13: Testing Your Knowledge of€ Motivational€Theories Hands-on 3.14: Testing Your Knowledge of Types of Power Hands-on 3.15: Testing Your Knowledge of Managing Conflict Hands-on 3.16: Testing Your Knowledge of Professional Responsibility in the Execution Phase Phase 4 Solutions Hands-on 4.1: Testing Your Knowledge of€ Scope€Verification Hands-on 4.2: Testing Your Knowledge of€ Controlling€Project Scope Hands-on 4.3: Testing Your Knowledge of€Controlling€ the€Project Schedule Hands-on 4.4: Testing Your Knowledge of Earned Value
xvii
365 367 367 367 368 368 369 370 371 371 372 372 373 374 375 375 376 376 377 378 378 378 378 379
xviiiâ•…
Contents
Hands-on 4.5: Testing Your Knowledge of€ Performance€Reporting Hands-on 4.6: Testing Your Knowledge of€ Integrated€Change Control Hands-on 4.7: Testing Your Knowledge of Quality Tools Hands-on 4.8: Testing Your Knowledge of€Problem€ Solving and Metrics Hands-on 4.9: Testing Your Knowledge of€ Managing€Risk€Events Hands-on 4.10: Testing Your Knowledge of€ Contract€Changes Hands-on 4.11: Testing Your Knowledge of€ Legal€Contract Issues Hands-on 4.12: Testing Your Knowledge of Communicating with Your Sponsor and Team Hands-on 4.13: Testing Your Knowledge of Professional Responsibility in the Monitoring and Controlling Phase Phase 5 Solutions Hands-on 5.1: Testing Your Knowledge of Formalizing Project Acceptance Hands-on 5.2: Testing Your Knowledge of Transferring Ownership of Deliverables Hands-on 5.3: Testing Your Knowledge of Legal and€ Administrative Contract Closure Hands-on 5.4: Testing Your Knowledge of Creating and Documenting the Project’s Final Report Hands-on 5.5: Testing Your Knowledge of€ Lessons€Learned Hands-on 5.6: Testing Your Knowledge of€ Performance€Reviews Hands-on 5.7: Testing Your Knowledge of Professional Responsibility in the Closure Phase Index
381 382 383 383 384 386 386 387 387 388 388 388 389 389 390 391 392 393
Introduction The project management discipline is swiftly becoming the catalyst of choice for change in modern business models. The added value project management provides to the bottom line is now considered a corporate lifesaver, not a corporate cost center. Even though the discipline does not usually generate revenue (except in projectized organizations), it enables profit generation by maintaining tight controls on expenditures with a proactive view of project events. Project managers today are provided the power and authority to establish, maintain, and forecast project results. It is a proactive instead of a reactive process. Project managers today participate with finance and marketing analysts in the financial justification of projects. Their contribution to the corporate bottom line makes the discipline of project management a twenty-first-century core business process. If used correctly, the process of project management can impact revenue-to-expense ratios in a positive way. It can curtail expenses and assist senior management in choosing one project over another by providing a realistic and defendable cost structure designed to increase competitive advantage and maximize shareholder wealth. In other words, project management is a cost saver rather than a cost center. So just how does a project fit within an organization’s goals and strategies? How can a project manager get others excited about the project? Complex projects challenge the capabilities of contemporary organizations, requiring new structures, sophisticated management skills, and new roles and relationships. This book addresses these challenges. Novice project managers will be able to follow a project from beginning to end. Seasoned project practitioners will be able to see how real-world project management and the Project Management Body of Knowledge® are aligned. While learning project processes and the activities associated with them, the reader will be able to: NN
NN
Describe how project management principles and techniques apply to the real-word challenges of project management Understand how to define project scope and explain the steps needed for successful project plan execution
NN
Develop competency in creating a work breakdown structure (WBS)
NN
Contrast the accountabilities of functional managers with those of project managers
NN
Develop schedule logic
NN
Develop competency in evaluating schedule performance
NN
Understand how to determine corrective action when plans go awry
NN
Utilize human resources effectively
NN
Understand appropriate communications with project stakeholders
NN
Get a glimpse of project portfolio management and how it relates to project selection
NN
Understand the characteristics of high-performance teams and their challenges
xxâ•…
Introduction
NN
Understand motivation techniques through constructive counsel
NN
Understand how to communicate more effectively in conflict situations
NN
Understand and demonstrate listening, persuasion, and delegation techniques
NN
Describe risk management components and concepts
NN
Understand uncertainty and its role in decision making
Project Success Factors Before we begin, let’s take a look at the factors that can make or break projects. As you move forward, keep these factors in mind so that your project will start out on a positive note. If these success factors do not exist in your organization, perhaps more up-front work will be needed before you begin your project management journey.
Project Success Factor 1 In order for project management to be successful within an organization, it must have topdown, senior-level or executive support. The project owner must support the benefits of the project, accept responsibility for funding and budget status, concur with project and charter requirements, sign off on risk plans, and be knowledgeable of the status of both planned and actual results.
Project Success Factor 2 Clients and users must have ownership of the project. This is demonstrated by providing resources, being involved in the project initiative, signing off on requirements once the plan is completed, signing off on the schedule, participating in the risk management processes, and concurring with scope changes.
Project Success Factor 3 Business processes must be fully known. The project manager and the team must demonstrate knowledge of business processes. Many projects are generated due to a business problem, and the team must understand that problem and define how the project solution will change business processes. When there are changes, the impacts should be documented and fully understood by the client. Process improvement metrics must also be identified so that it can be determined whether the project has met its intended purpose relative to the business problem.
Project Success Factor 4 Projects should be chosen based on a sound business plan that is completed for a particular stage or effort. The infrastructure and business solution units must be identified and synched with the corporate plan and economically validated.
Introductionâ•…
xxi
Project Success Factor 5 The project scope should be clearly defined and identified in the project charter. Impact analysis relative to budget and schedule must be performed when scope changes occur, and the focus of the team must be limited to approved changes only. Owners must step up to the risks and benefits for all scope changes.
Project Success Factor 6 An effective change control process must exist that is followed by all stakeholders. The project manager must regularly review all changes and their impacts with the owner, who must approve change requests and associated funding.
Project Success Factor 7 The business drivers must be fully identified and agreed upon by the owner and user community. In other words, the project must add value to the business. The solution elements of the project should be traced back to business drivers, with success criteria defined at the onset and benchmarked at each phase. A means to collect data should be established so that the metrics can be demonstrated.
Project Success Factor 8 There should be limited experimentation with new technology. Previous use must be demonstrated prior to commitment for mission-critical projects. Previous industry application must be demonstrated before application for customer-affecting projects. The appropriate technology group must agree to support the technology in a deployed state.
What Is PMP® Certification? The Project Management Institute (PMI®) was founded in 1969 with the goal of developing standards for project management practices across industries and across the globe. It has outlined processes and techniques in its own publication, A Guide to the Project Management Body of Knowledge (PMBOK® Guide), which has also been approved as the American National Standard by ANSI, the American National Standards Institute. PMI® also administers a certification process granting several different credentials depending on experience, education, and specialties such as risk, scheduling, program management, and project management. The Project Management Professional (PMP®) is their most recognized credential, as of this printing. According to its website, www.pmi.org, “The PMP® credential recognizes demonstrated knowledge and skill in leading and directing project teams and in delivering project results within the constraints of schedule, budget and resources.” To sit for the PMP® exam, you must demonstrate experience by filling out their application and capturing hours leading project tasks during the last eight years of your career. At the time of publication of this book, PMI® required that professionals holding a bachelor’s degree document a minimum of 4,500 hours of experience covering at least 36 unique months during the past eight years
xxii
Introduction
while those with a high school diploma need to demonstrate 7,500 hours of experience covering at least 60 unique months during the past eight years. Along with that experience, applicants must also show that they have accumulated at least 35 contact hours of project management education prior to submitting the application to sit for the professional exam. Once the application is accepted, and the applicant agrees to abide by the organization’s Code of Ethics, the applicant must then take and pass the proctored exam, consisting of 200 multiple choice questions, within a four-hour period of time. The tests are offered by a third-party professional test facility with locations around the globe. For more details on the professional exam, go to www.pmi.org.
Is This Book for You? Project Manager Street Smarts is designed to give a project manager all of the tools and techniques to be successful. Whether you are a Project Management Professional (PMP®), aspire to become one, or are a novice project practitioner, this book will guide you from the beginning of a project to the end. One case study is used throughout the book to bring reality to the challenges and successes a project manager faces. The book contains more than 65 exercises to challenge your knowledge of project management principles as they relate to real-world situations. We’ve also provided dozens of templates that you can use if you do not have access to them in your own work environment. This is not a PMP ® Study Guide, although Project Manager Street Smarts does align with the Project Management Body of Knowledge, ed. 4th Ed. (PMBOK® Guide). It is a companion book to Kim Heldman’s PMP® Project Management Professional Study Guide (Sybex, 2002).
How This Book Is Organized This book is organized into five phases, which represent the five main process groups of project management according to the PMBOK® Guide. Each phase is separated into individual tasks. The tasks within each phase lead you step by step toward completion of that phase. Phase 0 — Professional Responsibility This phase explains the project management standards established by the Project Management Institute (PMI®) in the areas of professionalism and ethical conduct and include the areas of responsibility, respect, fairness, and honesty. Phase 1 — Initiating Process This process includes financial information needed for a project, creating the charter, and defining the scope of the project. Phase 2 — Planning Process This process guides you through all the project management plans needed for the master project management plan. Phase 3 — Executing Process This process brings you to the implementation of all plans as well as management of team personnel.
Introductionâ•…
xxiii
Phase 4 — Monitoring and Controlling Process╇ ╇ This process provides real-world situations to keep the project on track as well as how to manage performance issues related to cost, schedule, scope, quality, risk, communications, procurement, and so forth. Phase 5 — Closing Process╇ ╇ This process walks you through all of the steps to close out a contract as well as the project. Each task in this book is organized into sections aimed at giving you what you need when you need it. The first section introduces you to the task. Descriptions of the remaining sections follow. Scenario╇ ╇ This section places you in the shoes of the project manager, describing a situation in which you will likely find yourself. Scope of Task╇ ╇ This section is all about preparing for the task. It gives you an idea of how much time is required to complete the task, what setup procedure is needed before beginning, and any concerns or issues to look out for. Procedure╇ ╇ This section is an outline of what will be learned in the task. Details╇ ╇ This is where the learning takes place. This section informs you how to complete the individual items included in the task.
Project Management Tasks The tasks included in Project Manager Street Smarts include: Phase 1: Initiating Process NN
Performing project assessment
NN
Defining high-level scope
NN
Understanding your stakeholders
NN
Identifying project limitations and proposing implementation approaches
NN
Developing the charter
NN
Obtaining approval for the project charter
Phase 2: Planning Process NN
Establish project deliverables
NN
Creating the work breakdown structure (WBS)
NN
Developing a budget plan
NN
Developing the project schedule
NN
Developing the human resource plan
NN
Developing the communications plan
NN
Developing the procurement plan
NN
Developing the quality management plan
NN
Developing a change management plan
xxivâ•…
Introduction
NN
Developing the risk management plan
NN
Documenting and presenting the master project management plan
NN
Conducting the kick-off meeting
Phase 3: Executing Process NN
Obtaining and managing project resources
NN
Directing and managing project execution
NN
Implementing the quality management plan
NN
Implementing approved changes to the master project plan
NN
Following the risk plan to minimize the impact of risk
NN
Developing and managing team performance
Phase 4: Monitoring and Controlling Process NN
Measuring project performance
NN
Managing changes to the project
NN
Ensuring project deliverables conform to quality standards
NN
Managing the impact of risk on the project
NN
Assessing corrective action on the issues register
NN
Communicating project status
Phase 5: Closing Process NN
Formalizing project acceptance
NN
Transferring ownership of deliverables
NN
Obtaining legal and administrative closure
NN
Distributing the final report
NN
Collating lessons learned
NN
Archiving project documents
NN
Measuring project performance
How to Contact the Publisher Sybex welcomes feedback on all of its titles. Visit the Sybex website at www.sybex.com for book updates and additional certification information. You’ll also find forms you can use to submit comments or suggestions regarding this or any other Sybex title.
How to Contact the Authors Linda Kretz Zaval and Terri A. Wagner welcome your questions and comments. You can reach them by email at
[email protected] and
[email protected].
Phase
0
Professional Responsibility
Congratulations! You have been designated a project manager (whether by choice or not) and now have the potential for a satisfying career or, at the very least, interesting work. You will have the opportunity to grow in ways you never imagined. You will embark upon an incredible journey through the seas of decision making and challenges, and you will become capable in more ways than you thought possible. As a project manager, you must always be mindful of your professional status. Whether you already are, or are soon to become, a Project Management Professional (PMP)® or any other project management practitioner, you are essentially a steward of corporate funds or client retainers. You may be challenged with potential conflicts of interest and issues among your resources that are debatable, or you may have to deal with unscrupulous vendors. Your responses to these problems will define not only what you do but who you are. As a practitioner of project management, it is your duty to be and portray yourself as having high standards in the areas of responsibility, respect, fairness, and honesty as described in the PMI® Code of Ethics and Professional Conduct. For more information on the PMI® Code of Ethics and Professional Conduct, please visit the Project Management Institute’s website at www.pmi.org/About-Us/Ethics/Code-of-Ethics.aspx.
In this phase, you will learn about the four areas of the PMI® Code of Ethics and Professional Conduct and how they apply to you. As in most professions, a code of ethics drives the behavior of its members. In this day of scandal and ethics abuse, it is even more important to abide by a set of ethical standards. PMI® began exploring standards for professional and ethical conduct back in the early 1980s and published its first report in August 1983. Since that time, not only did PMI® grow but the global project management community increased, and a need for a common set of global standards for ethical and social responsibility became paramount. PMI® revisited the issues of ethics several times in the years that followed. Several methods were employed to understand the ethical issues that were faced by the global project management community, including but not limited to Internet surveys as well as group discussions among members, nonmembers, nonprofit groups, and others in various regions of the world. The commonalities included the following: NN
Responsibility
NN
Respect
NN
Fairness
NN
Honesty
Responsibilityâ•…
3
How This Relates to Project Management Practitioners PMI® requires all PMP® candidates and other credential holders to uphold the PMI® Code of Ethics and Professional Conduct. Maintaining PMI®’s ethical and professional oath applies to our personal and professional day-to-day activities as well as the activities of our global project management community. The values set forth in PMI®’s code of conduct are responsibility, respect, fairness, and honesty. These attributes become our vision. Having a vision of these four values, and always keeping them in mind, provides you with a framework for good and ethical decision making, even when faced with issues that could compromise your values, reliability, and personal honor. The values of responsibility, respect, fairness, and honesty are characterized in the code of conduct by aspirational and mandatory elements. Aspirational conduct is described by the Project Management Professional (PMP ®) Handbook (PMI®, revised March 18, 2011): “The aspirational standards describe the conduct that we strive to uphold as practitioners.” Mandatory conduct is also described by the PMP® Handbook: “The mandatory standards establish firm requirements, and in some cases, limit or prohibit practitioner behavior.” It is important to understand that it is possible to breach both aspirational and mandatory conduct.
Responsibility To be a responsible individual, we must “own” our actions even if we fail. This includes decisions we make or don’t make, actions we take or don’t take, and the gracious acceptance of the consequences of our decisions and actions.
Aspirational Standards of Conduct for the Value of Responsibility A responsible individual is considered dependable, consistent, trustworthy and conscientious. We should aspire to exemplify the value of responsibility by managing as follows: NN
NN
NN
We make decisions in our projects that take into account the best interests of society, public safety, and the environment. We do not falsely exaggerate our abilities, experience, qualifications, and skills in order to accept assignments. We keep our commitments. We “own” our actions even if we fail.
4â•…
Phase 0╇ ╇ Professional Responsibility n
NN
Proprietary and/or confidential information is protected at all times.
NN
We defend this code and hold one another accountable.
Let’s look at an example. A project manager asked one of his team members to perform some tests on the project that were not usually performed but that would provide an extra layer of quality and customer satisfaction. The team member and his supervisor agreed that these tests would be done. Written instructions were provided to ensure the tests would be successful, and a procedure was put in place and documented in case the tests were unsuccessful. However, the tests weren’t done. Consequently, the project was placed in jeopardy, and the customer was furious. It took three days for the project manager to discover that the extra steps were not performed, thus causing this particular challenge. When the project manager found out that the tests had not been performed as stated, he insisted that the team member be suspended and sent home. This created a union tempest. In the end, the problem was solved, the team member was not suspended, and the project manager was not positively perceived by that individual, his supervisor, or the project team. In this case, the project manager did not “own” the mistake. He made sure that someone else took the fall. Instead, the project manager could have said something like “I must not have communicated my expectations about the additional testing as well as I should have. I take complete responsibility for these results and will do whatever is necessary to see that it doesn’t happen again.”
Mandatory Standards of Conduct for the Value of Responsibility It is the mandatory standards of conduct for the value of responsibility that keep our aspirations valid. NN
We keep ourselves informed of regulations, policies, and rules that preside over our actions.
NN
Illegal or unethical conduct is reported to the proper authorities.
NN
Violators of this code are brought before the appropriate body for resolution.
NN
We do not file ethics complaints unless they are substantiated by facts.
The following questions developed by David A. Lax and James K. Sebenius (in The Manager as Negotiator: Bargaining for Cooperation and Competitive Gain; Free Press, 1986) may be useful to you while trying to adhere to these standards of conduct: NN
NN
NN
Are you following rules that are generally understood and accepted for the task taking place? For example, in poker, bluffing is accepted as part of the game. Are you comfortable publicly discussing and defending your action? Would you be comfortable if your friends were aware of it? Your family? If it appeared on the front page of a newspaper?
Respectâ•…
NN
Would you want someone to do it to you? To your family?
NN
What if everyone acted that way? Would the resulting society be desirable?
NN
Are there alternatives that rest on firmer ground?
5
Things that may test your personal and moral belief systems include the following: NN
NN
You fail to weigh a proposal with the same weighting standards as competing proposals. You withhold bad news from management, your sponsor, your team, or your customer.
NN
In the interest of staying on schedule, you omit testing or ignore quality control.
NN
You discover acts of embezzlement or fraud and turn a blind eye to it.
NN
You take a bribe from a vendor who wants to be your sole source provider.
NN
You provide a flawed report to cover up unsolved issues.
Respect Have you ever been unjustly disrespected? As project managers, we may have been disrespected because we were “new” or “unknown.” Gender may have been an issue if you were managing a project in a field that was not typically managed by your gender. Maybe you were a member of a team that didn’t respect your point of view. Many people who have been disrespected simply stop communicating and no longer share their valuable information. As children we may have been taught to respect our parents and teachers, as well as our belongings. As adults we learned to respect money, the safety of others, our reputation, and the environment. When we have a healthy respect for ourselves and others, people begin to trust us, giving them confidence to speak freely (even if we disagree) and the motivation to cooperate.
Aspirational Standards of Conduct for the Value of€Respect A respectful individual is polite, courteous, and considerate to others. To aspire to this value: NN
NN
We learn about the customs of others so that we do not disrespect their values or culture. For example, if you are using chopsticks in an Asian country, the proper conduct while eating is to lay the chopsticks across the top of the bowl when you pause eating and not stab them inside the bowl of food. We listen to others’ points of view, striving not only to understand their meaning but also the intent of the communication. This means learning effective communication skills.
6â•…
NN
NN
Phase 0╇ ╇ Professional Responsibility n
We praise in public and discipline or confront in private. We are always professional in our manner and speech even when others do not reciprocate in kind. It demeans ourselves and our reputation if we reciprocate in an unprofessional manner.
One project manager tells this story. She had convened a meeting over a critical mistake that had been made. The purpose of the meeting was to determine how to fix that mistake. The participants figured out how to fix the problem. The project manager then asked the team, “Is there anything I could have done differently that might have avoided this problem?” A man in the back of the room spoke out: “Well, if you had asked me about this in last week’s meeting, I might have told you how to avoid it.” The project manager felt entirely disrespected. She was livid and responded, “If your intent was to make me look like a fool, you have accomplished that. If your intent was to embarrass our company, you accomplished that too. But I have to ask you, why would you jeopardize our customer’s service to fulfill those ills?” That’s when the rest of team became angry with him. Some people hold information close to their chests. Did the project manager know this? Did she ask the right questions? Maybe the situation could have been avoided if she had asked, “Is there anything else I should know about before we move forward?”
Mandatory Standards of Conduct for the Value of Respect When you demonstrate the value of respect, you elevate the esteem of others. Below are mandatory ways to respect others. NN
NN
When we negotiate, it is with a win-win attitude. We do not use the power of our expertise or position to influence the decisions or actions of others.
NN
We do not elevate ourselves at the expense of others for personal gain.
NN
We are not abusive toward others.
NN
We respect the rights of others, whether it is property, confidentiality, or any other item that would cause someone to lose the respect of others.
One project manager instructor tells this story. The discussion centered on teamwork. The class included a project manager and his team, who were having difficulty getting things done. The instructor asked, “Does the project manager have to be the most technical member of the team?” The response came from the project manager in the room: “I have to know everything; otherwise the work won’t get done the way it should.” The instructor paused for several seconds as she watched the body language of the others in the room. The project manager asked, “So what’s wrong with that?” The instructor said, “I personally believe that a team of one is not a team.” Therein lay the problem. The project manager didn’t trust that his team could do their tasks. They felt disrespected.
Fairnessâ•…
7
Fairness It is our duty to be free of favoritism or self-interest and be unbiased in our actions. When we make decisions, they should be objective and equitable.
Aspirational Standards of Conduct for the Value of Fairness In order to be fair, you must be just and impartial. The following are a couple of ways to maintain your objectivity: NN
NN
Our decision-making process should be transparent when we make decisions. In other words, we reveal how we arrived at a decision. We take steps to correct our actions if our objectivity or impartiality seems lacking.
A project manager was approached by a vendor who wanted her to have box seats at the World Series for all home games if the baseball team won the pennant. There were enough tickets to take her entire team to three games. In return, the vendor wanted the project manager to choose his company for some upcoming project work. “Just between friends,” he said. Not only was it not ethical, it wasn’t fair to the other vendors—no matter how enticing the offer.
Mandatory Standards of Conduct for the Value of€Fairness According to the PMP ® Handbook: NN
NN
“We proactively and fully disclose any real or potential conflicts of interest to the appropriate stakeholders.” “When we realize that we have a potential conflict of interest, we refrain from engaging in the decision making process or otherwise attempting to influence outcomes, unless or until: we have made full disclosure to the affected stakeholders, we have an approved mitigation plan, and we have obtained the consent of the stakeholders to proceed.”
You may not be aware that a potential conflict of interest exists. It may be helpful for you to ask yourself the following questions: NN
Are my personal finances involved?
NN
Do I have any economic interests such as stock or real property?
NN
Does this project provide me with a source of income?
NN
Am I a director, officer, partner, trustee, employee, who holds any position of management with the vendors or suppliers that serve my project?
8â•…
NN
Phase 0╇ ╇ Professional Responsibility n
Do I donate money or provide meals, travel expenses, or anything else beyond the limits prescribed by law?
NN
Has a gift been offered that exceeds the amounts approved by my management?
NN
Has another party offered to pay my travel expenses?
NN
Have I been offered tickets and passes to events?
NN
Have I used nonpublic information for personal gain? (e.g., insider trading in the stock€market)
You must make yourself aware of the potential conflicts of interest and the rules that govern them within your organization. According to the PMP ® Handbook: NN
NN
NN
“We do not hire or fire, reward or punish, or award or deny contracts based on personal considerations, including but not limited to favoritism, nepotism, or bribery.” “We do not discriminate against others based on, but not limited to gender, race, age, religion disability, nationality, or sexual orientation.” “We apply the rules of the organization (employer, Project Management Institute, or other group) without favoritism or prejudice.”
Honesty According to the PMP ® Handbook, “Honesty is our duty to understand the truth and act in a truthful manner both in our communications and in our conduct.”
Aspirational Standards of Conduct for the Value of€Honesty Honesty in our actions promotes trust. Sometimes candor may make someone uncomfortable, but you will be remembered for your sincerity and as one “who tells it like it is.” NN
NN
NN
NN
We always strive to understand the truth. For example, there may be sponsors and others who don’t want to hear the truth about your project status. Do not tell them what they want to hear. Tell the truth, even though there may be ramifications. Be prepared to provide the details in your explanation so they understand what the truth really means. We provide timely and accurate information. Do not hide information or blame others for poor performance. As we said earlier, “own” it; don’t forget to provide praise for those who deserve it. We create an environment in which others feel safe to tell the truth. No one comes to work planning on making mistakes. They are a part of every project. This is where we fix the problem and not the blame.
Honestyâ•…
9
Mandatory Standards of Conduct for the Value of Honesty According to the PMP ® Handbook: NN
NN
“We do not engage in or condone behavior that is designed to deceive others, including but not limited to, making misleading or false statements, stating half-truths, providing information out of context or withholding information that, if known, would render our statements as misleading or incomplete.” “We do not engage in dishonest behavior with the intention of personal gain or at the expense of another.”
On a large construction project, the director of procurement had a brother who owned a bore drilling business in the next state. An engineering decision was made on the project not to do any bore drilling as the cost was prohibitive. The project manager received an anonymous letter sent to her home with a copy of an invoice that the procurement director signed for 5 miles of bore drilling and included a bore drilling machine as a line item on the invoice. The invoice amount was over $300,000. What was even more amazing was that the project manager never saw that invoice and it did not have her signature on it. The project manager confronted the procurement director about the invoice. The procurement director told her to ignore it—it had already been paid. The project manager was dumbfounded. She took the invoice to the chief financial officer who approved the invoice and was also told to look the other way or lose her job. She took it to the chairman of the board, who told her to stop these inquiries at once and just do her job. She decided to quit. She wanted no part of the fraudulent activities that were happening on her project. What would you do in the absence of a set of guidelines governing your profession? Now you can begin your project management journey with a clear view of the standards and expectations of our trade. At the end of each phase, there will be questions to answer about this topic.
Phase
1
Initiating Process
Workers may think that projects are launched on nothing more than a grab out of thin air. Some feel that “sweetheart deals” are made before the project is cost justified. Others use sophisticated feasibility analysis as well as business cases to determine whether a project should be launched. Regardless of how your project is approved, at some point trusted and experienced project managers may have to challenge the rationale of senior managers before placing the project into the portfolio or moving on to the next phase. Let’s face it: These senior managers don’t always have all the information that we project managers may have. We do this based on data and facts. Emotions have no place here. For example, some project managers working on internal projects (such as capital improvement projects) are advised not to be concerned with the cost; “just do whatever it takes to get the job done” seems to be the order from the sponsor and senior management. As the project manager, you are the steward of company funds. You can help launch projects that will not only provide benefit to the company, but also be cost-effective. But you have to start at the beginning. This phase explores several ways you as the project manager can make a difference as projects are initiated: NN
Understand corporate strategy
NN
Understand finance principles
NN
Conduct project selection methods
NN
Establish a progressive business case with built-in feasibility analysis
Task 1.1: Perform Project Assessment To assess a project properly, you have to start with understanding corporate strategy and its usefulness in selecting one project over another. Strategic plans describe the corporate vision for their target markets with the goal of creating customer satisfaction effectively. Does your project align with strategic goals? Many projects are planned that do not align with the corporate vision. Some of these projects may benefit one department or another but may not be aligned with corporate strategy. All projects should answer the question, “Does this project benefit the company?” A project manager should be able to ask their sponsor that question and get an honest answer. Nothing is more frustrating to project teams when they have to ask the question, “Why are we doing this?” Strategic plans are sometimes created that never get implemented because they are always in the “planning” stage. If they aren’t implemented, they serve no useful purpose. Since it is
Task 1.1: Perform Project Assessmentâ•…
13
not cost effective to implement all projects, you must understand and utilize the various project selection methods available within your organization. Project selection methods help decision makers choose projects based on some criteria. There are several types of project selection methods. In this task we’ll show you economic models using net present value and internal rate of return as well as benefit measurement methods that compare projects based on prearranged criteria. We’ll also look at a weighted scoring model. Project managers may also play a pivotal role in the economic engineering of projects and should participate in feasibility studies as well as economic justification of projects. You cannot participate in finance matters unless you have a broad understanding of the concepts of how money is used. In no way is this information intended to be all-inclusive—people earn degrees to master this topic, but we’ll explore the basic tenets of finance. Once you have a good grasp of corporate strategy and business finance, we’ll explore a business case and its value to project management.
Scenario Cimarron Industries is a multimillion-dollar corporation that had very humble beginnings. It is now in the Fortune 500 ranks and owns 200 stores as well as a centralized textile mill that produces fabrics. The company was started to produce a series of children’s books that were being written by the company founder and current CEO, Olivia Ross. The books were a total success, and the revenues from the books provided seed money to open a line of children’s clothing stores patterned after the principal characters in the books. The lines of clothing for each character were originally designed and created by Ms. Ross and were consigned to a children’s boutique of a large clothing chain. They sold out immediately. Later, the apparel stores were also wildly successful. Marketing continues to focus on the superior quality of the clothing at discount store prices. Based on that success, Ms. Ross would now like to open a line of women’s clothing stores called Apples and Pears. Ms. Ross believes that the store would provide what women everywhere are looking for, that is, chic clothing tailored to body types. Those women with expanded waistlines are “apples” and those with large derrières and legs are “pears.” The target audience will be middle-aged to senior women, but Apples and Pears will also have a line for younger women with less-than-perfect shapes. It will not focus on plus sizes, just body types in all sizes. Ms. Ross does not consider herself business savvy. Her degree is in textiles and merchandising, so she counts on Skylar Reese, MBA, chief financial officer (CFO), to guide her business and financial decisions. During their discussions, Ms. Reese reminded Ms. Ross that several other projects are under consideration. One of these is the remodel of the five top-producing stores. Another is the upgrade of equipment at the textile mill. Ms. Reese believes that to start another project now would tighten their cash flow. She has suggested that a market analysis and economic study of the proposal be conducted and the decision made after that. Ms. Ross agrees.
14â•…
Phase 1╇ ╇ Initiating Process n
You have been assigned as the project manager of the Apples and Pears project to assist Ms. Reese any way you can. Ms. Reese has chosen you because your previous position was that of a business analyst. You have been a successful project manager for 5 years now but only on small-scale implementations. You previously had been assigned only to manage the execution of a project. You know your way around the company and most of its processes. You have taken a recent class on capital budgeting and are anxious to try out what you have learned. It all looks promising, but the answer is in the money. Since taking your class, you have gathered data about cash flows, and considered operating expenses and earnings before interest and taxes (EBIT) as well as the availability of personnel to work on the project, the training needed, strategic fit, competitive advantage, and a highlevel comparative analysis. You have shared this information with Ms. Reese. Although Ms. Reese is 99% sure that Ms. Ross would approve the project, based on what is known to date, Ms. Reese also wants to take a closer look at the real world in their business. You have been asked to create a progressive business case that would further substantiate your facts known to date by looking at operational issues, revenue tests, and other elements besides financials that could impact the bottom line. Ms. Reese has discussed your suggestion with James Stevens, a member of the finance committee they both attend, and he decides that a progressive business case should be used. He agrees that it would bring reality to their assumptions and solidify support from those who may oppose the project.
Scope of Task Duration This task should take several days, if not weeks, depending on the size of the project and your level of involvement in project selection methods.
Setup For this task you must know how the project aligns with corporate strategy and you also need an understanding, if not a working knowledge, of key financial principles. The project manager collects data pertinent to the project, and a financial person crunches the numbers. You have to know what the crunched numbers mean and be able to use them to help create your project plan. For this task you’ll also need a basic understanding of how business operates. With that, you can easily assist in the preparation of a business case. Again you’ll work with other managers—all of whom will own a piece of the pie.
Caveat You must have access to information that provides the company’s strategic plans, goals, and the like. During project selection, the project manager usually partners with a financial person to the extent needed to clarify the project to senior management.
Task 1.1: Perform Project Assessmentâ•…
15
The project manager will then typically be given the operations criteria of the business case segment called “probability of success and milestones” because that’s where a project manager’s expertise lies. By expertise here, we mean that most project managers have a good understanding of the processes within operations.
Procedure In this task you’ll take a look at the items you need to understand strategic plans: NN
Description of strategic plans
NN
Elements of a strategic plan
NN
Project portfolio management
NN
Business needs
You’ll also learn how businesses or organizations use money and understand its relevance in project management. We’ll review the following: NN
Time value of money
NN
Capital budgeting concepts
NN
Cash flow concepts
NN
Present value of money
NN
Future value of money
You’ll learn different approaches to determine whether projects should be approved or denied. Topics include the following: NN
Net present value (NPV)
NN
Internal rate of return (IRR)
NN
Benefit measurement methods such as comparative approaches and scoring models
As you learn the elements of a progressive business case, you’ll see how they are iteratively refined. We’ll look at the five segments of a business case and compare their iterative scorecards. Those five segments are: NN
Project assessment
NN
Financials
NN
Internal issues
NN
Alternatives and recommendations
NN
Milestones
Details Organizations are always in a state of change because of technological advances, legal requirements, market demand, customer requests, and so on. An organization’s strategic plan will also change depending on the rate of change and the organization’s ability to manage those changes.
16â•…
Phase 1╇ ╇ Initiating Process n
Additionally, it has been our experience that even though complete finance concepts are not generally taught in a project management class, business leaders expect project managers to be able to discuss issues relevant to finance. You may not be involved in the actual selection of projects, but given a basic knowledge of project selection methods and the way your project was chosen, you’ll be able to provide logical answers to problems along the way. Our intention is to provide simple finance concepts relevant to the project manager’s role in the money game. Because it’s sometimes difficult to choose one project over another, you may have to choose from a variety of project selection methods, but one of them should at least include an objective economic model such as NPV or IRR. You want to be able to defend your ideas with facts and figures as well as your own subjective thoughts and ideas. You can defend your ideas quite well, though, if you use a business case. Business cases are frequently used to assess projects. Business cases are prepared by people with knowledge of corporate finance and project management. A progressive business case has built-in feasibility analysis and provides a “score” at the completion of each phase. A minimum score is needed in order to move to the next phase. Each phase has its own “scorecard” that measures progress by the use of a minimum score. We’ll focus on the following scorecards: NN
Project selection scorecard
NN
Project charter sign-off scorecard
NN
Project planning scorecard
Description of Strategic Plans Strategic plans describe the corporate vision for their target markets with the goal of creating customer satisfaction effectively. Strategic plans that aren’t implemented serve no useful purpose. It is imperative that the strategic plan be “in the headlights,” so to speak, in order to solve problems and create marketing, product development, research and development, capital improvement, and other business plans. Optimal decision making is the ultimate result when all plans and problems are integrated and supported.
Elements of a Strategic Plan The elements of a strategic plan typically answer the following questions: Where do you see yourself going with your business? Is the business and market environment conducive to your success? How do you get there from here? Project plans should map back to strategic plans. It becomes a tactical plan along with the marketing plan, business plans, and so forth. So it is essential that you understand the elements of a strategic plan, which include, in part, these elements: NN
Value and vision statement
NN
Mission statement
NN
Critical success factors for the business
NN
What kind of image you want
NN
What you want to be known for
Task 1.1: Perform Project Assessmentâ•…
NN
Where you want to be in five years
NN
Key business drivers
NN
Actions for achievement
NN
Measurement system for success
17
Projects should be sanctioned based on their alignment with strategic goals and objectives.
Measurement System for Success Strategic metrics are critical to an organization’s success. If you have a stable environment, there is more tolerance for mistakes and a greater ability to recover from mistakes. In an unstable environment, very little tolerance for error exists, and measurements must be taken more often to allow critical adjustments to strategies. Strategic measurements are common planning tools that have increased importance in areas of uncertainty. They also add substance and give feedback regarding the efficacy of their execution. In the words of Richard T. Quinn, vice president of quality at Sears: “You simply can’t manage anything you can’t measure.”
Project Portfolio Management Project portfolio management is a business process that takes a holistic view of projects and the total investment required of them. In that way, decisions on funding can be prioritized based on corporate strategy and organizational alignment with that strategy, as well as resources available. Investments should not be made based on the political clout of one business unit over another. For example, most large corporations have business units, and those units have senior managers. The senior managers, with help from their team, forecast which projects will benefit their business unit and budget accordingly. Why not use portfolio management? The business unit leaders meet with one another and throw all their projects on the table. The team prioritizes those projects based on what’s best for the business rather than what’s best for the business unit. The benefits are obvious: NN
Results in rational decisions about funding
NN
Provides an optimal mix of investment risk and reward
NN
Facilitates the balance of riskier, higher-reward projects vs. safer, lower-reward ones
NN
Categorizes, prioritizes, and monitors new and ongoing investments
NN
Facilitates better communication between project owners and business leaders
NN
Results in greater understanding and cooperation over funding allocation—everybody sees where the dollars are flowing and why
NN
Provides greater business accountability for investments
NN
Allows portfolio management to be used to assign responsibility to appropriate leaders
NN
NN
Enables more efficient use of human resources—the number of staff and managers allocated to various projects becomes more visible and comparable Exposes redundant and overlapping projects
18â•…
Phase 1╇ ╇ Initiating Process n
There are a few pitfalls to portfolio management, however: NN
NN
Some business unit leaders may feel as if their position is in jeopardy if they are not funded for all of their project requests. Even in the senior ranks, it is sometimes difficult to change thinking.
It will be up to senior executives to support the process and lead their direct reports through the transition.
Define Business Needs The business need for the project should tie back to the strategic plan. Typical business needs might be as follows: NN
Increase revenue
NN
Increase market share
NN
Increase customer satisfaction
NN
Reduce expenses
NN
Update technology
NN
Update infrastructure
NN
Create new products and services
NN
Perform capital improvements
NN
Comply with regulatory or legal mandates
Key business drivers that help create strategic plans may change from year to year depending on the economy or the availability of key personnel. One year the strategic plan might be to reduce expenses by laying off personnel. Another may be to change a capability in order to remain competitive. There are many others. It is your job to always be able to answer the question, “Why are we doing this?”
Hands-on 1.1: Testing Your Knowledge of Corporate Strategy 1. Why does a project manager have to understand the corporate strategy? 2. List three elements of a strategic plan. 3. Why is portfolio management important? 4. What are the business needs for the Apples and Pears project?
Time Value of Money One of the basic concepts of business economics and managerial decision making is that the value of an amount of money is a function of the time of receipt or disbursement of cash. A dollar received today is more valuable than a dollar to be received at some future period of time. The only requirement for this concept to be valid is that a positive rate of interest exists
Task 1.1: Perform Project Assessmentâ•…
19
wherever you invest your funds. We’ll further explore this concept by showing you how to find the present value of a future amount and the future equivalent of a present amount. Time value of money is the heart of capital budgeting.
Capital Budgeting Concepts Capital budgeting is used for investment decision making and may include the following goals: NN
Maximize shareholder wealth
NN
Consider all cash flows
NN
Discount cash flows at the cost of capital
NN
NN
Attempt to place an economic value on the strategic implications of new projects and include them in the economic analysis Quantify the strategic benefits of new projects in nonfinancial terms (for example, quality improvement or reduced lead time) Capital budgeting’s purpose is to:
NN
Generate and gather investment ideas
NN
Estimate/forecast investment costs and benefits
NN
Analyze/evaluate the costs and benefits of each alternative
NN
Select among the alternatives and implement the investment chosen
NN
Evaluate the implemented investment
Cash Flow Concepts Because investment decision making requires knowledge of cash flows, let’s take a brief look at a simple cash flow illustration (see Table€1.1). A company spends $100,000 on a concept study and uses the following facts to determine cash flow: Equipment
$2,400 (year 0)
Depreciation
$450, $360, $270, $180, $90
Training costs
$816 (year 0)
Incremental sales
$7,500 with a 10% annual increase over six years
Incremental operating expenses
$6,500 with a 6% annual increase over five years
Ta b l e€ 1 .1 ╇╉╇╉Sample cash flow Year 0 Equipment Depreciation
Year 1
Year 2
Year 3
Year 4
Year 5
–$2,400.00 – $450.00
– $360.00
– $270.00
– $180.00
– $90.00
20â•…
Phase 1╇ ╇ Initiating Process n
Ta b l e€ 1 .1 ╇╇ ╇ Sample cash flow╇ (continued) Year 0 Training costs
Year 1
Year 2
Year 3
Year 4
Year 5
– $816.00
Incremental sales
$7,500.00
$8,250.00
$9,075.00
$9,982.50
$10,980.75
–$6,500.00
–$6,890.00
– $7,303.40
– $7,741.60
– $8,206.10
Earnings before interest and taxes minus total expenses (EBIT)
$550.00
$1,000.00
$1,501.60
$2,060.90
$2,684.65
Taxes = 40%
– $220.00
– $400.00
– $600.64
– $824.36
– $1,073.86
$330.00
$600.00
$900.96
$1,236.54
$1,610.79
Operating expenses
Cash flow
– $3,216.00
Notice that in year 0, there are only expenses. The following years show depreciation as a negative number, which is subtracted from the incremental revenue as well as the operating expenses to come up with the EBIT figures. Taxes are then subtracted to find the cash flow. Most cash flows are more complicated and include adding back the depreciation to receive a net cash flow.
Present Value Most large companies today use some form of discounted cash flow (DCF) techniques in investment decision making (capital budgeting). To perform a DCF analysis, you must find the present value of future sums of money. If you are entitled to receive $200 at the end of two years, you might consider receiving a lesser amount today (say, $188.68), provided that you could invest it over the next two years and earn enough to receive the $200. The formula for present value is: PV = FV/(1 + r)t where (1 + r)t is the present value of a dollar to be received at the end of period t when the time value of money is r and FV is the future value. The term 1/(1 + r)t is called the present value factor, or discount factor. These discount factors determine potential growth. Present value is equal to the future value times the discount factor. These factors can be computed in three ways: via tables, hand calculators, or computer programs. Tables are the easiest. Table€1.2 is an example of discount factors.
0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3759
0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3269
0.9143 0.8363 0.7664 0.7026 0.6448 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2472
0.9053 0.8303 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472
8
9
10
15%
7
14%
0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4323
13%
6
12%
0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4972
11%
5
10%
0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7639 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718
9%
4
8%
0.9706 0.8423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6575
7%
3
6%
0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7561
5%
2
4%
0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696
3%
1
2%
1%
n/r
Ta b l e€ 1 . 2 ╇╉╇╉Discount factors
22â•…
Phase 1╇ ╇ Initiating Process n
What is the present value of $1 to be received three time periods from now if the time value of money is 0.10 per period? In Table€1.2 at the intersection of 10% and three time periods, the value equals 0.7513. Therefore, if you invest $0.7513 to earn 10% per year, after three years you’ll have $1. What is the present value of $100 to be received three time periods from now if the time value of money is 0.10 per period? Because 1/(1 + 0.1)3 = 0.7513 (according to the discount table in Table€1.2), you can see in Table€1.3 that the present value of $100 is $75.13 at time 1, $82.64 at time 2, and finally $100 at time 3. Ta b l e€ 1 . 3 ╇╉╇╉Present value example
Time period
Investment at beginning of period
Interest
Investment at end of period
1
$75.13
7.513
$82.64
2
$82.64
8.264
$90.91
3
$90.91
9.091
$100.00
With discount factors, you can compute the present value of any single cash flow. But in most applications you need to be able to calculate the present value of any sequence of cash flows.
Present Value Addition Rule The present value addition rule states that the value of any set of cash flows is the sum of the present value of each of the cash flows in the set. For example, using Table€1.2, what is the present value of two cash flows, $100 to be received at the end of one period from now and $200 to be received two periods from now, if the time value of money is 0.10? Table€1.4 shows an example of how to compute this. Ta b l e€ 1 . 4 ╇╉╇╉Present value addition rule Period
Cash flow
Discount factor
Present value
1
$100.00
0.9091
$90.91
2
$200.00
0.8264
$165.28
Present value using 0.10 = $256.19
By using the formula for the present value of a future cash flow and the present value addition rule, you can calculate the present value of any possible cash flow.
Task 1.1: Perform Project Assessmentâ•…
23
Future Value Assume that you have $1 now and can invest it to earn i interest. After one period, you’ll have $1 plus the interest earned on the $1. Let FV be the future value and r be the annual interest. Repeating the process, at time 2 you’ll have: FV = PV (1 + r)2 If r = 0.1 and n = 2, you’ll have: FV = PV (1 + r) 2 = (1 + 0.1)2 = $1.21 If, instead of starting with $1, you start with a present value, PV, of $50, the value at time 2 is: FV = PV (1 + r) t = $50 (1.0 + 0.1)2 = $60.50 At 10% interest, $50.00 grows to $55.00 at time 1. The $55.00 (still at 10% interest) grows to $60.50 at time 2. This equation is the standard compound interest formula for the future value of a present sum. The term (1 + r) t is called the accumulation factor. It shows how to calculate future values of a present sum: the dollar amount you’ll have in n periods (which could be months, quarters, years, and so on) in the future if a present sum of PV dollars is compounded for n periods at an interest rate of r per period. Instead of computing future values, business decisions are frequently made based on present values.
Hands-on 1.2: Testing Your Knowledge of Finance Principles Make the calculations necessary to show which of the following statements are true and which are false if the interest rate is 5% per year. Remember that n is an accumulation factor and not a multiplier.
1. $98.00 now is equivalent to $105.60 one year from now. (True or false?) 2. $200.00 one year ago is equivalent to $205.00 now. (True or false?) 3. $3,000.00 now is equivalent to $3,150.00 one year from now. (True or false?) 4. $3,000.00 now is equivalent to $2,887.14 one year ago. (True or false?) 5. Interest accumulated in one year on an investment of $2,000.00 is $100.00. (True or false?)
Economic Models Sometimes it is difficult to choose one project over another. You may have a variety of project selection methods, but one of them should at least include an objective economic model such as NPV or IRR. You want to be able to defend your logic with facts and figures as well as your own subjective thoughts and ideas.
24â•…
Phase 1╇ ╇ Initiating Process n
Economic Model: Net Present Value
NPV is the current market value of a cash flow amount at time n if the discount factor (Dn) is based on a discount rate r that is the market price for the use of one dollar. It is an application of the present value concept, in which the values are summed over time. NPV is also known as the market value for the stream of cash. If the NPV is greater than 0, the investment is generally considered acceptable. You can still choose differently based on other factors. With zero taxes, the NPV of an investment may be described as the maximum amount a firm could pay for the opportunity of making the investment without being financially worse off. The NPV of the investment is the sum of the present values of the cash flow minus the initial investment. NPV is determined by following these steps: 1. Choose an appropriate rate of discount. 2. Compute the present value of the cash proceeds expected from the investment. 3. Compute the present values of the cash outlays required by the investment. 4. Sum the present values of the proceeds minus the present values of the outlays.
Following along in Table€1.5, assume that an investment costs $10,000,000 and returns $12,100,000 a year later. If the rate of discount is 10%, a company could make a maximum immediate outlay of $11,000,110 in the expectation of receiving $12,100,000 a year later. If it can receive the $12,100,000 with an actual outlay of only $10,000,000, the NPV of the investment will be $1,000,110. In other words, the $1,000,110 represents the difference between the present value of the proceeds, $11,000,110, and the actual outlay of $10,000,000. The value in period 0 is negative because that is our original investment. Ta b l e€ 1 . 5 ╇╉╇╉Net present value example Period
Cash flow
Present value factor
Present value
0
–$10,000,000
1.000
–$10,000,000
1
$12,100,000
0.9091
$11,000,110 NPV =
$1,000,110
NPV is widely used and accepted by most organizations. It’s simple to calculate and easy to understand. Additionally, NPV in this example is positive, indicating that the investment is acceptable. NPV has the following advantages: NPV is valid.╇ ╇ It directly measures the present market value of one or more cash flows considered separately or in combination.
Task 1.1: Perform Project Assessment
25
NPV is effective. As a decision variable, NPV provides all the usefulness of any other variable and also provides additional strengths. NPV is reliable. If the rules for calculating NPV are followed, any analyst will produce the same result for a given stream of cash flows and a discount rate based on the market cost of money. NPV is flexible. After the NPV has been calculated for a portion of any project, it can be used without recalculation to include that portion in any other investment. In several examples we have shown the use of NPV at either time 0 or time 1. If we start with time 0, that is the beginning of the time period. If we use time 1, we are saying that the investment has been working for a period of time (for example, the end of the first year). It is also important to note that if you start with time 0, you stay with time 0 to calculate NPV. If you start with time 1, you stay with time 1 to calculate NPV.
Now that you know the steps needed to calculate NPV, let’s try it.
Hands-on 1.3: Testing Your Knowledge of nPV 1.
Assume that there is an investment to pursue. The initial investment is $12,337 (year 0). Because this amount is the initial investment, it appears as a negative number. The cash flow at the end of the first year (period 1) is $10,000. The cash flow at the end of the second year is $5,000. Using Table 1.6, compute the NPV of this investment by using 10% as the discount rate.
TA b l E 1 . 6
Determine NPV problem 1 Period
Cash Flow
Present Value Factor
Present Value
NPV =
2.
The remodel project initial investment is $5 million, and the cost of money is 9%. Cash flow for year 1 is $1 million, for years 2–3 is $900,000, and for years 4–6 is $750,000. Using Table 1.7, determine the present values for each year of the remodel project.
26â•…
Phase 1╇ ╇ Initiating Process n
Ta b l e€ 1 . 7 ╇╉╇╉PV for remodel project Period
Cash Flow
Present Value Factor
Present Value
NPV=
3. What is the NPV for the remodel project? 4. The Apples and Pears project initial investment is $7,000,000, and the cost of money is 9%. Assume cash flow for year 1 is $3,000,000, for years 2–3 is $2,000,000, and for years 4–6 is $1,500,000. Using Table€1.8, determine the present values for each year of the Apples and Pears project. Ta b l e€ 1 . 8 ╇╉╇╉PV for Apples and Pears project Period
Cash Flow
Present Value Factor
Present Value
NPV=
Task 1.1: Perform Project Assessmentâ•…
27
5. What is the NPV of the Apples and Pears project? 6. If the investment for the Apples and Pears project increased to $8,750,000, how would that change the NPV?
7. Which project should be pursued? 8. What other project selection methods could you pursue?
Economic Model: Internal Rate of Return
The internal rate of return (IRR) is the value of r that makes the NPV = 0. The IRR is, therefore, a summary measure of an investment (not just of the cash flows) that is useful only when comparing that investment with another identical investment. For example, comparing two capital improvement projects is considered acceptable when using IRR. Comparing a construction project and an IT project is not. Using IRR can create serious challenges for those who manage capital budgets. When managers decide to finance only the projects with the highest IRR, they may be making a decision that is not as favorable as they think. For example, when all elements of the cash flow stream are known, the IRR provides some information about a particular stream of cash. Each financial investment in Table€1.9 has an IRR of 10%. Ta b l e€ 1 . 9 ╇╉╇╉Internal rate of return example Time period
0
1
2
A
– $100
$0
$110
B
– $100
$10
$110
C
– $100
$110
$110
Notice that the investments shown in column zero are negative values. In scenario A, $100 is invested at 10% for two years before there is a return on the investment of $100. In scenario B, $100 is invested at 10% for two years also, but the interest payment is made at the end of year 1 and principal is returned at the end of year 2 along with an interest payment for the last year. In scenario C, principal and interest are paid at the end of year 1. The principal ($100) is then invested for the second year at the same rate (10%). These examples have quite different scenarios, but all have the same IRR. Be careful when using IRR. Although it is quite possible that each of the alternatives A, B, and C, would be viewed as the same by one or more investors, it is also possible to alter the differences of the scale so the IRR would be the same for financial investment opportunities that would otherwise appear very different—say, when compared with one another using NPV.
28â•…
Phase 1╇ ╇ Initiating Process n
Benefit Measurement Methods Sponsors and corporate leaders always want to have confidence in the decisions that they make. They are fed information from project managers and others to assist them. A variety of benefit measurement methods are available that will assist project managers in providing acceptable and meaningful information to their sponsor and leaders. You’ll explore the following: NN
Comparative approaches
NN
Weighted scoring models
NN
Business cases
Benefit Measurement Method: Comparative Approach
Table€1.10 illustrates a comparative approach. There are three steps: 1. Criteria are determined. (These are typically preassigned.) 2. Each criterion is compared. 3. The decision is weighed. Ta b l e€ 1 .1 0 ╇╉╇╉Comparative approach Criteria
Project 1
Project 2
1. Project maps to business vision, mission, goals, and corporate strategy.
Yes/No
Yes/No
2. Project delivers sufficient value to the business.
Yes/No
Yes/No
3. Project impacts or relates to a project or application within other business units.
Yes/No
Yes/No
4. Alternative analysis done.
Yes/No
Yes/No
5. Project follows company standards.
Yes/No
Yes/No
6. Team members have appropriate skill set and are available.
Yes/No
Yes/No
7. O ther projects similar to this project address similar requirements.
Yes/No
Yes/No
8. Would any existing projects have to be discontinued when this project is completed?
Yes/No
Yes/No
It is important to remember that most projects also use an economic model before a decision is made or include an economic model as one of the criteria.
Task 1.1: Perform Project Assessmentâ•…
29
Benefit Measurement Methods: Weighted Scoring Models
The same comparison can be used but with a weight associated with each question. Each weight should be described to avoid confusion (for example, 5 = Mission critical, 4 = Very important, 3 = Important, 2 = Nice to have, 1 = Not important). In this case the scale is 1–5, with 5 being the highest. Other scoring models may have a different range. There are three steps for this process: 1. Assign a weight to each criterion. 2. Rate each criterion. 3. Multiply the weight by the rating to get the score.
Table€1.11 shows an example of weighted scoring. Ta b l e€ 1 .11 ╇╉╇╉Weighted scoring Criteria Weight
Project 1 Rate Score
Weight
Project 2 Rate Score
1. Project maps to business vision, mission, goals, and corporate strategy.
5
5
25
5
3
15
2. Project delivers sufficient value to the business.
5
4
20
5
5
25
3. Project impacts or relates to a project or application within other business units.
4
4
16
4
4
16
4. Alternative analysis done.
4
3
12
4
2
8
5. Project follows company standards.
4
3
12
4
4
16
6. Team members have appropriate skill set and are available.
3
3
9
3
3
9
7. O ther projects relate that address similar requirements.
4
2
8
4
3
12
8. Would any existing projects have to be discontinued when this project is completed?
3
2
6
3
1
3
Total
108
Total
104
30â•…
Phase 1╇ ╇ Initiating Process n
Weighted scoring models are simple and provide consistency in their approach. For small projects (and your company would have to decide what is considered small), weighted scoring models may be enough. But most companies use an economic model as well. There could be challenges with scoring models. Projects may be ranked and scored subjectively (without data and facts) instead of objectively. There may be inconsistencies in the selection committee based on politics, a personal agenda, and so on. Senior management may override the decision. If these challenges do exist, consider revamping the criteria so that all are in agreement.
Hands-on 1.4: Testing Your Knowledge of Benefit Measurement Methods—Scoring Models Answer the following questions:
1. For each criterion found in Table€1.11, what information could you provide that would justify the rating and score?
2. Select five additional criteria. Weight and rank them. Determine the score. How could this impact the result in question 1?
3. What are the advantages of scoring models? 4. Is a comparative approach enough? Why or why not?
Business Cases with Built-In Feasibility Analysis The difference between a business case and other project selection methods is that a business case affords a higher level of confidence to decision makers, because it takes a holistic view of the company. The business case is completed through the planning phase, thus before major expenditures occur. Additionally, the business case can be followed through the end of the project and beyond. For instance, if the business goal of the project were to increase revenues, it may take another year or more to see whether revenues have increased. A minimum score is assigned to each of the criteria within a segment of the business case. If the total minimum score is not achieved, the project cannot proceed to the next activity. The minimum values have been preassigned to each criterion. A project selection committee usually decides the minimum score for each scorecard. In the real world, this business case is repeated for the project charter sign-off and planning activities. Each progressive phase increases the minimum score that enables a decision maker to decide whether the project should continue. For example, if the minimum score through project charter sign-off does not meet the minimum score for both activities (selection and charter), the project cannot advance to planning. Rather than show the table in its entirety for charter and planning, we include only summary minimums. Table€1.12 is an example of a minimum scorecard for the project selection activities.
Task 1.1: Perform Project Assessmentâ•…
Ta b l e€ 1 .1 2 ╇╉╇╉Project selection scorecard 1. PROJECT ASSESSMENT A. MARKET ANALYSIS
SCORE
Customer Initiated Request or Customer Expectation 0 No request 5 Informal request 10 Formal request/expectation
Minimum Score 0
Meets Customer Need 0 No needs identified 5 Perceived fit with need(s) 10 Known fit with need
Minimum Score 5
Market Window Minimum Score 4 0 Can’t meet—delivery time exceeds customer requirements 5 Perceived ability to meet customer requirements 10 Known ability to meet customer requirements Willingness to Pay 0 Known unwillingness 5 Perceived willingness 10 Known willingness at proposed price
Minimum Score 5
Market Potential 0 No potential 3 Perceived potential 5 Some customers want 10 Most customers want
Minimum Score 3
Forecast Minimum Score 3 0 No forecast 5 Draft forecast 10 Firm forecast from customers with commitments from account teams and customers B. STRATEGIC FIT Product Alignment with Strategy 0 No fit with any Business Unit Strategy 5 Fits with half of Business Unit strategies 10 Fits with all of Business Unit strategies
SCORE Minimum Score 3
C. COMPETITIVE ADVANTAGE Creates Competitive Advantage 0 No advantage 5 Perceived advantage or meets competition 10 Clear advantage
SCORE Minimum Score 0
D. PROBABILITY OF SUCCESS Availability of Technology 0 No advantage 5 Perceived advantage or meets competition 10 Clear advantage
SCORE Minimum Score 5
Ordering Minimum Score 3 0 Means not available 5 Perceived feasibility 10 Known feasibility—mechanized systems ready when needed
(continues)
31
32â•…
Phase 1╇ ╇ Initiating Process n
Ta b l e€ 1 .1 2 ╇╇ ╇ Project selection scorecard╇ (continued) Billing Minimum Score Means not available Perceived feasibility Known feasibility—mechanized systems ready when needed
3
Fraud Control 0 No advantage 5 Perceived advantage or meets competition 10 Clear advantage
Minimum Score 3
Maintenance 0 Means not available 5 Perceived feasibility 10 Known feasibility—available when needed
Minimum Score 3
Installation/Deployment 0 Means not available 5 Perceived feasibility 10 Known feasibility—available when needed
Minimum Score 3
Systems Synergy 0 All new systems needed 5 Major modifications needed 10 Minimal modifications needed
Minimum Score 3
Risk Versus Benefits 0 Risks outweigh benefits 5 Risks and benefits are equal 10 Benefits outweigh risks
Minimum Score 3
PROGRAM ASSESSMENT MINIMUM SCORE PROGRAM ASSESSMENT ACTUAL SCORE
49
DIFFERENCE 2. FINANCIALS A. Quality of Financial Analysis Minimum Score 3 SCORE 0 Not done 1 Rough estimate of revenue, expense, capital or price and estimated incremental investment (per unit basis) 3 Estimated demand, revenue, expense, capital in business case format (income statement, etc.) 5 Preliminary financial analysis including sensitivity analysis of variables, functional units involved in estimating costs where appropriate 7 Financial analysis including best/worst case scenarios, sensitivity, analysis, and functional units involved in estimating costs where appropriate 10 Financial analysis including Monte Carlo risk analysis, best/worse case scenarios, sensitivity analysis, and service units involved in estimating costs where appropriate B. Financial Desirability of Program Minimum Score 0 Not done 1 Project/Program is expected to break even within 5 years 3 Project/Program has a positive NPV within the study life and has a discounted break even of 5 years or less 5 Project has significant gross margin/EBITDA opportunity and impact
1 SCORE
Task 1.1: Perform Project Assessmentâ•…
Ta b l e€ 1 .1 2 ╇╇ ╇ Project selection scorecard╇ (continued) 7 Project/program meets 3 of the following 4 criteria: 1. A modified profitability index of 2.0 or greater 2. A program rate of return 10% above the cost of capital 3. A discounted break-even of 5 years or less 4. And/or shareholder value greater than $5M 10 Project/program has: 1. 2. 3. 4. 5.
A modified profitability index of 3.0 or greater A program rate of return 15% above the cost of capital A discounted break-even of 3 years or less And/or shareholder value greater than $10M Worst-case scenario meets all of criteria #5 FINANCIALS MINIMUM SCORE FINANCIALS ACTUAL SCORE
4
DIFFERENCE 3. INTERNAL ISSUES Minimum Score 3 SCORE A. Effects of Preliminary Disclosure 0 Effects of disclosure either have not been considered, or considered to be generally negative 1 Net impacts of full disclosure to competitors considered to be generally neutral 3 Net impacts of full disclosure to competitors considered to be generally positive B. Contract Development 0 Not done 3 Outline completed 7 Draft completed, issues resolvable 10 Contract completed C. NET REVENUE TEST INPUTS/ANALYSIS Impact on Cross Elastic (CE) and Complimentary Services
Minimum Score
2 SCORE
Minimum Score
5
Minimum Score
5
SCORE
0 Not done or negative net impact 5 Neutral net impact 10 Positive net impact Demand Analysis for New Services, Cross Elastic, and Complimentary Services
0 Not done 5 Preliminary analysis completed, somewhat rough but much research either completed or in process 10 Analysis well developed and documented Net Revenue Test Demand Relationships Analysis
Minimum Score
5
Minimum Score
4
0 Not done or negative net impact 5 Neutral net impact 10 Positive net impact Legal 0 3 4 5 10
Violates rules/law Issues identified Legal department contacted Perceived ability to resolve issues Does not violate rules/laws
(continues)
33
34â•…
Phase 1╇ ╇ Initiating Process n
Ta b l e€ 1 .1 2 ╇╇ ╇ Project selection scorecard╇ (continued) FINANCIALS MINIMUM SCORE FINANCIALS ACTUAL SCORE
24
DIFFERENCE 4. ALTERNATIVES AND RECOMMENDATIONS A. Pricing Plan (First Year) 0 Not done 5 Rough draft 10 Completed
Minimum Score 3 SCORE
ALTERNATIVE AND RECOMMENDATIONS MINIMUM SCORE ALTERNATIVE AND RECOMMENDATIONS ACTUAL SCORE
3
DIFFERENCE 5. MILESTONES A. First Year Milestones by Quarter (including tracking mechanisms and contingencies) 0 Not done 5 Rough draft 10 Completed
Minimum Score 0 SCORE
MILESTONES MINIMUM SCORE MILESTONES ACTUAL SCORE
0
DIFFERENCE
Hands-on 1.5: Testing Your Knowledge of Business Cases Using your common sense and experience, please answer the following questions:
1. Who should prepare the business case? Why? 2. What do you think are the advantages of a project manager participating in the business case process?
3. Are there disadvantages? Why or why not? 4. Is a business case enough? Why or why not?
Now that you have reviewed the business case, Table€1.13 provides a summary for project selection, charter sign-off, and planning. Notice how the scores progressively increase. Now that you have an overview of corporate strategy, you have the ability to map your project activities to the corporate issues that matter the most—money. You also have a good grasp of finance, how projects are selected, and how business cases evolve. You are ready to move forward! Remember, at the top of the food chain, it’s always about money. You can now plan your project brilliantly, present your project brilliantly, and defend your project brilliantly: with data and facts relative to money!
Task 1.2: Creating the Scope Statementâ•…
35
Ta b l e€ 1 .1 3 ╇╉╇╉Summary scorecards for project selection, charter sign-off, and planning Summary Scorecard for Project Selection Minimum Score PROGRAM ASSESSMENT FINANCIALS INTERNAL ISSUES ALTERNATIVES AND RECOMMENDATIONS MILESTONES TOTAL
Actual Score
Difference
Actual Score
Difference
Actual Score
Difference
49 4 24 3 0 80
Summary Project Charter Sign-off Minimum Score PROGRAM ASSESSMENT FINANCIALS INTERNAL ISSUES ALTERNATIVES AND RECOMMENDATIONS MILESTONES TOTAL
76 8 33 10 5 132
Summary Project Planning Minimum Score PROGRAM ASSESSMENT FINANCIALS INTERNAL ISSUES ALTERNATIVES AND RECOMMENDATIONS MILESTONES TOTAL
117 12 43 19 9 200
Task 1.2: Creating the Scope Statement The purpose of creating a scope statement at the beginning of the project is to have a basis on which to make future project decisions. The project scope statement should give senior management a holistic overview of what to expect throughout the life of the project and what the desired final outcome of this project will be. At this stage in the process, you describe what you know. This high-level scope statement then becomes part of the project charter. Further planning steps will progressively elaborate on this initial scope statement, providing additional detail for estimating, assigning, controlling, and finally accepting the project deliverables.
36â•…
Phase 1╇ ╇ Initiating Process n
Scenario Rather than reinvent the wheel, you obtained the original project plans for Cimarron’s children’s stores; although the plans are outdated, you were able to glean and update what you feel is enough information to develop a scope statement. These facts supplement additional information you have obtained. You learned through your interviews with the stakeholders that not everyone was wild about the project. You have been privileged to be a part of some strategic planning sessions because your mentor is also your project sponsor. Terri Higgins is a Project Management Professional (PMP)®, and hopefully you’ll become one by the end of December, because this project will give you the required hours needed to sit for the PMP exam. She will be a huge help to you. Thankfully, you know that project management is a key business process and is supported by your superiors. In fact, there is a central project management office (PMO), with a manager of project managers who provides project management services, support, training, and mentoring to their staff. You belong to this group. You now know that for Phase 1 of the project, trial stores will be constructed at a new mall being built in Bellevue, Washington. This is a high-end location, but the company is betting that regardless of their customers’ spending habits, beautiful clothing that fits and can be purchased at a reasonable price will appeal to most shoppers. The other location will be at Washington Square, just south of Portland, Oregon, where there is a broader range of spending habits. These stores are to be elegant, with plush carpeting, soft music playing, designer showcasing, private dressing rooms, ambient lighting, as well as displays for jewelry, accessories, and perfume items. There will also be a second-floor bridal gallery. Senior management initially decided that developing and advertising the brand, hiring personnel, and performing any IT work would be considered a cost of doing business. You and Ms. Reese have since convinced senior management that the cost for that work will be at least $1,750,000 more than the original estimate and should be included in the project so that real costs can be determined for future use. They agreed to add that amount to the budget. The project will not include the cost of leasing space at the malls because that is considered a yearly operational cost. Terri Higgins has advised you that the project has been conditionally approved based on the business case you helped to prepare. The rough order-of-magnitude budget for setting up the two stores is $8,750,000, to be allocated as shown in Table€1.14. Ta b l e€ 1 .1 4 ╇╉╇╉Preliminary project budgets Budget item
Amount
Advertising
$1,000,000
Space planning
$5,000
Construction
$3,600,000
Task 1.2: Creating the Scope Statementâ•…
Budget item
Amount
Non-inventoried furnishings
$50,000
Design of clothing
$1,250,000
Hiring and training of personnel
$50,000
Information technology
$700,000
Manufacturing costs
$2,075,000
Delivery and setup
$20,000
Total
$8,750,000
37
This number will be refined when the details of the project are known. The target date for completion is November 1 of next year for both stores, just in time for the holidays.
Scope of Task Duration The duration might be hours or days, depending on the complexities of the project.
Setup This is not a task you’ll do alone. You’ll enlist your team members and others to assist you with this task. Don’t forget your sponsor!
Caveat Be sure to include geographically dispersed team members. The duration of tasks may be affected, particularly if team members live in other countries or time zones.
Procedure For this task you’ll build a project scope statement that will include, but is not limited to these factors: NN
Project objectives
NN
Product scope description
NN
Project requirements
NN
Initial project organization
38â•…
Phase 1╇ ╇ Initiating Process n
Additionally, this task will describe the characteristics needed to staff a project with the right people who have the right skills, who are available when needed for the right duration within the planned budget.
Details It has been said that a poorly prepared scope statement is often the cause of major cost overruns, schedule delays, poor morale, and ultimately project failure. So where do you get all of the information needed to create the scope statement? You can rely on experts; use templates, forms, and past history; and talk to fellow project managers, who may be your best source if they have managed the same kind of project. You have already conducted a stakeholder analysis, and much of the information you’ll need comes from that. A properly prepared baselined project scope statement is comprehensive enough to provide a common understanding of the project objectives and deliverables among all the stakeholders. After the scope is baselined, it allows for evaluating change requests on additional work to verify whether they are within the boundaries of the originally approved work effort.
Business Goals vs. Project Objectives Business goals describe what you want to accomplish. The business goals should align with corporate strategy. Project objectives describe how you are going to accomplish the business goal. The best method to use when writing project objectives is the SMART method, a popular method that has been around for many years. The objectives should be as follows: Specific╇ ╇ The objective tells exactly what, where, and how the problem or need is to be addressed and should be written in a clear, concise, and understandable way. Measurable╇ ╇ Metrics need to be put in place so that you know whether you succeeded. Accurate╇ ╇ The objective should be described precisely so errors do not occur. Realistic╇ ╇ The objective should be a result that can be achieved in the time allowed. Time-bound╇ ╇ The objective must include a specific date for its achievement.
Product Scope Description If a project is in-house, the product scope description indicates the characteristics of the end result of the product within the project and should map back to the business goals. Because you’ll know more as the project progresses, this description will be progressively elaborated. If the project comes from an external source and will be performed under a signed contract, it is referred to as a statement of work or contractual statement of work. This activity should be the driving force for what you want to end up with, so it is imperative that the statement not be confusing. Most elements of the project management plan (which we’ll discuss later) should map back to this description. Just remember that the project scope is the sum of all products and the product scope is the sum of all items creating an individual product.
Task 1.2: Creating the Scope Statementâ•…
Hands-on 1.6: Testing Your Knowledge of Goals and Objectives Given what you now know about the Apples and Pears project, write the business goals for this project and the project objectives to achieve them. Use the following SMART model (Table€1.15) to assist you: Ta b l e€ 1 .1 5 ╇╉╇╉SMART goals and objectives exercise SMART
Business Goals (What)
Project Objectives (How)
Specific
Measurable
Accurate
Realistic
Time-bound
Hands-on 1.7: Testing Your Knowledge of the Product Scope Description Given what you now know about the Apples and Pears project, use Table€1.16 to write the product scope description for two products: Ta b l e€ 1 .1 6 ╇╉╇╉Product scope descriptions Product Scope Description 1.
2.
39
40â•…
Phase 1╇ ╇ Initiating Process n
High-Level Project Requirements Project requirements describe the characteristics of the deliverables. A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Fourth Edition, p. 104, describes requirements as “the quantified and documented expectations of the sponsor, customer and other stakeholder.” Requirements are often not fully known at the onset of a project. A good rule of thumb to follow is to continue to accept requirements until actual work begins. It is much easier to change a document than to perform rework out in the field or when developing software. So where do we get these requirements? This is something you’ll never want to do alone. However, you may find yourself eliciting and documenting them alone—but you should not be the sole source of information about what is needed! Business process owners, team members, consultants, customers, management staff, and experts are just a few of the people you can enlist to be sure you have all the requirements and only the requirements necessary to fulfill the goals of the project. A simple approach is to validate the needs and expectations of your customers. You simply take each need and expectation and do the RUMBA! Ask, “Is this requirement...?” Table€1.17 describes the elements of the RUMBA. Ta b l e€ 1 .17 ╇╉╇╉The RUMBA Responsible
You or your organization can meet the requirement (it does not violate company procedures, equipment capability, and so forth).
Understandable
The customers verify that you understand what they require from you.
Measurable
In some way, you can objectively determine the degree or frequency of meeting the requirement.
Believable
Employees will agree to strive for that level of achievement.
Achievable
Can you meet the requirement (is the desired performance level theoretically possible)? If not, you may need to renegotiate as facts and data become available.
For each agreed-upon and reasonable expectation, if all answers to the RUMBA questions are Yes, then that requirement is valid. Any No answer implies further negotiation until it becomes a Yes answer. If it cannot become a Yes answer, then the need or reasonable expectation is not a valid requirement and should not be accepted as such.
Typical Organization Structures Understanding the organizational structure(s) that exist within companies will help you manage your project and set up your project organization structure better. At this point, you define authority and accountability issues as well as control issues. There are several types of organizations, which we’ll look at next.
Task 1.2: Creating the Scope Statementâ•…
41
Hands-on 1.8: Testing Your Knowledge of Requirements Given what you now know about the Apples and Pears project, use Table€1.18 and the RUMBA to describe and validate five requirements associated with the project. Ta b l e€ 1 .1 8 ╇╉╇╉Requirements Requirements
R
U
M
B
A
1. 2. 3. 4. 5.
Functional Organizations
The first type of organizational structure is the functional organization (see Figure€1.1). In this organization, the functional manager determines who will work on a project task. You already know the folks from the project charter work who will be team members; some will be full time and others will be ad hoc. In this case the project manager is typically the functional manager as well. Project managers are rarely assigned, but if they are, they have little or no authority. The people assigned as project managers also have their full-time line job and have not participated in the initiation phase of the project. Their managers will coordinate activities among themselves by using their staff. Staff members do not cut across functional boundaries; their managers do that. Figure€1.1 illustrates a functional organization. There are advantages and disadvantages of functional organizations. See Table€1.19. Ta b l e€ 1 .1 9 ╇╉╇╉Advantages and disadvantages of functional organizations Advantages
Disadvantages
Enduring organizational structure.
Project manager has little or no authority.
Clear career path with separation of functions, Multiple projects compete for limited allowing specialty skills to flourish. resources and priority. Employees have one supervisor with a clear chain of command.
Project team members are loyal to the functional manager.
42â•…
Phase 1╇ ╇ Initiating Process n
F ig u re€ 1 .1 ╇╉╇╉Functional organizational chart CEO
Finance
HR
IT
Sales
Operations
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Projectized Organizations
Projectized organizations have ultimate authority over the project. Figure€1.2 illustrates that the focus of the organization is the project. Staff for the project is focused only on projects and project work—they do not wear more than one hat. Team members are typically co-located, and loyalties are formed to the project, not to a functional manager. F ig u re€ 1 . 2 ╇╉╇╉Projectized organizational chart CEO
Project Manager
Project Manager
Project Manager
Project Manager
Project Manager
Project Staff Team Members
Project Staff Team Members
Project Staff Team Members
Project Staff Team Members
Project Staff Team Members
In this organization, the project manager can hire team members who are suited to the tasks. The project manager may have a set of core individuals who work on all projects (such as construction). These folks remain on the project payroll as long as their services are needed. Others are hired for a one-time-only event. These folks may be consultants, subject matter experts, and so forth.
Task 1.2: Creating the Scope Statementâ•…
43
Matrix Organizations
A strong matrix environment is an ideal organizational structure that supports project management (see Figure€1.3). In the figure you can see a manager of project management who would be on equal footing with other managers relative to staffing and funding. In this arrangement a project management office is most likely to survive, but project management offices can reside in other organizational structures as well, even if they are not as well supported. F ig u re€ 1 . 3 ╇╉╇╉Strong matrix organizational chart
CEO
Manager of Project Managers
HR
IT
Sales
Operations
Project Manager
Staff
Staff
Staff
Staff
Project Manager
Staff
Staff
Staff
Staff
In a weak (Figure€1.4) or balanced matrix (Figure€1.5) structure, the project management work remains a stepchild to the organization within which it resides. For example, if the budget for marketing is x amount of dollars, you can be sure that only about 5% of that budget will be allocated to project management support. The balanced matrix, however, gives equal power to the project manager and functional manager. In these organizations, the project manager may have to negotiate with the functional managers for a specific individual. This can be a problem as that person may not be available to work on your project. Project managers also tend to tell the functional manager how much time they have to complete tasks. The functional manager (who is often a peer) feels like the project manager is telling them how and when to do their jobs. We really don’t know what functional managers have on their plate. Here’s what you can do instead: NN
Discuss the known task(s) with the functional manager.
NN
Ask how long the task will take.
NN
Ask for a time commitment to finish the task.
When the functional manager is approached in this way, an element of trust is achieved. They will usually become a trusted ally and send one of their direct reports to be a team member on your project.
44â•…
Phase 1╇ ╇ Initiating Process n
F ig u re€ 1 . 4 ╇╉╇╉Weak matrix organizational chart CEO
Finance
HR
IT
Sales
Operations
Staff
Staff
Staff
Staff
Staff
Staff/Project Coordinator
Staff
Staff
Staff
Staff
F ig u re€ 1 . 5 ╇╉╇╉Balanced matrix organizational chart CEO
Finance
HR
IT
Sales
Operations
Staff
Staff
Staff
Staff
Staff
Project Manager
Staff
Staff
Staff
Staff
The conversation may end with something like this: “I know that it’s your place to manage your workload with the folks you have available. I also know you’ll finish the task as agreed; however, I would appreciate a commitment from you that you’ll not change that resource if at all possible. If you must change the resource, please let me know as far in advance as possible. That will give me a chance to make adjustments.” In Table€1.20 you can easily see how project management is viewed in the various organizational structures as well as the power and focus of the project manager.
Task 1.2: Creating the Scope Statementâ•…
Hands-on 1.9: Testing Your Knowledge of Organizational Structures Given what you now know about organizational structures and the Apples and Pears project, answer the following questions:
1. Is Cimarron’s organization considered functional, projectized, weak matrix, strong matrix, or balanced matrix?
2. List the characteristics of Cimarron’s organization that led you to your answer in question 1.
3. Complete the organizational chart shown here in Figure€1.6 as it relates to your previous answers. F ig u re€ 1 . 6 ╇╉╇╉Sample organizational chart
CEO
Finance
HR
IT
Sales
Operations
Ta b l e€ 1 . 2 0 ╇╉╇╉Comparison of matrix organizational structures Weak matrix
Balanced matrix
Strong matrix
Project manager’s title
Project coordinator, project leader, or€project expediter
Project manager
Project manager
Project manager’s focus
Projects and Split focus between project and functional project work responsibilities
Projects and project work
45
46â•…
Phase 1╇ ╇ Initiating Process n
Ta b l e 1 . 2 0 ╇ ╇ Comparison of matrix organizational structures╇ (continued) Weak matrix
Balanced matrix
Strong matrix
Project manager’s power
Minimal authority and power
Balance of authority and power
Significant authority and power
Project manager’s time
Part-time on projects
Full-time on projects
Full-time on projects
Organizational style
Most like functional organization
Blend of both weak and strong matrix
Most like a projectized organization
Project Manager Reports to
Functional manager
A functional manager but shares both power and authority
Manager of project managers
Hands-on 1.10: Testing Your Knowledge of Project Scope Statements Using Table€1.21, create the high-level Apples and Pears project scope statement with the elements known at this time: Ta b l e€ 1 . 2 1 ╇╉╇╉Scope statement template High-Level Scope Statement Template Describe business goals Describe major objectives of this project Describe background for the project Describe the expected benefits List the stakeholders and their role in the project Describe 5 high-level requirements Describe project organization
Task 1.3: Understanding Your€Stakeholders╅
47
Task 1.3: Understanding Your€Stakeholders Stakeholders are people. First and foremost, they are human beings. These folks can be an individual, a group, a community, or the like, but whatever we call them, they have an interest in your project. They may support your project with enthusiasm, or they may have serious concerns about your project. Some people may have serious concerns but have no power to change anything in the project. Others may be highly supportive but have no rank. And the opposite is also true: Some high-ranking corporate individuals may be the champions for your project or the harbingers of doom because they do not support the project at all. The stakeholders on your project can make or break the project. The project manager defines stakeholder assets or detriments and as a result will discover who supports your project and who does not. You need to know who you can go to for help and support, but you especially want to know who may sabotage your project or cause you to “lose traction” as you move forward. People with high rank and high support should be leveraged fully. The project manager should create a response strategy that satisfies those with high power and no support. In all cases it is important to listen to all the stakeholders in your project. You may learn something you didn’t understand or know. In this task you’ll discover who your stakeholders are as well as their roles and responsibilities in a project.
Scenario Ms. Reese, with help from her project manager from Cimarron Industries, has determined that the Apples and Pears project is a favorable project to pursue. It was determined that this project will generate more revenue in the short term than upgrades to the textile mill or a remodel of existing children’s stores. Creating clothing stores is the company’s bread and butter. Ms. Ross believes they should use the same approach they used 20 years ago when the original children’s stores were launched. Ms. Reese wants to bring in additional internal people who may have a better understanding of the more current way this type of project is handled. Ms. Ross thinks this is a waste of time but reluctantly agrees. Ms. Reese also reminds Ms. Ross that if all goes well during this initiation phase, the planning work can be started in December and the project could be complete by the start of the next holiday season. Ms. Ross thinks that would be splendid but realizes those dates are not cast in stone until thorough planning has occurred. Ms. Reese has also prepared a list of key stakeholders and provided them to the project manager. NN
NN
Megan Holly is a marketing manager who participated in the original market study. She has a sales background and is already planning her marketing strategy. James Stevens is on the finance committee with Ms. Reese. He believes that even though the initial numbers looked positive, it is risky to assume that the current economy will support the increasing revenue projections for the project.
48â•…
NN
NN
NN
NN
NN
NN
Phase 1╇ ╇ Initiating Process n
Jacob Patrick is the manager of engineering and construction. He believes that the cost of materials is decreasing due to the slowdown in new home sales and that the project could provide many jobs during its implementation. Jordyn Kelly is the human resources vice president who is all for the project because it will create new jobs in many new cities. Skylar Janes is the advertising manager for Cimarron Industries and is eager to pursue the brand project this will create. Carolyn Lee is the union representative for the manufacturing facility. She represents those who will ultimately design and manufacture the clothing. Madison Adams is the webmaster of Cimarron’s web pages. She wants to know if Apples and Pears customers will order clothing through the Internet and if so, whether adequate funding will be provided for additional servers and the like. Allison Jones is the IT manager and is concerned that traffic may double without adequate support systems being provided.
NN
Darcy Moore is the operations director for the West Coast children’s stores.
NN
Louise Rose is the operations director for the East Coast children’s stores.
NN
Todd Franks is a site superintendent for new stores.
NN
Harry Edwards is the procurement director for Cimarron.
James Stevens has agreed to be the project sponsor, even though he is still concerned about the cost and the economy. This role will give him a firsthand look at the budget and costs that are incurred. Jocelyn Greer is a new person you met on a conference call. She is Cimarron’s liaison in Europe for clothing design. She has been a clothing designer for 20 years and is up on all of the latest fashions. She will coordinate the European and stateside people who will be designing the clothing for the Apples and Pears project. Ms. Greer is excited that the project is to include wedding and formal apparel; she will work with her partner Jeness Hopkins to design some of the apparel and search for other designs to bring into the wardrobe. Ms. Hopkins is a buyer of formal wear, and so this partnership should work out well. Ms. Hopkins and her team of buyers will be responsible for purchasing clothing that will not be made in the manufacturing plant. Eric Nash is the manufacturing director. He will oversee the construction at the manufacturing plant of the clothing Ms. Greer and Ms. Hopkins will design. Michelle Price will coordinate the flow between designers and manufacturing. You believe you have identified the proper team for the project. All of your team members have a great reputation as individuals, but you know that it takes a bit of time to “synch up” as a team. You have defined the roles and responsibilities of your team members. Now you want to create a project organizational structure that provides a visual of who the team members are and their accountabilities. You have managed many projects in the past, but have not used a formal methodology because your previous projects have been small compared to this one.
Task 1.3: Understanding Your€Stakeholders╅
49
Ms. Reese named you as the project manager in the project charter. She also sent a company-wide memo announcing your position. Hopefully, this will help you gain the support of all the stakeholders. You were a functional manager in the past, and those who reported directly to you respected you. You were able to accomplish many good things, so you are confident that you can manage this project and the people taking part in it.
Scope of Task Duration This task may take hours or days due to factors such as these: NN
Your organization is new at formal project management.
NN
The availability of stakeholders.
NN
The roles and responsibilities have been predefined in a mature project management methodology.
Setup None.
Caveat For this task, you must be able to converse with senior management or others at their level. This task also depends on the following: NN
The size of the project
NN
The degree of uniqueness
NN
The degree of managerial complexity
NN
The degree of technical complexity
NN
Organizational factors
Procedure In this task, you’ll do the following: NN
Identify types of projects.
NN
Identify and analyze project stakeholders.
NN
Explore the roles and responsibilities of the project sponsor, project manager, and team leaders.
NN
Take a look at the management and leadership skills needed in a project manager.
NN
Identify team members.
50â•…
Phase 1╇ ╇ Initiating Process n
NN
Learn how to obtain team members.
NN
Assign responsibilities.
NN
Conduct a stakeholder analysis.
NN
Create a stakeholder map.
NN
Create the project organizational chart.
This task will also describe the characteristics needed to staff a project with the right people who have the right skills and are available when needed for the right duration and within the planned budget.
Details People are the most important resource on a project! Individuals are complex, and as project manager you’ll spend a great deal of time with them. You provide and receive information, overcome emotional hurdles, and provide and receive performance information in all manner of communications. First and foremost you must know and understand who these people are and their roles in the project. The stakeholders will come from different backgrounds, depending on the types of projects you’re working on. Let’s take a look at the types of projects you may manage someday.
Types of Projects Different project types will dictate the appropriate stakeholders who will participate in the project. Most project managers do not have experience in all types of projects, and although it is helpful to have technical skills, the right project manager can manage many types of projects. Several types of projects seem to be common to most businesses and organizations from time to time, although this list is not all-inclusive: Research and Development Projects╇ ╇ These projects are often likened to programs because they typically have an element of ongoing activity and exist as long as they are funded and achieve the desired result. Strategic Projects╇ ╇ These projects include reorganizations, mergers, acquisitions, reengineering, or enterprise-wide initiatives such as process improvement or quality efforts. Information Technology Projects╇ ╇ These projects include new development, rapid application development, small and large maintenance, LAN/WAN creation, application acquisition, and the like. Engineering and Construction Projects╇ ╇ These projects create buildings, bridges, and roads, among other things. Capital Improvement Projects╇ ╇ These projects exist to upgrade internal or external infrastructures (roads, bridges, and the like) or equipment. Product Development Projects╇ ╇ These projects create new products and services for internal or external use based on market demand and technology advances, and often involve manufacturing efforts.
Task 1.3: Understanding Your€Stakeholders╅
51
Legal Mandates or Requirements╇ ╇ These projects can include, for example, a manufacturing facility that must comply with mandatory Environmental Protection Agency (EPA) emission standards or a legal mandate that safety equipment be updated, perhaps based on a negligence lawsuit. External Customer Requests╇ ╇ These projects are projects generated by customers that are not internal to your organization. This list does not represent all types of projects—there are many more.
What Is a Stakeholder? A stakeholder is anyone who will be impacted by or has an interest in the project. Who are these interested and involved people? The following is a list of some of the stakeholders on a project: NN
Clients
NN
Sponsor
NN
Project manager
NN
Champion
NN
Performers
NN
Users
NN
Line managers
NN
Vendors
NN
Steering committee
NN
Support and operational staff
NN
Quality control staff
NN
Quality assurance staff
Some of the most important members of the project team are the project sponsor, project manager, and project team leaders. You need to understand their roles and responsibilities so there is no role confusion. We also will take a brief look at the leadership and management skills of a project manager.
Roles and Responsibilities of Stakeholders Some of the most important members of the project team are the project sponsor, the project manager, and project team members. You need to understand their roles and responsibilities so there is no role confusion. We’ll also take a brief look at the leadership and management skills of a project manager. Roles of the Project Sponsor
The project sponsor plays a key role and has a defined set of responsibilities within a project: NN
Participates in sales efforts and contract negotiations
NN
Establishes and maintains top-level client relationships
NN
Assists the project manager in launching the project
52â•…
NN
Phase 1╇ ╇ Initiating Process n
Participates in the project steering committee, governance board, or oversight committee to assist in setting project priorities
NN
Interprets company policies if necessary
NN
Cuts through the red tape when that is required
NN
Optimizes corporate objectives
The sponsor should be in constant communication with the project manager. The project manager must keep the sponsor informed of project activities. The sponsor should never find out from someone else a piece of information that they should have received from the project manager. Roles of the Project Manager: Management
Most people can be taught the tools of the trade, but a project manager must possess good management skills and be able to support the following disciplines: NN
Financial management and accounting
NN
Purchasing and procurement
NN
Contracts and commercial law
NN
Manufacturing and distribution
NN
Logistics and supply chain
NN
Strategic planning, tactical planning, and operational planning
NN
NN
Organizational structures, organizational behavior, personnel administration, compensation, benefits, and career paths Information technology Additionally, a project manager must have some technical skills and be able to:
NN
Manage the technology even if not skilled in the technology
NN
Communicate with technical personnel
NN
Use a holistic perspective
NN
Facilitate trade-offs
NN
Integrate technical, business, and human objectives
NN
Understand engineering tools and support methods
NN
Perform appropriate budgeting and estimating techniques
NN
Plan and organize multifunctional teams
NN
Understand functional policies and operating procedures
So what else is a manager looking for when they hire a project manager? Not everyone is cut out to do this work. Do you fill the bill? NN
You have to have a very thick skin.
NN
You need to be a technical generalist (not a specialist).
NN
You need to be able to live without structure and rules.
NN
Conversely, you also need to be able to live with structure and rules.
Task 1.3: Understanding Your€Stakeholders╅
53
NN
You can accept the fact that you’ll (on occasion) have high-maintenance team members.
NN
You’ll manage conflict on a daily basis.
NN
You’ll have to decide whether an issue equates to the milk being left out or missing a job interview.
NN
You’ll deal with all ranks in the hierarchy but will have no significant rank.
NN
You must be willing to take the heat without its breaking your heart.
NN
You’ll smile when you see the client shaking hands with the president of your company on the company newsletter.
NN
You’ll be an honorable mention in the last paragraph of the company newsletter.
NN
Expect to be on the 6 o’clock news if things go wrong.
NN
You are in a place of notoriety and visibility (for good or ill).
NN
You’ll have a great sense of humor!
And remember, this is just a job—don’t forget work/life balance. Now that you know what the project manager’s management roles are, let’s take a look at the leadership roles of a project manager. Roles of the Project Manager: Leadership
The project manager position is not for everyone. There is a distinct difference between management and leadership. The first female general of the U.S. Army, Brigadier General Anna Mae Hays, Chief of the Army Nurse Corps, coined the phase, “You lead people. You manage time and things.” Both are necessary, but in the project management role, quintessential leadership is the more important role. Most project managers probably didn’t tell their parents as they were growing up that they wanted to be a project manager. We landed that role in a variety of ways. You may have been asked if you wanted a “job enrichment opportunity.” Of course you said yes, but in reality you knew nothing about managing projects. Thankfully, your boss saw good managerial and leadership skills in you and over time you became successful as a project manager. Others were chosen to be a project manager because of their superior technical skills. This may sometimes be a hindrance to the project, however, as project managers focus their expertise in the technical field. It is difficult to remove your technical hat and become a generalist instead of a specialist. It takes a lot of trust that someone can do your technical job as well as you did. Some project managers actually went to school and studied the topic, so they were prepared to be a project manager from the onset. Are you ready to take on the project management leadership role? Hands-on 1.11: Testing Your Knowledge of Leadership Analysis Table€1.22 represents key project management leadership skills. For each item, circle the number that represents your brutally honest answer. Your analysis is found in the Phase 1 Solutions section.
54â•…
Phase 1╇ ╇ Initiating Process n
Ta b l e€ 1 . 2 2 ╇╉╇╉Leadership analysis Little
Some
A Great Deal
SKILL
1
2
3
4
5
1. Ability to understand and work with group dynamics
1
2
3
4
5
2. Ability to differentiate between important and unimportant issues
1
2
3
4
5
3. Ability to know when to compromise
1
2
3
4
5
4. Possess both a flexible personality and a strong determination to succeed
1
2
3
4
5
5. Ability to state case well when needed
1
2
3
4
5
6. Ability to be assertive
1
2
3
4
5
7. Want to see things through
1
2
3
4
5
8. Ability to be persuasive and not be put off by potential confrontations or arguments
1
2
3
4
5
9. Feel comfortable with self-direction and do not become frustrated with unclear delegation of authority from superiors
1
2
3
4
5
10. Ability to make fast, on-the-job decisions
1
2
3
4
5
11. Exhibit mature judgment
1
2
3
4
5
12. Ability to control costs
1
2
3
4
5
13. Ability to establish ties, and monitor and evaluate project accountability among team members
1
2
3
4
5
14. Ability to understand major technical issues
1
2
3
4
5
15. Ability to provide feedback for productive and creative efforts
1
2
3
4
5
16. Ability to communicate upward with clients and higher management and downward with key technical managers and professionals
1
2
3
4
5
17. Ability to take strong leadership in the beginning and willingness to delegate responsibility and authority to others as the project progresses
1
2
3
4
5
18. Ability to listen, probe, and objectively evaluate information
1
2
3
4
5
19. Ability to play unfamiliar roles as a manager
1
2
3
4
5
20. Politically astute
1
2
3
4
5
21. Ability to develop effective work relationships with peers and with individuals of different ranks
1
2
3
4
5
22. Willingness to participate in problem identification, problem solving, and decision making
1
2
3
4
5
23. Willingness to use, when needed, a trial and error approach rather than a sophisticated management approach
1
2
3
4
5
24. Well skilled in negotiating processes
1
2
3
4
5
25. Ability to be a political diplomat
Task 1.3: Understanding Your€Stakeholders╅
55
Role of the Project Team Leader
Project managers usually work within the construct of a matrix organizational structure. Functional managers, line managers, or team leaders play a vital role in the success of projects. Their role, in addition to being accountable for their operational objectives, is to support the project manager. Here are some make-or-break roles that a project manager expects from team leaders: NN
Demonstrates potential for innovative and creative behavior
NN
Is supportive of project goals and objectives
NN
Remains flexible when changes are necessary
NN
Meets commitments for completion of deliverables
NN
Deals with conflicts within own area of authority
NN
Is results oriented
NN
Maintains high morale
NN
Communicates clearly and concisely
Identifying Team Members So far, we have focused on key stakeholders (who become ad hoc team members). Team members are those assigned who would actually do the work. Should you define the tasks first and then identify who will do the work? Or identify team members and decide what the work is? In reality, it’s both. You inherently know who some of the team members are. You may have worked with them before on a project; some folks, such as IT, are on all of your projects because they play a key role. Because you know the high-level scope of the project, refining that scope will identify others.
How to Obtain Team Members You want to be able to choose the best possible team members available. Sometimes you do not get to choose who will be on your team. But you’ll be able to negotiate for your team members more effectively if you do the following: NN
NN
NN
NN
NN
Identify the skills needed to fulfill the project goals and objectives. Create a brief job description for those who have the skills needed to perform various tasks. List the names of those you feel would best serve the project needs and why if the resource will come from internal sources. Determine your ground rules for accepting employees; for example, you do not wish to accept someone who has a performance problem or you don’t have the budget to train someone, or they need to be on the project full or part time. Ask team leaders or supervisors what their ground rules are for loaning their employees; for example, employees must have sufficient time to perform their own tasks as well as the project task or they want someone to have a developmental opportunity, and the like.
56â•…
Phase 1╇ ╇ Initiating Process n
Responsibility Assignment Matrix Project managers have many things to be responsible for on a project, but what about the members of the team? The responsibility assignment matrix (RAM) is a simple tool to see at a glance who is responsible for what. Table€1.23 describes RAM terms that are frequently used. Table€1.23 shows a RAM that represents a two-dimensional relationship between personnel on the project and their level of involvement in the project. Ta b l e€ 1 . 2 3 ╇╉╇╉Description of RAM terms Responsible
This person is usually a line manager responsible for individuals performing the work.
Accountable
An accountable party is a person or group who is liable for the outcome and having the authority to approve or reject deliverables based on acceptance criteria. This person is usually the owner of the project.
Support
A support person is usually the person performing the work. This may be an internal support person or an external vendor.
Contributor
This person is a contributor or a consultant who provides input to the project. These folks contribute expertise on an as-needed basis.
Information
This person is one who is informed of project information. This is usually the sponsor and members of the project team. Senior managers may wish to be informed if the project is highly visible.
They can be noted as responsible, accountable, provide support, must be consulted, or need to provide information, sometimes known as RASCI. Projects and the tasks within them are often complex. People want to know where they fit in the scheme of things. Many models exist for identifying the roles of individuals in a project. A popular model is the RASCI model shown in Table€1.24 and described in Table€1.23. The RASCI model is simple. It can be made more complex by adding task numbers and any number of additional personnel titles. The RAM is a good executive overview tool enabling senior management to see at a glance what is being done and by whom. Now that you know who these people are, you should identify key stakeholders other than the sponsor, project manager, and team leaders. You need to do this because key stakeholders can influence a project in a positive or negative way. For example, a key stakeholder is concerned about exceeding the budget. In fact, that key stakeholder may be able to cancel your project if she does not feel that the project is staying on track and within the budget. If you know this information, you can provide the key stakeholders with a level of confidence that the project is within the budget by giving them project cash flow data, earned value information, and so forth. So how do you determine these things? You conduct a stakeholder analysis.
Task 1.3: Understanding Your€Stakeholders╅
57
Ta b l e€ 1 . 2 4 ╇╉╇╉RASCI model Project Team Line Dept Senior Manager PMO Members Managers Manager Sponsor Management
Tasks
R
Responsible
Step 1: List the tasks.
A
Accountable
Step 2: Show the Letters of RASCI to each task as it corresponds to the title of the person listed above.
S
Support
Step 3: Make sure there is only one accountable individual.
C
Consult
I
Information
Assigning Roles and Responsibilities You want your team members to know exactly where they are going and which road to take to get there. In the event a team member is unclear about their role, they may take off down the wrong path (with all good intentions, of course). You are not trying to tell them how to perform their work—they already know that. What you do want is for each team member to have precise and unambiguous roles and responsibility assignments. When the work is done by the right person at the right time, it helps the project manager ensure that tasks don’t fall by the wayside. Table€1.25 shows the roles and responsibilities of the various participants in the project. Ta b l e€ 1 . 2 5 ╇╉╇╉Roles and responsibilities Team member
Role
Responsibility/accountability
Project sponsor
Takes part in all phases of the project
Ensures that the project is moving along so that the work is sufficient to actualize the project.
Project manager
Guides all processes of the project
Ensures that the project work can be successfully completed and deployed.
58â•…
Phase 1╇ ╇ Initiating Process n
Ta b l e€ 1 . 2 5 ╇╇ ╇ Roles and responsibilities╇ (continued) Team member
Role
Responsibility/accountability
Functional (line) manager(s)
Provides estimates for work to be performed by their groups and communicates availability of the staff that will be assigned to the project
Accountable to the project manager and sponsor regarding performance of their parts of the project.
Suppliers
Plans the work to be performed by their groups and the availability of the staff that has been assigned to the project
Supplier managers are accountable to the project manager and sponsor regarding performance of their parts of the project.
Clients
Owners of the project
Have significant authority regarding scope definition and whether the project should be initiated and/or continued.
Individual contributors
Performs project work
Ensures the work is in compliance with the PM plan as well as any industry standards pertaining to their work.
Project management office
Facilitates and supports project management
Performs administrative activities, methodology coaching, training and enforcement, portfolio tracking, and so forth.
Subject matter experts
Individual performers with expertise in their process
Provides expertise as needed on either technical or business issues.
Key decision makers
Anyone with the responsibility to make major decisions regarding the project
Make major decisions regarding the project such as whether to stop the project or allow it to continue.
Task 1.3: Understanding Your€Stakeholders╅
Hands-on 1.12: Testing Your Knowledge of Identifying Team Members Using Table€1.26 as a model, create the Responsibility Assignment Matrix using the RASCI model for Cimarron’s Apples and Pears project. Add as many rows as needed. Ta b l e€ 1 . 2 6 ╇╉╇╉RAM for Cimarron Apples and Pears project Tasks
Project Manager
PMO
Team Members
Line Managers
Dept Manager
Sponsor
Senior Management
Project management Advertising Space planning Construction Noninventoried furnishings Design of clothing Hiring and training of personnel Information technology Manufacturing R
Responsible
A
Accountable
S
Support
C
Contributor
I
Information
Step 1:
List the tasks.
Step 2:
Use the letters of RASCI for each task as it corresponds to the title of the person listed above.
Step 3:
Make sure there is only one accountable individual.
59
60â•…
Phase 1╇ ╇ Initiating Process n
Hands-on 1.13: Testing Your Knowledge of Roles and Responsibilities Using Table€1.27, define the specific roles, responsibilities, and authority levels of your identified team members for the Apples and Pears project. Be sure to include any new members. Ta b l e€ 1 . 2 7 ╇╉╇╉Roles and responsibilities Team Member
Role
Responsibility/Accountability
Conduct a Stakeholder Analysis Everyone has something of value to bring to the project, some more than others. Acknowledging contributions and feedback of stakeholders will go a long way toward project success. To accomplish this, you conduct a stakeholder analysis. A stakeholder analysis is a relatively simple task to do. Keep in mind, however, that key stakeholders may not always be the higher-level managers in an organization. For example, five call centers located in different areas were being moved to a location at least 75 miles away to create a mega-center. The key stakeholders for this project were the call center employees. Their concerns were very high relative to the cost of gas, the increase in time, and day-care issues. Most were going to quit. By conducting a stakeholder analysis, management ensured that their concerns were noted and several steps were taken to make it palatable for these workers to stay with their jobs. As mentioned earlier, you conduct a stakeholder analysis to identify those who may have a positive or negative influence on the project. The steps include, but are not limited to, the following: 1. Brainstorm who potential stakeholders might be.
Task 1.3: Understanding Your€Stakeholders╅
61
2. Interview potential stakeholders for their interests or concerns they may have about
the project. 3. Determine the stakeholder’s level of power or influence. 4. Determine the impacts of stakeholders. 5. Develop strategies that will lend support to your projects from these stakeholders. 6. Create a stakeholder map.
After you brainstorm with your team and others to identify the stakeholders and have interviewed them, the next two steps are relatively simple. Developing strategies can be a little more complicated, but not so much if you did a good job with the previous steps. Table€1.28 shows four elements of the analysis. Ta b l e€ 1 . 2 8 ╇╉╇╉Stakeholder analysis template Identify and interview potential stakeholders
Determine concern or interest
Impact assessment
Strategies to reduce challenges and gain support
For those who have high power and high concern, you must get them involved in the stakeholder analysis and make a concerted effort to satisfy their concerns. Before they can be involved, you must be prepared to answer their questions. Here are a few questions that executives might have: NN
What is the business need for the project?
NN
Why are we undertaking it now?
NN
What is the commercial implication?
NN
Do we have the right people with the right skills available to do the project?
NN
Will this affect our market share?
NN
What is the proposed schedule?
NN
What are the cost factors?
NN
Are there any special requirements?
NN
What would happen if we did not do this project?
For those who have high power and no concerns, you should keep them in the loop but not bog them down with details.
62â•…
Phase 1╇ ╇ Initiating Process n
For those who have low power but high concern, be sure to identify those concerns, and keep them involved in the details of the project. These are the folks who are technically proficient but may not trust that you have all the details needed. They can be a detriment to your project if you ignore them. For example, they might bring up a technical issue that you are not familiar with. If you do not listen to these folks, they may stand back, watch you get in trouble, and say “Well, if you had asked me to help, I would have.” Not everyone would do this, but if only one does it, the project can be in peril. Here are a few questions that people with low power and high concern might have: NN
What is the benefit of this project to me?
NN
Will this project change/eliminate my job?
NN
Will this project change the way I do my job?
NN
Will this project create personal conflict for me (start of shift, overtime, day-care issues, and so forth)?
For those who have low power and low interest, do not send them too much information. So now we know who the key stakeholders are: those with high power and high concern and those with low power and high concern. The last step of the analysis is accomplished by creating a stakeholder map. This map (Figure€1.7) allows you to see at a glance how to manage your stakeholders. When creating the map, some people like to color-code the output—for instance, green for positive people plotted on the grid, yellow for neutral, and red for negative. F ig u re€ 1 . 7 ╇╉╇╉Stakeholder map Low Concern/Interest/Support High Power
Keep Satisfied
Low Concern/Interest/Support Low Power
Normal Monitoring
High Concern/Interest/Support High Power
Manage Closely High Concern/Interest/Support Low Power
Keep Informed
Task 1.3: Understanding Your€Stakeholders╅
Hands-on 1.14: Testing Your Knowledge of the Stakeholder Analysis 1. Complete Table€1.29 to determine the level of power or influence, the impact assessment, and the strategy to leverage or reduce the challenges perceived by these stakeholders. Ta b l e€ 1 . 2 9 ╇╉╇╉Stakeholder analysis Identify and Interview Potential Stakeholders
Determine Concern or Interest
Impact Assessment
Strategies to Reduce Challenges and Gain Support
Megan Holly James Stevens Jacob Patrick Jordyn Kelly Skylar Janes Carolyn Lee Madison Adams Allison Jones Darcy Moore Louise Rose Todd Franks Harry Edwards
2. What are the benefits of interviewing stakeholders and conducting a stakeholder analysis?
3. What other stakeholders may be interested in your project? 4. What other information might you want to know to help understand your stakeholders? 5. How does stakeholder analysis help you to build the support you need?
63
64â•…
Phase 1╇ ╇ Initiating Process n
Hands-on 1.15: Testing Your Knowledge of Stakeholder Mapping Use Table€1.30 to map the stakeholders that you have analyzed. Ta b l e€ 1 . 3 0 ╇╉╇╉Stakeholder mapping exercise Low Concern/Interest/Support High Power
Keep Satisfied
Low Concern/Interest/Support Low Power
Normal Monitoring
High Concern/Interest/Support High Power
Manage Closely
High Concern/Interest/Support Low Power
Keep Informed
Create the Project Organizational Chart The line (or functional) manager, the product manager, the project manager, and the project sponsor are part of a core team. They usually participate for the duration of the project. Primary performers working in a matrix organization have a dotted line relationship to the project manager; that is, as long as they are on the project, they report their work to the
Task 1.3: Understanding Your€Stakeholders╅
65
project manager. The functional manager (their regular boss) assigned them to the project and still manages their administrative issues or concerns. These performers come and go as phases are completed and new work commences. Think of functional managers as subcontractors on the project. They have their own piece of the action to fulfill as contributors to the project. A partnership should develop between project managers and functional managers because they are often peers. Having a partnership attitude makes all the stakeholders have an investment (money or otherwise) in the project, and all parties in the partnership will benefit when the project comes to fruition as planned. So what about the steering committee and the project sponsor? Shouldn’t they be at the top? If you are operating flat, they are equal members of the team. They have different accountabilities and authorities but they are “in it to win it” just like everyone else. So don’t get hung up on rank. Senior managers are quite often very likable and approachable. A project’s organization is influenced by the characteristics of the project. This is not to be confused with hierarchical organizational structures such as the matrix and projectized structures we looked at earlier. However, the project organizational structure is created through hierarchical, organizational relationships. In fact, most of these relationships live in a matrix or other organizational structures. You can build a hierarchical project structure in terms of rank, but there are benefits to building a flat structure instead. Consider managing projects on a horizontal plane—that is, there is no rank. That does not mean that everyone on the team runs the project—the project manager is accountable for the project and should be the single point of contact for all team members. The project manager simply has a different role to play than the members of the team. Everyone comes to the table with something of value to lend to the process. Having said that, be sure, as project manager, not to sit at the head of the table! The project organizational structure must also support the skills and abilities of the staff. Some team members are provided a “developmental opportunity” that may be beyond their skills and capacities. Organizational project planning facilitates communication between functional groups and project team members by defining roles and responsibilities and defines specific staffing requirements to ensure that the performers have the desired skill levels and competencies to perform project activities. The purpose of a project organizational chart is to help communicate the reporting relationships within the project team, and to explain how the project team relates to or reports to the larger organization. In the example shown in Figure€1.8, the project sponsor has a dotted-line relationship with the steering committee and a dotted-line relationship with the project manager, as well as directly reporting to the VP. Notice that the arrow goes both ways between the project manager and sponsor, making this a horizontal instead of a vertical, or hierarchical, relationship. The project organizational chart maps how the project is structured and provides stakeholders with a view of who is involved in the project. It is a good idea to keep the project organizational chart up-to-date as project members come and go. The functional managers also have a two-way dotted-line relationship with the project manager and report directly to the director. The performers report directly to functional managers but also have a dotted-line relationship with the project manager.
66â•…
Phase 1╇ ╇ Initiating Process n
F ig u re€ 1 . 8 ╇╉╇╉Horizontal project organizational chart VP
Project Sponsor
Group Leader
Contractor
Steering Committee
Director
Project Manager
Functional Manager
Leaderless Team
Performer
Performer
Group leaders, contractors, and leaderless teams all have a dotted-line relationship with the project manager. This type of project organizational structure facilitates teamwork and communications; an open door policy is clearly the goal.
Project Interfaces You need to be in constant communication with your project interfaces. It is essential that each team member perform the right work at the right time in accordance with the manner needed by the project or by contractual agreement. They may be formal or informal reporting relationships, and generally fall into one of three categories: NN
NN
NN
Organizational interfaces exist internally among different departments, business units, or specialized organizational units or between a company and external contractors. Technical interfaces are the formal or informal relationships that exist among various technical disciplines, such as between sales and IT. Interpersonal interfaces exist among different individuals who are working on the project.
Limiting Factors The project manager and team will encounter factors that can limit their options in the organizational planning process. We looked at constraints earlier. If we don’t address constraints, they can become hindrances to the project. Here are some examples: NN
The project manager doesn’t have the authority needed.
NN
Labor unions will dictate what work individuals may do.
NN
The experience level of individuals determines how closely they must be supervised.
Task 1.4: Identify Project Limitations and Propose an Implementation Approachâ•…
NN
NN
NN
67
The people who are eventually assigned to the project may be geographically dispersed. Functional managers may have other demands that affect their ability to provide resources when you need them. The organization may have policies that restrict the use of outside contractors or temporary help.
You can overcome all of these constraints through good project communication. We’ll discuss this in detail in the next task.
Hands-on 1.16: Testing Your Knowledge of Project Organizational Structures Answers questions 1–3 and follow the instructions for item 4:
1. What challenges are associated with working in a horizontal reporting structure? 2. What are two challenges associated with managing a project within a vertical structure? 3. How can you overcome the challenges of working in a horizontal reporting structure? 4. Create a project organizational structure.
Task 1.4: Identify Project Limitations and Propose an Implementation Approach Sometimes, especially if a project is strategic as this one is, there exists the tendency to “solve world hunger” with it. Everyone wants to jump on the bandwagon and include their pet projects. While it would be nice to include or “sneak in” a small project, it is necessary to rein in and document your project limitations. Additionally, deciding on an implementation approach will help you stay within the limitations of the project relative to budget, schedule, and scope.
Scenario You have conducted your interviews with stakeholders and created your scope statement, but now you find that you are missing a few things. A high-level risk assessment is needed, as well as the assumptions and constraints.
68â•…
Phase 1╇ ╇ Initiating Process n
Scope of Task Duration The duration of this task could be several hours.
Setup There is no particular setup for this task.
Caveat None.
Procedure In this task you’ll identify project limitations and document high-level risks, as well as assumptions and constraints based on the environment of your project using historical data, and expert advice as needed.
Detail Describing what is not within the scope of the project will avoid confusion as the project moves along. For instance, if you’ll be updating equipment for an IT unit you may decide that it includes only specific equipment and you would name other pieces of equipment that would not be changed. In other words, be very specific with your requirements and the boundaries will identify themselves. This will help you avoid conflicts as the project continues.
Project Limitations Establishing project limitations also reduces, or in some cases, eliminates what is called scope creep. For example, if one of the requirements was to purchase accounting software, you would describe it and point out that you are not going to purchase the payroll software also because the payroll software will be outsourced. Scope creep often occurs because customers do not really know what they want until the project is well under way. Some client changes can be added to the project as long as appropriate change control measures are followed. You have to learn how to say “no” without saying no. You can do this by saying to the customer, “I would be happy to make that change for you. It will increase the budget by $____ and will extend the schedule until ____ and will increase risk. If you wish to approve these changes with all of the impacts I have identified for you, we can do it.” Sometimes they will, but more often than not, they won’t. Clients often don’t realize the impacts of their requests. Remember, if the change comes before actual work begins, then it may not be as risky as making changes in the middle of work; however, it depends on what is actually changing. For example, a change in business drivers or needs could cancel a project, or a change in infrastructure and technology could add significant cost and scope. The cost of rework downstream seems always to be greater than a correction early on, but changes are inevitable for every project.
Task 1.4: Identify Project Limitations and Propose an Implementation Approachâ•…
69
Hands-on 1.17: Testing Your Knowledge of Project Limitations Given what you now know about the Apples and Pears project and using Table€1.31, describe as many of the project boundaries as you can. Ta b l e€ 1 . 3 1 ╇╉╇╉Project limitations Project Limitations 1. 2. 3. 4. 5.
Determining the Implementation Approach A project can be implemented in several ways. Your choice depends largely on the criticality of the project, the complexity of the solution, and internal client organizations. Phased implementations are the most common. They are linear—Phase 2 cannot be started until Phase 1 is completed, and so on. Each phase may be designed to implement one department at a time. Another type of project is often referred to as a “cutover” or “crash” project. This type of project is usually done during nonworking hours. The project “cuts” out the old system and implements the new. Training of users is essential so that the new system doesn’t seem foreign to them. Some projects can and should be done in parallel. For example, the client organization cannot have any downtime, so an implementation strategy might be to implement the project “in the background.” Everyone is advised of a “go-live” date, and after considerable testing on that date the new project solution supplants the old one. Everything is totally transparent to the customer—which is as it should be.
Hands-on 1.18: Implementation Approaches Given what you now know about the Apples and Pears project, describe ways you might approach the implementation for this project.
70â•…
Phase 1╇ ╇ Initiating Process n
Task 1.5: Develop the Project Charter The project charter is usually a short document that refers to other more detailed documents such as a “new offering request” or a “request for proposal” or any other perceived business need or client request. The project charter is a document that is created by the sponsor but is signed off by someone external to the project. In reality, you’ll prepare this document for your sponsor.
Scenario You have conducted your interviews with stakeholders and created your scope statement, but now you find that you are missing a few things. A high-level risk assessment is needed, as well as the assumptions and constraints, scheduled milestones, configuration management, project acceptance, and approval guidelines. You are anxious to complete this part of the project so that it can be formally launched.
Scope of Task Duration The duration of this task could be several hours.
Setup There is no particular setup for this task.
Caveat None.
Procedure For this task you’ll create the project charter, which in addition to the high-level project scope statement includes the following: NN
Summary of milestones (preliminary)
NN
Summary of costs (preliminary)
NN
A description of the project’s high-level risks
NN
Configuration management requirements
NN
Environmental, organizational, and external assumptions
NN
Environmental, organizational, and external constraints
NN
Project approval requirements
NN
Project acceptance criteria
Task 1.5: Develop the Project Charterâ•…
71
Details The project charter formalizes the request from a sponsor for responding to a business need. It is a created by the sponsor but is signed off by someone external to the project. In reality, you’ll prepare this document for your sponsor. The purpose of the project charter is to: NN
Acknowledge the existence of the project
NN
Name the project manager who will lead the project
NN
Provide the project manager with the authority to utilize corporate resources Failure to write a charter may lead to:
NN
Ambiguity about the project objectives
NN
Ambiguity concerning the solution to a business need or client request
NN
Missing an important stakeholder for the project
You have determined the rationale for the project in the project charter and written the high-level initial scope statement, but you still need additional information.
Scheduled Milestones Milestones are significant events in a project, such as the completion of deliverables. You can add additional milestones as the project planning progresses. Senior managers are not usually interested in all the project details, but they will be interested in key milestone information. They simply want to know whether a scheduled milestone was completed as scheduled—or if it wasn’t, why not. Hands-on 1.19: Testing Your Knowledge of Milestones Given what you now know about the Apples and Pears project, use Table€1.32 to list the milestones for this project. You may use your imagination to indicate specific dates. Ta b l e€ 1 . 3 2 ╇╉╇╉Project milestones Milestones
Date
72â•…
Phase 1╇ ╇ Initiating Process n
Estimated Budget Costs We’ll spend more time on this subject in Phase 2. For now, we are talking about high-level estimates based on what is known now. Estimated time and costs should validate the proposed high-level budget and include at least the following: NN
High-level estimates for the proposed project
NN
Requirements for out-of-the-ordinary funding, if needed
NN
Ongoing costs
NN
Major arguments that support time and cost elements
Hands-On 1.20: Testing Your Knowledge of an Estimated Budget Given what you now know about the Apples and Pears project, and using your common sense, list any additional costs you feel have been left out and insert them into Table€1.33. Ta b l e€ 1 . 3 3 ╇╉╇╉Estimated budget Item
Amount
High-Level Project Risks High-level project risks help you to decide whether the project should be approved or denied. You want to be able to answer questions that senior management may have regarding risks, such as the following: NN
What is the probability of success?
NN
Will expectations be met?
NN
Is the scope statement understood by all?
NN
Is there a project champion for this project?
NN
Is there any known opposition to the project and, if so, from where?
NN
Is the base budget reasonable?
NN
Is the schedule reasonable?
NN
Will resources be available when needed?
Task 1.5: Develop the Project Charterâ•…
NN
What are the assumptions and constraints for this project?
NN
Are there marketing risks to this project?
NN
Are we aware of external project dependencies?
NN
Do we have the capability for support after launch?
73
Most folks look at risks as being negative, but opportunities also exist when defining risk. Suppose you are trying to solve a problem regarding some sort of risk. Your solution not only solves the risk, but can be used in daily operations and therefore becomes an opportunity as well. We’ll discuss risk response strategies in Phase 2.
Hands-on 1.21: Testing Your Knowledge of High-Level Project Risks Given what you now know about the Apples and Pears project, and using your common sense, list any high-level risks or opportunities at this stage of the project in Table€1.34. Ta b l e€ 1 . 3 4 ╇╉╇╉High-level risks and opportunities High-Level Risks and Opportunities 1. 2. 3. 4. 5.
Configuration Management Requirements This is not a subject to take lightly. In the PMP: Project Management Professional Exam Study Guide, Deluxe Edition, 2nd edition (Sybex, 2007), configuration management is described as consisting “of documented procedures that describe how to submit change requests and how to manage change requests. Configuration management tracks the status of change requests and defines the level of authority needed to approve changes. It describes the characteristics of the product of the project and ensures that the description is accurate and complete. Configuration management controls changes to the characteristics of an item and tracks the changes made or requested and their status.” It is especially important for IT projects and operations.
74â•…
Phase 1╇ ╇ Initiating Process n
The project charter should describe briefly the change management process that will be used. (We’ll discuss change management in Phases 2, 3, and 4.) It is also possible that we’ll use the organization’s existing process by referencing it in the project charter.
Environmental, Organizational, and External Assumptions and Constraints False assumptions and unknown constraints can bring your project to its knees. You may think you have your bases covered, but then find you are scrambling to overcome challenges due to false assumptions and unknown constraints. Although we discussed assumptions and constraints earlier in this phase, we’ll revisit them in greater detail here. Assumptions
Assumptions are those things that you believe are true or that you take for granted. There are many elements that you won’t know about the project, so you make assumptions. You might assume that Connie in IT will be the individual who manages testing. She is the only one who knows the new test environment. Then you find out that when you need her to perform her task, she is out of the country on vacation. This assumption now becomes a risk. You can find these assumptions by communicating with your stakeholders—all of them. Ask them to provide you with their assumptions. Document them. There will be redundancies; others believe the assumptions are also true. If an assumption turns out not to be true, then you have a risk—maybe even a major one. Try to validate any assumptions that are unclear and be sure to test them frequently by asking, “Is this assumption still true?” Constraints
Constraints are limitations or barriers that may or may not be obvious at the beginning of a project. Some will surface as the project progresses. Constraints can break a project if they are not managed. Two major steps can help manage constraints: 1. Identify constraints such as time, budget, quality, schedule, technology, and directives
from management, legal, political, skill sets and attitudes, and geographical perspectives. 2. Develop a response strategy for those that can be managed. For instance, if manage-
ment says there is to be no overtime, allow longer durations for a task if that is appropriate. If you are dependent on external factors such as delivery of products, allow a longer lead time. There are also enterprise environmental factors and organizational process assets that may help you define assumptions and constraints. The PMBOK® Guide, 4th ed., p. 14 describes enterprise environmental factors as follows: NN
Organizational or company culture and structure
NN
Governmental or industry standards
NN
Infrastructure (including IT)
NN
Human resources
NN
Personnel administration
NN
The organization’s work authorization system
NN
Marketplace conditions
Task 1.5: Develop the Project Charterâ•…
NN
NN
NN
75
Stakeholder risk tolerance Commercial databases (referring to industry-specific information, risk databases, and so forth) Project management information systems The PMBOK® Guide, 4th ed., p. 32, describes organizational process assets as follows:
NN
Organizational standard policies
NN
Guidelines, procedures, and plans
NN
Approaches or standards for conducting work
NN
Templates
NN
Communication requirements
NN
Project closure guidelines
NN
Financial control procedures
NN
Quality management procedures
NN
Change control procedures
NN
Risk control procedures
NN
Approval and work authorization procedures
Hands-on 1.22: Testing Your Knowledge of Project Assumptions Given what you now know about the Apples and Pears project, use Table€1.35 to list three assumptions that you know are true and three assumptions that you are not sure about. Ta b l e€ 1 . 3 5 ╇╉╇╉Project assumptions Project Assumptions 1.
True
2.
True
3.
True
4.
Not Sure
5.
Not Sure
6.
Not Sure
76â•…
Phase 1╇ ╇ Initiating Process n
Hands-on 1.23: Testing Your Knowledge of Project Constraints and€Response Strategies Given what you now know about the Apples and Pears project, list three constraints in Table€1.36 and determine a response strategy for them. Ta b l e€ 1 . 3 6 ╇╉╇╉Constraints and response strategies Constraint
Response Strategy
1. 2. 3.
Project Acceptance Criteria Project acceptance criteria vary according to the type of project, but most projects follow these general acceptance criteria: NN
All work has been inspected.
NN
All deliverables have been accepted.
NN
Training of staff has been completed.
NN
Manuals and procedures have been provided.
NN
As-built drawings have been received and approved.
NN
Items reviewed by the customer as needing to be completed before approved—also called a “punch list.”
NN
Supplier contracts and agreements have been closed out.
NN
Contractors have received final payment.
It’s important to list these criteria in the project charter so you don’t lose sight of them down the road. This will be an important element when you create your project acceptance plan.
Task 1.6: Obtain Project Charter Approvalâ•…
77
Hands-on 1.24: Testing Your Knowledge of Putting It All Together Just as you did for the project scope statement, fill out the template (Table€1.37) to complete the project charter. Ta b l e€ 1 . 3 7 ╇╉╇╉Project charter The Project Charter Summary of Milestones Summary of Costs High-Level Risks Configuration Management Assumptions Constraints Project Approvals Project Acceptance Criteria
Task 1.6: Obtain Project Charter Approval Project approval is obtained by creating the project charter and having it approved by the signature of the sponsor or someone else in the organization who can approve the project.
Scenario You have completed your project charter and now must obtain approval from your sponsor.
Scope of Task Duration The duration of this task could be several hours depending on the availability of the approver.
78â•…
Phase 1╇ ╇ Initiating Process n
Setup There is no particular setup for this task.
Caveat None.
Procedure This task creates project approval requirements based on the summary scorecard results.
Detail Project approval should be aligned with the progressive business case at the project charter scorecard level (Table€1.38). Remember, the project charter will be signed by someone external to the project. You need to provide the signatories with a level of confidence that those scores are valid, so be prepared to defend your project brilliantly!
Summary Scorecard You know that you can proceed if the summary scores are at least those shown in Table€1.38. Remember, the project charter will be signed by someone external to the project. Ta b l e€ 1 . 3 8 ╇╉╇╉Project charter summary scorecard Summary Project Charter Summary Scorecard Minimum score Program Assessment
76
Financials
8
Internal Issues
33
Alternatives and Recommendations
10
Milestones
5
TOTALS
132
Actual score
Difference
Task 1.6: Obtain Project Charter Approvalâ•…
79
Hands-on 1.25: Testing Your Knowledge of Phase 1 Professional Responsibility In Phase 0 you learned about professional responsibility and conduct. Here, and in each subsequent phase, you’ll be asked questions about professional responsibility and conduct. Answer the following questions as they pertain to Phase 1:
1. Some budget information was provided to the finance director. He calls you about the information and advises the numbers are all wrong. What do you do?
2. You can choose one of two people to be on your project team. One is highly skilled and you have worked with that person before. She is a friend of yours. The other person is equally competent but has not had the opportunity to be a member of a project team. Whom do you chose and why?
3. You have been treated very badly by one of the functional managers. They embarrassed you in front of meeting participants. What do you do?
4. Since you were appointed the project manager of the Apples and Pears project, you discovered that one of the suppliers being considered is your brother-in-law. What do you do to ensure your personal integrity and professionalism?
5. What actions do you take to promote honest interaction among team members and other stakeholders?
You obtained quite a bit of knowledge in this phase. You learned how to do the following: NN
Perform project assessment
NN
Create a scope statement
NN
Identify project limitations
NN
Propose an implementation approach
NN
Develop the project charter
NN
Obtain project charter approval
You are now moving on to perform more detailed planning for your approved project. Believe us when we say that it will be worth doing all of these steps. Some will be redundant (go ahead and cut and paste), but no matter how it’s put together, completing the initiation phase will give new meaning to the saying, “We have bonded!” You’ll be intimately involved with your project, which is where you want to be. We are not talking about micromanaging here, but being this informed will keep the meddling managers off your back because they will have a higher level of confidence that you really know what’s going on and have the ball moving in the right direction.
Phase
2
Planning Process
Planning a project can be as simple or elaborate as you make it. Some folks spend more time planning and creating forms and documents than they do managing the project. But no matter what, proper planning will decide the fate of your project. Planning should not be done alone, although some project managers feel that they can create the project plan on their own. They have the technical expertise and feel they are professional practitioners and therefore do not need any help. This could be true. But even if you could do all of the project planning, it is simply wrong to do so! A team of one is not a team. When you encourage some of your stakeholders to participate in the planning process, you take the first step in developing your team as well as creating a more robust and realistic project plan. Sometimes you are brought into the project after it has begun. Maybe you don’t believe you have the right support or have enough time to plan. Are you implementing someone else’s plan? And how accountable do you feel when you are asked to simply implement someone else’s plan? You may feel defeated before you begin. Or that someone else is running the show. Do you have the authority necessary to manage this project? You may believe that these things will hinder your ability to create a good plan. But fear not! You can make the project work in spite of those things. Believe in your own abilities and make it happen—because in this phase, we are going to show you what good project planning is all about. You will come out smelling like a rose! Planning is not a substitute for thinking. It requires every step of the project to be thought out more fully than ever before. It also requires wholehearted support of all management— upper, middle, and peer levels. The project manager and staff must be a part of the effort. A common mistake is to turn items such as network development or scheduling over to a staff “expert” or outside consultant and hope for the best. You must use the plan to monitor and control the project. The old saying “Plan the work and work the plan” applies here. The plan only provides information. It is up to the project manager to keep the project on schedule and within budget. This process includes the following: NN
Establish the project deliverables
NN
Create the work breakdown structure (WBS)
NN
Develop a budget plan
NN
Develop the project schedule
NN
Develop the human resource plan
NN
Develop the communication plan
Task 2.1: Establishing the Project€Deliverables╅
NN
Develop the procurement plan
NN
Develop the quality management plan
NN
Develop the change management plan
NN
Develop the risk management plan
NN
Develop and present the master project management plan
NN
Obtain plan approval
83
Abraham Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” He knew that advance planning is essential for successful outcomes.
Task 2.1: Establishing the Project€Deliverables The deliverables of a project are the products we hope to achieve when the project is completed. Deliverables typically include physical properties, content properties (documents or other written artifacts), technical properties, and acceptance criteria.
Scenario You, Carrie MacIntyre, have been designated in the project charter as the official project manager. Now that Cimarron’s project charter has been approved and you are thoroughly engaged with your project, it is time to identify the deliverables based on the requirements that were established while defining the high-level scope of the project.
Scope of Task Duration This task may take a day or two, or several months depending on the size of the project. When you have a project with a long duration such as many years, you can’t possibly plan today for something that will happen perhaps years from now. So you plan in detail for the near term and at a high level for the remainder of the project. As you approach work that will happen within the next 18 months or so (in technology this duration could be the rate of change), more complete planning can occur. This is called rolling wave planning.
Setup None.
84â•…
Phase 2╇ ╇ Planning Process n
Caveat Be sure to include geographically dispersed team members. The duration of deliverables may be affected, particularly if team members live in other countries or time zones.
Procedure This task consists of the following steps: 1. Document each deliverable from the client’s point of view. 2. Review project objectives, key assumptions, and scope with the client relative to the
deliverables we are identifying and defining. 3. Review with the client the overall project approach to ensure that the deliverables can
and will be achieved. 4. Define the product acceptance criteria for each deliverable. 5. Establish metrics for each of the acceptance criteria.
Details A deliverable is not considered complete until the tasks associated with that deliverable are accepted by predetermined and measurable results. It is vital that the project manager communicate and obtain agreement on the deliverables and their associated requirements before the project begins.
Document Each Deliverable from the Client’s Point of View It is incumbent upon you as the project manager to ensure that you are addressing apples as apples or pears as pears! There should be no confusion about what a particular deliverable looks like. What if the client has a different idea in mind than you do? Simply document the deliverable as you understand it relative to purpose, composition, derivation, and quality criteria and then ask your client for feedback. If you do not communicate these items succinctly, some people will do just about anything to produce what they think you want.
Review Project Objectives, Assumptions, and Scope with the Client Make sure that the project objectives have not changed. If a red flag appears, investigate thoroughly and if necessary, rethink or cancel the project. For example, you are working on a technology project, but it has been announced by your competitor in the media that the “next best thing” will be on the market next year. Now would be a good time to rethink the current project, salvage what you can, and maybe even start over. There are other questions you can ask regarding assumptions, such as the following: NN
Are they still the same?
NN
Is the content the same?
Task 2.1: Establishing the Project€Deliverables╅
NN
Has your audience changed?
NN
Are the resources still going to be available to you?
85
Review Project Strategy In Phase 1, “Initiating Process,” you determined the project limitations as well as implementation approaches. Now is a good time to review to see if those strategies still hold true. Maybe the due date has been extended or reduced, in which case your strategies may change. Make sure your client is in on all decisions regarding strategy.
Define the Product Acceptance Criteria for Each Deliverable Product acceptance criteria may include, but are not limited to, the following: NN
Quality expectations
NN
Schedule dates
NN
Functionality—does the product work as it should?
NN
Appearance
NN
Performance levels
NN
Practicality—is the product suitable for the majority of users?
NN
Clarity—is the product easy to use and understand?
NN
Capacity—does the product fulfill the intended use of the product?
NN
Accuracy
NN
Availability—is the product readily available to the consumer?
NN
NN
NN
Maintainability—does the product have the capability to be repaired within a reasonable amount of time? Reliability—will the product have the same result each time it is used? Flexibility—when external changes occur, can the product easily be conformed to new situations?
This list should be further developed by identifying particular artifacts, evaluation methods, the required resources, an acceptance schedule, and a problem resolution process.
Establish Metrics for Each of the Acceptance Criteria
Hands-on 2.1: Testing Your Knowledge of Deliverables Looking back at Phase 1 and using what you now know about the Apples and Pears project, use Table€2.1 to describe five deliverables associated with the project. Remember to provide enough detail so there are no questions associated with the deliverables.
86â•…
Phase 2╇ ╇ Planning Process n
Ta b l e€ 2 .1╇╉╇╉ Deliverables 1. 2. 3. 4. 5.
Hands-on 2.2: Testing Your Knowledge of Product Acceptance Criteria Given what you now know about the Apples and Pears project, and using the quality measures discussed previously, describe the product acceptance criteria for the clothing that will be designed and manufactured for the stores. Use Table€2.2 to show your answers. Ta b l e€ 2 . 2╇╉ Product Acceptance Criteria Schedule Dates Functionality Appearance Performance Levels Practicality Clarity Capacity Accuracy Availability Maintainability Reliability Flexibility
Task 2.2: Creating the Work Breakdown€Structure╅
87
Task 2.2: Creating the Work Breakdown€Structure The work breakdown structure (WBS) is at the heart of the project. In fact, if you don’t create one, the project will skip a beat or two or a hundred and could die a quick death. By definition, according to the PMBOK® Guide, 4th ed., p. 444, the WBS is a “deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create required deliverables. It organizes and defines the total scope of the project.” In other words, the WBS provides all the work that will be performed in the project. This work is divided into logical components so that the responsibility assignments for each deliverable can be established, estimated costs and budgets can be determined, and planning can be performed. The total project can be described as a summation of subdivided deliverables. If done well, the WBS prevents omitted deliverables, gains commitment of project personnel, enables the development of a basic project plan, ensures the deliverable’s visibility, and reduces risk. The scope statement that is created with the project charter creates only a high-level picture of a project. The WBS adds details (tasks and activities) that comprise the overall project scope. In this task you will learn how to create a WBS. Elements of the WBS should map back to the project charter, and from charter back to the scope and scope back to objective, as illustrated in Figure€2.1. F ig u re€ 2 .1 ╇╉╇╉Mapping of WBS, charter, scope, and project objective
Project Objective
Create New Revenue Stream
Project Scope
Build 2 New Stores
• Milestones • Budget • Risks
Project Charter WBS
• Assumptions and Constraints • Project Acceptance Criteria • Approvals
• Tasks • Responsibilities • Cost Estimates
88â•…
Phase 2╇ ╇ Planning Process n
Scenario During the process of creating the project charter, you also determined the project scope statement—at least at a high level. Now you need to break it down into smaller, more manageable chunks of work that will be performed by a live body or group. You have reviewed the scope statement and decided that these are the high-level elements of the project: NN
Advertising
NN
Hiring and training
NN
Space planning
NN
Construction
NN
Furnishings
NN
Design of clothing
NN
Information technology
NN
Manufacturing of clothing
NN
Delivery and setup
You are ready to list the tasks in the project and have set up a team meeting with those you feel will participate in this effort with you and are ready to get started.
Scope of Task Duration This task may take hours or days, depending on the size and complexity of the task.
Setup None.
Caveat Be sure to include geographically dispersed team members.
Procedure To create a partial WBS: 1. Create the list of work that results in producing your previously identified deliverables. 2. Organize the work. 3. Deconstruct each task and review with the team. 4. Verify that the WBS is correct and complete.
Task 2.2: Creating the Work Breakdown€Structure╅
89
Details Work that is not in the WBS is not part of the scope of the project! A WBS is not just an extensive list of work. It is a thorough categorization of project scope. Some folks believe that the WBS is the project plan. Although it is at the heart of the project, it is part of the scope management plan, and a part of the master project management plan. The WBS is commonly used at the beginning of a project for further defining project scope, organizing schedules, and estimating costs. It is a living document throughout the project. It can be used for reporting project costs, as well as managing risks. On larger projects, the WBS may be used throughout the project to identify and track work packages, to organize data for earned value management (EVM) reporting, for tracking deliverables, and so on. We will discuss these items later. The key thing to remember is that the WBS must fully cover the scope of the project. Following the procedures outlined earlier helps ensure that all the scope and only the scope is successfully and completely decomposed in the WBS. Before we move on, let’s look at some important definitions.
PMBOK® Guide Glossary Definitions WBS Dictionary (p. 445)╇ ╇ “A document that describes each component in the work breakdown structure (WBS). For each WBS component, the WBS dictionary includes a brief definition of the scope or statement of work, defined deliverable(s), a list of associated activities, and a list of milestones. Other information may include responsible organization start and end dates, resources required, an estimate of cost, charge number, contract information, quality requirements, and technical references to facilitate performance of the work.” Work Package (p. 445)╇ ╇ “A deliverable or project work component at the lowest level of each branch of the work breakdown structure.” Control Account (p. 422)╇ ╇ “A management control point where scope, budget (resource plans), actual cost, and schedule are integrated and compared to earned value for performance measurement.” We will discuss more about these definitions as we move along. Let’s go through the steps we defined earlier.
Step 1: Create the List of Work When you are meeting with your team for creating a WBS, describe the scope of work and what is to be delivered so the team won’t get off track. Remember, we discussed that this is a horizontal project structure where there are no ranks involved, so participate as a peer. It will be helpful to start by using command verbs. Table€2.3 shows several useful command verbs. Then brainstorm the rest of the work to be done and compile a list of work. Decide whether adequate costs and durations can be developed at the level of detail you have identified.
90â•…
Phase 2╇ ╇ Planning Process n
Ta b l e€ 2 . 3 ╇╉╇╉Command verbs Verb
Description
Assessment
Review, research, collect, analyze, assess, determine, identify
Requirements
Define, describe, design, develop, choose, obtain, prepare, approve
Construction
Construct, build, write, obtain, create
Validation
Validate, pilot, check, test
Implementation
Implement, move, train, replace, evaluate
Hands-on 2.3: Testing Your Knowledge of Creating a List of Work You have been charged with defining the tasks associated with furnishings as they relate to the Apples and Pears project. Decompose the higher element “Determine the furnishings required” (found in the high-level WBS that follows) until you believe you have accomplished the deliverable “Furnishings identified.”
1. Obtain a copy of space planning results. 2. Determine what furnishings are required. 3. Order the furnishings. 4. Set up the furnishings.
Step 2: Organize the Work Now it’s time to create logical groupings. You can do this by phase, by geography, by organization, by key work products, chronologically, or any other way that your team feels will accomplish this task.
Hands-on 2.4: Testing Your Knowledge of Organizing Tasks€into€Logical€Groupings You have worked with your team on and have made a list of tasks associated with advertising, training of sales and marketing staff, and printing of brochures and manuals for the Apples and Pears project.
Task 2.2: Creating the Work Breakdown€Structure╅
1. Place the following tasks into four logical groupings: training sales, training marketing, preparing advertising, and printing brochure and manual: NN
Familiarize sales with the brochure and manual.
NN
Return sales to territories.
NN
Consolidate specific marketing training.
NN
Draft and approve the brochure.
NN
Design the layout of the brochure.
NN
Design the customer instruction manual.
NN
Select marketing personnel for training.
NN
Distribute advertising to the proper media.
NN
Prepare an article for a professional journal.
NN
Train marketing personnel.
NN
Send sales personnel to training.
NN
Proceed with familiarization course.
NN
Select sales personnel.
NN
Print brochures.
NN
Print customer instruction manuals.
NN
Return marketing to territories.
NN
Publish the article in the professional journal.
NN
Bring marketing personnel to the home office.
NN
Prepare phase 1 of training.
NN
Prepare phase 2 of training.
NN
Prepare regional advertising.
NN
Release and carry regional advertising.
NN
Consolidate advertising plans.
NN
Determine a general marketing approach.
NN
Approve regional advertising.
NN
Approve the customer instruction manual.
NN
Conduct phase 1 training.
91
92â•…
Phase 2╇ ╇ Planning Process n
NN
Conduct phase 2 training.
NN
Send manuals to the training center.
2. What challenges would you have if you did not create a WBS?
Step 3: Deconstruct Each Task and Review with the Team Make sure that each task is deconstructed to a level where resources can be assigned and cost estimates given. Because your team helped to create the WBS, you will want to review it and make adjustments as needed. This sort of team involvement cements the plan for your team members. Your review should include the following: NN
Show the team what has been done so far.
NN
Go through the WBS and fix and/or confirm groupings.
NN
Adjust task and activity names, if necessary.
NN
Change wording, if necessary, to make it clearer but do not adjust intent.
Hands-on 2.5: Testing Your Knowledge of Reviewing and Adjusting a WBS You have worked with your team and created work lists, placed them into logical groupings, and decomposed the tasks and activities until a deliverable was produced. Review the following construction WBS and review and adjust groupings if necessary. Add tasks or activities if needed until you feel you can produce appropriate deliverables. Use command verbs. NN
Obtain work plans
NN
Submit plans
NN
Obtain permits
NN
Stake the corners and offsets
NN
Establish a monument (set pin) for points of reference
NN
Perform dirt work NN
Dig out foundation
NN
Sell or save the dirt
NN
Bring in utilities
NN
Inspect dirt work for grade to set pins
NN
Order materials per plan
Task 2.2: Creating the Work Breakdown€Structure╅
NN
Foundation NN
Build forms
NN
Place rebar
NN
Pour concrete
NN
Pour test cylinders
NN
Strip and clean forms
NN
Allow concrete to cure
NN
Analyze test cylinders
NN
Inspect finished foundation
NN
Framing
NN
Rough in electrical and plumbing
NN
Set up material delivery in back of building
NN
Set up sidewalks, walkways, and blacktop
NN
Rafters
NN
Sheet the roof
NN
Create traces for wiring
NN
Electrical/plumbing to roof
NN
Put up roofing
NN
Pull wire
NN
Inspect wiring
NN
Insulation
NN
Put up sheetrock
NN
Install cabinets
NN
Lay tile and linoleum
NN
Finish carpentry
NN
Finish plumbing
NN
Finish electrical
NN
Finish heating
NN
Hire cleaning service
NN
Install carpeting
93
94â•…
Phase 2╇ ╇ Planning Process n
Step 4: Verify That the WBS Is Correct and Complete The best way to verify completeness and correctness is to ask this question at the lowest level: “Will these tasks fully complete the required deliverable?” If you have prefaced your tasks with command verbs, you should be able to associate a deliverable with the tasks.
Common Obstacles Even though you are acting as a peer on this process, your facilitation skills will be needed if you encounter any of these obstacles: NN
Discussing or adding new requirements
NN
Talking about the solution rather than the work
NN
Wanting to establish dependencies too early
NN
Wanting to assign resources too early
NN
Being so overly detailed that you spend more time creating the WBS than managing it
NN
Concern over levels of a WBS: NN
Commonly a WBS has between five and seven levels.
NN
It may take only three or four levels to create a budget-level deliverable.
NN
If you have seven or more levels, typically this would then become a subproject or a program with multiple subprojects.
Levels of Detail in a Work Package You know you have broken the scope of the project down far enough when you feel that the work package: NN
Can be realistically and confidently estimated
NN
Cannot be logically subdivided further
NN
Can be completed quickly
NN
Has a meaningful conclusion and is deliverable
NN
Can be completed without interruption (without the need for more information)
NN
Can be outsourced or contracted out
Task 2.3: Developing a Budget Plan After resource and staffing planning has taken place, the project manager can develop an estimate of resource costs. A finance plan (or as it is sometimes called, a cost plan) should be credible enough that there will be sufficient budget in place before work begins, particularly when you are dealing with projects that require several subcontractors, vendors, and so on.
Task 2.3: Developing a Budget Planâ•…
95
Scenario You now have a partial WBS that you are still working on, but you realize that other plans have to be created as well. This is not a linear process—pieces and parts will eventually populate the master project plan. Based on your WBS, you have enough information to validate the initial budget spelled out in the project charter.
Scope of Task Duration The extent of this task depends on the size and complexity of the project.
Setup None.
Caveat You must have access to the costs associated with resources. This does not mean that you will be given salary information. You will be given the loaded labor rate for your organization. The loaded labor rate is typically the employee hourly rate plus employee benefits, capital expenses, and other overhead. If you do not receive a “loaded” rate, you can double that rate for labor costs.
Procedure This task will describe the following steps: 1. Cost estimating 2. Cost budgeting 3. Cost control
Details A financial management system should be in place for receiving, approving, and paying suppliers and subcontractors. The invoices you receive should map back to purchase orders, contracts, and receipts for materials or work that has been completed and accepted. The finance plan should also possess a process for the final audit of the contract (where present) and closeout of that contract. You should include contingency reserves in the baseline budget. Management reserves that are approved are also included as part the cost plan, but are not part of the baseline budget. This is not a plan that you can create and forget about. Like all project plans, it should be iteratively refined. You want to be able to validate the capabilities of the financial controls you have in place. Elements of a cost plan include cost estimating, cost budgeting, and cost control.
96â•…
Phase 2╇ ╇ Planning Process n
Cost Estimating You know what the high-level estimate was when the project charter was signed, but now you need to “true it up.” You now know more than you did when you started, so the costs should be more realistic. Let’s take a closer look at estimating types: Parametric Modeling╇ ╇ This type is considered “top-down.” It uses project characteristics (parameters) in a mathematical model to predict project costs. For example, if you are going to build a commercial building in a certain city, information is available that you can use (for example, cost of materials, land values, and so forth). But that information averages all types of buildings, from a local fast-food restaurant to a high-rise, and the average cost of commercial land. As a result, the difference in accuracy can be anywhere from –25% to +75%. By the way, consider this about averages: If you are standing with one foot in a bucket of boiling water and the other foot frozen in a block of ice, on “average” you are considered comfortable! Analogy Estimating╇ ╇ This is another top-down estimating method. The difference in accuracy may be –10% to +25% when the current project is very similar to the analogous project. The variance could be greater if this is an early estimate. For example, some organizations apply T-shirt sizes to their analogies. In other words, without spending a lot of time or looking at too much detail, an analogy may simply put a project into a small, medium, or large label on a project for consideration prior to acceptance of a project into a portfolio. This may be all the detail required to advance an internal enhancement type of project. Remember, you learn more and will be more accurate with your estimates as the project progresses. Definitive Estimating╇ ╇ This type often has a –5% to +10% level of accuracy. You estimate the cost of individual work items so that when you summarize, or roll up, the individual estimates you can get a project total. This type of estimating is considered bottom-up. When preparing the base project budget, you must consider the realistic availability of resources, which is about 75%. Then determine the loss factors associated with the project, such as errors, interruptions, rework, and so on. This will give you the effort estimate for cost. Next you consider nonproject loss factors such as training, vacations, sick time, holidays, and the like, and this gives you your effort estimate for the schedule.
Cost Budgeting The total effort required to perform the project is determined in the estimating and scheduling process. Until the final schedule has been agreed upon, estimating isn’t complete because as you schedule you may reassign resources, which may change effort estimates for individual tasks. The effort is multiplied by the hourly rate(s) for the resources to obtain human resource costs. These are allocated over the project duration based on where in the schedule the resources are expected to expend their effort. Then, capital costs or costs associated with equipment purchases, software licenses, and the like are added. Additionally the costs of supplies and facilities are directly charged to the project. Overhead is added to get the total cost estimate. This total cost estimate is spread across the project duration, based on when the expenditures are expected to be made, to form the budget for the project.
Task 2.3: Developing a Budget Planâ•…
97
The budget must be reassessed from time to time and changed if variances (differences between the budget and actual expenditures) are significant enough to warrant it. Usually, as you move from phase to phase in the project, you have an acceptable range of budget that must be met before moving on to the next phase. For example, your organization may allow a 10% overage to move forward but will stop the project if costs exceed the range. After you know who does what and when and their loaded rates (including benefits and overhead), you can create a report showing the budget (see Table€2.4). Ta b l e€ 2 . 4 ╇╉╇╉Human Resource Budget
Activity
Resource
Est. Effort
Loaded Rate
Budget
A
Michelle
80 h
$85
$6,800
B
Jeness
40 h
$85
$3,400
C
Carrie
1,800 h
$60
$108,000
D
Jocelyn
120 h
$100
$12,000
E
Todd
480 h
$35
$16,800
Estimated Budget
$147,000
Actual Effort
Actual Cost
The estimated resource budget (in this abbreviated example) plus nonlabor costs (excluding contingency and management reserves) becomes your baseline cost budget. We will discuss contingency and management reserves in Phase 4, “Monitoring and Controlling Process,” Task 4.4.
Cost Control According to The Chaos Report, 2004 from the Standish Group (http://ptgmedia .pearsoncmg.com/images/9780131575516/samplechapter/0131575511_CH01.pdf), cost overruns average about 56% of original budgets. Cost control entails monitoring actual cost performance to identify and act on cost variances. It also includes vigorous control of changes to the project scope to prevent unnecessary cost increases. Finally, it includes communicating cost performance and variances to applicable stakeholders and working with them to define plans to keep the project within its approved scope. We will look at ways to control cost in the monitoring and controlling phase. The following is a cost management plan template that may be useful when you create your cost plan:
98â•…
Phase 2╇ ╇ Planning Process n
Section 1: Estimates NN
Describe how you derived your estimates.
NN
Describe the estimates derived from labor resources.
NN
Describe estimates required for nonlabor resources.
NN
Describe estimates from contingency funds associated with known risk events.
NN
Describe the estimate of the management reserve that may be needed for unknown risks that may arise.
Section 2: Cost Budgeting NN
Allocate costs per work package.
NN
Allocate costs to time elements such as months, quarters, or years.
NN
Define spending plans to answer, “Will the project partially fund itself?” For example, if a project is launched to upgrade the infrastructure for cable TV, as soon as the upgrade is complete in an area, customers begin to pay to use the new service; as a result, some of those profits can fund the continuing project.
Section 3: Cost Control NN
Document procedures for retrieving cost information.
NN
Use earned value to determine whether funds are adequate within predetermined ranges.
NN
Compare planned costs to actual costs.
NN
Establish cost-control procedures.
Section 4: Establish a Cost History NN
Build a WBS with actual costs of activities so as to establish cost history for similar projects.
NN
Utilize or create a historical database to capture cost information.
NN
Audit existing finance controls to see if they worked properly.
Hands-on 2.6: Testing Your Knowledge of Cost Budgeting 1. Who should perform activity estimating? Why? 2. We discussed top-down and bottom-up estimating. Is there a place for both types in a project? Why or why not?
3. Provide two scenarios in which a human resource estimate might change the budget.
Task 2.4: Developing the Project Scheduleâ•…
99
Task 2.4: Developing the Project Schedule A good scheduling plan maximizes the productivity of resources on project activities. You know by looking at your schedule who is to do what, and when. The project manager is responsible for the schedule. If there are a huge number of tasks—for example, on a mega project—it may be beneficial to hire a project scheduler.
Scenario You have completed your WBS but there is much more work to be done before you finish the project schedule.
Scope of Task Duration This task could take hours, days, or weeks depending on the size or complexity of the project.
Setup None.
Caveat None.
Procedure The following represents the processes necessary to create and understand a project schedule: NN
Define scheduling activities.
NN
Determine activity sequencing.
NN
Estimate resources.
NN
Determine activity durations.
NN
Develop the schedule.
Details This is probably the most important task in the project. If the schedule is not created and managed correctly, the project may not come in on time, or within budget. It is imperative that you and your team take the time needed to get it done.
100â•…
Phase 2╇ ╇ Planning Process n
Define Scheduling Activities The WBS we described earlier shows only the major tasks within logical groupings. What you want to do now is further define those tasks into subtasks (if appropriate) and activities that can be scheduled and are associated with deliverables. Name the tasks and subtasks. At this point you will want to have some sort of numbering convention, such as in Figure€2.2. Finally, name the activities that create a work package. These activities are also called schedule activities because you can assign a resource to the activity as well as an estimated duration for that activity. Figure€2.2 shows us a partial WBS with tasks, subtasks, and activities needed to install a lawn sprinkler system. F ig u re€ 2 . 2 ╇╉╇╉Hierarchical work breakdown structure Tasks
1.0 2.0 3.0 4.0
Subtasks
Check water pressure Create zones for coverage Pick up materials Dig the yard 4.1 Reserve a ditch witch 4.2 Pick up the ditch witch
Activities to be scheduled
4.2.1 4.2.2 4.2.3 4.2.4
Work Package
Borrow pickup Buy oil and gas Bring a ramp for loading and unloading Arrange for Joe to dig the yard
The work package fully accomplished the subtask “Pick up the ditch witch” and the subtasks fully accomplished the task “Dig up the yard.” Notice the numbering convention— outlining is common. At the lowest level of a WBS, you can now schedule activities.
Determine Activity Sequencing Activity sequencing establishes logical relationships (dependencies) between the project activities. Project teams work together to identify the dependencies between tasks. You have to know the types of dependencies first. There are three types of dependencies: Mandatory╇ ╇ Mandatory dependencies use hard logic (that is, task A must be completed before task B). Discretionary╇ ╇ Discretionary dependencies use soft logic or preferred logic. For example, using soft or preferred logic, you typically would paint the walls before you would lay carpet; however, if the painter is running late on another project, you can, at your discretion, choose to install the carpeting first (with plastic to cover it) and have the painting done later. Any time you bypass preferred logic, you must also account for risk that is being added to the task that was done, in this case by covering the carpet with plastic. External╇ ╇ External dependencies determine when some activities can be scheduled. For example, say you have to cross a street underground to lay in fiber. The gas company is also
Task 2.4: Developing the Project Scheduleâ•…
101
doing an underground street crossing in the same location. The city won’t give you a permit for a second underground street crossing. You would have to coordinate your efforts with the gas company. The result of sequencing tasks is a network diagram. Two types of diagramming techniques can be used. One is the arrow diagramming method (ADM), shown in Figure€2.3, and the other is the precedence diagramming method (PDM), shown in Figure€2.4. F ig u re€ 2 . 3 ╇╉╇╉ADM network diagram B A
y mm Du ivity t Ac
START C
D FINISH F
E
F ig u re€ 2 . 4 ╇╉╇╉PDM network diagram
A
B
D
START
FINISH
C
E
F
Arrow Diagramming Method (ADM) NN
Activity identified on the arrow (AOA).
NN
Circles represent the start or finish of an activity.
NN
Uses only finish-to-start relationships.
NN
Can use multiple time estimates to determine durations.
NN
May need dummy activities to complete the logic (shown with dashed line) that are used to show only complex precedence activities such as finish to start.
Precedence Diagramming Method (PDM) NN
Activity identified on the node (AON).
102â•…
NN
Phase 2╇ ╇ Planning Process n
Can use four precedence relationships: NN
Finish to start
NN
Start to finish
NN
Finish to finish
NN
Start to start
NN
Uses only one duration.
NN
Other project information can be displayed on the node.
Precedence relationships simply show how tasks relate to each other based on how the network diagram was built, specifically the dependencies between tasks. In most cases, one activity cannot start until another activity has finished. This is referred to as a finishto-start relationship, and it is the most common form. However, there are four ways, listed in Table€2.5, that one or more activities can be related to each other. Ta b l e€ 2 . 5 ╇╉╇╉Four activity relationships Activity
Description
Diagram
Finish to start
The finish of activity A drives the start of activity B.
A
Start to finish
The start of activity A drives the finish of activity B.
B
Start to start
The start of activity A drives the start of activity B.
Finish to finish
The finish of activity A drives the finish of activity B.
B A
A
A
B
B
To illustrate how precedence relationships work, consider the initial plan of a project with duration of 20 days (see Figure€2.5). F ig u re€ 2 . 5 ╇╉╇╉ADM with finish-to-start relationship Framing
Finishing
10 days
10 days
Assume you have to reduce the duration of this project by starting the finishing activity four days after you start the framing activity. In Figure€2.6, we have modified the plan and shortened the duration to 14 days. Notice the “dummy” activity that completes the logic.
Task 2.4: Developing the Project Scheduleâ•…
103
F ig u re€ 2 . 6 ╇╉╇╉ADM with reduced duration Framing
Complete Framing
4 days
6 days Finishing 10 days
You can see in the less complicated PDM diagram, Figure€2.7, that four days after you start the framing activity you will start the finishing activity by using a start-to-start relationship of four. Four days after framing has started, you can start the finishing activity by using a start-to-start dependency relationship. The default relationship is always a start-tofinish dependency relationship, which in this case would be 20 days. F ig u re€ 2 . 7 ╇╉╇╉PDM with reduced duration Framing 10 days
SS4
Finishing 10 days
When using precedence relationships, you may sometimes want to use lead and lag times. They enable you to further describe what is happening with a task. Lead is a modification of a logical relationship that allows an acceleration of the successor task. For example, in a finish-to-start dependency with a 10-day lead (see Figure€2.8), the successor activity can start two days before the predecessor has finished. Perhaps you have framers putting up interior walls on a multistory, street-of-dreams private mansion. The electricians have to wait until the walls are up before they can start running the electrical wiring. That does not necessarily mean they have to wait until all the walls are up; they could, if you schedule it properly, lead into the electrical wiring after a certain percentage of the predecessors’ task is complete or a specific number of days prior to completion of the predecessors’ task. F ig u re€ 2 . 8 ╇╉╇╉Lead dependency S
Start Framing 10 days
S 8 days
2 days
F
Begin Wiring 10 days Lead Time
Task “Start Wiring” starts 8 days after “Start Framing”
F
104â•…
Phase 2╇ ╇ Planning Process n
Lag is a modification of a logical relationship that directs a delay in the successor task. In a finish-to-start relationship with a five-day lag (see Figure€2.9), the successor activity cannot start until five days after the predecessor has finished. For example, you have poured concrete, and the next task is to frame the building. The lag time tells you to wait five days and does not use any resources. You don’t need to put into your plan a task called “watch the concrete cure”! F ig u re€ 2 . 9 ╇╉╇╉Lag dependency S
F
Pour Concrete 1 day Lead Time
5 days S
Begin Framing 10 days
F
Task “Begin Framing” starts 5 days after “Pour Concrete”
Estimate Resources Your resource plan helped you determine the resources you need, but now you have to estimate what these resources will cost. The project manager works with the resources assigned to do the work to first estimate the time needed for activities. Most resource managers tend to estimate with their known constraints. They have full plates and give a duration based on their own situation. Ask them to give you an unconstrained estimate instead; that is, if it were a perfect world, how many hours would it take an average employee to complete the task? Think of these estimates as billable hours. What we are talking about, of course, is effort versus duration. If it should take only 40 hours, don’t accept an effort estimate of three weeks. It may take three weeks to get it done, but you should bill only around 40 hours. You should also express estimates in ranges and communicate assumptions that you validate and revise as a normal part of project control. If you have a very long project, estimate it in phases. Estimate the first phase or two with a bottom-up approach and the rest with a top-down approach. Variance is greater in longer-range estimates and greater still when there is no history. There is no need to pad estimates. You can apply other factors. Table€2.6 lists factors that help bring reality to the estimate. You should consider productivity as well. As you can see, many items could affect an estimate. After all, the production time or utilization rate of an eight-hour shift is rarely, if ever, eight hours. The utilization rate for an oil field employee in winter conditions, for example, may be only three hours in an eight-hour shift. Safety considerations may require warming breaks after so much exposure time to the elements. Suiting up once at the site with appropriate protective apparel is required but not considered productive time.
Task 2.4: Developing the Project Scheduleâ•…
105
Ta b l e€ 2 . 6 ╇╉╇╉Factors that bring reality to the estimate Productivity
Other factors
Number of effective work hours
Size of team
Tools and techniques
Number of clients
Skill level
Client availability
Motivation
Understanding of objectives
Working environment
Project complexity
Leadership and direction
Experience of team
Time spent on rework
Time on other work
Number of tasks involved
Availability of historical data
Determine Activity Durations You now know the scope of each activity. The Associated General Contractors of America uses productivity rates to determine activity durations. It considers the productivity rate as it relates to the work quantity and then divides the work quantity by the production rate to determine an estimate of the activity duration. Activity duration = work quantity / production rate You have everything you need to put together correct durations for the advertising, brochure, and training pieces of the WBS. You should now add durations to your Microsoft ® Project or other scheduling software file.
Develop the Schedule You now understand the concept of dependencies as well as lead and lag time. Next, we will cover other essentials that will help you develop a schedule: NN
Critical path
NN
Float and slack
NN
Forward and backward pass logic
Creating the network diagram is easy, but you should understand the logic that is used in project management software so you can make changes to your network diagram and understand what the results of your changes are. But first you need to understand the critical path method (CPM). CPM calculates a single, deterministic early and late start and a finish date for each activity based on specified, sequential network logic and a single duration
106â•…
Phase 2╇ ╇ Planning Process n
estimated. The focus of CPM is calculating float to determine which activities have the least scheduling flexibility. A forward pass is performed, calculated from the early start and early finish dates of all network activities. Then a backward pass is performed, calculated from the latest start and latest finish dates of all network activities. Any task that has no float is considered critical. Understanding the logic of CPM and float helps you make schedule trade-offs and is useful in individual task control as well as total schedule control. Critical path tasks have no float or slack in them. That’s why they are critical. Without float, if a task on the critical path takes longer than expected, it will delay the end of the project. Free float or free slack is the amount of time an activity can be delayed without delaying the early start of any immediately following activities. Total float or total slack is the amount of time an activity may be delayed from its early start without delaying the planned project finish date. The word float is used interchangeably with the word slack. It is a mathematical calculation and can change as the project progresses and changes are made to the project plan. Late start – early start = slack The main thing to remember is this: Do not let your team members know what their float is. Parkinson’s Law is alive and well here—work expands to fill the time available for its completion. What your team members usually do not know is that the float they think they have for their task can be cumulative for the entire path. So if Joe sees that he has oneweek float on his task and uses it up, the rest of the members on the path suddenly may not have any float at all. In fact, after the float is used up, you now have another critical path! Sequencing activities is only part of the action you need to build a schedule. The software that you choose utilizes the forward pass and the backward pass. These functions are performed automatically as you build your network, but again, it is useful for you to understand this built-in logic that determines the amount of float you have for a task or an entire path. When you make changes to the durations or dependencies between tasks, float and critical path could change. We are now going to determine dependencies, perform a forward pass, perform a backward pass, and then determine the critical path and float time. Figure€2.10 shows an example of determining the dependencies between tasks. Figure€2.11 performs the forward pass. Tasks that have no predecessor begin the early start with the 0 (see A7, C6, D8, and F6). The forward pass is noted on the top of the box or node. Starting with 0 as the early start of the first task, add the duration; this becomes the early finish date. The early finish date follows the arrow(s) to the next node(s) and becomes that node’s early start. Proceed to the end of the project, keeping in mind that when several arrows from different nodes land into just one node, the forward pass rule is to use the largest early finish date. Figure€2.12 performs the backward pass. Doing the backward pass is a little trickier than the forward pass. It’s just a matter of watching how many arrows flow into and out of the nodes. Begin with the last node in the project. Place the late start and late finish dates at the bottom of the node. On the last node this will always be the same as the early start and early finish. Now the fun begins.
Task 2.4: Developing the Project Scheduleâ•…
107
F ig u re€ 2 .1 0 ╇╉╇╉Determine dependencies. A7
B3
C6
D8
F6
E5
Task & Duration G2
L2
H7
I3
J3
M8
N3
K7
F ig u re€ 2 .11 ╇╉╇╉Perform a forward pass. Early Start 0
7 A7
0
B3
13 15
15 17
G2
L2
8 13
13 20
20 23
28 31
E5
H7
I3
N3
13 16
20 28
J3
M8
C6
8 D8
0
6 F6
Task & Duration
7 10
6
0
Early Finish
6 13 K7
Notice how many arrows are flowing into the last node. Follow those arrows to their originating node. The late start of the last node becomes the late finish of the preceding nodes. Subtract the duration of the current node, and this becomes the late start of that node. Notice again how many arrows are flowing into these nodes. If there is more than one, take the smaller of the late starts and proceed backward until you reach the beginning of the project.
108â•…
Phase 2╇ ╇ Planning Process n
F ig u re€ 2 .1 2 ╇╉╇╉Perform a backward pass. Early Start 0
7
Task & Duration
7 10
A7
B3
14 21
21 24
Early Finish
Late Start
Late Finish
13 15
15 17
C6
G2
L2
18 24
24 26
26 28
8 13
13 20
20 23
28 31
E5
H7
I3
N3
8 13
13 20
25 28
28 31
13 16
20 28
J3
M8
17 20
20 28
0
6
0
8 D8
0
8
0
6
6 13
F6
K7
4 10
10 17
Figure€2.13 shows how to determine float and the critical path. Float is determined by simply subtracting the early start from the late start, or the early finish from the late finish. If you have done your calculations correctly, both of the answers on each node will be the same. Now you know this: NN
NN
NN
NN
NN
NN
The critical path is D8, E5, H7, M8, and N3 because these tasks have no float. Total float for path A, B, G, L, N = 14. Tasks A and B have a free float of 3 that can be shared between the two tasks without impacting the rest of the path, which is 11. Total float for path C, G, L, N = 18. Task C has a free float of 7 before impacting the rest of the path, which has 11. Total float for path D, E, G, L, N = 11. There is no free float for an individual task— they must share 11. Total float for path D, E, H, I, N = 5. Only task 1 can use this float because the remainders of those tasks are on the critical path. Total float for path F, K, J, M = 4. The float is shared so there is no free float.
Now you know the duration of the project, which is also the critical path. You also know how much float is available for noncritical tasks. You now have everything you need to develop your schedule.
Task 2.4: Developing the Project Scheduleâ•…
F ig u re€ 2 .1 3 ╇╉╇╉Determine float and critical path. Early Start 0 A7
14
14 21 0
Task & Duration
7 10
7
B3
21 24
18
18 24 0
8
8 13
D8 0 0
E5 0 8 13
8
Late Start
14
6 C6
13 15
15 17
G2
L2
11
26 28
13 20
20 23
H7 0 13 20
J3 6 F6 4 10
6 13 4
K7
Late Finish
11
24 26
I3
28 31 5
25 28
13 16
0
Early Finish
N3 0 28 31
20 28 4
17 20
M8 0 20 28
4
10 17
Hands-on 2.7: Testing Your Knowledge of Network Logic You have just determined the following major activities required for the implementation of a new telephone system: A: Conduct station reviews (3): Predecessor none B: Obtain network requirements (2): Predecessor none C: Create station designs (2): Predecessor A D: Create network cable design (4): Predecessor B E: Build out switch room (8): Predecessor B F: Install patch panel in switch room (2): Predecessor E G: Install hardware (3): Predecessor E H: Install cable (2): Predecessors D, E I: Tie down cable to patch panel (3): Predecessors F, H
109
110â•…
Phase 2╇ ╇ Planning Process n
J: Install, program, and test stations (2): Predecessors C, G, I K: Conduct continuity tests (4): Predecessor J L: Test software (1): Predecessor K
1. Using the precedence diagramming technique, draw the network diagram for this project and calculate the ES, EF, LS, and LF of each of its activities.
2. Determine the critical path. 3. Show all float.
Hands-on 2.8: Testing Your Knowledge of Network Logic Using the PDM diagram in Figure€2.14: F ig u re€ 2 .1 4 ╇╉╇╉Network diagram B2
D4
E10
C8
A10
G12
H6
F9
J3
K1
L2
M1
16
O4
P5
Q3
R8
S10
T4
U2
V2
W6
X8
Y2
BB4
Z8
CC2
AA8
N1
Forward Pass ES FF
LF LS Backward Pass
Task 2.4: Developing the Project Scheduleâ•…
111
1. Calculate the ES, EF, LS, and LF of each of its activities. 2. How much float is does each path have? 3. Is there any free float, and if there is, which tasks have it? 4. What is the difference between float and free float? 5. Determine the critical path(s). 6. What happens to your schedule if you have more than one critical path? 7. What should the project manager do when there is more than one critical path?
Use Gantt Charts Gantt charts are named for Henry L. Gantt. Gantt worked in a ship building facility during World War I and decided to use a two-dimensional relationship between task and time to better serve those activities. The process was very successful and is widely used today. Most project management software builds this timeline for you when you sequence your tasks. When tasks are “rolled up” into milestones, the Gantt chart can provide management with a quick view of the status of the project. Figure€2.15 is a Gantt chart provided through Microsoft® Project with the details of your advertising, hiring, and training tasks.
Determine Project Scheduling in the Face of Uncertainty For very large-scale, one-time, complex, nonroutine projects, you can use a process referred to as program evaluation and review technique (PERT). PERT is used when there is uncertainty and when uncertainty hinders decision making. Booz Allen Hamilton developed this process during the Sputnik crisis. This consulting firm was engaged by the U.S. Department of Defense’s U.S. Navy Special Projects Office in 1958 as part of the Polaris mobile submarine–launched ballistic missile project. PERT was used to simplify planning of large projects that have outcomes that are unknown. Whereas CPM uses only one duration, PERT uses three: Optimistic (to)╇ ╇ Activity time if everything progresses in an ideal manner Most Likely (tm)╇ ╇ Activity time under normal conditions Pessimistic (t p)╇ ╇ Activity time if major problems are encountered PERT calculates the average or expected time (te) of each activity as follows: (0+(4M)+P) / 6 ____________________ 6 The variance of each activity (v) is calculated as shown in the following equation: v=
t0 tp 6
2
112â•…
Phase 2╇ ╇ Planning Process n
F ig u re€ 2 .1 5 ╇╉╇╉Gantt chart i Task Name
Dec 7, ‘08
Nov 30, ‘08
S M T W T F S S M T W T F S A & P Project 1. Training of Sales Personnel 1.1 Prepare phase 1 of training program
‘1
1.2 Select sales personnel
‘1
1.3 Send sales personnel to training
12/10 12/2 12/8
12/3
1.4 Conduct phase 1 training
12/9 12/11
1.5 Prepare phase 2 training 1.6 Prepare phase 2 training for sales personnel 1.7 Familiarize sales with brochure and customer manual 1.8 Return sales to territories 2. Training of Marketing Personnel 2.1 Determine general marketing approach
‘1
12/12
2.2 Select marketing personnel for training 2.3 Bring marketing personnel to home office 2.4 Consolidate specific marketing training 2.5 Proceed with familiarization course 2.6 Train marketing personnel 2.7 Return marketing to territories 3. Preparation of Advertising 3.1 Consolidate advertising plan 3.2 Prepare white paper 3.3 Publish paper in professional journal 3.4 Prepare regional advertising 3.5 Approval regional advertising 3.6 Distribute advertising to proper media 3.7 Release and prepare to carry regional advertising 3.8 Finish 4. Printing Brochure and Manual 4.1 Draft and approve brochure 4.2 Design layout of brochure 4.3 Print brochure 4.4 Design customer instruction manual 4.5 Approve customer instruction manual 4.6 Print customer instruction manual 4.7 Send manual to training center
‘1
12/10
Task 2.4: Developing the Project Scheduleâ•…
Dec 14, ‘08
Dec 21, ‘08
Dec 28, ‘08
Jan 4, ‘09
Jan 11, ‘09
Jan 18, ‘0
S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T
12/22 12/23 1/8
12/24
1/15
1/9 1/16
1/16
12/18 12/15
12/19
12/22
12/16 12/15 1/1
12/23
1/16
1/16
12/22 12/15
12/30
12/23
1/9
12/31 1/5
12/23
1/9
1/6
1/12
1/13 1/14
1/15 1/19
12/22
12/17
12/29
12/23
1/1
12/30 12/225
12/23
1/1
12/26
1/5
1/2 1/6
1/15
113
114â•…
Phase 2╇ ╇ Planning Process n
The total variance of the project is equal to the sum of the variances of the critical path activities. The standard deviation (SD) of a project’s duration is equal to the square root of its total variance. Finally, the PERT assumption that the distribution of the project’s completion time (T) is a normal (bell-shaped) distribution enables you to compute the probability of meeting a specified project completion date. Consider the project in Figure€2.16. All numbers are in days. The first number is the activity’s optimistic time. The second number is the activity’s most probable time. The third number is the activity’s pessimistic time. F ig u re€ 2 .1 6 ╇╉╇╉Three time estimates per task 2-3-5
2-3-6
1-1-1
Design Training A
Obtain Approval B
Deliver Training D
Start 1-2-3 Select Trainee C
The duration of this project (T) is equal to the sum of the expected times of its critical activities (A, B, D): T = teA + teB + teD = 3.17 + 3.33 + 1.00 = 7.50 Table€2.7 shows the expected time (te) and the variance (v) of each activity on the critical path of the training project, using two decimal places in the calculation. Ta b l e€ 2 . 7 ╇╉╇╉Expected time and variance Activity
Optimistic
Most Likely
Pessimistic
Expected Time
Variance
(O+(4M)+P) / 6 v = 1o – 1p 6 A
2
3
5
3.17
B
2
3
6
3.33
.45
D
1
1
1
1.00
.00
7.50
.70
Total
2
.25
Using two decimal places, the sum of the variances of the project is 0.70. The standard deviation (SD) of the project is 0.837: (SD = √ 70 = 0.837)
Task 2.4: Developing the Project Scheduleâ•…
115
Let’s take a closer look at standard deviation. Standard deviation is a measure of how spread out your data is. The center line in Figure€2.17 is the mean. On either side of the mean are (plus or minus) one, two, or three standard deviations (sigma noted as ∑). F ig u re€ 2 .17 ╇╉╇╉Standard deviation model
34.19%
0.1%
2.1%
–3σ
34.19%
13.6%
–2σ
2.1%
13.6% µ
–1σ
–1σ
–2σ
0.1% –3σ
For 68.3% of the time, the project will be completed plus or minus one standard deviation from the expected time. For 95.4% of the time, it will be completed plus or minus two standard deviations from the expected time, and 99.7% of the time it will be completed plus or minus three standard deviations from the expected time. If you want to know percent of likelihood that your project will complete at 68.3%, perform the following calculation: (100% – 68.3%) _________________ = 15.85% 2 The difference between 50% (on the plus side) and 15.85% is equal to 34.15%, which equals the probability that your project will not come in on time. You would perform the same calculations at 2s and 3s. Follow these 11 steps when using PERT: 1. Build the network diagram. 2. Determine the duration for each task. 3. Do a forward pass. 4. Do a backward pass. 5. Determine the critical path. 6. Draw a standard deviation diagram. 7. Determine the mean. 8. Determine the variance for each task on the critical path. 9. Sum the variances for each critical task to determine the total project variance.
116â•…
Phase 2╇ ╇ Planning Process n
10. Determine the standard deviation for the project. 11. Add the standard deviation to the mean, and to each sigma.
Reduce the Schedule Earlier we suggested that you estimate durations based on the best-case scenario. The reason for that is simple—it makes the schedule realistic. Most of us estimate our durations based on constraints. We are told, “The project must be completed by this date.” So what do we do? Regardless of the constraint presented, ask your team to provide unconstrained estimates for more realistic outcomes. This may require renegotiations with the source imposing the constraint, but then you will have the required data to defend that information brilliantly and facilitate reasonable project time frames for all involved. For example, let’s say management wants this project completed by October 15. You present the schedule that says the project will most likely complete on November 30. Sometimes management will simply approve that. They gave you perhaps an arbitrary date and need ammunition to support any other date. You have given them the ammunition (rationale) so they can defend the date if needed to others who may question the date.
Hands-on 2.9: Testing Your Knowledge of PERT Table€2.8 contains information you have developed for a project. Ta b l e€ 2 . 8 ╇╉╇╉PERT exercise Activity
Predeccesor
Successor
Optimistic
Most Likely
Pessimistic
A
None
B, D, E
6
7
14
B
A
C
8
10
12
C
B, D
G
3
4
5
D
A
C
6
7
8
E
A
F
5
5.5
9
F
E
G
2
3
4
G
C, F
None
1
2
3 Totals
1. Create the network diagram. 2. Determine the critical path. 3. Determine the variation for each task on the critical path.
PERT Duration
Critical Tasks
Variance of Critical Tasks
Task 2.4: Developing the Project Scheduleâ•…
117
4. What is the total variation for the project? 5. What is the standard deviation of this project? 6. What is the probability that the project will be completed at 1 sigma? 7. What is the probability that the project will be completed at 2 sigma? 8. What is the probability that the project will be completed at 3 sigma? 9. Using the standard deviation of question 5, what is the number of weeks for the project at 1 sigma?
10. Using the standard deviation of question 5, what is the number of weeks for the project at 2 sigma?
11. Using the standard deviation of question 5, what is the number of weeks for the project at 3 sigma?
Other times, of course, the date is cast in stone for whatever reason. So in the preceding example you would have to reduce the schedule by six weeks. Most folks simply ask everyone in the project to shorten their durations. You do not need to do this. Now that you know how CPM works, you know that you only have to reduce the critical path. There is danger in creating more than one critical path, however. Here are some suggestions for reducing the project duration: NN
Crash the project by reducing the duration of activities located on the critical path: NN
NN
Determine the cost to reduce by one unit of time each activity on the critical path.
NN
Reduce the least costly activity first.
NN
NN
NN
NN
NN
NN
When faced with the choice of reducing an upstream versus a downstream activity, reduce the upstream activity.
Reduce the duration of the critical path until it becomes equal to the longest noncritical path. Now there are two critical paths, and both paths must be reduced to further compress the duration of the project. In reaching the final decision regarding which activity to reduce, consider quality, cost, and all other appropriate factors. Figure slope to defend yourself brilliantly!
Fast-track the project. Fast-tracking is simply doing things in parallel that normal logic suggests you do in series. You introduce risk during fast-tracking, but it is an effective way to reduce the project duration. Calculate slope. The calculation of slope, shown in Figure€2.18, shows the cost per day of crashing the project.
118â•…
NN
NN
Phase 2╇ ╇ Planning Process n
Negative slope indicates that as the time required for a project decreases, the cost increases. If costs and times are the same regardless of whether they are crashed or normal, the activity cannot be expedited.
F ig u re€ 2 .1 8 ╇╉╇╉Slope formula Slope =
(Crash Cost - Normal Cost) (Crash Time - Normal Time)
Another thing to consider when you are reducing the duration of a project is that your resources may be limited. If that is the case, then do the following: NN
NN
Schedule the project within the time limit if the end date is fixed, but resources may have to be added to meet the date. When scheduling the project within the resource limit, plan to complete the project as soon as possible without using more than the available resources. The project end date could be extended in order to avoid scheduling more resources than are available. Additionally:
NN
Move from the start to the end of the project.
NN
Do not violate your original logic.
NN
Do not exceed the available resources.
NN
If you have a choice, schedule the shortest activity first.
Manage Your Resources It is important to make sure that your resources don’t get “burned out.” When they are assigned more hours than they can handle, they become overburdened. It is up to you to ensure that resources are available when you need them, considering the commitments they may have to other projects or work. There are two processes you can use to ensure this: Resource Loading╇ ╇ This is the process of allocating resources to tasks. Sometimes it is referred to as resource allocation. The loading begins when the task-level estimates are being made. Remember, in order to estimate the effort and duration of a task, you must assume a certain number of resources at an assumed skill level (for human resources). Resource Leveling╇ ╇ This is the process of ensuring that resources are not overburdened and that resource use on the project is relatively smooth. There will be peaks and valleys within a project in terms of resource usage, and you should be prepared to spread the work around if you can, given the ability of another person to handle the same work as someone who is overallocated.
Task 2.4: Developing the Project Scheduleâ•…
119
The following represents a template that includes the elements of a project schedule management plan:
Section 1: WBS NN
Insert a copy of your WBS that includes these items: NN
Task name
NN
Duration of task
NN
Resource assigned to the task
NN
Deliverable associated with the task, including work packages
Section 2: Gantt Chart NN
Include your Gantt chart or describe where the daily updated Gantt chart is located.
Section 3: Network Diagram (optional) NN
Include your network diagram or describe where the daily network diagram is located.
Section 4: Monitoring the Schedule NN
Describe how you plan to monitor your schedule.
NN
Describe how status will be received and posted to the schedule.
Section 5: Controlling the Schedule NN
Describe how you will use resource leveling and resource loading.
NN
Describe the process you will use to compare actual results with planned results.
NN
Describe how preventive and corrective actions will be done.
Hands-on 2.10: Testing Your Knowledge of Reducing a Project’s Duration You prepared a proposal for Cimarron to do a portion of the manufacturing of wedding clothing. Unfortunately, because of a typing error, the proposal promised that the project would be completed five weeks following a purchase order from one of your vendors. The original length of the project is eleven weeks, and you discover the error as soon as the purchase order is received. There is also a penalty of $3,000 for each week of delay in completing the project beyond the end of the fifth week. The fifth week for this task actually starts six weeks after the project begins. You quickly prepare the information in Table€2.9.
120â•…
Phase 2╇ ╇ Planning Process n
Ta b l e€ 2 . 9 ╇ ╇ Crashing exercise Activity
Predeccesor
Successor
Normal Time
Normal Cost
Crash Time
Crash Cost
A
None
B
4
$3,200
2
$5,200
B
A
E
3
$6,000
1
$12,000
C
None
D
5
$5,000
2
$9,500
D
C
E
3
$3,000
1
$5,400
E
B and D
None
3
$1,200
1
$2,200
1. Create the PDM network diagram. 2. Determine the critical path. 3. What is the crash cost to reduce the project to eight weeks?
Task 2.5: Developing the Human Resource Plan The project manager must determine the resources needed to complete the full scope of the project. You already have a team put together, but they are not the only resources that will be used on the project. You must also work with functional managers and possibly your Human Resources (HR) department to gain commitment of needed resources.
Scenario You have identified your team members; defined roles, responsibilities, and accountabilities; created a project organizational chart and built your project schedule based on the cost estimates and durations of tasks. Now the tasks have to be assigned to individuals.
Scope of Task Duration This task may take a few hours or days, depending on the size of your project.
Task 2.5: Developing the Human Resource Planâ•…
121
Setup None.
Caveat None.
Procedure Steps needed to create a human resource plan include the following: 1. Determine human and nonlabor resources. 2. Determine resource skill sets. 3. Create a resource calendar. 4. Determine resource assumptions. 5. Determine resource risks and mitigation strategies.
Details In order to create the staff that you want, you will probably need to negotiate for them. In a functional organization, human resources are typically assigned by the functional manager. In a matrix organization the project manager can often negotiate for them. In a projectized organization, the resources are first selected from existing resource pools and then outside talent may be hired. The steps that follow will guide you through completion of a human resource plan.
Step 1: Determine Human and Nonlabor Resources After you complete the WBS, you will know what the deliverables are so you can determine specific human resources needed. To define the required human resources needed for the project, you will want to consider these factors: NN
The deliverable
NN
The type and quantity of resources needed
NN
The source of the resource
NN
The cost assumptions
NN
Special needs
NN
Training needs
NN
Material needs
Step 2: Determine Resource Skill Sets Most of the time, a project manager doesn’t get to choose their team members. You use those people who are assigned by others. So how do you know whether the individual has
122â•…
Phase 2╇ ╇ Planning Process n
the skill sets needed for your project? You have a discussion with the manager providing the resource. You will want to know if the resources are: NN
Expert
NN
Highly competent
NN
Competent
NN
Novice
Knowing competency levels will help you understand how much supervision will be needed and make adjustments for learning curves as well.
Step 3: Create a Resource Calendar A resource calendar lets you know how many resources you need as well as when you need them. When you are planning a project of significant duration, a functional manager may commit to resources for six months from now. In six months, they probably won’t remember what they committed to. So, a resource plan includes a process for reminding the resource suppliers well in advance that they made the commitment to your project and the amount of time that was committed.
Step 4: Determine Resource Assumptions We spoke of project assumptions earlier. Resource assumptions work the same way. An assumption is something you believe to be true. If it turns out not to be true, it becomes a risk. Here are some typical resource assumptions: NN
The sole-source resource will be available when needed.
NN
Suppliers will provide correct materials when needed.
NN
Resources will not be overburdened.
NN
Resources will have the skill sets you need.
NN
Resources will be available when you need them.
Now that you have identified these assumptions, what do you do if the assumption turns out not to be true? You determine resource risks and strategies to overcome them.
Step 5: Determine Resource Risks and Mitigation Strategies Resource risks happen when your assumptions about them are not true. You should create a staffing risk list that describes the risk associated with each resource and then define a strategy to overcome the risk. Planning ahead for determining all resources needed and appropriate staffing will also assist in developing the finance/cost plan. You want to know as much as possible about your resources now in order to have more-accurate resource costs. The following is a template that includes the elements of a resource and staffing management plan:
Task 2.5: Developing the Human Resource Planâ•…
123
Section 1: Human Resources NN
Quantity
NN
Cost assumptions
NN
Dates needed
NN
Date released
NN
Special needs
NN
Special skills
NN
Training needs
NN
Office and material requirements
Section 2: Nonlabor Resources NN
You will want to list the type of resource, the source of the resource, the quantity, and the cost of each resource: NN
Training
NN
Facilities, such as floor space furniture and moving costs
NN
Dates needed
NN
IT hardware such as computers, printers, and the like
NN
IT software for administrators, end users, and technical support
NN
Publishing items such as binders, reproduction expenses, and office supplies
NN
Environmental needs such as asbestos, soil preparation, site work, and so on
NN
Construction material and equipment
Section 3: Resource Knowledge, Skills, and Abilities NN
Task name
NN
Type of resource
NN
Quantity of resources needed for tasks
NN
Skills
NN
Experience level: NN
Expert
NN
Highly competent
NN
Competent
NN
Novice
Section 4: Resource Calendar NN
Insert your resource calendar in this section.
124â•…
Phase 2╇ ╇ Planning Process n
Section 5: Resource Assumptions NN
Insert your documented assumptions in this section.
Section 6: Resource and Staffing Risks NN
Resource
NN
Risk
NN
Mitigation strategy
Hands-on 2.11: Testing Your Knowledge of Staffing Risks You have already determined that the resources may be a source of risk in staffing your project. Use Table€2.10 to describe the potential risks and the strategy you might use to overcome these risks. Ta b l e€ 2 .1 0 ╇╉╇╉Resource risks and strategies Resource
Risk
Strategy
Sole-source human resource Sole-source supplier in your geographic area Internal resources
Task 2.6: Developing the Communication Plan Some projects may involve many teams and large numbers of people. When there is an extensive undertaking, communication of information and coordination of efforts across teams are critical success factors. The objective is to ensure accurate, consistent, and timely communication of information to the business teams, project teams, and management.
Task 2.6: Developing the Communication Planâ•…
125
The project manager will be engaged in many types of project communications modalities including, but not limited to, the following: NN
Project plans (schedules, budgets, risk plans, resource plans, and so forth)
NN
Project meetings
NN
Status reporting
NN
Organizational charts
NN
Requirements
NN
Contracts
NN
Presentations
NN
Decision memoranda
NN
Policies and procedures
NN
Historical records To be able to do all of this effectively, you must create a communications plan.
Scenario You have identified your team members; defined roles, responsibilities, and accountabilities; and created a project organizational chart. That has helped you see your team as a whole, but now you want to be able to communicate with your team members in an effective manner. You have been on projects where everyone on the team receives the same information at the same time. Some of it is pertinent—but often it is not. You are determined that your team will receive the information identified by your stakeholders as information they want, when they want it, and in the right format.
Scope of Task Duration This task may take a few hours or days, depending on the size of your project.
Setup None.
Caveat None.
Procedure This task will show you what is to be included in a communications plan.
126â•…
Phase 2╇ ╇ Planning Process n
Details The project manager should be the focal point for the flow of communications in a project environment. Let’s take a look at three common scenarios: Between the Project Manager and the Customer╇ ╇ The project manager receives the project goals from the customer. The project manager reports back to the customer regarding the performance of the project relative to these goals. Between the Project Manager and the Sponsor╇ ╇ The project manager receives the project priority from the sponsor. The project manager sends performance information such as budget and schedule results to the sponsor. Between the Project Manager and the Project Team╇ ╇ The project manager provides the project standards to the project team and receives performance results from the project team. To be successful with these communications, you need to determine the communication needs of stakeholders.
Determine the Needs of Stakeholders You interviewed your stakeholders in Phase 1 to determine their issues and concerns, and whether they supported the project. Now you want to establish communication objectives for each of the stakeholders. For example: NN
NN
NN
A communication objective for the project sponsor is to keep the project manager in the loop regarding strategic changes to the business. A communication objective of the project manager is to keep the team informed of what is going on and to provide credit and recognition when it is due. You must include the project team, sponsor, suppliers, and the delivery and performing organizations’ management and others who may need information regarding the project.
The information needs of the various stakeholders should be carefully analyzed to determine how information will be provided and the sources of that information. Here are two examples: NN
NN
Know the official or formal communication channels in your company. Interview stakeholders to understand their information needs and informal communication channels.
Table€2.11 identifies some of the key stakeholders and the type of information they may require.
What Should You Communicate? Communication that is designed to support the information needs of each stakeholder and to support the flow of information between stakeholders is critical for project success. Key information is gathered, reviewed, consolidated, and reported to stakeholders based on their particular requirements. Here are several elements that should be communicated to stakeholders, based on their needs: Progress Reports╇ ╇ Highlight progress from the previous report.
Task 2.6: Developing the Communication Planâ•…
127
Ta b l e€ 2 .11 ╇╉╇╉Stakeholders’ information needs Business Stakeholders Senior Management
Key Knowledge Need
PM Communication Approach
• Information to understand business impact of business initiatives
• Gather necessary information from project teams
• Consistent, cross-discipline information
• Present cross-team information in management information format
• Planned versus actual
• Meet cross-enterprise requirements for project information
• Progress • Cost Project Manager
• Information to support decisionmaking
• Define cross-team standards
• Defined plans to assess progress
• Gather, review, and integrate information
• Budget/actual financial information Other Business Communities
• Information on business projects
• Disseminate information broadly
• Forum for discussion on issues
• Provide database for information access and update capability
• Background on business initiatives • Information on issues requiring management direction Core and Extended Project Teams
• Standards and templates • Forum for discussion of commitments and issues • Support for planning and administration
• Present information for management assessment/decision making • Define templates and examples as required • Define and implement standard processes • Host inter-team meetings • Project planning and support
Status Reports╇ ╇ Provide project details for management review. The information is gathered in a standard format from each team in a predetermined timeframe and reviewed with the project team prior to providing status to other stakeholders. There should be no surprises when information is given to any who have a need to know. The reports provide the communication vehicle to summarize the overall status of each project. Forecast Reports╇ ╇ Forecast project outcomes. You don’t have to make three separate reports; they can be combined into one as long as progress, current status, and estimated future outcomes are included.
128â•…
Phase 2╇ ╇ Planning Process n
Report Cards╇ ╇ Provide a management summary of each project. The report cards can also be consolidated and submitted to the quality assurance office for review. Project Issues╇ ╇ Highlight critical items affecting projects. The issues and action items should be maintained in a data repository; the results are consolidated and reports provided to the project manager. Budget/Actual╇ ╇ Provide the project budget and actual expense information. Actual expenses are consolidated and compared to the budget; the results are published for those stakeholders with a need to know. Project Changes╇ ╇ Highlight changes affecting project scope, vendor agreements, overall project plans, or deviations from the project. The changes are reported to the project manager, who in turn advises all stakeholders with a need to know. Vendor Information╇ ╇ Identifies and tracks those vendors supporting projects. Updates to the vendor information will be presented to the project manager as changes occur. Consolidated Work Plans╇ ╇ Consolidate all project plans to produce an extract of significant project deliverables. The deliverables list is reviewed on a biweekly basis with those who have a need to know.
When Should You Communicate? Each stakeholder group may have different needs for receiving information. It is useful then to create a communications matrix. Table€2.12 shows an example of a communications matrix.
Communications Deliverable Template A table similar to Table€2.13 can be used to identify and control the development and delivery of each communications deliverable. The audience could be team members, customers, business partners, managers, executives, and/or professionals who need to understand what deliverables are being developed and when they will be available. The messages column is defined by the specific communication this audience needs to be informed of at the appropriate time (prior to the completion of development or after delivery of the product). The media column indicates the type of communication (web, one-on-one, one-ongroup, presentation, phone, email, and so on) that would go out to the specific audience. The responsible party column identifies the person or organization that will develop the deliverable. If it is a group, the individual leader of the group should be identified by name. The date column defines the timing of each communication. Delivery of these messages on a timely basis is necessary for the success of the project. The owner column identifies the person who will provide direction and approve the finished product. This person will sign off on the communications plan before distribution. This individual approves draft communications before they are released.
Task 2.6: Developing the Communication Planâ•…
129
Ta b l e€ 2 .1 2 ╇╉╇╉Communications matrix
M
As needed
AN
Key decision-makers
Monthly
Subject matter experts
BW
Individual contributros
Biweekly
Suppliers
W
Clients
Weekly
Team performers
D
Functional manager
Daily
Project managers
Reported To
Project sponsor
Legend
Initiated From Project sponsor Project manager Functional manager Team performers Clients Suppliers Individual contributors Subject matter experts Key decision-makers
The following represents a template that includes the elements for a project communications management plan:
Section 1: Organizational Chart NN
Insert your project organizational chart.
Section 2: Team Directory NN
Name
NN
Address
NN
Telephone
NN
Cell phone
NN
Fax number
NN
Email
130â•…
Phase 2╇ ╇ Planning Process n
Ta b l e€ 2 .1 3 ╇╉╇╉Communications deliverable template Audience
Messages
Deliverable
Media
Responsible Party
Date
Owner
Approved? No
Yes
Project description Audiences Key messages Communication timing Communication vehicles Feedback mechanism Advance notification Communication sign-offs Communication Tools
Definition
Status web page
Provides anyone access to a project web page. Show web link.
General announcements
Announcements that go to everyone on the project. Show web link.
Global email
Allows for targeted email to predefined databases and responsibilities. Show global access telephone number.
Emergency numbers
List of specific numbers to an individual assigned as an emergency contact.
Voicemail
Used to send broadcast messages to all voicemail recipients. Show local telephone access number.
Executive status report line
At specific milestones executives receive an hourly update as to the completion of that milestone. Provide this status number only to executives.
Task 2.6: Developing the Communication Planâ•…
Section 3: Information Needs of Stakeholders NN
Senior management
NN
Project sponsor
NN
Project manager
NN
Team members
NN
Vendors and suppliers
NN
Consultants
Section 4: Information to Be Collected and Distributed NN
Status reports
NN
Report cards
NN
Project issues
NN
Performance results
NN
Vendor information
Section 5: Filing Structures NN
Intranet
NN
Team rooms
Section 6: Communications Matrix NN
Insert your communications matrix here.
Section 7: Communications Deliverables NN
Project description
NN
Audiences
NN
Key messages
NN
Communication timing
NN
Communication vehicles
NN
Feedback mechanism
NN
Advance notification
NN
Communication sign-offs
Section 8: Communications Tools NN
General announcements
NN
Global and local email
131
132â•…
Phase 2╇ ╇ Planning Process n
NN
Emergency numbers
NN
Voicemail
NN
Executive status report phone line
NN
Voicemail and associated distribution lists
NN
Audio conferencing
NN
Video conferencing
NN
Websites
NN
NN
Electronic workroom or other databases such as IBM’s Lotus Notes or Microsoft’s Outlook Express Online methods such as Skype, text messages, and online tools such as Twitter
Section 9: Controlled Information NN
Access to buildings
NN
Passwords
Twenty Questions The communications plan is the ultimate goal of the communications planning process. Let’s walk through the questions that, when answered, will ensure that you have created a robust project communications plan: NN
NN
NN
NN
NN
NN
NN
Have you reviewed memos from the sponsor, formal or informal agreements, and the project organizational structure in order to determine the requirements for reporting and meetings imposed by the sponsor, the project definition statement, or other sources? Have you reviewed supplier agreements to determine requirements for reporting performance and meetings? Have you reviewed the project procedures to understand the specific project policies and procedures regarding status reporting and status meetings? Have you determined whether there are any external media communication requirements? (Identify key messages, announcements, and/or marketing that needs to be delivered and can or should be included with routine or recurring communications. You may have to consult with your public relations group prior to committing to provide information.) Have you determined how the information needs of each stakeholder will be satisfied? Have you identified and reviewed the communication technology media available within the project infrastructure? Have you defined formal reports that will be produced to satisfy stakeholder requirements?
Task 2.6: Developing the Communication Planâ•…
NN
NN
NN
NN
NN
NN
NN
NN
NN
NN
NN
133
Have you defined the levels and project organizational units within the project structure for which the reports will be built? Have you defined the types of reports that will be produced for various levels and project organizational units? Have you defined the project meetings that will occur? Have you defined the information retrieval and distribution strategy that will be used to share information among your project team members? Have you assigned responsibilities for creating and delivering the various types of communications? Have you identified key events, milestones, and deliverable dates that will initiate communications? Have you defined a process for handling ad hoc inquiries the project is likely to encounter? Have you developed a library of project information and assigned responsibilities for its maintenance? Have you created internal and external feedback loops to help evaluate the effectiveness of communications? Have you scheduled the work of communications and related triggers into the project schedule to ensure they are part of the overall plan? Have you defined a process for updating or changing the communications management plan?
NN
Have you documented the approval process needed for any of the communications?
NN
Have you finalized the plan by reviewing it with your project team?
At this stage of the project, you don’t have all the answers to these questions. As the project progresses, however, you will want to review these questions again to be sure you have covered them and include them in your communications plan. It has been said that 90% of a project manager’s job is communications. Now you know why!
Hands-on 2.12: Testing Your Knowledge of Communications Answer the following questions:
1. The information needs of the various stakeholders should be carefully analyzed to determine the information that will be provided and the sources of that information. What can you do to acquire this information?
2. What factors may influence the selection of communications technology? 3. What sort of metrics could you put in place that would measure the efficacy of your communications?
134â•…
Phase 2╇ ╇ Planning Process n
Task 2.7: Developing the Procurement€Plan The procurement management process consists of six separate processes and related activities involved in procuring goods and services needed for the project from external sources.
Scenario Now that you know what your deliverables are and the resources needed to fulfill the scope of the Apples and Pears project, you are ready to focus on those resources that need to be outsourced. Your sponsor has decided that for this project you will outsource most of the work. Cimarron has a preferred vendor list but will allow you to go beyond that list if the project requires it—for example, for a sole source provider that is not on your list.
Scope of Task Duration This task may take hours or days, depending on the size and complexity of the task.
Setup None.
Caveat None.
Procedure There are several steps to this process: 1. Deciding whether to make the product or buy it 2. Conducting procurement solicitation process 3. Acquiring vendors and subcontractors 4. Developing contractual statements of work 5. Determining types of contracts 6. Assigning responsibilities
Details Acquisition can be a time-consuming process. Allow sufficient lead time in the project plan to properly perform the work of describing the product/services needed, getting bids
Task 2.7: Developing the Procurement€Plan╅
135
from qualified vendors, selecting the right one, awarding the contract, getting feedback and approval from the participants in the procurement process, kicking off the engagement, managing the supplier during the engagement, and wrapping up. Since we are still in the planning phase, we will obtain bids, perform vendor selection, award the contract, kick off the engagement, and manage the suppliers in Phase 3, “Executing the Project.”
Make or Buy? The make or buy question can be daunting, depending on what you are producing, but to find the answer you must know what your in-house capabilities are. What are the volumes of product needed? What is the fixed cost of making a product? What is the direct per unit cost? You essentially explore per unit the cost of buying versus making and then select the best option based on various inputs and considerations. So let’s first go on a fact-finding journey. The reason for “making” a product in-house must be substantiated by facts and figures. The facts should substantiate: NN
Cost issues—have you covered everything?
NN
Intellectual property—how will you protect it?
NN
NN
NN
NN
NN
Proprietary and confidential processes—are they in place? Do you have to obtain nondisclosure agreements? Complete control over the product—do you really have it? Or do you really need it? Supplier unreliability or incompetence—how do you know? Have you checked references and feedback from previous times this vendor has been used? Volumes too small to attract a supplier—which suppliers have you checked? Quality control—can you measure it against existing criteria for quality or do you need to create a new quality control measurement?
NN
Do you want to maintain a backup source?
NN
Do politics or the environment impact your decision?
Whenever you are outsourcing, you have decided to buy. The following represents some reasons why organizations would choose to buy: NN
You lack the required technical experience.
NN
The supplier is the leader in their field.
NN
The supplier can provide discounts.
NN
Strategic partnerships are possible.
NN
It costs less to buy than to make.
NN
You prefer one brand over another.
Procurement Solicitation Solicitation planning entails the writing of the various procurement documents needed to support issuance of solicitations and developing evaluation criteria that will be used to select the best value suppliers.
136â•…
Phase 2╇ ╇ Planning Process n
Knowing the estimated dollar value of the procurement will help you determine what procurement solicitation process you will choose. The dollar values are determined within your organization. Let’s look at the differences among several types of proposals: Preferred Vendors or General Marketplace╇ ╇ Reasonable and adequate competition exists, so there is no need to send out proposals—a preferred vendor list or a solicitation to the general marketplace can be used. A suggested dollar value for this type of proposal is $0–$5,000. Requests for Quotes╇ ╇ These are similar to requests for proposals (RFPs) but are generally used for goods or materials rather than services, solutions, or procurements that will be running a portion of your project or the entire project. If you need to purchase 200 hammers, all you really need to know is the product specification and the price for that quantity and variety. Getting three or more responses increases the probability of getting fair market prices for the materials or goods you seek. Requests for Information╇ ╇ Requests for information (RFIs) are generally used when the buyer may not know what options are available in the marketplace or when the buyer is open to various solutions rather than a specific result. RFIs ask vendors what they would offer to solve a particular problem or opportunity and usually do not require any pricing information at that point. RFIs may also be used to better understand the options, narrow the field to those suggestions you like, and then issue an RFP to the narrowed group of competitors. Requests for Proposals╇ ╇ Requests for proposals are generally used when both the solution and the pricing are under consideration. RFPs may be supplemented with an oral presentation or product demonstrations for those making it through the initial screening. The final procurement document should have a legal review. Only when the review is completed and is acceptable should the documents be distributed. Requesting seller responses is considered part of the conduct procurements process in the PMBOK® Guide, 4th ed. We’ll discuss that process along with source selection in Phase 3, Task 3.5. Contract administration will be discussed in Phase 4, Task 4.5. The closed contract process will be discussed in Phase 5, “Closing Process,” Task 5.3.
Vendors and Subcontractors A vendor is an external organization or individual providing products or services under contract to the client or to the project performance group. Vendors are also referred to as outside contractors or subcontractors. A subcontractor is a group or individual providing products or services to the project. Commonly, subcontractors are considered vendors (see the following section). However, there is a growing understanding that any internal group that provides products or services (for example, an internal technical writing department) is a subcontractor to the project manager. Of course, in this broader usage, the agreement between the parties is not a legally binding contract, but it is a contract nonetheless. Subcontractors may be hired external to the project by the contractor. The contract then is between the vendor and the subcontractor and not between the organization and the vendor. Do not manage subcontractors. Make provisions for their monitoring in your contract with the hiring vendor.
Task 2.7: Developing the Procurement€Plan╅
137
Contractual Statement of Work Once it has been determined that you will outsource your work item(s), it is time to prepare the statements(s) of work to enable the procurement process to begin. Depending on the size of the project, either you or a designee will perform this work. If you do not actually write the statement(s) of work, you must be an active part of that process. When you develop a contractual statement of work (CSOW), essentially you are preparing the document that will provide potential vendors detailed requirements so they can determine whether they are a good fit for your needs, and if so, provide enough information so they can prepare an appropriate bid for your contract work. The more complete and accurate the CSOW is, the less heartburn, grief, and rework you will encounter later. The vendor is interested in the same things you are. They want to make money and produce a high-quality work product. To do that, you need to set your vendors up to succeed. A good CSOW helps you do that. The elements of a CSOW include but are not limited to the following: NN
Clear roles and responsibilities
NN
Location of work
NN
Security issues if necessary, such as access to proprietary information, key codes, building access codes
NN
Milestones and deliverables with acceptance criteria
NN
Clear description of quantities, technical specifications, and quality expectations
NN
Progress reports
NN
Payments
NN
Change control
Types of Contracts There are several types of contracts you could use. The following contract types are typically found in the project world: Firm Fixed Price
A firm fixed price (FFP) contract is used most often. Another name for this contract is lump sum. In this type of contract, the contractor agrees to furnish supplies or services at a specified price that is not subject to adjustment because of performance costs. This type of contract is best suited when reasonably definite production specifications are available and costs are relatively certain. The seller bears the greatest degree of risk in this contract type and may therefore pad their price for contingencies that may occur during the project. In this situation, the seller is motivated to decrease costs by producing efficiently because regardless of what the costs are, the seller receives the agreed-upon amount. As a consequence, the seller should place emphasis on controlling costs. Fixed-Price Incentive
A fixed-price incentive (FPI) contract is composed of a target cost, target profit, target price, ceiling price, and share ratio. This contract type is probably the most complex.
138â•…
Phase 2╇ ╇ Planning Process n
Here’s an example: Based on a ceiling price of $120,000, a target cost of $100,000, a target profit of $10,000, a target price of $110,000, and a share ratio of 70/30, for every dollar the seller can reduce costs below $100,000, the savings will be shared by the buyer and seller based on the negotiated sharing formula, which reflects the degree of uncertainty faced by each party. Assuming the seller tries to maximize profits, it is provided with an incentive to reduce its costs by producing more efficiently. When a ceiling price is agreed to up front, the seller assumes all overruns above the ceiling, but if costs exceed the target cost of $100,000, regardless of the costs incurred by the seller, both the buyer and seller share the risk up to the ceiling. This incentive-type contract is usually used when contracts are for a substantial sum and involve a long production time. This enables the seller to develop production efficiencies during the performance of the contract. Cost Plus Incentive Fee
A cost plus incentive fee (CPIF) is a cost-reimbursement contract. The CPIF means the seller is paid for allowable performance costs along with a predetermined fee and an incentive bonus. If the final cost is less than the expected cost, both the buyer and seller benefit by the cost savings based on a prenegotiated sharing formula. This sharing formula is an agreed-upon percentage reflecting the degree of uncertainty each party will bear. Here’s an example: Say that the expected cost is $100,000, the fee to the seller is $10,000, and there is a sharing formula of 85/15. Under this contract, the buyer absorbs 85% of the uncertainty, and the seller absorbs 15% of the risk. If the final price is $80,000, resulting in a cost savings of $20,000, the seller’s compensation includes the final cost and the fee, plus an incentive of $3,000 (15% of $20,000), for a total reimbursement of $93,000. Cost Plus Fixed Fee
A cost plus fixed fee (CPFF) contract provides that the seller be reimbursed for allowable costs of performing the contract, and in addition the seller receives as profit a fee payment, usually based on a percentage of estimated costs. This fixed fee does not vary with actual costs unless the scope of work is changed. Here’s an example: If the estimated cost for performance is $100,000, and a profit fee of $10,000 is agreed upon, even if the cost for performance rises to $110,000, the fee remains $10,000. Cost Plus Award Fee
Cost plus award fee (CPAF) contracts include an estimated cost and potential awards paid based on periodic subjective evaluations of contractor performance. Here’s an example: The estimated cost for a project is $500,000, to be completed in six months. The project was completed five weeks early and 10% under budget. The buyer decided that because the project came in early and under budget, the award would be formulated as follows: Base award = 2% of the original budget, or $10,000. Cost award = $10,000 for every 5% under budget. In this case the cost award is $20,000.
Task 2.7: Developing the Procurement€Plan╅
139
Schedule award = $5,000 for every week the project comes in early from the original time estimate. In this case the schedule award is $25,000, and the total award is $55,000. Time and Materials
Time and materials (T&M) contracts have fixed-unit arrangements but are open-ended. The PMBOK® Guide, 4th ed., p. 324, describes time and materials contracts as a “hybrid type of contractual arrangement that contains aspects of both cost-reimbursable and fixedprice arrangements.” T&M contracts resemble cost-type arrangements in that they are open-ended, because the full value of the arrangement is not defined at the time of the award. Thus, T&M contracts can grow in contract value as if they were cost-reimbursable arrangements. Conversely, T&M arrangements can also resemble fixed-unit arrangements, when, for example, the unit rates are preset by the buyer and seller, as when both parties agree on the rates for a specialty resource (for example, senior engineer). This contract type is often used for staff augmentation agreements rather than project completion contracts. Cost Plus Percentage of Cost
A cost plus percentage of cost (CPPC) provides for reimbursement to the contractor for allowable costs of contract performance. Additionally, the contractor receives an agreedupon percentage of the estimated cost as profit. Here’s an example: If the estimated cost is $100,000 and the agreed-upon percentage is 10%, the estimated total price is $110,000. If the seller increases costs to $110,000, the total price would be $121,000, which will result in an increase in profit of $1,100. Contract Administration
Contract administration is the process of ensuring that the company and project obtain the products and services from suppliers as specified in the contract. The project manager, working with the contract manager, monitors contractor performance and ensures that all changes are processed as required by the change control process specified in the project plan, elements of which have been added to the contract. Contract performance that deviates from contract requirements is addressed, and appropriate remedies, both administrative and legal, for nonperformance are applied as necessary. Contract Closure
Closing a contract includes the formal acceptance of the project and agreement that the project has ended. The closing phase consists of the following: Project Closure╇ ╇ Finalize all activities across all of the project process groups to formally close the project or a project phase. Contract Closure╇ ╇ Complete and settle each contract, including the resolution of any open items, and closing each contract applicable to the project or a project phase.
140â•…
Phase 2╇ ╇ Planning Process n
Responsibilities Although the project manager has overall responsibility for procurement and contract management, on large projects a contract manager is usually assigned who will perform many of the duties described in this plan. The project manager works closely with the contract manager to define requirements, write a statement of work, recommend sources, and so on. For example, your project may require ergonomic seating for a service center. The procurement contact (manager, agent) will do the legwork of finding these chairs for you and ask you to select the chair from a list of choices. This person already knows who is on the preferred vendor list and has done this many times before. The contact may not even offer you a choice of chairs. As long as the chairs meet the product acceptance criteria, the contact’s choice should be fine. Most organizations have definite policies and procedures regarding procurement (or acquisitions, purchasing, and so forth). Be sure you are aware of them. Consult with your purchasing or procurement department. Evaluate the standard processes to see whether they serve the purposes required for your project.
A Procurement Plan Template The following represents a template that can be used to create your project procurement plan:
Section 1: Specifications NN
Design specifications
NN
Performance specifications
NN
Functional specifications
Section 2: Source Selection Package NN
Bid documents (usually standardized)
NN
List of qualified vendors (expected to bid)
NN
Proposal evaluation criteria
NN
Bidder conferences and schedules
NN
How change requests will be managed
NN
Supplier payment plan
Section 3: Procurement Actions NN
NN
What procurement actions the project team is authorized to execute on its own without reference to the procurement department What status reports the project team will require from the procurement department on outsourced items
NN
How multiple providers will be managed
NN
How procurement will be coordinated with other aspects of the project
NN
Purchasing decisions (including authority to commit)
NN
Make-or-buy decisions with supporting data
Task 2.7: Developing the Procurement€Plan╅
Section 4: Procurement Documents NN
Requests for quotes
NN
Requests for information (RFIs)
NN
Requests for proposals (RFPs)
Section 5: Types of Contracts NN
Firm fixed price (FFP)
NN
Fixed-price incentive (FPI)
NN
Cost plus fixed fee (CPFF)
NN
Cost plus incentive fee (CPIF)
NN
Cost plus percentage of cost (CPPC)
NN
Cost plus award fee (CPAF)
NN
Time and materials (T&M)
Section 6: Contract Administration NN
Change management
NN
Specification interpretation
NN
Adherence to quality
NN
Warranties
NN
Subcontractor management
NN
Production surveillance
NN
Waivers
NN
Contract breach
Hands-on 2.13: Testing Your Knowledge of Contract Types 1. What should the project manager monitor when managing a CPIF contract? 2. Under a CPFF contract, the project manager assumes what type of risk? 3. What should the project manager monitor when managing a CPFF contract? 4. From the buyer’s standpoint, a CPPC is the most undesirable type of contract. Why? 5. What should the project manager monitor when managing a CPPC contract? 6. What should the seller monitor on an FFP contract?
141
142â•…
Phase 2╇ ╇ Planning Process n
Hands-on 2.14: Testing Your Knowledge of Contract Calculations Cimarron has just completed a two-story expansion of one of their children’s stores located at the Mall of America in Bloomington, Minnesota. As with most projects at Cimarron, Olivia Ross was anxious to see the lessons learned. Ms. Ross initially wanted to receive just FFP bids, but after speaking with her procurement director, Harry Edwards, it was agreed that other types of contract offers would also be considered. Several contractors submitted FFP bids: NN
Contractor A bid $825,000.
NN
Contractor B bid $795,000.
NN
Contractor C bid $850,000.
NN
Contractor D bid $790,000.
NN
Contractor E bid $800,000.
Details of the contracts are as follows: NN
Contractor A submitted a CPPC contract with a percentage of 4%.
NN
Contractor B submitted only an FFP bid.
NN
NN
NN
Contractor C submitted a CPIF contract with a target cost of $725,000 and an 80/20 share ratio. Contractor D also submitted a CPIF bid, with the incentive of $25,000 for every month that was completed early. Contractor E offered an alternative FPIF, which indicated receiving 10% of the total cost per month for completing the project early and 10% for every $10,000 below the fixed price.
Mr. Edwards had originally chosen contractor D because of its FFP bid. As part of a contract audit performed by A-Z Audits Plus, an independent auditing company, contractor D willingly revealed the costs associated with the project, which were $720,000, and the project was completed one month early.
1. If contractor A’s cost was $720,000, what would have been the cost for contractor A’s CPPC bid?
2. What would be the cost of the contract if Ms. Ross chose contractor D’s CPIF bid? 3. What is the cost of contractor C’s CPIF contract if its cost was $700,000 and the costsharing ratio was 80% for the client and 20% for the seller?
4. What is the profit of contractor E’s contract if the target cost is $720,000, target profit is $10,000, target price is $730,000, ceiling price is $750,000, and actual cost was $700,000?
Task 2.8: Developing the Quality Management Planâ•…
143
Task 2.8: Developing the Quality Management Plan Quality of a project is measured by whether the project meets or exceeds customer expectations. The expectations, of course, are the product (deliverables), service, or result the customer will receive throughout the project. A project quality plan is simply a set of actions defined at the onset of the project that will produce quality results during the execution of the project. How do you create this? You work with the client, owner, and others to establish acceptance criteria for each of the deliverables you produce. You can complete a deliverable, but until the client accepts the deliverable, the task is not complete.
Scenario You have been charged with creating a quality plan. You know that this is something you cannot do alone, so you request quality manager Charlotte Tebow to assist you. Now that you have the acceptance criteria of the deliverables for the project, it is imperative that those acceptance criteria be measurable against the standards set forth for those items and how they align with corporate strategy.
Scope of Task Duration This task may take hours or days, depending on the size and complexity of the task.
Setup None.
Caveat None.
Procedure This task will explore: NN
Standards
NN
Metrics
NN
Quality planning
NN
Collecting the right data
144â•…
Phase 2╇ ╇ Planning Process n
NN
Establishing valid requirements
NN
The quality management plan
Details A standard, as defined by the World English Dictionary is “something considered by an authority or by general consensus as a basis of comparison.” Standards can be created internally or follow national and international standards set for certain items. Internal indicators monitor performance against long-term strategies. External indicators are typically market driven. A project quality plan identifies the standards that will be used on the project. It includes performing quality actions such as peer reviews by using various quality resources (templates, standards, checklists) available within your organization.
What You Measure Is What You Get Can you imagine a project where there were no standards put in place—particularly if they do not map to strategic goals? If a business unit were to decide to implement something without looking at the effects this implementation may have on the big picture, that decision may create chaos. For example, in a major telecom company, a business unit decided to create a new position solely for the purpose of fixing errors. Why didn’t they also check to see where these errors came from and have them fixed at the front end of the process? Because they weren’t looking at the big picture or considering the cost reduction and process improvement that can result from root cause analysis that would allow for complete elimination of those errors. Metrics, like deliverables, are more refined as they trickle down to a standard that can be measured that will fully justify the strategic goal. For example, there may be a core ideology regarding the mission and values of an organization. Next is the corporate vision, which is usually too broad to be consequential. Following that are the goals that may not be defined sufficiently to ensure accountability but are useful for senior leadership. Next are strategies that support the goal that are more definitive. Finally are the tactics that are useful for implementation teams but too detailed for senior leadership. You measure what you want to achieve. For example, you order 36˝× 36˝ acoustical tiles that will be used for the flooring in a television studio. The vendor purchases and installs 12˝×12˝ tiles of the same material. The client does not accept the flooring. The reason the client wants the bigger tiles is to reduce jitter when cameras roll across the floor. The jitter is undetectable in the larger tiles but would be noticeable with the smaller tiles. If complete acceptance criteria (which can be measured) were identified in the first place, this might not have happened (although you could spell out the acceptance criteria and the vendor might still decide to order the smaller tiles to save money). It happens.
Quality Planning There is a difference between planning for quality and creating the quality plan. Planning for quality is the prerequisite to the quality plan.
Task 2.8: Developing the Quality Management Planâ•…
145
There are nine basic steps in the quality planning process: 1. Review the documents for quality language. 2. Identify a quality team and leader. 3. Identify plan components and owners. 4. Negotiate specific quality assurance (QA) requirements. 5. Plan the QA and quality control (QC) steps for the project. 6. Educate the project team on QA/QC guidelines. 7. Incorporate QA/QC tasks into the project plan. 8. Get client sign-off. 9. Collect and report QA/QC data and re-plan if necessary.
Collect the Right Data The development of the quality plan document begins with the collection of all the information needed for the project. The data to collect will depend on what product, service, or result is being delivered, and might include the following: NN
Customer quality characteristics or product description
NN
Attribute description
NN
Technical specifications with tolerance ranges
NN
Blueprint drawings
NN
Configuration diagrams
NN
Legal or regulatory guidance documents
NN
Standards documents
NN
Calendar
NN
Measurement devices
NN
Any other relevant information from the scope statement or other project documents to get started
This information, as well as additional information described in the quality plan template discussed in a moment, is then used in the elements of the quality plan.
Establish Valid Requirements How do you know whether you are meeting your customer’s needs? Indicators help you determine whether your processes are capable of meeting your customer’s needs. An indicator is defined as a measure of meeting valid requirements. Indicators are used to monitor both the effectiveness or condition of a part of the work process (process indicators) and the quality of the output or outcome of the process (quality indicators). No matter what type, all indicators should have the following characteristics:
146â•…
Phase 2╇ ╇ Planning Process n
Measurable╇ ╇ They can be expressed quantitatively (in time, dollars, customer specifications, and so forth). Verifiable╇ ╇ Multiple, independent observers of the process should be able to agree on the results obtained from measuring the process. Accurate records should be kept so the measurements can be tracked over time. Cost-effective╇ ╇ Indicators must be chosen with economy of time and cost in mind. Ideally, data for indicators will be available from existing sources and/or management information systems. In any case, common sense tells us that the benefits gained from using an indicator should exceed the costs associated with tracking it.
The Quality Management Plan The quality management plan describes how the project management team will execute the project while complying with policies, standards, or legal requirements. The following represents a quality plan template that you may find useful: Section 1: Quality Control Activities╇ ╇ Describe the planned approach for verifying that the required quality has been obtained. Section 2: Project Management Quality Activities╇ ╇ Describe activities such as compliance reviews, templates, and checklists. Section 3: Quality Assurance Checkpoints╇ ╇ Describe points in the project when checks will be made to verify that the quality control activities and project procedures have been implemented effectively. Section 4: Quality Roles and Responsibilities╇ ╇ Define the quality roles of all participating in the project—for example, the functional manager delivers the work product as described in the acceptance criteria pertaining to that work product. Section 5: Work Products and Quality Characteristics╇ ╇ Describe the work products for each deliverable and the set of attributes assigned to them. Section 6: Quality Criteria╇ ╇ Describe the measurable properties of work products that must be implemented to ensure that the level of quality for a particular quality characteristic will be met. Section 7: Quality Contributors╇ ╇ Include project elements such as skills, standards, tools, methods, and procedures that when applied will contribute to achieving specified quality criteria and customer satisfaction. Section 8: Quality Standards╇ ╇ When appropriate, include a mapping of quality contributors and project procedures to required quality standards such as the International Organization for Standardization (ISO) or the American National Standards Institute (ANSI). Section 9: Technical Specifications╇ ╇ These may be separate documents, but include them in the quality plan. Section 10: Project Schedule╇ ╇ Attach a Gantt chart that shows the activities and time scales necessary to implement quality tasks.
Task 2.9: Developing the Change Management Planâ•…
147
Section 11: Assumptions╇ ╇ Define important assumptions on which the quality plan is based. Section 12: Dependencies╇ ╇ Describe any external dependencies on which the plan depends. Section 13: Risks╇ ╇ Describe the risks that will affect quality. Section 14: Costs╇ ╇ Define the costs associated with implementing this project quality plan, not including costs accounted for elsewhere in the project management master plan. Section 15: Corrective Actions╇ ╇ Describe the procedures for taking corrective actions for the problems encountered during project execution. In Phase 3, we’ll explore quality assurance as well as the tools and techniques available to you as you execute the project.
Hands-on 2.15: Testing Your Knowledge of Quality Planning 1. Using your common sense, describe the conditions that must be met for team members to make maximum contributions to the project.
2. What are the differences between product results and project results? 3. In Phase 1 you identified many quality attributes associated with the quality of clothing in Cimarron’s Apples and Pears project. What quality attributes do you want to see associated with the construction of the stores?
Task 2.9: Developing the Change Management Plan Change is inevitable. Just when you think the project plan is cast in stone, a change pops up. You want to be able to do the following: NN
NN
NN
Manage each request for change, in order to ensure that any new scope, cost, and/or schedule of the project remains under control and has full traceability Make sure each request for change is assessed by all affected functional areas Make sure each assessed change request has a decision made (accepted, rejected, or deferred) by the appropriate authority
The project manager drives the decision-making process and ensures that all the stakeholders who might be impacted by the change are fully involved. The change management process includes subprocesses to: NN
Briefly assess each proposed change
NN
Analyze the potential impact of the proposed change on the project as a whole
148â•…
Phase 2╇ ╇ Planning Process n
NN
Decide how to proceed with a change request (CR) after its impact has been analyzed
NN
Monitor the progress of approved changes until they are complete
Additionally, a change review board (CRB) or change control board (CCB) should be engaged if the changes affect the project scope, the original schedule, and/or costs beyond the authority level delegated to the project manager. The CRB provides advice and counsel on whether the CR should proceed to the funding board for review and request for approval.
Scenario Many changes have occurred during plan preparation. You have decided that it is essential to have a robust change management plan in place to keep track of these changes—especially because you are soon to enter the execution phase.
Scope of Task Setup None.
Caveat None.
Procedure This task is accomplished by documenting the change request process in five steps: 1. Submit, receive, and review the change request. 2. Analyze the impact. 3. Make a decision on the change request. 4. Escalate to the CRB or funding board, if necessary. 5. Manage the change order.
Details A change request is a request to change some aspect of the project after it has been approved and committed. Change requests may affect one or several of the following: NN
NN
NN
Work to be done or work in progress, with regard to schedule, solution definition, deliverables, and so on Business plans or procedures, including project costs or acceptable risk levels Obligations within a statement of work, or other formal agreements with customers or vendors
Task 2.9: Developing the Change Management Planâ•…
149
Change Request Process The change request procedure is launched when a change is requested after specific deliverables are approved, and anytime after exiting the planning phase if the change would affect the project’s schedule, scope, or costs. The end result of the procedure is one of the following: NN
The change is accepted and will be implemented.
NN
The change is rejected.
NN
The change is deferred.
Step 1: Submit, Receive, and Review the Change Request
In this step a change request is submitted and assigned a number. The change request documents the need and rationale for the proposed change. Table€2.14 is a sample of the change request form. To avoid any confusion, Table€2.15 provides directions on filling out the change request form. When you receive the CR form, log it into the CR log found in Table€2.16. Figure€2.19 represents a flow chart of step 1. Step 2: Conduct an Impact Analysis
Develop an estimate of the effort needed to assess the requested change. The purpose of this subprocess is to provide the approving body with the detailed information it needs to decide whether to implement a proposed change. Impact analysis involves determining what would need to be done to implement the change and then estimating how it would affect the baseline of the project, including the schedule, costs, and benefits. Figure€2.20 represents a flow chart of step 2. Step 3: Make a Decision on the Change Request
The purpose of this step is to describe how to proceed with a CR after impact analysis has been completed. For a small change request, a decision may be made almost immediately after being presented to the project team, whereas for a larger one it will be after a more detailed impact analysis has been completed. Based on the projected impact of the change, the request may also need to be reviewed by the change review board and then go to the funding board for final approval. In all cases, it is the project manager’s responsibility to ensure that the decision is made in a timely manner. Figure€2.21 represents a flow chart of step 3. Step 4: Follow Escalation Procedures
The purpose of this subprocess is to describe what steps are required when a change request accepted by a project team is outside of the authority level for that team and project manager. In general, this means the CR involves a scope change to the project, has a schedule impact greater than about two weeks, or will affect costs by more than 10% from the planning phase. It may be necessary for the project manager to request a special CRB or FB meeting, to reach a CR decision on a timely basis. Figure€2.22 represents a flow chart of step 4.
150â•…
Phase 2╇ ╇ Planning Process n
Ta b l e€ 2 .1 4 ╇╉╇╉Change order request form Change Request Identification Project Name:
Date Raised to Project Team:
CR Number:
Status:
Submitter:
Change Type: 1. Additions, Changes, or Deletion to Requirements 2. Change in Technical Assumptions 3. Resources Unavailable 4. Other (briefly describe)
Priority with Supporting Rationale:
Change Request Description Detailed Description: Accepted for Assessment On:
Analysis Assigned To:
Small Change: Y/N
Assigned Date:
Change Request Impact Analysis Schedule Impact: Scope Impact: Cost Impact: Other: Solutions Considered: Effort Estimate:
Cost Estimate:
Impact Level:
Resources:
Estimates Validated On:
Estimates Validated By:
Analyzed By:
Analysis Completed On:
Change Request Implementation CR Decision: Decision Date:
Decision Made By:
Approved Effort:
Approved Cost:
Approved Start Date:
Target Completion Date:
Impact on Plans Incorporated Into Plans On:
Incorporated Into Plans On:
Plans Changed: Completion Criteria: Change Order ID(s): Date Closed:
Date Implementation Completed:
Task 2.9: Developing the Change Management Planâ•…
Ta b l e€ 2 .1 5 ╇╉╇╉Change order request form instructions Form Entry
Definition Changes Request Identification
Project Name:
Program and release name — what it was called at the Planning Gate exit
CR Number:
The sequence number assigned to the CR.
Priority:
One priority for this CR should be selected, from High, Medium, or Low.
Submitter:
Enter name of person submitting CR.
Date Raised to Client:
The date CR is first submitted to the project team.
Status:
Enter status, from In Progress, Accepted, Rejected, or Deferred.
Priority with Suporting Rationale:
One priority for this CR should be selected, from High, Medium, or Low, and reasons from the submitter’s perspective for assigning this priority.
Change Type:
Enter the type of change according to the following: 1. Addition/Changes/Deletion to Requirements This section would be checked when the Change Request is based on DOCUMENTED requirements being added to, changed, or deleted. If the original requirement isn’t documented, the PM may have a difficult time getting CRB and FB approvals, which are required for Scope changes. 2. Change in Technical Assumptions This section would be checked when the Change Request is based on DOCUMENTED technical assumption changing. Usually these assumptions will be found in an Analysis or Design document, Statement of Work, or Project Definition Report. If the original assumption isn’t documented, the PM may have a difficult time getting CRB and FB approvals, which are required for Scope changes. 3. Resources Unavailable This section would be checked when the Change Request is based on a critical set of resources (people, envrionmental, systems, etc.) not being available when needed and scheduled per the approved and DOCUMENTED Project Plan. It may also trigger a follow-up set of CRs to reflect related scope, schedule, or cost changes as workaround or program resets occur. 4. Other (briefly describe) This section would be checked when the Change Request is based on anything not covered above. Example: The Change Request is based on changing the committed schedule or staffing levels of the project. This might occur if the sponsor or customer asks to get the project done sooner or to delay the implementation date, either of which might involve adding or removing resources from the project. Changes Request Description
Detailed Description:
A description of the change that is being proposed and assessed. The altered or affected baselined requirements should be indicated.
Accepted for Assessment On:
This is the date that the project team determined that the CR needed additional impact analysis prior to a vote, and approved it for assessment.
Small Change Y/N:
If it is determined that the project team can make the decision concerning the CR without conducting an impact analysis of the change, this would be “Y”.
Assigned Date:
The date the Change Request was assigned to the person/team doing the analysis of the CR.
Assigned for Analysis To:
This is the name of the person or lead for the team that will perform the analysis of the CR.
151
152â•…
Phase 2╇ ╇ Planning Process n
Ta b l e€ 2 .1 5 ╇╇ ╇╉Change order request form instructions╇ (continued) Change Request Impact Analysis Impact Analysis — Schedule, Scope, Cost, Other:
Enter details on the results of the analysis of the CR, showing what type of impact(s) will occur as a result of implementing the CR.
Solutions Considered:
Describe the intended solution for the change request, and, where applicable, any alternatives considered can be described along with their reasons for not being chosen. This information is especially useful if the CR gets regected or deferred, and has to be referenced or revisited in the future.
Effort Estimate:
Estimate of the effort needed to implement the solution for the CR, preferably in hours.
Cost Estimate:
Estimate of the cost, in dollars or appropriate currency, to implement the solution, if any.
Impact Level:
If the CR is approved or recommended for approval, then an impact level of High, Medium, or Low should be assigned and noted here.
Resources:
This is the number of resources, and their associated functional areas, required to implement the solution for the CR.
Estimates Validated On:
The date that the estimate to implement the solution for the CR was validated.
Estimates Validated By:
Person’s name who validated the estimates to implement the CR.
Analyzed By:
Person’s name who conducted the analysis of the CR.
Analysis Completed On:
The date of the completion of the analysis.
CR Decisions:
Possible entries: 1) Approved; proceed to implement the solution; 2) Rejected; do not start or continue work effort, or 3) Defer the CR and rationale for deferral; if applicable, identify any future target release that should consider including the CR.
Changes Request Implementation
Decision Date:
The date that the final approval authority made the decision. If this is NOT the client, then the dates should show the review sequence — dates of client recommendation, CRB recommendation, and FB decisions.
Decision Made By:
Indicate final authority level — whether project team, CRB, or FB decision.
Approved Effort:
Amount of effort approved to implement the solution for the CR, preferably in hours.
Approved Cost:
The approved cost, in dollars or appropriate currency, to implement the solution is entered here, if any.
Approved Start Date:
Enter date that has been approved to start the implemtation of the CR.
Target Completion Date:
Enter a target date if there is uncertainty about whether the implementation can be started on the approved date. Impact on Plans
Incorporated Into Plans On: The date that CR and its impact were incorporated into the project plans. Incorporated Into Plans By:
The person’s name that incorporated the CR and its impact into the project plans. This is usually the PM.
Plans Changed:
Describe how the plans changed as a result of implementing the CR. Also, include any changes to other work products.
Completion Criteria:
Describe the criteria that signal that the solution has been successfully implemented.
Change Order ID(s):
The sequence number(s) given to the change order which is the approval document that directs the PM/project team to implement the CR.
Date Closed:
Date that the CR is closed.
Date Implementation Completed:
The date that the CR was successfully implemented.
CR#
Change Type
Ta b l e€ 2 .1 6╇╉
Description of Change
Scope
Date Submitted Effort Auth
Date Auth
Start
Finish
Implementation
Investigation Authorized
CHANGE REQUEST LOG Status
Status Date
N, or Y with new date
Schedule Impact
154â•…
Phase 2╇ ╇ Planning Process n
F ig u re€ 2 .1 9 ╇╉╇╉Flow chart for submitting, receiving, and reviewing the change request Process
Client
Project Manager
Submit Change Request
Submit CR
Review CR for Completeness
Clarify CR and No Resubmit
Is CR Complete
Project Team
Change Review
Funding Board
Yes
Assign CR # Enter in CR Log Present to Team
Is CR Ready for Decision?
Identify team timeframe for input
Go to process Make Decision
Update CR and Log Form Go to Next Process
Step 5: Manage Change Orders
The purpose of this step is to manage the implementation of the change requests by revising the project management plans and procedures to reflect the approved change and periodically checking the status of the associated CR. The change management plan brings us to the end of the planning phase. By now, you and your team should be able to visualize all parts of the project and begin the execution phase.
Task 2.10: Developing the Risk Management Plan Risk is often thought of as something negative, something that should be avoided. Depending on whether one is a risk seeker or opposed to risk, opinions will often lead to very different results. Within project management, risk is looked at both ways—as a
Task 2.10: Developing the Risk Management Planâ•…
155
potential problem and as a potential opportunity. Regardless, risk always involves something that will occur in the future. It will involve some sort of change, as well as an element of personal choice. F ig u re€ 2 . 2 0 ╇╉╇╉Flow chart for the impact analysis Process
Impact Analysis
Client
Project Manager
Project Team
Change Review
Funding Board
From Previous Process
Assign Subteam and Due Dates Update CR Form and Log
Complete Analysis & Recommendation
Present to Client Go to Next Process Make Decision
Before you can develop the actual risk management plan you must understand the elements of risk and how they may affect the project. As you begin planning for risk you must identify elements of risk, quantify risks by assessing their probabilities of occurrence, analyze financial and nonfinancial factors, establish how to mitigate risks and their potential negative effects or enhance the opportunities that may occur, and control risk, should it occur. In any case, understanding risk: NN
Increases the understanding of the project
NN
Identifies the alternatives available in delivery and methods
NN
NN
Ensures that uncertainties and risks are adequately considered in a structured and systematic way that enables them to be incorporated into planning and project development processes Establishes the implications of these on all other aspects of the project
156â•…
Phase 2╇ ╇ Planning Process n
Scenario You have been overwhelmed in the past while managing projects, and as you thought about the reasons for being overwhelmed, you realized that all you were doing was responding to risks and performing “brute force coordination.” It seemed you were constantly putting out fires. And although you were able to work through most of them, you are determined that with this project you are going to be proactive about risk. F ig u re€ 2 . 2 1 ╇╉╇╉Flow chart for making a decision Process
Client
Project Manager
Make Decision
Project Team From Previous Process
Review CR/Impact Analysis for Completeness
Do Additional Analysis and No Is CR Ready for Decision? Report Back to PM Yes Team Votes to Accept, Reject or Defer
Package CRs if Appropriate Publish CR Decision and Amend Contracts if Required
Yes
Within Team Authority?
No
Update CR Form and Log Go to Next Process Escalate to CRB
Go to Next Process Escalate to CRB
Change Review Board
Funding Board
Task 2.10: Developing the Risk Management Planâ•…
157
F ig u re€ 2 . 2 2 ╇╉╇╉Flow chart for escalating to the CRB or funding board Process
Escalate to CRB or Funding Board
Client
Project Manager
Project Team
Change Review
Funding Board
From Previous Process
PM Presents CR to CRB
CRB Accepts, Rejects or Defers
Schedule CRB Review
Present to FB
Package CRs if Appropriate Publish CR Decision and Amend Contracts if Required
FB Accepts, Rejects or Defers
Return to Process Make Decision
Updated CR Form and Log and Create the Change Order End CR Process Go To Manage Change Orders
Scope of Task Duration This task may take a few hours or a few days, depending on the complexity of your project.
Setup None.
158â•…
Phase 2╇ ╇ Planning Process n
Caveat None.
Procedure In this task, you’ll do the following: NN
Understand the differences among certainty, uncertainty, and choice
NN
Understand the rules of probability
NN
Understand stakeholder risk tolerance
NN
Learn the process of risk identification
NN
Learn how to categorize risk
NN
Learn the process of qualitative risk assessment
NN
Understand the benefits of using a risk register
NN
Learn the process of quantitative risk analysis
NN
Determine the expected value of a risk event
NN
Learn the elements of a risk-response plan
NN
Understand the difference between contingency reserves and management reserves
NN
Learn the elements of a risk management plan
Details In reality, human beings do their best work during a crisis. They tend to support one another regardless of personal circumstances. Observe the behavior that occurs during a natural catastrophe to see that this is true. But the question begs to be asked: At what cost? Substantial savings can occur if risk mitigation strategies are developed ahead of time. Planning for risk is simply good business and provides clients with a sense of confidence in the potential project outcome. Risk management should always be used when uncertainty hinders decision making.
Uncertainty, Choice, and Certainty Uncertainty exists when there is a complete absence of information. Nothing is known about the possible outcomes, and no probability distributions (based on experience) can be developed. Project managers typically do not deal in areas of total uncertainty. Choice, on the other hand, negates the existence of risk. If there is no choice, there is no risk, even if there is a loss. If a person making a decision can take actions to increase or decrease the chance or magnitude of the loss or gain, then risk exists. Certainty implies that all information to make a decision about a situation is known ahead of time and there is a certainty of occurrence. There are three ways to encounter a risk: NN
Placing yourself at risk
NN
Being put into a risk situation by another
NN
Acts of nature (contracts may also refer to this as acts of God)
Task 2.10: Developing the Risk Management Planâ•…
159
You can also be placed at risk without recognizing that it exists, and perceived risks are as important as real risks. Not choosing is considered a choice. Some folks also believe that issues are the same as risk, but there is a difference between an issue and a risk. All issues need to be acknowledged, documented, assigned an owner, and continuously monitored for resolution. A risk event may or may not occur. Some risks have higher priorities than others. The project manager makes sure that a risk response is developed for each risk. Part of the riskresponse strategy is to create a contingency fund for risks that have high impact and high probability of occurrence.
Understanding Probability Theory Risk analysis is rooted in the use of probabilities. In the absence of known facts, probabilities are used to help find ways to look at future events. Before we can truly qualify or quantify risks, we must understand probability theory and the notion of randomness. The mathematical study of randomness, called probability theory, is used to assign relative frequencies to each of the possible outcomes of an event. Randomness exists where individual outcomes are uncertain but there is a regular distribution of frequencies when a large number of repetitions occur. For example, when throwing a pair of standard six-sided dice, we know that 36 combinations exist and that the probability of throwing a 10 is 3/36, or 8.33%. Understanding probability theory will help the project team create a probability/impact risk-rating matrix that enables scoring interpretations based on risk event value. There are three simple rules of probability: NN
NN
NN
The probability of an event occurring plus the probability of an event not occurring always equals 1. The event either happens or it doesn’t, which can be split on the continuum infinitely, such as a 50-50, 70-30, or 60-40 split. The probability of two events happening simultaneously is the product of the probabilities. If you have a 60% chance of using one process and a 40% chance of using it in conjunction with another, then the probability of using both together is 24%. The probability of two independent and mutually exclusive events is the sum of probabilities of all possible outcomes of an event and is equal to 1. When there are more than two possible outcomes, the sum of the probabilities is still equal to 1. For example, suppose a high school consists of 25% juniors and 15% seniors, and the remaining 60% are students of other grades. The relative frequency of students who are either juniors or seniors is 40%. We can add the relative frequencies of juniors and seniors because no student can be both a junior and a senior.
Understanding Stakeholder Risk Tolerance Risk cannot be objective based on a given individual’s perspective; sometimes there are winners and sometimes there is only a chance for a loss. What determines whether risk is acceptable depends entirely on the tolerance for risk by the individual risk taker. Individuals may be one of the following: Risk Averse╇ ╇ Prefer outcomes that do not have the highest monetary downside value, which usually translates to lower potential upside as well
160â•…
Phase 2╇ ╇ Planning Process n
Risk Neutral╇ ╇ Indifferent to outcomes of the risk event Risk Seeker╇ ╇ More willing to take a chance Most people think of themselves as more risk-taking than they really are. Decisions change from situation to situation. Very few people are totally averse to risk. Stakeholders may be risk averse, risk neutral (indifferent) to outcomes of the risk event, or risk seeking (more willing to take a chance). Accepting a sure loss is admitting defeat and is not an easy thing to do, but at times you might have to choose to cut your losses and move on—lose the battle so you can win the war. Honor your risk takers by rewarding good tries as well as successes.
Risk Identification Identifying risk events is a major part of the up-front planning process. It should be incorporated into the planning process before implementation occurs. You must also acknowledge that the risk management process is highly iterative and may occur whenever there are changes to the original plan. Initial risk discovery incorporates historical data and interviews with experts or those folks in the trenches who have previously been exposed to or had to respond to specific risk events. In other words, you need to “blow holes in the plan” by considering what could possibly go wrong. Risk identification must occur as early in the project as possible, but is typically the last of the subsidiary plans to be created before the overall project plan is finalized. You want to know as much as you possibly can about the project, and so your first steps involve best case, logical parameters. Once you believe that your plan makes sense, it’s time to establish categories where the plan can go wrong or be further enhanced. These tools can be used for risk identification: NN
NN
Documentation reviews Information-gathering techniques: NN
NN
Brainstorming Delphi technique—another way of obtaining group input for ideas and problem-solving. A question is posed and sent out for answers. When the answers are returned, the results get distributed to all who participated by a facilitator who sent out the original questions. There may be voting involved, but in any case, anonymity is the key with this process.
NN
Interviewing
NN
Root cause analysis
NN
Checklists analysis
NN
Assumptions analysis
NN
Diagramming techniques, such as cause and effect or flow charting
NN
SWOT (strengths, weaknesses, opportunities, and threats) analysis
Risks that may affect the project for better or worse can be more effectively managed if they are organized into risk categories. The PMBOK® Guide, 4th ed., p. 280, identifies
Task 2.10: Developing the Risk Management Planâ•…
161
four broad categories, but others can be used that make sense to the project team. They should reflect common sources for the industry or application area of the project. Let’s take a closer look. Risk Categories
You are fairly adept at identifying technical risks. They may include such items as relying on unproven technology, unrealistic performance goals, or changes in the state-of-the art or industry standards. There may be complex requirements, a difficult operating environment, integration or interface problems, and perhaps severe reliability issues. In reality, you may not always consider project management risks. They can cause severe issues if not addressed and may include poor allocation of time and resources, inadequate quality of the project plan, or poor use of the project management discipline. The project manager or team members may be on a learning curve. There may be unrealistic schedule and cost estimates, poor communication, short planning time, no change control procedures, and unmanaged project assumptions. Organizational risks include cost, time, and scope objectives that are internally inconsistent, lack of prioritization of projects, insecure funding, and resource competition. Field inexperience and changing or untimely decisions can also cause risk. External risks could include a shifting legal or regulatory environment; labor issues; country risk; weather; unavailability of raw materials; permitting difficulties; postulated events such as vandalism, terrorism, or sabotage; or social and environmental issues. Additionally, you may want to consider fluctuating currencies; political unrest; failure of a supporting infrastructure due to others; or failure of design, execution, or suppliers due to bankruptcy. This list could go on forever. Other risks include the following: NN
Personnel
NN
Human resource management
NN
Financial
NN
Operational
NN
Natural and man-made disasters
NN
Political
NN
Economic cycle/marketing
NN
Contractual/legal
NN
Requirements changes
NN
Design changes
NN
Task omissions
NN
Estimating and scheduling errors
NN
Technical errors
NN
Staff turnover, illness or death, unplanned vacations and leaves of absence
NN
Late delivery of external deliverables
162â•…
Phase 2╇ ╇ Planning Process n
NN
Priority changes that result in loss of resources, including support work
NN
Late approvals and acceptances
NN
Extended learning curves
NN
Unavailable or unreliable tools and methods
NN
Assumptions that turn out not to be true Risk events and their impact to the project change throughout the life of the project. There are three elements to risk:
NN
The risk event
NN
The probability of the risk occurring
NN
The impact of the event on the project
The categories of potential risk events can help you identify specific risks that fall into those categories. Some project managers would prefer to brainstorm the risks and then place them into categories. It really doesn’t matter which method you use.
Perform Qualitative Risk Assessment After you have identified the risks, the next process for risk management is qualitative analysis. In this process, you want to determine the likelihood of occurrence and the impact of the risk if it does occur. Sizing the Probabilities of Risk Likelihood
Project stakeholders must agree on the break points between severity descriptors and percentages associated with them in order to be consistent in their assessment regarding the likelihood that a risk event will occur: NN
NN
NN
NN
NN
Very low may indicate a 5% likelihood of occurrence or that the risk event hasn’t happened within the past five years. Low may indicate a 20% likelihood of occurrence or that the risk event has happened within the past five years. Medium may indicate a 40% likelihood of occurrence or that the risk event has happened once or twice within the past 24 months. High may indicate a 60% likelihood of occurrence or that the risk event has happened once within the past 12 months. Very high may indicate an 80% likelihood of occurrence or that the risk event has happened on a regular basis over the past 24 months.
Sizing the Impact of Risk Events or the Amount at Stake
Impacts, or consequences associated with risk, are examined to assess the consequences to project objectives. Project stakeholders describe and agree on severity descriptors in order to be consistent in their assessment regarding the impact or amount at stake that a risk event may inflict.
Task 2.10: Developing the Risk Management Planâ•…
163
The following are examples of using severity descriptors: NN
NN
NN
NN
NN
Very low may mean having insignificant impact on the project objectives (for example, 5–10% slippage on the schedule and/or budget). Low may mean having minor outcomes that are unlikely to have a permanent or significant effect on the project objectives (for example, a 20% chance that materials won’t arrive when planned). Medium may mean having a potentially serious impact that can be managed without major impact to the project objectives (for example, a 40% chance that training will be delayed by one month). High may mean having a potentially significant effect on the project objectives that will require major effort to resolve (for example, a 60% chance that manufacturing won’t finish on time). Very high may mean having significant risk that could totally jeopardize the objectives of the project (for example, an 80% chance that your labor pool will go on strike during the time you need them).
Probability and Impact Matrix
Many people want things to be certain and unambiguous. But as it has been said by that famous philosopher, Mick Jagger, “You can’t always get what you want.” Give them what they need—a realistic assessment of risk and uncertainty. Table€2.17 shows a probability and impact matrix with varying shades of gray. The darker gray represents risk averse, the lighter gray represents risk seeking, and the lightest gray represents risk neutral. Your organization may look differently at risk—whereas this table shows a slightly more risk-averse culture, your organization may be more risk-seeking. When you multiply the probability by the impact, you can obtain a defendable rating to the degree that your data are accurate. Ta b l e€ 2 .17 ╇╉╇╉Probability and impact matrix Probability
Risk = Probability X Impact
0.90
0.09
0.27
0.45
0.63
0.81
0.70
0.07
0.21
0.35
0.49
0.63
0.50
0.05
0.15
0.25
0.35
0.45
0.30
0.03
0.09
0.15
0.21
0.27
0.10
0.01
0.03
0.05
0.07
0.09
0.10
0.30
0.50
0.70
0.90
Impact
164â•…
Phase 2╇ ╇ Planning Process n
You can identify and qualify risks in the following steps: 1. Send a blank risk event worksheet (Table€2.18) to each person who you believe will
be able to identify risk events for the project. Ask them to consider all risks that could affect the objectives of the project in their area of support. For example, if your team member is from IT, they should identify those items that could be risks in IT. 2. Ask them to fill out the worksheet(s) completely, one for each risk, and return it to you
in whatever timeframe is needed—typically no longer than one week. 3. Collect the filled-out worksheets (via whatever tools the team agrees on—typically
email) and sort by probability, impact, category, and risk response. There will probably be duplicates. This will eliminate many hours of brainstorming or trying to collect all of the risks at one sitting. 4. Set up a meeting with your team and show them the risk events that were identified,
what their probabilities and impacts are, and their categories. This can be done via conference call and meeting software or face to face. Ta b l e€ 2 .1 8╇╉ Risk Event Worksheet Risk Probability
Category
Impact
Risk Response
Very Low
Very Low
Technical
Avoid
Low
Low
Project Management
Transfer
Medium
Medium
Organizational
Mitigate (reduce)
High
High
External
Accept
Very High
Very High
Other
Triggers
Describe your risk response strategy
As a team, reach agreement on the probability of the risk, the impact to the project objectives, the categories, and the risk responses. You, as project manager, will facilitate this discussion and add the completed information to the risk register. Triggers
Triggers are symptoms and warning signs that a risk event is likely to occur. Using one of our qualifying risk examples, hearing the news that contract negotiations have broken down is a trigger that your labor pool may go on strike. After you have identified and qualified your risk events, place them in a risk register such as the sample found in Table€2.19.
Control: communicate and address concerns with external customers.
External specification of manufacturing test equipment and subcontracting test work.
External customer confidence
7.
Control: communicate with and solicit participation of internal customers.
Continued proliferation of alternate test methods and equipment.
Internal customer confidence
6.
Not started
Not started
Julie
Not started
Not started
Not started
Not started
Not started
Status
Julie
Diane
Lin
Lin
Terri
Control: prepare summary of operational differences. Avoid: fight for adequate funding. Deflect: Capital Acquisitions has contingency funds.
Jeff
Owner
Absorb risk: workarounds for test station usage already exist.
MITIGATION STRATEGY
Avoid: negotiate protection with sponsor and management in advance.
Micromanagement
5.
High
May consume inordinate amounts of resources, schedule, and budget.
Inadequate schedule
4.
Med.
IMPACT
Avoid: create schedule contingency.
May cause reductions in scope and technical capabilities.
Inadequate funding
3.
Low
May result in inadequate test capacity and use of alternative test methods.
May require unplanned revisions to department test practices.
DESCRIBE IMPACT ON PROJECT
Audit failures
High
2.
Med.
PROBABILITY
Future use of stations may require external equipment and complex testing.
Low
Technical Obsolescence
RISK EVENT DESCRIPTION
1.
RISK #
Ta b l e€ 2 .1 9 ╇╉╇╉Risk register sample
166â•…
Phase 2╇ ╇ Planning Process n
Hands-on 2.16: Testing Your Knowledge of Identifying and€Qualifying€Risk€Events 1. Identify two risk events that could occur on the Apples and Pears project in each of the following categories: NN
Organizational
NN
Project management
NN
External
2. Decide the probability of occurrence, the impact of occurrence, and your risk response for the risk events identified in question 1, and place your answers in the risk register template found in Table€2.20. Ta b l e€ 2 . 2 0 ╇╉╇╉Risk register template Risk Register RISK #
RISK EVENT DESCRIPTION
PROBABILITY Low Med. High
DESCRIBE IMPACT ON PROJECT
IMPACT Low Med. High
MITIGATION STRATEGY
Owner
Status
Task 2.10: Developing the Risk Management Planâ•…
167
Plan Risk Responses Risk-response planning is the process of developing responses to the risks identified and analyzed in the previous steps. Possible responses to any risk include avoidance, transference, mitigation (reducing the probability and/or impact), and acceptance. After responses are developed, they should be recorded on the risk register. Project risks diminish naturally as the life cycle of the project unfolds and the project is completed. The purpose of risk management is to drive risk as low as possible before the amount at stake gets too high. You can see that total project risk decreases as you move toward project completion, but the amount at stake increases toward the end of the project life cycle. Keeping that in mind, create the risk-response plan so that appropriate and timely strategies can be established. For example, if you know a key resource may not be available when their work is needed, actions should be taken to backfill that person should that situation arise. If you wait until later in the project to find a replacement, it may be more costly to train someone with a learning curve, or in the absence of someone in-house, costly outsourcing may be necessary. Elements of the Risk-Response Plan
The risk-response plan must be documented at a level of detail at which action will be taken. The PMBOK® Guide, 4th ed., pp. 305–306, suggests the inclusion of some or all of the following: NN
Identified risks, their descriptions, the areas(s) of the project or WBS element affected, their causes, and how they may affect project objectives
NN
Risk owners and their responsibilities
NN
Results from the qualitative and quantitative risk analysis process
NN
Agreed-on responses, including avoid, transfer, mitigate, accept, exploit, share, or enhance, for each risk in the risk-response plan
NN
The level of residual risk expected to remain after the strategy is implemented
NN
Secondary risks that may arise because of implementation of suggested strategies
NN
Specific actions to implement the chosen response strategy
NN
Budget and times for responses
NN
Contingency plans and fallback plans The following questions should be asked as you plan your mitigation strategies:
NN
How could this risk be avoided?
NN
Can this risk be reduced?
NN
Can the risk be shared or transferred?
NN
Should you face the risk (and if so, should schedule and financial allowances be made)?
NN
Can you contain the risk?
NN
Will this risk response be funded?
168
Phase 2
N
Planning Process
Be careful to limit your responses to only those items that affect your project. It is far too easy to examine the ills of the entire company when exploring risk events. You are hoping to mitigate risk on a specific project. You are not trying to solve world hunger.
In answering these questions, you must determine which risks are likely to affect the project and document their characteristics. This is most easily done by classifying them according to their cause and then ranking them according to your ability as a project team to effectively manage the responses. Ultimately, the responsibility to manage risk events rests with the project owner. The risk-response plan becomes a part of the overall risk management plan.
Contingency Plans Contingency plans are created in advance and are applied to risk events that arise during the project. They reduce the cost of an action. An example of engaging a contingency plan would be when a milestone is missed; additional resources that were identified and estimated in your contingency plan are added to a specific task to get back on track. The contingency plan will be implemented if certain trigger points or previously agreedupon metrics occur. These triggers could include missed milestones, failed inspections, or the inability to get good people or supplies delivered in a timely way.
Contingency Reserves vs. Management Reserves Cost is associated with each risk-response strategy identified in the risk-response plan, and these costs become line items in the project budget. These are known risks, with known recovery costs. According to the PMBOK® Guide, 4th ed., p. 177, contingency reserves are allowances for unplanned but potentially required changes that can result from realized risks in the risk register. Management reserves, on the other hand, include those budgets set aside for “unknown unknowns” that may cause changes to the project scope and cost. These costs are also placed in the project budget and are typically a percentage of the total project budget. Management may have to approve access to these funds. By the way, they are not included in earned value calculations—more about that later.
Take Corrective Action The best-laid plans still require estimates, and no one is able to predict the future with total accuracy. Changes occur regularly, resources do not always complete their work according to their estimates, and so corrective action needs to take place. Project managers should set expectations with project performers: if the performers cannot meet their commitments to the project, a recovery plan must be defined and enacted to get back on track. There may be performance issues to face and any of a variety of challenges. The corrective action must be immediate and monitored for its efficacy.
Choose Alternative Strategies Using an alternative strategy for the project or any piece of it assumes that the alternative was well thought out to begin with in regard to when it should be employed, with what
Task 2.10: Developing the Risk Management Planâ•…
169
approvals, and under what conditions. An alternative strategy is almost always more costly to the project, as you are discarding the initial strategy (or parts of it) and must “shift gears,” so to speak; additional planning may be needed.
Update the Risk-Response Plan Implementation of risk controls may reduce the probability or impact of identified risks. Risk rankings must be reassessed so that new, important risks may be properly controlled. Risks that do not occur should be documented and closed in the risk-response plan. Whenever a workaround happens or a change request is implemented, the affected project plans (including the risk management plan and the risk-response plan) may need to be updated following the project’s integrated change control process.
Create the Risk Management Plan Now you have everything you need to put together an entire risk management plan. This is how we recommend it should be put together: 1. Describe the risk methodology you used. This includes your risk assumptions, roles
and responsibilities, timeframes, rating and scoring techniques, risk communications, and a risk tracking process. You also want to include how you identified and categorized risk, your means of determining risk impacts and probabilities, and how you prioritized them. 2. Include your risk-response plan. 3. Describe how you will track or monitor your risks.
We have included a simple risk management template to use if this is the first time you have had to create one:
Section 1: Management Strategy NN
Describe the risk methodology you used for the following: NN
Risk identification
NN
Risk categories
NN
Risk probability and impact
NN
Risk priorities
NN
Risk assumptions
Section 2: Risk-Response Plan NN
Describe your response strategies (mitigation, sharing, transference, and so forth) for each risk.
NN
Document the detailed response for each risk and whether it is cost/schedule-effective.
NN
Describe what will happen if the risk event occurs.
NN
Describe triggers, including timeframes.
NN
Assign a responsible person for each risk response.
170â•…
Phase 2╇ ╇ Planning Process n
Section 3: Risk Monitoring NN
NN
Describe what dates and actions were taken to mitigate risk. Document whether those mitigation strategies were successful. (Was there a contingency plan and was it sufficient as planned?)
NN
Describe successive actions needed to overcome or reduce the risk.
NN
Establish a review schedule.
NN
Validate assumptions.
NN
Review the risks (see Figure€2.23).
Section 4: Risk Control NN
NN
Confirm that risk strategies are still valid. Take corrective action when risk events occur that are outlined in the risk-response plan.
NN
Assess actual impacts in terms of time, cost, and quality.
NN
Ensure that the master project management and risk plan is being followed.
NN
Ensure that the change control plan is being followed.
NN
Make revisions as needed. The flow chart in Figure€2.23 shows how you might review risk events.
Task 2.11: Documenting and Presenting the Master Project Management Plan The master project management plan is the culmination of the many days and hours that have been spent to ensure that the project will be a success. The master project management plan is like a pattern or a template. You probably wouldn’t create a wedding dress without a pattern or an Adirondack chair without a template if you are new at making furniture. But if you have a pattern or template with good directions, it will turn out just right. Your project management plan becomes your project control book. As we said earlier, plan the work, now work the plan. However, it is also a known fact that your first plan is your worst plan. There will be many changes to the project plans as you “go forth and do,” so the project plans will be refined periodically.
Scenario Wow! You have spent many days with your team creating documents that have provided you and your team with a better understanding of the Apples and Pears project. You have done some additional research and your team has created the perfect template to put it all together.
Task 2.11: Documenting and Presenting the Master Project Management Planâ•…
F ig u re€ 2 . 2 3 ╇╉╇╉Risk review flow chart Risk identified and communicated to project manager
Project manager assesses and documents all risks
Project manager reviews risk with project sponsor and team
Does team agree with risk assessment?
No
Yes
Is it still a risk?
No
Project manager clarifies risk
Yes Team determines impact of risk and probabilities of occurrence
Assign risk ID number
Is contingency plan required?
Yes
Develop contingency plan
No No
Conduct monthly risk review
Has risk priority changed?
Yes
Is it a priority?
No Yes
Is it still a risk? No Close out the risk and adivse stakeholders
Yes
Close out the risk and advise stakeholders
171
172â•…
Phase 2╇ ╇ Planning Process n
Scope of Task Duration This should take hours to a few days, depending on the size and complexity of the project.
Setup None.
Caveat None.
Procedure In this task you will create the master project management plan that includes: NN
All of the plans created thus far
NN
A milestone list
NN
The project baseline
NN
The resource calendar
NN
The risk register
NN
Configuration management
NN
The management review process
NN
Approval from management
NN
Approval from the customer
Details The master project management plan has many parts. You are not going to reinvent the wheel. You have determined, however, that you will include all items necessary to ensure that you are very clear as to what you will be doing on the project.
Create a Milestone List A milestone is considered the end of a series of tasks, the completion of work packages or even phases. It could also reference key decision points or mark the end of reviews. At key decision points, a milestone might signal how far you have come or where you wish to go next. You typically use milestones in your schedule plan to determine whether you are where you want to be at a given place in time. Although milestones quite often are used to measure progress, do not be fooled. You may pull resources from some tasks and put them on critical activities, but you may be left with neglected tasks. A true measure of progress is shown through earned value calculations, which you will study in Phase 4.
Task 2.11: Documenting and Presenting the Master Project Management Planâ•…
173
Management really isn’t interested in seeing the minutiae that go along with plans, especially lengthy ones. They would rather see a dashboard view of the happenings in a project. You can create a task milestone list within your schedule plan and a risk milestone list in your risk plan. There may be financial milestones as well. After you have completed your subsidiary plans, you can establish project baselines.
The Project Baselines You use baselines as a starting point from which you can begin to measure progress by comparing the actual results to planned results. Project baselines include, but are not limited to, the following: NN
Scope baseline
NN
Schedule baseline
NN
Cost baseline
NN
Quality baseline
As you know, all of these baselines are the result of the planning process. We said earlier that your first plan is your worst plan. All of the plans created thus far are iterative. But you have to start measuring results when you begin the execution phase of the project. The baselines are typically not changed unless there is an approved change order that modifies the scope, schedule, cost, or quality of the project. If scope, schedule, cost, and quality changes are not approved, you, as project manager, are not doing your job. If, however, the estimates were all high level, you have an inexperienced team, or you are inexperienced, you may not be able to stay within the original estimates. It is demoralizing to work on objectives that cannot be reached. At this point you should speak to the sponsor and the change review board and ask for a baseline change to make your project more realistic.
The Resource Calendar You looked at resource calendars earlier. When you get to this stage of planning, you will have created your schedule plan. If you use project management software and load resource data into your plan, this calendar will automatically be created for you.
The Risk Register You looked at a sample risk register in Table€2.20. You will want to insert it here.
Configuration Management We spoke briefly about configuration management earlier as part of change control on a project. It is a very important part of project management. Configuration management was developed by the U.S. Department of Defense as a technical management system. It takes a holistic view of products, hardware, software, and so on, so if there are any changes to the product, hardware, or software, you can be aware of the impacts that those changes may have. For example, in a software configuration management process you would visit such topics as these: NN
Documentation
NN
Logical access controls
174â•…
Phase 2╇ ╇ Planning Process n
NN
Change control
NN
System testing
NN
Input/output controls
NN
Records management
NN
Reports
The way this applies to a project management plan is by simply taking the big picture view and assessing what a change may do to the rest of the project. For example, a scope change has been approved. You now need to look at all of your subsidiary plans to see whether the change impacts any of those plans. Does it affect the schedule, resources, budget, quality, procurement, and so on? If it does, you need to make changes to the plan. Usually configuration management rests with the change control board that will approve or disapprove the change.
The Management Review Process It has taken a bit of time to produce your project management plan. Now it is time to have your plan reviewed. The review typically takes place at a number of levels. The project sponsor will want to review it. So will functional managers and workers. These folks are usually invited to a meeting, and the project manager conducts a presentation highlighting all the elements of the plan. Here is where you can make changes before the work begins.
Approval from Management You have completed the daunting task of planning your project. You want to get this plan approved so you can conduct a stakeholder kickoff meeting and actually begin executing the project. You have managed projects before, but they have always been “brute force” coordination activities. You can see now that much time and grief could have been avoided if you had been proactive instead of reactive in managing projects. The proactive master project management plan should now be approved by the sponsor and other senior managers who may have a keen interest in the project, as well as by the client. Obtaining approval should be easy at this point, as long as you have kept your stakeholders in the loop and have created a plan that provides management and customers, as well as your team, with a level of confidence that the project will be successful if the plan is followed. Following approvals, a kickoff meeting is conducted and further meetings can begin. If management has participated in the management review you conducted, and all of their questions and concerns have been answered, they will typically approve the plan. You need to know what your internal approval processes are. There may be people you’ve never heard of who need to approve and sign off on the plan. Your sponsor should be able to tell you exactly who needs to approve and sign the plan.
Approval from the Customer You also need to have your customer approve the plan. You have identified the true scope of the project and given the customer everything they need to approve the plan. These customers
Task 2.12: Conducting the€Kickoff€Meeting╅
175
may be internal or external, but are treated the same. Someone needs something that you will deliver. By sharing plans with the customer, you eliminate surprises and know what your anticipated result will be.
Task 2.12: Conducting the€Kickoff€Meeting You have your project plan approved! This is where the fun begins. As with any type of meeting, you will want to prepare the kickoff meeting carefully and invite all appropriate stakeholders so that a common goal is understood by each person. You will be the cheerleader, the Energizer Bunny, and the face of reality from this point forward.
Scenario You are very glad that you and your team’s planning efforts have been so thorough. You will be able to present your project with all known facts thus far. You have been in meetings that were counter-productive and want to be sure this doesn’t happen at your kickoff meeting. Each team member has participated in the planning and has a copy of the approved plan. This is also the time to answer any questions that may arise.
Scope of Task Duration This typically takes approximately 90 minutes depending on the size and complexity of the project.
Setup None.
Caveat Make sure the meeting place will comfortably seat your invitees. It never hurts to bring refreshments—even if it’s out of your own pocket.
Procedure In this task you plan for and conduct the kickoff meeting for the project, including: NN
Pre-meeting preparations
NN
Presenting the project
176â•…
Phase 2╇ ╇ Planning Process n
NN
Setting expectations
NN
Obtaining feedback
Details Now that your plan is approved, you need to conduct a kickoff meeting. You have spent a lot of time preparing the plan, and you want this meeting to showcase the efforts of those plans. You want your team to come away from this meeting with the following: NN
A unified team spirit
NN
A mutual understanding on how the project will be managed
NN
A complete understanding of individual roles and responsibilities
NN
The project goals and objectives
NN
Project assumptions
NN
Key success factors
NN
How and when status meetings will occur
NN
How information should be distributed and received
NN
An agreement of expectations between the project manager and the team and vice versa
Pre-Meeting Preparations To be effective, you have to plan this meeting well. Table€2.21 provides a template to help you prepare for your meeting. Ta b l e€ 2 . 2 1 ╇╉╇╉Meeting characteristics and preparation template Kickoff Intent Purpose Subject Participants Size of Meeting Roles Frequency Agenda Prep Steps
Status
Steering
News
Issues
Decision
Task 2.12: Conducting the€Kickoff€Meeting╅
177
An agenda is essential. It should include: NN
The purpose and goals of the meeting
NN
The project plan
NN
A list of the meeting participants
NN
Roles and responsibilities
NN
Project assumptions
NN
Key success factors
NN
Major deliverables and milestone
NN
Project communications
NN
The length of the meeting
NN
Questions and answers
NN
Meeting feedback
You should have an individual discussion with each participant and explain that you will be sending them a copy of the project plan. Up to this time, they may not have had a holistic view, but it is important for the participants to see where they fit into the action. Ask them to bring their questions or concerns about the project (not their individual parts in it).
Presenting the Project One of the overarching goals of any project is to develop a well-oiled machine called a team. The more they are involved, the more likely they are to do their best work. They want to see your leadership in action, so this is a good place to demonstrate that you can lead this team and manage the project. They want to be empowered—so it is important that they know you will not micro-manage them and that you trust in their abilities. The project manager at a kickoff meeting shouldn’t be the only one talking. Starting out, the project manager should welcome all participants. Go through the agenda. Explain that even though the plan has been approved, it will change over time as more information becomes available Then introduce key stakeholders who may wish to explain their take on the project. This is not the time to go into detail. This allows the sponsor or others to share their vision of why the project is important for the organization. Next introduce each participant and describe their roles and responsibility to the project. If there is a misunderstanding, it will come out here. Discuss the communications plan. Be sure to leave time for questions and answers. Do not exceed the allotted time spelled out in the agenda. If another meeting is necessary, it can be scheduled for a later date and time.
Setting Expectations A lot of folks think they know what is expected of them. It should come as no surprise that often their expectations and yours are quite different. Here are some expectations and commitments you may consider sharing with your team:
178â•…
Phase 2╇ ╇ Planning Process n
My Expectations of You as a Project Team Member: NN
Attend face-to-face or video meetings and conference calls, and be punctual. If you are unable to attend, please send someone who can make decisions in your absence.
NN
Meet quantitative and qualitative commitments.
NN
Provide timely reporting of status and jeopardy conditions (good or bad news).
NN
Participate with high energy and a good attitude.
NN
Be supportive and respectful of other team members.
NN
Have a willingness to accept responsibility and accountability.
NN
Solve conflicts without alienation and accept challenges cheerfully.
NN
Apply your technical judgment when necessary.
NN
Be an honest steward of time and expenses.
NN
Assert your creative abilities with flexibility.
My Commitments to You as Your Project Leader: NN
I will involve you in appropriate planning efforts.
NN
I will value and utilize your input.
NN
I will provide timely notification of meetings, conference calls, etc.
NN
I will keep you informed of changes as soon as they occur.
NN
I will return your phone calls and other inquiries within 24 hours unless you designate otherwise.
NN
I will be as flexible as possible with changes that may occur within our plan.
NN
I will not get involved in your work effort unless you ask me.
NN
Standards of performance will be provided and communicated to everyone.
NN
My meetings will always be “no rank” sessions.
NN
I will deal with conflicts quickly with the attitude of fixing the problem, not assigning blame.
This is not a one-way process. You should ask your team members what they expect from you and what their commitments are to you. The purpose of this exercise is to reach a common ground as a team.
Obtaining Feedback You also want to have a feedback mechanism to evaluate your meeting after it is conducted. See Table€2.22. You will be conducting many meetings from now until the project is finished. This feedback loop will give you information regarding what was good about your meeting as well as suggestions for improvement.
Task 2.12: Conducting the€Kickoff€Meeting╅
Ta b l e€ 2 . 2 2╇╉╇╉ Meeting Evaluation Date:
Subject:
Instructions: Indicate on the scales that follow (1 low, 7 high) your assessment of the meeting. 1. Purpose of the Meeting Totally unclear as to the purpose or objective of the meeting.
1
2
3
4
5
6
7
The purpose or objective of the meeting was well defined.
1
2
3
4
5
6
7
We decided what we wanted to achieve by the end of the meeting.
1
2
3
4
5
6
7
We were sufficiently prepared for this meeting. Crisp & focused presentation and discussion. Good flow of information.
2. Decided What We Wanted to Achieve By the end of the meeting, we still had no idea of what we wanted to achieve. 3. Meeting Preparation We were totally unprepared for this meeting. 4. Meeting Effectiveness Disconnected information and tangent discussions.
1
2
3
4
5
6
7
1
2
3
4
5
6
7
Team participated actively in the meeting.
1
2
3
4
5
6
7
It was evident that we were living by our rules.
1
2
3
4
5
6
7
1
2
3
4
5
6
7
Agenda items addressed per the allotted times.
1
2
3
4
5
6
7
The meeting was an effective use of my time.
1
2
3
4
5
6
7
5. Team Participation Little team participation in discussions. 6. Ground Rules We violated many of our rules during the meeting. 7. Meeting Process Meeting started/finished late.
8. Time Allocation Agenda items continually ran over allotted times. 9. Meeting Usefulness A complete waste of time.
10. Team Building The meeting was a chore.
Meeting started & finished on time with consistent attendance.
We had fun.
Please Provide Any Additional Comments Below: 1. If you have answered any of the above questions with a response of 1 or 2, please identify why you have given that question(s) such a low rating, and offer your suggestions for making an improvement. 2. If you have answered any of the above questions with a response of 7, please identify why you have given that question(s) such a high rating.
179
180â•…
Phase 2╇ ╇ Planning Process n
Hands-on 2.17: Professional Responsibility in the Planning Phase 1. During your planning review sessions with one of the senior managers, you were advised by the senior manager to add parts to this project that were not in the original scope and informed that the extra part cannot be funded. He told you to “Just work it into the original budget; after all, you do have a little wiggle room, don’t you?” What should you do?
2. One of your team members gets angry at someone while participating in one of your planning sessions and makes a reference to her ethnicity. What should you do?
3. During the planning regarding procurement, one of your team members suggested that the project use a cousin of his who could do the work better than anyone else. What do you do?
4. One of the team members assigned to your team is not able to perform the work. Her supervisor told you that she would make the work look easy.
So How Do You Know If You Have a Good Plan? You may think you have a good plan, but the proof is in the pudding! You will know the plan is done well if the following are true: NN
Management is committed and supportive.
NN
Key personnel have reviewed and agreed to it.
NN
Team leaders have committed resources.
NN
Resources have reviewed and committed to tasks.
NN
The project manager has been fully acknowledged.
NN
Project funds are sufficient to do the job.
NN
The unknowns are discovered and documented.
NN
There are written contingency plans.
NN
There is a formal, approved, and published plan.
Phase
3
Executing Process
You now have a robust project plan. Your planning efforts should pay off here. The executing phase puts your plan into action. As project manager, you’ll now do the following: NN
Obtain and manage project resources
NN
Direct and manage project execution
NN
Implement the quality plan
NN
Follow the risk plan to minimize the impact of risk events
NN
Develop and manage team performance
Task 3.1: Obtaining Project Resources Project resources are the most valuable commodity on your project. Some will be people with whom you have worked previously; some will be preassigned to your team. You may have to negotiate for others and be mindful that part of your team may be a virtual team, that is, those who are either geographically dispersed or working away from your office. If you do not have the in-house expertise to do a certain portion of the project, you may have to acquire outside resources—such as consultants, temporary employees, and so forth.
Scenario You have had several discussions with internal resource managers. You worked with them during the planning phase, and they are in tune with the project. You now want the resource managers to release the individuals in their work units to work on your project. You have already sent out your statements of work to the contractors, and they are ready to begin as soon as you give them the go-ahead.
Scope of Task Duration This duration may be hours or days, depending on the complexity of the project.
Setup None.
Task 3.1: Obtaining Project Resourcesâ•…
183
Caveat None.
Procedure In this task, you’ll do the following: NN
Acquire resources
NN
Activate resources
NN
Orient and assimilate your team
Details The purpose of this process is to fill open positions on the project with qualified persons from the available pool of candidates. If staff selection is not the role of the project manager, then the project manager should provide the sourcing organization with the information needed to choose the candidate.
Acquire Resources There are nine steps to this process: 1. Review corporate guidelines for recruiting and staffing procedures, particularly regarding
Equal Employment Opportunities (EEO) guidelines. 2. Review candidate résumés and compare to the staffing plan to see whether an interview
should be conducted. 3. Conduct the interview. 4. Complete an interview assessment. 5. Review assessments and determine whether the candidate meets your requirements. 6. Contact the sourcing organization and provide feedback. 7. Plan for new staff training, if needed. 8. Update the resource and staffing plan. 9. Update the organizational chart.
Activate Resources As the project progresses, staffing continues in order to extend existing resource commitments or to acquire replacement staff, and is dependent on the recruiting and procedures of the delivery organization. This process has six steps: 1. Review the existing resources and future staffing requirements. 2. Review constraints such as budget, specific staff providers only, citizenship require-
ments, availability for travel, and so on. 3. If external resources are needed, check the current labor pool.
184â•…
Phase 3╇ ╇ Executing Process n
4. Develop a staff requisition document in compliance with corporate standards and
include special skill requirements if needed. 5. Evaluate trade-offs between numbers of personnel available and needed skills. 6. Agree on a timetable for completion of recruitment processes.
Orient and Assimilate the Project Team The purpose of this process is to provide all new members of the project team with a clear understanding of the project, their roles within the project, and the facilities they will need to perform their duties on the project. This process is done in six steps: 1. Review the goals and objectives of the project, including information about the client,
the project management system, technical approach, deliverables, and so on with the new team member. 2. Review the detailed project plans that they are part of. 3. Ensure that appropriate facilities or office space and tools needed are supplied (either
by the functional manager or the project office). 4. Assign and review the work package with the new member. 5. Confirm work assumptions and gain commitment from the new member. 6. Review the team rules that have been established.
Hands-on 3.1: Testing Your Knowledge of Acquiring Resources 1. What are the challenges associated with acquiring resources? 2. What could happen if a new team member is not oriented to the project?
Task 3.2: Directing and Managing Project Execution In this task you begin to implement your plan and collect performance information relative to the schedule, budget, status of deliverables, and implementation status for approved change orders, as well as corrective action if needed and preventive activities associated with risk. Directing and managing the project is the responsibility of the project manager. Efficient execution of the project relies on the direction and leadership of the project manager, the support of senior management, resource managers, and the commitment of team members, but mostly relies on the project manager. You’ll also perform procurement procedures that provide guidance on the strategies that will be used to request bids from the marketplace, select sellers, and award contracts.
Task 3.2: Directing and Managing Project Executionâ•…
185
Sellers may be obtained through advertising and bidder conferences. Independent estimates and proposal evaluation criteria are used to select sellers, and procurement negotiations bring you to awarding the contract.
Scenario Olivia Ross has signed off on the plans and is excited to finally begin the implementation of this project. Ms. Ross took you (Carrie MacIntyre, project manager) to lunch and had a candid discussion about the Apples and Pears project. Ms. Ross wanted to be sure that you were aware of how important the due date was, and you wanted to be sure that she was aware of the real-world facts as you know them up to this point. Your team is well in place now, and you have established guidelines on how project information is shared. You have created toll-free telephone numbers for your virtual team members, set up emails and voicemail, and provided a fax number dedicated to the project. You have sent everyone a meeting schedule and considered the different time zones. Considering the different time zones, you have also established your video conference schedule. You have set up manual and electronic filing structures and provided your team with a team directory, including emergency numbers.
Scope of Task Duration This task will run the length of the project.
Setup None.
Caveat None.
Procedure In this task, you will: NN
Use your expert judgment
NN
Use the project management information system to execute the tasks on your project
NN
Execute the communications plan
Details According to A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Fourth Edition, p. 55, “The Executing Process Group consists of those processes performed to
186â•…
Phase 3╇ ╇ Executing Process n
complete the work found in the project management plan to satisfy the project specifications.” It is here you will coordinate all of the activities of the project and manage the resources. You have also created a communications plan and have already used it to get this far in the project, but now more than ever communications are the key to success. You know what tools you’ll be using, have done your stakeholder interviews, and know when and how to send information and where information can be found. But there’s more! You’ll want to know the correct way to communicate with your sponsor and your team as well as with those who are technical.
Use Expert Judgment You were chosen to be a project manager because you have proven that you have the leadership and managerial expertise to bring the project to fruition. This, along with your team members and the technical expertise they provide, is a great start in managing project tasks. Other avenues of expertise are also available to you and your team, including your in-house experts, outside consultants, and your stakeholders, as well as professional and technical associations. Use other experts when you need them, and your expertise will improve exponentially.
Hands-on 3.2: Testing Your Knowledge of Expertise 1. As a project manager, what should you do when you are assigned to a project but feel you don’t have the expertise to do the work?
2. What should a team member do when it is clear the assigned project manager simply doesn’t have the skills needed to manage the project (for example, the project is behind schedule, meetings have become finger-pointing sessions, or the project manager doesn’t return calls and sits in the office all day with the door shut)?
Use the Project Management Information System (PMIS) As you may recall from Phase 1, “Initiating Process,” your project management information system (PMIS) is part of your enterprise environmental factors. A PMIS provides you with an information collection and distribution process for all of your project management documents, access to intranet or Internet sites, scheduling software, configuration management databases, and so forth. Not all people should have access to your project information, so you should establish passwords for those with a need for certain information. For example, your sponsor may want an executive summary, instead of all the details you typically provide to the project team. Or, you may provide contractors and suppliers with a portal and a password that bypasses your PMIS so confidential and proprietary information is not available to them. In the absence of an active PMIS, you’ll have to create your own project control book to manage the project. This control book should include the project charter, the project management plan, forms and checklists, and so on. If possible, build a digital project control
Task 3.2: Directing and Managing Project Executionâ•…
187
book. Your forms should have “write” abilities, enabling you to simply tab through your document to fill in the answers. Let’s take a look at some tools that may be useful to you as you create your project control book and manage the project. Work Authorization Form
Most of your resources are internal, but for those who are external to the project, you must provide a notice to proceed. Table€3.1 represents a work authorization form. Extra Work Authorization Form
You want to be sure that suppliers and vendors understand that work not approved is work not paid. Table€3.2 represents a form for extra work authorization. Ta b l e€ 3 .1 ╇╉╇╉Work authorization form Work Authorization Project Name
Project Manager
Date
Contract Type Firm Fixed Price Cost Sharing
Cost Plus Percentage of Cost Ratio
Cost Plus Fixed Fee
Fixed Price Incentive Fee
Cost Plus Incentive Fee
The contractor's bid accepted by the customer is: Start Date:
Completion Date:
Special Instructions:
I have reviewed and accepted this project: Please keep me informed of progress and any changes in the scope as work proceeds. Signature:
Date:
Position: Distribution List: Scheduler
Estimating staff with a copy of drawings
Contract General Supervisor
Contract Inspector with three copies of drawings Project file with a copy of drawings
Accounting
188â•…
Phase 3╇ ╇ Executing Process n
Ta b l e€ 3 . 2 ╇╉╇╉Extra work authorization form Extra Work Authorization CONTRACT:
PROJECT:
DATE:
WBS CODE: DESCRIPTION OF WORK PERFORMED: IS THIS THE FINAL DAILY REPORT AGAINST THIS WORK ORDER?
YES
NO
PHYSICAL PERCENT COMPLETE: LABOR NAME
TRADE HOURS WORKED ST OT
RATE
DT
STANDARD PREMIUM AMOUNT AMOUNT
SUBTOTAL LABOR EQUIPMENT DESCRIPTION
HOURS WORKED
TOTAL HOURS
RATE
AMOUNT
SUBTOTAL EQUIPMENT MATERIAL DESCRIPTION
UNITS
UNIT PRICE
AMOUNT
SUBTOTAL MATERIAL SUBMITTED BY:
DATE:
ACCEPTED BY:
DATE:
Meetings
Meetings are the order of the day for project managers. You want to make this time as productive as possible—not only for yourself, but also for your team members. You never want to hear that your meeting was a total waste of time, which it can be if you do not prepare for the meeting properly. There are rules to harness the power of a meeting. These rules have been around for more than 30 years but are as valid today as they were then. Here is a suggested list of rules to help you harness the power of a meeting: NN
Do not call a meeting to decide something you could and should decide on your own.
NN
Never get people together if a series of phone calls would serve you better.
Task 3.2: Directing and Managing Project Executionâ•…
NN
NN
Never invite anyone who is not vital to the discussion, but do make sure that everyone who would be of value is included. Insist on punctuality. If you are 2 minutes late for a 20-person meeting, you have wasted 40 minutes.
NN
Keep the purpose of your meeting firmly in mind and be sure it can be achieved.
NN
Draft an agenda that breaks all subjects down into their simplest constituents.
NN
NN
NN
NN
189
Before sending out the agenda, read it through and examine points that can be misunderstood. In most meetings, disagreements occur because people are not talking about the same thing. If the issues are crystal clear, there is less chance for confusion. See that the agenda is circulated in sufficient time for people to read it before they come— but not so far ahead that they will have forgotten it when the meeting time arrives. Set time limits for each phase of the discussion and make sure everyone can see the clock. As the old saying goes, “Discussion, like work, expands to fill the time available.” See that whoever acts as chairperson states the issues, keeps to the agenda, lets everyone have a fair crack at the subject, cuts speakers short if they wander, and sums up succinctly as soon as all participants have their say.
NN
Ask open questions to uncover necessary information.
NN
If your budget allows, serve refreshments.
Your next item of business is to set up your meeting schedule. You’ll be meeting in person several times, but you’ll also have conference calls and video calls for those who are overseas. You’ll save a lot of time if you prepare the entire schedule in advance. Reserve your meeting locations and set up conference and video calls in advance as well. Table€3.3 represents a meeting schedule form that could be sent out to each team member and others as appropriate for the meetings. But that’s not the end of it. Be sure to send out reminders as well. Some people will forget they received this schedule. Or, prepare this for yourself and send out a notice to your participants at least two days in advance. Correspondence Log
You’ll want to keep track of any correspondence you receive or create that may be of value in defending the decisions you make. You’ll also want to keep memorandums from management or your team that may be crucial in the future. Table€3.4 is a sample correspondence log. Decisions Log
You’ll make many decisions when working on a project. Sometimes others will make decisions. These decisions may affect the entire project (for example, decisions on whether to cancel or move to next phase) or they may affect only one portion of the project. It is important that you keep a decisions log so you can refer to it when needed. Table€3.5 is a sample of a decisions log.
Participants
Project
Date
Time
Location
Conference Calls
Ta b l e€ 3 . 3 ╇╉╇╉Meeting schedule
Subject
Date
Time
Location
Video Conference
Project Manager
Meeting Schedule
Subject
Date
Time
Location
Face-to-Face Meetings Subject
Task 3.2: Directing and Managing Project Executionâ•…
191
Vendor/Consultant Profile
Vendors and consultants will come and go during the course of the project. Sometimes there are many vendors, and it can be difficult to keep track of who is doing what. You may consider creating vendor profiles to keep track of them and the deliverables they are providing. In the Comments field you can keep track of your conversations, encounters, issues, and so on. If the project is complex, it would be difficult to sort through notes to find information. Table€3.6 is a sample of a vendor profile. Daily Work Report for Prime Contractors
You also need to collect information from your outside contractors and suppliers. You do not manage the subcontractors if you have hired a prime contractor. If you are managing subcontractors because you are the prime contractor, you need a different type of status report. Table€3.7 is an example of a daily work report you can use for contractors and suppliers. It is important that you collect status information daily so you can use the data to evaluate performance. If you do not collect it daily, it will be difficult for you to keep track if it.
Hands-on 3.3: Testing Your Knowledge of PMIS 1. What are the elements of an electronic PMIS? 2. If you are lacking a PMIS, what should you do? 3. When setting up electronic permission to a PMIS, what items should you consider?
Execute the Communication Plan Communicating is the most important process in a project. According to New York University’s Project Communication Management program (2011) (www.scps.nyu.edu/ course-detail/PROJ1-CE8612/20112/project-communication-management), you could spend approximately 90% of your time communicating. How well you communicate could decide the fate of your project. Communication Model
Figure€3.1 is from Project Management: A Systems Approach to Planning, Scheduling, and Controlling by Harold Kerzner (9th ed., John Wiley & Sons, 2006). It is a communication model showing that when you are speaking (as the source or encoder), the message flows through your personality screen and to the receiver (decoder) through the receiver’s perception screen. When the receiver provides feedback, the message flows through the receiver’s personality screen and back through the sender’s perception screen.
From Whom
*Email, letter, memorandum, fax.
Type*
Project
Subject
TO
Ta b l e€ 3 . 4 ╇╉╇╉Correspondence log
Date Received
To Whom
Location
Correspondence Log
Type*
To Whom
Project Manager
Subject
FROM Date Sent
Location
#
Business Area
Project
Ta b l e€ 3 . 5 ╇╉╇╉Decisions log
Decision Date
Person(s) Involved Medium
Project Impact
Project Manager
High
Decisions Log
Low
Decision Agreed Upon
194â•…
Phase 3╇ ╇ Executing Process n
Ta b l e€ 3 . 6 ╇╉╇╉Vendor/consultant profile Vendor Profile Project
Project Manager
Vendor/Consultant Name Vendor/Consultant Project Work Description Manager
Tel:
Vendor/Consultant Manager
Tel:
Contract Start Date Contract End Date Summary of Major Deliverables
Comments
Information Distribution
A considerable amount of information must be distributed during a project. You’ll create project reports that describe the status of the project, the status of issues, approved changes, and lessons learned during the time cycle for the reports. When you provide lessons learned, you should document the causes of issues and the rationale behind the corrective action taken. You may have to conduct project presentations, either to your team or executive management. It is helpful to use presentation software when doing this, but if you are adequately prepared, you can present your project information by using video conferencing or face-to-face meetings. When feasible, be sure to provide your audience with a copy of what you’ll be presenting in advance so they have time to digest the information and prepare any questions they may have. You’ll need to create project records that include meeting minutes, formal or informal correspondence or memos, emails, decisions made, and so forth. Remember that the distributed items need to be appropriate to the recipient based on their expectations. For example, your
Task 3.2: Directing and Managing Project Executionâ•…
195
sponsor may ask you for an executive summary instead of the details that your team needs. By the way, an executive summary should always include cost information. Remember, at the top of the food chain it’s all about the money! All of this information should be placed with electronic project historical records, if possible, so that others can review your records and learn from them. Ta b l e€ 3 . 7 ╇╉╇╉Contractor daily work report
Contract #: WBS Description of Work Performed
CONTRACTOR DAILY WORK REPORT Project: Percent Complete:
Date:
Is this the final daily work report against this order? Name
Trade
Description
Supplier
Yes
LABOR Hours Worked ST OT DT
Rate
Standard Pay
Subtotal Labor EQUIPMENT Total Hours Rate
Premium Pay
Amount
Subtotal Equipment MATERIAL Invoice # # Units Cost Per Cash Charge Unit
Amount
Sub Total Material Submitted By: Accepted By:
No
Date: Date:
196â•…
Phase 3╇ ╇ Executing Process n
F ig u re€ 3 .1 ╇╉╇╉Communication model
REGION OF EXPERIENCE FOR SOURCE
Source/Encoder Personality Screen
REGION OF EXPERIENCE FOR RECEIVER
Message
Decoder/Receiver Perception Screen
FEEDBACK PERCEPTION SCREEN
PERSONALITY SCREEN
Status Reports
Some project managers spend the majority of their time chasing the status of their project. We spoke earlier about proactive versus reactive project management. If you feel you spend the best part of your day trying to get status from people (being reactive), you may want to try something different (being proactive). Communicate with your team about what status looks like to you. Do you want a highlevel report such as “I’m good” or would you rather have something that tells you exactly where team members are on their tasks? If there are 15 people at your status meeting and you are the last to give your report, a lot of your time is wasted. Some people like to air their dirty laundry at these meetings. Sometimes these sessions become finger-pointing events or problem-solving meetings—not good. You may want to have a problem-solving meeting, but not at a status meeting. Consider using your status report meeting as something you present back to your team. Collect the information in advance. Let’s say you have a weekly status meeting. Tell your individuals in advance what day they are to report status to you. For example, team members A and B report on Mondays, C and D report on Tuesdays, and so on. You have instructed them on how to provide this information to you. Perhaps you have set up a status phone line or a web page. You check the status lines or web pages daily and do not have to spend the whole day looking for status. If challenges are reported, work it out with the team member(s) involved. If only three people are involved, you can settle this without involving everyone else. If a team member reports on Wednesday but the next day has an urgency of some kind, tell that person to contact you immediately and not to wait until the following Wednesday.
Task 3.2: Directing and Managing Project Executionâ•…
197
Let’s say you have your status meetings on Monday. You report back to your team what has progressed during the previous week. You may want to create a presentation showing whether you are on track, behind, or ahead of schedule and budget. Table€3.8 is an internal status report form you may consider using to extract information from internal sources. Ta b l e€ 3 . 8 ╇╉╇╉Internal status report Internal Status Report Project Team Member Project Health Milestone
Items To Date Remaining Total Comments Items To Date Remaining Total Comments
Project Manager Date Status Summary RED YELLOW Percent Complete Planned Completion
GREEN Forecast Completion
Resources (week) Budgeted Actual/Forecast
Variation
Costs ($0.00) Budgeted Actual/Forecast
Variation
Accomplishments This Period Milestones achieved Milestones planned but not achieved Deliverables completed Work products planned but not completed Issues and Lessons Learned Issues Lessons Learned Managing Stakeholder Expectations
You have created a communications matrix and performed a stakeholder analysis regarding their concerns and interests. Those tools gave you the big picture about the expectations of stakeholders. But expectations are only half of the equation. You should use an
198â•…
Phase 3╇ ╇ Executing Process n
expectations/commitment process to assist in the area of managing stakeholder expectations. The following represents sample expectations and commitments between the project manager and the project team. After these are shared with your project team, ask the team members what their expectations are of you and their commitments to you. You may have to add or change your original thoughts. Project manager expectations of the project team are as follows: NN
NN
NN
Punctual attendance will be the order of the day at face-to-face or video meetings and conference calls. If you are unable to attend, please send someone who can make decisions in your absence. Quantitative and qualitative commitments will be met. Status and jeopardy conditions will be reported in a proactive and timely manner (good or bad news).
NN
The team will participate with high energy and a good attitude.
NN
Everyone will be supportive and respectful of other team members.
NN
Everyone will be willing to accept responsibility for their tasks.
NN
Solve conflicts without alienation and accept challenges cheerfully. The following are project manager commitments to the project team:
NN
I will involve you in appropriate planning efforts.
NN
I will value and utilize your input.
NN
I will provide timely notification of meetings, conference calls, and so on.
NN
I will keep you informed of changes as soon as they occur.
NN
I will return your phone calls and other inquiries within 24 hours unless you designate otherwise.
NN
I will be as flexible as possible with changes that may occur within our plan.
NN
I will not get involved in your work effort unless you ask me.
NN
Standards of performance will be provided and communicated to everyone.
NN
My meetings will always be no-rank sessions.
NN
I will deal with conflicts quickly with the attitude of fixing the problem, not assigning blame.
Hands-on 3.4: Testing Your Knowledge of Expectations and Commitments List at least five expectations a project sponsor may have of you (the project manager) and five commitments a sponsor will make to you (the project manager).
Task 3.2: Directing and Managing Project Executionâ•…
199
Listening Skills
It seems that one of the most difficult communication skills we as humans have is listening. Television journalist Diane Sawyer says it best: “I think one lesson I have learned is that there is no substitute for paying attention.” Attentive listening is a learned skill. It is not automatic but requires conscious effort and intent. So how can we improve how we listen? We can improve how we listen by first becoming aware of the skills involved in listening and then practicing these skills. What specific skills are involved in attentive listening? The following are critical: NN
NN
Pay attention to verbal and nonverbal signals. NN
Look at the speaker.
NN
Lean forward.
NN
Use “listening noises” (oh? yes, uh-huh).
Verify using feedback and clarification. NN
NN
NN
This helps you to determine whether you are interpreting the message correctly.
NN
This helps the receiver, or decoder, to look at the issue from another perspective.
Think about what the sender has to say. NN
NN
NN
NN
NN
This shows the other person (or decoder) you are listening and that you understand what is being said.
Listen for facts as well as ideas, and be sure you ask the speaker questions if necessary to ensure that you understand what was said. Ask yourself questions such as, “Is this meaningful to me?” and “What can I do with this information?” Listen for what is not being communicated. Is the speaker preparing me for good or bad news? Listen to the passion and the attitude of the speaker. Use your thought processes to internalize what you’re hearing so you can question and evaluate what is being said.
Respond to what the speaker has said. NN
Be sincere, not patronizing.
NN
Reply to the speaker’s concerns or points.
Hands-on 3.5: Testing Your Knowledge of Listening Habits The following listening assessment tool has been around for many years. Unfortunately, the author of this self-assessment listening IQ is unknown, but this is an effective tool.
1. Read each statement in Table€3.9. Reflect on whether you have experienced or felt the thought expressed in the statements in the past year. To the left of each numbered statement, circle one response.
200â•…
Phase 3╇ ╇ Executing Process n
Ta b l e€ 3 . 9 ╇╉╇╉Listening questions YN
1.
It is difficult for me to listen because I have so many other demands on my time and energy.
YN
2.
I can listen effectively while doing other things, like signing my correspondence or logging onto my computer.
YN
3.
After someone has explained a concept, I ask several probing questions to help clarify or understand the concept.
YN
4.
I have frequently left meetings with no idea what decisions we made or who was accountable for what action.
YN
5.
During meetings, people rarely ask questions exploring issues that are raised and points that are made.
YN YN
6. 7.
When someone is speaking, I let my mind find ways to remember key facts. If I am tired or distracted, I try to give the illusion I am listening, but really I mentally “check out.”
YN YN
8. 9.
I write down the most important ideas in a message when someone speaks. In meetings, subgroups have formed that don’t appear to listen (or even be willing to listen) to one another.
YN
10.
When people come to talk to me about personal matters, I try to think of ways to help them solve the problem.
YN
11.
After presentations, discussions, or major parts of meetings, rarely does anyone summarize or extract clear and specific points to then feed back to the group.
YN
12.
I interrupt people to save them the time of explaining something I already understand.
YN
13.
In meetings, I see myself as the “devil’s advocate,” and am always trying to help the group see “the other side.”
YN
14.
I restate or read key details to the speaker before our conversation ends so I am sure our understanding is clear.
YN
15.
I am in the habit of listening for key points when people talk, and then reflecting those key points back to the speaker.
YN
16.
I tend not to listen when I am distracted by the outfit someone is wearing or something they do that “puts me off.”
YN
17.
I filter out distractions when I am trying to listen, or I suggest we move to a quieter place.
YN
18.
During meetings, questions are asked that have already been covered in the meeting.
YN
19.
I use phrases like “Let me be sure I understand...” quite regularly when I have listened to someone else.
YN
20.
In meetings, while someone makes a point, I am already thinking about how I will give my “yes, but...” response.
YN
21.
When someone is talking with me, I stop whatever I am doing and give them my full, absolute, sincere attention.
YN
22.
When people begin to talk to me about personal matters (like their divorce), I get very uncomfortable and don’t want to listen.
YN
23.
I feel that if I listen to someone else, I will lose something important (such as my job, our uniqueness, our power, etc.)
YN
24.
Emotional words or ideas that don’t fit my view of the world make me not want to listen to the speaker.
Task 3.3: Implementing the Quality Planâ•…
201
2. Now you’ll compute your score for this assessment. Your score is based only on Yes responses in each of the three key categories. On the survey form, you may have noticed a symbol to the left of each question number. Compute the score for each symbol category, scoring 5 points for each Yes response in that category only. (Score 0 points for each No response in a category.) Place the total number of points for each category in Table€3.10. Ta b l e€ 3 .1 0 ╇╉╇╉Listening scores Listening Survey Scores Group 1
Points
Group 2
Points
Group 3
Points
These values will be interpreted in the “Phase 3 Solutions” section in the Appendix.
Task 3.3: Implementing the Quality Plan Implementing the quality plan begins with quality assurance, which is a proactive process that helps execute the project and delights the customer. (We will address quality control in Phase 4, “Monitoring and Controlling Process.”) In the absence of a quality manager, the project manager is responsible for the administration of the project quality plan. But that does not dismiss others from maintaining their own quality activities. Quality assurance begins when you begin the work on the project. You want to be sure that your deliverables are “fit for use” and meet the quality characteristics that the client has specified. If your quality assurance processes do not allow you to meet quality objectives, it is time to change or improve your processes to achieve that goal. The quality assurance plan should be multifunctional (so the plan can be repeated elsewhere in the organization) and prevention oriented. You’ll need to collect data and use that data to establish performance measures, and at times a quality audit will need to be performed.
Scenario Quality is everything on this project. You do not want to wait until a deliverable is finished to discover that it does not conform to quality standards, so you’ll use certain quality assurance tools to be sure that the project achieves its goals.
202â•…
Phase 3╇ ╇ Executing Process n
Scope of Task Duration This will last the length of the project.
Setup None.
Caveat None.
Procedure In this task, you’ll learn about the following: NN
Data quality definitions
NN
Cost of quality
NN
Cost of nonconformance
NN
Quality audits
NN
Process analysis
NN
Preventive and corrective action
Details Quality assurance is preplanned. It is an integral part of your Project Quality Management Plan, with predetermined check steps that you have placed within your project to ensure that the project fulfills its goals. Quality control (which will be discussed in Phase 4) consists of the processes of applying quality tools at predetermined checkpoints.
Data Quality Definitions Whenever you are collecting data about anything, be sure that they conform to the following: NN
NN
NN
Accuracy is the most important element when it comes to data. With accurate data, you can validate your requirements. Reliability is ensuring that the data is consistent every time. You have tested the data using the same processes and come up with the same results each time. Thomas D. Cook and Donald T. Campbell, in their book, Quasi Experimentation: Design and Analytical Issues for Field Settings (Houghton Mifflin, 1979), define it as the “best available approximation to the truth or falsity of a given inference, proposition, or conclusion.” Completeness is defined as being satisfied with the end result and knowing that there is nothing more you need to do.
Task 3.3: Implementing the Quality Plan
N
N
N
203
Precision is having a degree of exactness based on certain predetermined measurements. Data are considered timely when they are up-to-date and when the information is available on time. Timeliness can be affected by the rate at which an item is updated, the rate of change, and when the information is actually used or required. Integrity is when data are protected from deliberate bias or manipulation for political or personal reasons. Precision and accuracy are two different things. Accuracy is how close a measured value is to the actual or true value. Precision is how close the measured values are to each other. For example, if you always land a dart on a dart board in the same place but not the bull’s eye, you have high precision but low accuracy. If you land a dart just around the bull’s eye each time, you have high accuracy but low precision. If all your darts land in the bull’s eye, you are highly accurate and highly precise.
Cost of Quality Cost of quality refers to the total cost of all efforts to achieve product or service quality, such as reworking. CoST oF ConFoRMAnCE
Prevention and appraisal activities are considered a cost of conformance to quality. Design reviews, training, and quality planning are also associated with the costs of prevention activities. Preproduction and production inspections, lab tests, and in-process testing are costs associated with appraisal activities. CoST oF nonConFoRMAnCE
Joseph Juran, a noted quality expert, spoke often of the cost of not conforming to quality, referring to the impacts of internal and external failure. Internal failures are those that occur before leaving the organization and include scrapping, reworking, repairing, and evaluating defects. These cause costs to rise and employees to become disgruntled about having their efforts wasted. The goal is to design quality in, so there is little to catch at the inspection phase. External failures are those discovered by the customer and include returns, complaints, corrective action, and field maintenance. There is no way to know the true cost of external failures. Unhappy customers may complain to their friends and acquaintances about the failure, and you may never know the cost of that loss of business.
Quality Audits One of the quality assurance tools is a project audit. A project audit can be performed randomly or at specified times within each phase of the project. The intended outcome of the audit is to confirm the following: N
The planned project quality requirements are met.
N
The products are safe and fit for the customers’ use.
N
All laws and regulations have been followed.
204â•…
NN
NN
NN
Phase 3╇ ╇ Executing Process n
Data systems to track, measure, and report quality attributes and quality characteristics are accurate and adequate. Any variances identified during quality checks are addressed by appropriate corrective action. Any opportunities for continuous improvement are noted for future action.
Process Analysis Process analysis enables you to determine whether the processes you use meet your goals and objectives. You may have used a process for years, but it may not have fulfilled your expectations and you wouldn’t know that until you collected some data on the process. For example, say you own a pizza business and promise to deliver pizza within 30 minutes. Lately you find that customers are complaining because they are not receiving their pizzas in 30 minutes. So you check your internal process and find that the orders are not reaching the cook in a timely fashion. The person taking the orders also serves the drinks, and orders often sit on the counter for minutes at a time. You correct your process by using an ordering machine. The order now goes directly to the cook via a screen in the kitchen and prints out directions to the customer’s home at the same time. Quality improvement is not as simple as just described. That was just one example. What if you solved that problem only to discover that the driver wastes time by driving slowly and talking or texting on his cell phone? It is important to take accurate data from all processes. You may find that one process has been created to absorb inadequacies in a previous process.
Hands-on 3.6: Testing Your Knowledge of Quality Assurance 1. Describe items that are considered a cost of quality and items that are considered a cost of nonconformance.
2. What is the purpose of a quality audit?
Task 3.4: Performing Quantitative Risk€Assessment The risk management plan is a living document throughout the project life cycle. As the project moves forward, you learn more and know more about what is really happening in the project and whether identified risks are as risky as or riskier than what you previously planned. Some risks will not happen; others happen that you did not plan for. Use your risk register to document new risks and what you’ll do with identified ones.
Task 3.4: Performing Quantitative Risk€Assessment╅
205
Scenario Your boss reviewed your risk management plan and would like you to delve further into the risks that were qualified as high risk and highly likely to occur. You have agreed to perform quantitative analysis on these risks and meet with her later in the month. The identified risks that were high probability and high impact include: NN
Teamsters may go on strike as this is the final year of the current contract.
NN
The construction labor pool may not be highly skilled.
NN
Not enough time built in to correct clothing mistakes.
Scope of Task Duration This is an iterative task and continues for the duration of the project.
Setup None.
Caveat None.
Procedure In this task you’ll learn how to perform quantitative risk analysis, which includes: NN
Interviewing
NN
Probability distributions
NN
Sensitivity analysis
NN
Expected monetary value
NN
Decision trees
NN
Simulation
Details The value of quantitative risk analysis depends on the accuracy of the data used to perform this task. When you multiply the potential loss ($) by the probability of that loss occurring, you can use the results to rank the risks and to make decisions based on those results. This is a part of quantitative risk analysis. Quantitative risk analysis is not as subjective as qualitative risk analysis (which was discussed in Phase 2, “Planning Process”). Quantitative risk analysis takes data and applies monetary values to assist in decision making.
206â•…
Phase 3╇ ╇ Executing Process n
Perform Quantitative Risk Analysis
The results of your qualitative analysis determined which risks you’ll use in this process. Normally you would work on risks that were qualified as high impact and high probability of occurrence. Or, if your organization is more risk-averse, you may choose to quantify those in the medium/high range. In any case, there are tools you can use to assist you in this process. Any risk that is high probability and high impact should be treated with a sense of urgency. For example, if you are in an area that has hurricanes, it would not be prudent to save money on glass in buildings that have a substantial amount of glass. You would want to install the type of glass that can withstand hurricane winds and the bracing that comes with them. Or, you could ignore the risk and take your chances. If this building is your fulfillment center for clothing orders, you may even consider moving it to another location. Interviewing
Follow these steps to conduct a successful data collection interview: 1. Interview project stakeholders and subject matter experts in order to quantify the
probability and consequences of risk on the project objectives. The information needed depends on the type of probability distributions that will be used. 2. The project manager must then define the benefits and boundaries of the project and
document the rationale of the risk ranges discovered during the risk qualification process. 3. The project manager must prepare for the risk interview by performing triage on key
risk elements in order to establish risk ranking. 4. Set up a meeting with the subject matter experts and those who planned and who will
manage the work. 5. Conduct the interview. Everyone’s views are valuable but do challenge the ranges they
may give you. There may be motivational biases or a lack of understanding that may result in underestimates. 6. If the relationship between risk and probability is uncertain, then you as the project
manager may choose to perform three-point estimating as you did while using the Program Evaluation and Review Technique (PERT) in Phase 2 for project tasks. Probability Distributions
According to Juran, continuous probability distributions are used to model situations where the outcome of interest can take values in a continuous range. Data are captured and turned into a model such as a histogram. The veracity of the model depends on the accuracy of the data collected. If the model is based on observed (physical) data, the model will be equally accurate. Errors account for skews in the distribution. Beta distributions are continuous distribution models and are frequently used in quantitative risk analysis; however, they are constrained to a finite interval of possible outcomes, for example, minimum or maximum values. The beta distribution is used extensively in PERT applications. Triangular distributions have three possible outcomes, all of which are equally likely. The mean is calculated in the same way as a beta distribution and is what you use in PERT calculations.
Task 3.4: Performing Quantitative Risk€Assessment╅
207
Sensitivity Analysis
Sensitivity analysis is a simple tool that investigates how estimated performance varies with changes in the pre-identified key assumptions that are based on the project objectives. It seeks to place value on the effect of change of a single variable within a project by analyzing that effect on the project plan. This process can help the project team discover which risk events have the greatest impact on the project objectives. Sensitivity analysis uses the data gathered in the interviewing process to “examine the extent to which the uncertainty of each project element affects the objective being examined when all other uncertain elements are held at their baseline values” (PMBOK® Guide, 4th ed., p. 298, glossary). If a small change in a parameter results in relatively large changes in the outcomes, the outcomes are said to be sensitive to that parameter. Generally, five steps are involved in creating a sensitivity analysis: 1. Design the experiment. 2. Assign ranges of variation to input factors. 3. Generate the input vectors through the design. 4. Create the corresponding output distribution. 5. Assess the relative importance of inputs. Expected Monetary Value
Expected monetary value (EMV) is a tool that can be used to determine an outcome. EMV uses probabilities to determine what an expected outcome, such as a payoff or risk, will be. Expected monetary value multiplies the probability of each case or potential event by the numerical impact of that case or event. EMVs are very easy to use. For example, when investing $100,000, imagine our research gives us three likely outcome scenarios: we might make a large profit, a small profit, or a small loss.
Profit Result
X
Probability of That Result
=
Unweighted Value
RE€1
+$80,000
X
0.20
=
$16,000
RE 2
+$30,000
X
0.60
=
$18,000
RE 3
–$20,000
X
0.20
=
–$4,000
Expected Value =
$30,000
There are advantages to using EMV: NN
It provides an indication as to which approach may offer the best or worse case.
NN
It provides upper management something more than just guesses. There are also disadvantages:
NN
The outcome is subjected to the bias of probability.
NN
It tends to be used as the absolute.
208â•…
Phase 3╇ ╇ Executing Process n
Decision Trees
Decision trees also use the concept of expected monetary value. They provide a highly effective, visual structure within which the project team can display options and further explore the possible outcomes of choosing those options. Decision trees help form a balanced picture of the risks and rewards associated with each possible course of action. Let’s create a decision tree one step at a time. There are three steps to this process: 1. Determine what decision you wish to make. 2. Apply probabilities based on collected data. 3. Apply monetary value and analyze the data.
The decision tree in Figure€3.2 shows step 1, which is to determine which machine combination will be the most cost-effective: machine A with machine C, machine A with machine D, machine B with machine C, or machine B with machine D. F ig u re€ 3 . 2 ╇╉╇╉Step 1—What machine combination is least expensive? Machine C
Machine A Machine D
Machine C Machine B
Machine D
Next you determine the probabilities, given the data you have available. Your data suggests that machine A or B has a 50% chance or likelihood of use. Combining machine A with machine C (AC) has a 70% likelihood of occurrence and a 30% chance that machine A will be used with machine D (AD). Machine B also has a 50% chance of being used with either machine C or D. There is a 60% chance that B will be used in combination with C and a 40% chance that machine B will be used with machine D. In order to find the likelihood of use, you simply multiply the percentages. We can now see that AC has a 35% chance of use. AD has a 15% chance of use. BC has a 30% chance of use, and BD has a 20% chance of use. Figure€3.3 illustrates the use of probabilities.
Task 3.4: Performing Quantitative Risk€Assessment╅
209
F ig u re€ 3 . 3 ╇╉╇╉Step 2—What are the probabilities? Machine C .7
Machine A .5
.3 Machine D
.5 Machine B
Machine C .6
.4 Machine D
AC = (.5) (.7) = .35
AD = (.5) (.3) = .15
BC = (.5) (.6) = .30
BD = (.5) (.4) = .20
You have now determined the costs associated with each machine combination. Figure€3.4 shows that on the AC and AD branches, AD passes because AD is less expensive than AC. On the BC and BD branches, BD passes because between the two passes, BD is the least expensive choice. F ig u re€ 3 . 4 ╇╉╇╉Step 3—Apply monetary values.
Cost = $5000 Machine A .5
.5 Machine B Cost = $3000
Machine C .7 Cost = $800
AC = .35 AC = $5000 (.5) + $800 (.7) $2500 + $560 = $3060 Fails
Machine D .3 Cost = $500
AD = .15 AD = $5000 (.5) + $500 (.3) $2500 + $150 = $2625 PASS
Machine C .6 Cost = $1800
BC = .30 BC = $3000 (.5) + $1800 (.6) $1500 + $1080 = $2580 Fails
Machine D .4 Cost = $800
BD = .20 BD = $3000 (.5) + $800 (.4) $1500 + $320 = $1820 PASS
210â•…
Phase 3╇ ╇ Executing Process n
Hands-on 3.7: Testing Your Knowledge of Expected Value and NPV A proposed project will have an initial outlay of $1,500. At the end of one year, there is a 30% probability of a $100 loss and a 70% probability of $2,000 revenue. At the end of the second year, there is a 40% probability of a $200 loss and a 60% probability of $5,000 revenue. Assuming an interest rate of 10% compounded annually, which of the following is the expected net present value of the project? Is this a project to pursue?
A. $3,254 B. $2,158 C. $450 D. – $200 E. – $2,042 F. None of the above
Simulation
The Monte Carlo method was conceived in the 1940s by John von Neumann, Stanislaw Ulam, and Nicholas Metropolis while working on nuclear weapons projects. The method received its name from Ulam, whose uncle would often gamble at the Monte Carlo Casino in Monaco. This process is useful in most scenarios using probabilities. Monte Carlo simulation requires the generation of random numbers between 0.00 and 1.0. The fraction is then converted to an equivalent sample based on the distribution of interest. We’ll now explore the process steps used to create a Monte Carlo simulation: 1. During a single trial, a computer program randomly selects a value from the defined
possibilities and assesses the range for the variables to determine the probability distribution (the range and shape of the distribution) for each uncertain variable. 2. The simulation then selects variable values (such as optimistic, most likely, and pes-
simistic) at random to simulate a model that translates uncertainties specified at a detailed level into their potential impact on project objectives. 3. The simulation then conducts a deterministic analysis of the effect of varying inputs on
outputs of the modeled system. 4. It then calculates multiple scenarios of a model by repeatedly sampling values from
the probability distributions for the uncertain variables (usually a minimum of 2,500 iterations).
Task 3.5: Conducting Procurementsâ•…
211
Task 3.5: Conducting Procurements In this task you’ll perform procurement procedures that provide guidance on the strategies that will be used to request bids from the marketplace, select sellers, and award contracts. Sellers may be obtained through advertising and bidder conferences. Independent estimates and proposal evaluation criteria are used to select sellers, and procurement negotiations bring you to awarding the contract.
Scenario This project is your first chance to be a part of the procurement process. You have aligned yourself with Bud Bergstrom, the director of procurement, and he has allowed you to be present during bidder conferences as well as contract negotiations. You are learning more about contracts than you previously imagined and can see how important the project manager’s role is in procurement processes. Your master project plan and statements of work drive much of what goes into a contract, and you have conveyed this information to your team.
Scope of Task Duration The duration begins in the executing phase and lasts until procurements are no longer needed.
Setup None.
Caveat None.
Procedure In this task, you’ll learn about the following: NN
Obtaining seller responses
NN
Selecting sellers
NN
Awarding contracts
NN
Scope-related contract components
NN
Cost-related contract components
NN
Schedule-related contract components
NN
Contract approvals
212â•…
Phase 3╇ ╇ Executing Process n
Details Procurement procedures should provide guidance on the strategies that will be used to solicit the marketplace. Procurement procedures will impact how many suppliers will be approached in a given procurement event, in what manner the agency will go to the market, and the type of contract that is intended to be established. These factors must be considered before you can actually choose a vendor or contractor. Additionally, a system of selecting sellers without prejudice needs to be in place so that contracts can be awarded fairly.
Obtain Seller Responses In Phase 2 you learned about procurement solicitation using RFPs, RFQs, and so on. In this phase, the process of obtaining seller responses involves announcing the opportunity to respond to a buyer’s request (advertising, Internet, and so forth), as well as holding bidder conferences where questions are asked and responded to by an audience of all potential bidders. Bidder Conferences
Bidder conferences are held before potential sellers submit their proposals. The procurement office typically conducts the conference and invites all potential sellers. Project managers are not usually trained in the legalities of selecting sellers but attend the bidder conference to provide support as needed to the procurement officer. The purpose of a bidder conference is to ensure that all parties hear the same things at the same time and that all questions and corresponding answers are heard by all. This also gives the sellers an opportunity to see who they are bidding against—they may even opt out of the bidding if they know they cannot compete with certain parties. When planning for the bidder’s conference, use an agenda with the following items: NN
NN
NN
NN
NN
The introduction should introduce key players and include the purpose of this meeting, information about your company, and any pertinent background information. Requirements should be listed within the RFP or other solicitation document. Business items should include why the project is important to your business and performance expectations, among other things. The process should include the negotiation procedure, timetable, and an outline for the award criteria. The questions-and-answers session should be handled with great care and precise administration. The facilitator of the bidder conference should record questions that are received and include who submitted them, their reference to the solicitation section, and the specific paragraph and line of the contract in question.
All answers must be provided to all active bidders so that everyone has the same information. In addition, these answers must become part of the solicitation from which bidders will submit the final offer and, subsequently, part of the awarded contract. Advertising
Advertising or publishing a request for information (RFI) in trade journals, newspapers, or other industry publications expands exposure to potential bidders. Include in your advertising
Task 3.5: Conducting Procurementsâ•…
213
a project brief and an abbreviated statement of work to solicit information from potential sellers to meet your needs. In most government agencies, a buyer is required to publicly advertise pending government contracts. Internet Search
Many commodities can be obtained over the Internet for a firm fixed price. However, if the commodities are highly complex or are associated with high risk, you should not use the Internet because of the costs involved. What if the item wasn’t what you thought you would get? You lose all of the time you spent obtaining the product and now have to do it again. As long as ordering the product does not involve any risk to the project, the Internet is a great place to order items.
Hands-on 3.8: Testing Your Knowledge of Obtaining Sellers 1. Why is a bidder’s conference important? 2. When should a bidder’s conference take place? 3. Who should conduct the bidder’s conference and why?
Select the Seller The process of selecting the seller involves determining the best-value contractors by considering price, schedule, technical issues, and other factors. The project manager works closely with the procurement officer (buyer) to evaluate proposals, review independent estimates, and score proposals against evaluation criteria. Independent Estimates
To validate the reasonableness of proposals, your organization may choose to bring either in-house or external experts to create their own independent estimate of the project. If there are major differences between the independent estimate and contractors’ proposals, it may indicate that the statements of work were ambiguous or otherwise failed to consider all items necessary to complete a proposal. Proposal Evaluation Techniques
There are several ways to evaluate a proposal. A weighting system is one method for quantifying qualitative data to minimize the effect of personal prejudice on source selection. Earlier you used a weighted scoring process when you were choosing one project over another. You can do the same thing to evaluate a proposal. There are four steps to this process: 1. Assign a numerical weight to each of the evaluation criteria. 2. Rate the prospective sellers in each criterion with a raw score. 3. Multiply the rate score by the weight given that proposal element. 4. Total the resultant products to compare an overall score.
214â•…
Phase 3╇ ╇ Executing Process n
Table€3.11 looks at weighted scores of vendors based on predetermined selection criteria. Ta b l e€ 3 .11 ╇╉╇╉Choosing vendors via a scoring model Evaluation Criteria
Vendors Raw Score A
B
Weighted Score C
Weight
Ability to Deliver Technology
5
Financial Capacity
5
Understanding Our Need
4
Management Approach
3
Life Cycle Costs
4
A
B
C
Totals
A screening system establishes minimum performance requirements for one or more of the evaluation criteria; for example, the buyer may want individuals to have specific credentials or companies to have specialized certifications, such as ISO 9000. During the screening, when you expect there will be suppliers you have used before, ask the following questions: NN
Was the experience good or bad?
NN
Was the end product acceptable?
NN
Was delivery on time?
NN
Were there claims resulting in litigation?
NN
Was the supplier cooperative and friendly?
NN
Was the supplier willing to work with the project team?
Another evaluation technique is the use of a compliance matrix, through which bidders indicate their ability to fulfill specific performance criteria or functionality. The U.S. government typically uses compliance matrices to review their contracts. (These matrices are also used to choose vendors.) Table€3.12 is a modified version of the government’s contract compliance matrix. Ta b l e€ 3 .1 2 ╇╉╇╉Sample contract compliance matrix Clause
Item
Descriptions
Yes/No
Standard form used to award a contract.
Yes ¨ No ¨
Section A: Standard None
Solicitation, offer, and award
Task 3.5: Conducting Procurementsâ•…
Clause
Item
Descriptions
215
Yes/No
Section B: Supplies or Services and Costs/Prices B.1
Service being acquired
States the nature of the work to be performed.
Yes ¨ No ¨
B.2
Estimated cost and fees
States that the estimated cost of the contract is $________ and the potential fee is $___________.
Yes ¨ No ¨
B.3
Availability of funds
States that there are no funds available until the buyer states that funds are available and any action by the contractor before funds are available will not be reimbursed.
Yes ¨ No ¨
Section C: Description/Specification/Statement of Work C.1
General information
Sets forth the basic requirements under the contract.
Yes ¨ No ¨
C.2
Statement of work
Yes ¨ No ¨ Sets forth specific requirements. See program/project plans for details available from the program/project manager.
C.3
Deliverables
Specifies deliverables the customer is expecting to see and due dates for each. Refer to the project plan.
Yes ¨ No ¨
Section D: Packaging and Marking D.1
General information
Requires use of standard commercial practices in packing and marking shipments.
Yes ¨ No ¨
Section E: Inspection of Services E.1
Inspection and cost reimbursement
Establishes the right of the buyer to inspect all services called for by the contract at all places and times.
Yes ¨ No ¨
E.2
Acceptance
Acceptance of all work is by the contracting officer or duly authorized representative.
Yes ¨ No ¨
216â•…
Phase 3╇ ╇ Executing Process n
Ta b l e€ 3 .1 2 ╇╇ ╇ Sample contract compliance matrix╇ (continued) Clause
Item
Descriptions
Yes/No
Section F: Deliveries or Performance F.1
Term of contract
Establishes the contract term.
Yes ¨ No ¨
F.2
Option to extend the term of the contract
Allows the buyer to extend the term of the contract with 30 days notice as long as intent was communicated at least three months before expiration.
Yes ¨ No ¨
F.3
Stop work order
Establishes the buyer’s right to issue a written order for the contractor to stop all or any part of the work under the contract. The contracting officer should make an equitable adjustment (e.g., delivery schedule, estimated cost, fee, etc.) as appropriate.
Yes ¨ No ¨
Red Flags
Joseph T. Wells, in his book Occupational Fraud and Abuse (Obsidian Publishing Company, 1997), prepared the following list of “red flags” that may indicate improper activity in the solicitation process: NN
NN
NN
NN
NN
NN
NN
Limiting time for submission of bids so only those with advance information have adequate time to prepare bids or proposals Revealing information to one contractor that is not revealed to all Conducting a bidders’ conference that permits improper communications between contractors, who are then in a position to rig bids Failure to ensure that a sufficient number of potential competitors are aware of the solicitation, such as using obscure publications to publish bid solicitations or publishing bid solicitations during holiday periods Bid solicitations that are vague as to the time, place, or other requirements for submitting acceptable bids Inadequate internal controls over the number and destination of bid packages sent to interested bidders Improper communication by purchasers with contractors at trade or professional meetings or improper social contact with contractor representatives
NN
Financial interest by purchasing agent in the business of the contractor
NN
Discussions by purchaser of possible employment with the contractor
NN
Assistance by the purchaser in helping the contractor prepare his or her bid
Task 3.5: Conducting Procurementsâ•…
NN
NN
Referring a contractor to a specific subcontractor, expert, or source of supply Failure to amend solicitation to include necessary changes or clarifications in the bid, such as telling one contractor of changes that can be made after the bid
NN
Falsification of documents or receipts to get a late bid accepted
NN
Low bidder withdraws to become subcontractor on the same contract
NN
Any indications of collusion between bidders
NN
217
Falsification of the contractor’s qualification, work history, facilities, equipment, or personnel
Hands-on 3.9: Testing Your Knowledge of Selecting Sellers 1. When selecting a seller, what are the differences among a weighting system, a screening system, and a compliance matrix?
2. What would you do to eliminate the red flags listed earlier?
Award Contract Buyers and sellers usually start out with different goals. The buyer wants maximum value for minimal cost. The seller wants to provide the minimal value for the maximum amount possible. Procurement negotiations, if done well, enable both buyer and seller to reach a meeting of the minds so that both sides are pleased with the outcome. It starts with procurement negotiations. Procurement Negotiations
Henry Ford said it best: “If there is any secret to success, it lies in the ability to get the other person’s point of view and see things from his angle as well as from your own.” Procurement negotiations are used to clarify and gain mutual agreement on the elements and requirements of the contract prior to signing the contract. Final contract language should include all terms and agreements that were negotiated. Planning for negotiations requires several steps: Develop objectives.╇ ╇ If you are the buyer, what is the maximum you are willing to pay? If you are the seller, what is the minimum you are willing to accept? Assess your opponent to see what motivates them.╇ ╇ Is your opponent interested in profitability, keeping people employed, developing a new technology, or wanting to use your name for future reference? Describe your strategy and tactics.╇ ╇ Know before you begin what techniques you’ll use to swing your opponent to your point of view. Assemble your facts.╇ ╇ Do your financial and other homework! Your opponents are doing their homework about you and your business, and will use these facts to their favor.
218â•…
Phase 3╇ ╇ Executing Process n
Conduct a complete price/cost analysis.╇ ╇ That way, you know what the contract items should cost before committing to a fee or type of contract. Arrange the details of the negotiations.╇ ╇ Specify where the negotiations will occur, the type of table to be used (round or square), who will face the windows, and so on. Project negotiation objectives are to obtain a fair and reasonable price while still getting the contract performed within certain time and performance limitations and developing a good relationship with the seller. According to the PMBOK® Guide, 4th ed., p. 332, negotiations are used to “clarify the structure, requirements, and other terms of the purchase so that mutual agreement can be reached prior to signing the contract.” Final contract language reflects all agreements reached including, as per the PMBOK® Guide, 4th ed., pp. 332–333: NN
Responsibilities
NN
Authority to make changes
NN
Applicable terms and governing law
NN
Technical and business management approaches
NN
Proprietary rights
NN
Contract financing
NN
Technical solutions
NN
Overall schedule
NN
Payments
NN
Price There are typically five stages of negotiation for project management:
Orientation╇ ╇ Introductions are made. Exploring╇ ╇ Issues are searched and identified. Bargaining and Decision Making╇ ╇ This is where bargaining occurs and concessions are made. Resolution╇ ╇ The two positions are summed up, and final concessions are made and documented. Closing╇ ╇ The ultimate goal; this ensures that both parties have identical agreement and marks the end of negotiations. Planning ahead of time for the negotiations can minimize the negative aspects of negotiation. Remember, you are the buyer. The seller wants your business. You are in control. Scope-Related Contract Components
Scope-related contract components include the following: Statements of Work╇ ╇ The statement of work is a written document that includes the labor, materials, equipment, and services that are to be supplied by an outside contractor. The
Task 3.5: Conducting Procurementsâ•…
219
statement of work can be written internally or during a bid process; for example, the supplier can provide a contractual statement of work (CSOW). Drawings╇ ╇ Drawings or pictorial portions of a contract show graphical depictions of a design(s) or dimensions of the work. Cost-Related Contract Components
Cost-related contract components include the following: Contract Sum╇ ╇ The contract sum is stated in the contract and is the total amount payable by the owner to the contractor for performance of the work defined under the contract. Retention Amount╇ ╇ This is a contractually stipulated amount, withheld by the owner from each progress payment, which gives the owner protection from incomplete or insufficient work. Issues related to the retention amount include the amount, duration, and release of funds. Final Payment╇ ╇ This is the owner’s last payment to the contractor, upon the contractor’s completion of the work, and includes any accrued retention amounts. Issues relative to the final payment are timing of the final payment, final inspections, and handling disputes over the final payment. Liquidated Damages╇ ╇ The owner reduces a contractor’s fee if the project is not completed. This is usually a per diem amount and must be established in the contract before it can be enforced. Liquidated damages cannot be a penalty. Penalties will be enforced typically when balanced by a reward or incentive. Schedule-Related Contract Components
Schedule-related contract components include the following: Date of Commencement╇ ╇ The date the work is established in the contract; this may require a work authorization to proceed. Notice to Proceed╇ ╇ Determines when the contractor may begin work and when the “clock starts” for billing. Substantial Completion╇ ╇ The stage in the progress of the work that is sufficiently complete in accordance with the contract documents so that the owner can occupy or utilize the work for its intended use. Acceleration╇ ╇ Acceleration is the hastening of the work pace by the owner. Causes of acceleration may include increased scope without extension of time, owner-caused delays without extension of time, or decreased schedule. Delays╇ ╇ Delays can be excusable, nonexcusable, or compensable: Excusable╇ ╇ These delays occur because of factors beyond the control of any party involved in the project (for example, inclement weather). The contractor may be afforded extra time without penalty but no additional money.
220â•…
Phase 3╇ ╇ Executing Process n
Nonexcusable╇ ╇ These delays occur when the contractor fails to live up to contractual obligations. For example, if materials are not obtained in time or if there is insufficient labor, the contractor is due neither additional time nor money. Compensable╇ ╇ These delays are caused by the owner’s failure to live up to contractual obligations—for example, the owner fails to provide access to a building. The contractor is due additional time and money. Contract Form
Kerzner, in Project Management: A Systems Approach to Planning, Scheduling, and Controlling, explains that the two most common contract forms are completion contracts and term contracts: Completion Contracts╇ ╇ The contractor is required to deliver a definitive end product. Upon delivery and formal acceptance by the customer, the contract is considered complete and final payment can be made. Term Contracts╇ ╇ The contractor is required to deliver a “specific level of effort,” not an end product. The effort is expressed in woman/man-days (months or years) over a specific period of time using specified personnel skill levels and facilities. When the contract effort is performed, the contractor is under no further obligation. Final payment is made, regardless of what is accomplished technically. Contract Approvals
Most businesses and organizations have written policies and procedures that state who has the authority to sign a contract. Contracts still should be reviewed for contract language that fulfills the identified need for an end product or service. There are various approval authority and levels. General council, procurement officers, risk managers, quality managers, and so on may need to sign off on a contract. In summary, executing the project is like launching a rocket—you may have a few tough moments while it is being launched, but once it’s in orbit, you can breathe a sigh of relief that you have put in place all that you need to set it on its planned course. Now that the execution phase has started, monitoring and controlling (which you have been doing since early in the project) play the critical role of keeping the project on course.
Hands-on 3.10: Testing Your Knowledge of Awarding Contracts 1. What is the difference between excusable delays and compensable delays? 2. Why is it important to get an independent estimate? 3. What research and preparations need to be made before contract negotiations begin? Why?
4. Describe a situation when a term contract is appropriate.
Task 3.6: Developing and Managing the€Project Team╅
221
5. Cimarron is participating in a contract negotiation with a clothing manufacturer that is certified by ISO 9000. They have agreed to reproduce the line of clothing for the Apples and Pears project that Cimarron’s former outside manufacturer couldn’t complete without making too many errors. Introductions have been created, but the potential manufacturer has already begun offering solutions in your meeting before the problem details have been discussed. They are so excited to get the business that they fail to realize they won’t have the business until the contract is signed.
a. If you were a project manager, what would you do? b. What should Cimarron’s procurement officer do? c. What are the next steps after introductions and issues are identified?
Task 3.6: Developing and Managing the€Project Team We discussed in Phase 1 the attributes of a leader as well as the tasks of a manager. It is important to understand the difference between the two and use leadership and management wisely. You want to improve team performance by improving individual competencies and team interactions that enhance the culture of the team. Before you can develop your team, however, you must develop trust between yourself and your team. Some people believe that trust must be earned. Others believe that you should trust until there is a compelling reason not to. In any case, trust between team members and yourself will make your project successful. In this task you’ll learn management tools and leadership skills in order to develop your team. Once you have acquired and developed your team, it becomes routine for you to manage them. You should make sure your team knows that even if you are managing on a horizontal plane, your job is not higher or better than theirs; you simply perform a different job than they do.
Scenario You already know several of the individuals on your team; however, there are a few new people and you are sure that some of them do not know each other. None of them has worked for you before, and you are anxious for the team to get to know each other as well as you. Your team hasn’t synced up as a team; in fact, the experienced people tend to mock the newer ones if they make a mistake. You go to James Stevens, the project sponsor, for funding
222â•…
Phase 3╇ ╇ Executing Process n
of three team-building activities over the course of the next six months. However, he tells you that there is no money in the budget for that. You are on your own for developing your team. You have done some research for conducting a few team-building activities. You hope they help the team get along Also, you discover that certain members of your team seem hesitant to ask for help until it is way too late. You know you must handle this conflict, but managing conflict does not come easily for you. You have attended a class on conflict management and are eager to try some of the new concepts you have learned.
Scope of Task Duration You’ll perform this task throughout the project.
Setup None.
Caveat None.
Procedure In this task you’ll use a variety of tools that will assist you in developing and managing your team, such as the following: NN
Ground rules
NN
Team building
NN
Training
NN
Coaching
NN
Abraham Maslow’s hierarchy of needs
NN
Frederick Herzberg’s hygiene theory
NN
Theory X and theory Y
NN
Expectancy theory
NN
Achievement theory
NN
Types of power
NN
Performance problems
NN
Rewards and recognition
NN
Conflict resolutions
Task 3.6: Developing and Managing the€Project Team╅
223
Details Working with a team that runs like a well-oiled machine is a wonderful thing. Working with a dysfunctional team is the complete opposite. Here are characteristics of a highly functional team: NN
Meets stakeholder expectations
NN
Reduces barriers through open, honest communication
NN
Improves processes as they go by applying lessons learned throughout the project rather than just talking about them at the end of the project
NN
Embraces and controls change
NN
Makes and uses ground rules
NN
Has mutual accountability
NN
Uses collaborative creativity
NN
Makes joint decisions
NN
Takes appropriate initiatives
Knowing the characteristics of a dysfunctional team will help the project manager realize the areas of improvement needed in the team as well as yourself. These are some of the characteristics of a dysfunctional team: NN
Low performance
NN
Confusion, conflict, and inefficiency
NN
Low commitment to project objectives
NN
Subtle sabotage, fear, disinterest, or foot dragging
NN
Unclear commitment from upper management
NN
Cliques, collusion, and isolation of members
NN
Unproductive gamesmanship and manipulation of others
NN
Hidden agendas
NN
Lethargy and unresponsiveness
If you are dealing with a dysfunctional team, how do you motivate them? It really isn’t about the money anymore—or is it? Motivational theories such as Maslow’s hierarchy of needs, Herzberg’s hygiene theory, and the concept of expectancy theory take different looks at motivation and the use of money. The notion of power and its effect on you and others is important to understand, because the misuse of power can alienate you from your team. Managing your team well is critical to the success of you and your team and, as a result, your project. At times you may instantly try to correct a problem before you even know what the problem is. You may overstate the criticality of a problem or turn a blind eye because you are not comfortable with conflict. In any case, you must use your leadership as well as your management skills to resolve performance problems.
224â•…
Phase 3╇ ╇ Executing Process n
On the flip side of the coin are recognition and rewards. Everyone wants to be recognized for their efforts, and rewards need not be costly. So how do you begin? Start with ground rules, conduct team-building activities, follow with training where needed, and then mentor your team with an open-door, alwaysavailable policy.
Ground Rules When the team gets together for the first time, ground rules should be established and set by the team. Ground rules determine how the team should function. The project manager should facilitate this activity but not take over the process. If the team helps to set the rules, they are most likely to follow them. Here is a sample of team rules that you may consider using: NN
NN
NN
NN
Plans set in concrete are not as useful as plans that reflect current reality. Credibility is indispensable—without it, quality is impossible. If credibility is lost, regaining it will be your top priority. Consider how you’ve handled problems before; it is not always necessary to reinvent the wheel. Do not be lured into giving preliminary results—you want the full picture, good or bad.
NN
Don’t fix the blame if things go wrong—fix the problem.
NN
Take pleasure in doing a task well; in other words, do it right the first time.
NN
NN
NN
NN
Meetings are essential. Your individual and collective participation is required, so if you are unable to attend, send someone who can make decisions in your absence. Status reporting structures (schedule, costing information, and so forth) will be consistent across all projects. Measure progress by monitoring the production of deliverables. This can be a tangible document or visual inspection of physical work to see that performance specifications are met. Believe it or not, you are supposed to have fun!
Team Building It takes a while for a team to start working as a team—even if individually, team members are superior workers. A high level of conflict exists at the beginning of a project’s life cycle. This is normal and all teams go through this, but team-building activities force the team to remove conflict early in the project to establish a team culture that uses conflict resolution techniques. Most project managers neglect to allocate time and budget for team-building activities. Considering how important it is for teams to achieve high performance, team building is one of those essential budget items. In 1965, psychologist Bruce Tuckman theorized that teams have to go through five stages before they truly become a team: forming, storming, norming, performing, and adjourning.
Task 3.6: Developing and Managing the€Project Team╅
225
Let’s take a closer look at these stages: Forming╇ ╇ People are usually guarded, polite, reserved, and impersonal. Storming╇ ╇ People exhibit infighting, chaos, conflict, opting out, turf battles, cliques, and power plays. Norming╇ ╇ People are organized, developing skills, solving problems, and resolving conflicts. Performing╇ ╇ People are cooperative, productive, resourceful, and capable. Adjourning╇ ╇ People exhibit a sense of loss and anxiety at having to break up. As the project manager, you must allow time for these stages to occur. Forming and storming do not take as long as you might think, and soon you’ll see norming and performing. Also you may want to go to http://wilderdom.com for dozens of free team-building activities. Table€3.13 represents a team-building plan. On a stressful project, it is wise to schedule teambuilding activities and get funded for them before the project starts. Use as many team-building activities as your team needs and as are appropriate for the duration of your project. Team building is especially useful when everyone is at a high stress level. Perhaps you can plan to take a day or a half day off and do something fun. This really rejuvenates a team. Ta b l e€ 3 .1 3 ╇╉╇╉Team-building plan Team-Building Plan Team Building #1
Activity: Planned Date: Owner: Cost Estimate: Approved By:
Team Building #2
Activity: Planned Date: Owner: Cost Estimate: Approved By:
Team Building #3
Activity: Planned Date: Owner: Cost Estimate: Approved By:
226â•…
Phase 3╇ ╇ Executing Process n
Training Some individuals dive right in and can do their job well. Others may need some training. You may have established some links to an automated team room, or a file for status input, or even a data repository for retrieving or sending information. Do not assume that your team knows how to access these items. They may be password protected, and your team may need special access privileges. If training is necessary, be sure to allow time and budget for it.
Coaching As a project leader, you may need to “coach” an individual who may be having difficulty of one sort or another. With your open-door policy, this is something you may do often or not so often, depending on the maturity level of the individual. Most of us have a coaching style, and we tend to always coach in our own style. This is not always a good thing. In their book Management of Organizational Behavior (Prentice Hall, 2007), Kenneth Blanchard and Spencer Johnson created a situational leadership model that is still widely used today. This model is found in Figure€3.5. F ig u re€ 3 . 5 ╇╉╇╉Blanchard and Johnson’s situational leadership model
PA TI N
S3
S1
(LOW)
High Task and Low Relationship
NG
(HIGH)
Task Behavior High M4
Moderate M3
Low M2
M1
Immature
Low Relationship and Low Task
I LL TE
TI NG
High Task and High Relationship
S2
S4
GA LE DE
Mature
G
PA RT ICI
High Relationship and Low Task
IN G LL SE
Relationship Behavior
(HIGH)
Style of Leader
Maturity of Follower(s)
As you are looking at the diagram, please note that S1, S2, S3, and S4 refer to supervisory style of your direct supervisor. M1 through M4 denote the maturity of individuals as they relate to their supervisor. When you begin a new relationship as the supervisor, typically you participate in a oneway conversation—that is, you are the one teaching and telling your new person what to do.
Task 3.6: Developing and Managing the€Project Team╅
227
The new person doesn’t even know what to ask at this point. You are in the telling mode. The new person is “unwilling” to do the work because they are “unable” to perform the job yet. Trust between the manager and worker is low. Soon the relationship changes. The new person understands the work but still must come to you with questions. Two-way communications are established, and you are now in the selling mode. The new person is “willing” to do the job but is “unable” to go it alone. Trust is building. Now the person knows the job and doesn’t need you anymore. You are in the participating mode with your team. The person is willing and able to do the job without your guidance. However, this person may become “unwilling” to do the job if they become bored or demotivated. Trust is higher between everyone in this mode. Finally, you trust everyone on your team completely and may delegate your own work to the now fully functional team. They are more than willing and able to perform their tasks, and trust is highest here. You are now in the delegating mode. By the way, you should delegate important tasks as well as small, insignificant tasks. You can see that your personal style of managing needs to change according to the maturity levels of the people on your team. Let’s say, for example, that you are more comfortable in the delegating mode. You must adjust your personal style if you have a new person. If you delegated work in this example, the new person would be frustrated and may think they are being set up to fail. They would feel more comfortable if you were in the telling mode. Likewise, if you are more comfortable in the telling mode, it would be disastrous to tell people what to do if they are fully functional.
Hands-On 3.11: Testing Your Knowledge of Developing Your Project Team 1. Based on the scenario at the beginning of this task, describe three things you can do to develop your team that don’t cost money but that will take extra time.
2. Describe five additional ground rules you believe would help your team perform better.
Maslow’s Hierarchy of Needs What motivates you at home or work? Are you satisfied with your job? Do you face challenges at home? Are you happy at work but unhappy at home? Or vice versa? Psychologist Abraham Maslow wrote an article in 1943 that was published in the Psychological Review. It was the first time that a publication looked at a motivational study of humans rather than animals. In Figure€3.6 you can see in the pyramid the five strata of the human condition, as Maslow defines it. Suppose you have an employee whose performance is superior. That person may be at the self-actualization stratum. Then you learn that your department is shutting down and all employees will be laid off. Suddenly, that person and the rest of the employees drop to the basic physical needs stratum. The employees may not be able to focus on anything but getting a new job in order to keep their homes. A person cannot get to a higher level unless their lower-level needs are met.
228â•…
Phase 3╇ ╇ Executing Process n
F ig u re€ 3 . 6 ╇╉╇╉Maslow’s hierarchy of need Performing at your highest potential Accomplishment, self-respect, and capability
SelfActualization Self-Esteem Needs
Physical welfare and security of your belongings
Social Needs
A sense of belonging, love, acceptance, friendship
Safety and Security Needs Food, clothing, and shelter Basic Physical Needs
It is important for you to understand Maslow’s theory, because it may explain changes in behavior, attitude, and performance.
Herzberg’s Hygiene Theory Psychologist Frederick Herzberg published his findings about motivation in The Motivation to Work (John Wiley & Sons, 1959). He observed that humans have two sets of needs: the first to avoid pain (hygiene needs) and the second to grow mentally (motivators). Hygiene theory is one way of determining satisfaction or dissatisfaction in the workplace. Motivators, or satisfiers, consist of elements such as learning opportunities, gaining competency, achievement, and recognition. Hygiene factors are more concerned with the items that may cause dissatisfaction in the workplace, such as working conditions, job security, relationships with peers and supervision, salary discrepancies, technical issues, policies and procedures, and so forth. Considering hygiene theory, you may conclude that performance problems may not always be the employee’s fault after all.
Theory X and Theory Y Douglas McGregor, in his book The Human Side of Enterprise (McGraw-Hill Education, 1960), postulated that managers hold one of two sets of assumptions about human motivation. These assumptions will affect the manager’s behavior and management style. Theory X assumptions: NN
NN
People inherently dislike work and will avoid it if possible. The average person wants security, avoids responsibility, has little ambition, and prefers to be directed.
Task 3.6: Developing and Managing the€Project Team╅
229
If these assumptions are true, the theory X project managers will do the following: NN
NN
Pressure or control people to achieve work objectives or organizational goals Closely supervise, punish poor performance, give workers little latitude and few rewards, and provide only negative feedback to “help them improve” Theory Y assumptions:
NN
NN
The average person likes work; it is as natural as play. If a person is committed to goals, that person will work toward them without external control.
NN
Goal commitment follows from the satisfaction of a person’s desire to achieve.
NN
Creativity, ingenuity, imagination, and other widely dispersed human characteristics exist. If these assumptions are true, theory Y project managers will do the following:
NN
Give workers more responsibility
NN
Rely on the self-motivation of employees
Other Motivational Theories Several other motivational theories are worth exploring. One of them is expectancy theory, postulated by Victor Vroom, which states that if expectations are high, you’ll receive positive outcomes. Conversely, if there are low expectations, the outcome may not be so positive. You should not set expectations that are unachievable, as these will demotivate people. People usually perform what is expected of them if they know their effort will be recognized or even rewarded. Do not offer insincere praise, though, as that may appear patronizing. Another motivational theory is achievement theory, which is credited to David McClelland. People are motivated based on their ability to acquire achievement, power, and affiliation. People want to establish camaraderie with other team members and want to be affiliated with a team. If each individual on your team wants to achieve, chances are that team will be successful.
Types of Power There are several types of power: legitimate power, referent power, expert power, reward power, penalty power, and personal power. The need to understand the use of power is critical to project managers—both the power they have as well as the power of others. Let’s take a look at other types of power. Legitimate Power
Project managers have legitimate power by being recognized in the project charter. Legitimate power is also established as a formal position within an organization. Organizational hierarchy defines the level of authority. Project managers can use power in a variety of ways. The legitimacy that comes with their title, for some, may turn into “power trips.” That is exactly the kind of power for which you don’t want to be recognized.
230â•…
Phase 3╇ ╇ Executing Process n
Referent Power
Referent power is based on the authority of an admired person. You may see prominent sports stars or movie stars doing advertising on TV. Somehow, because they are admired in the media, their support of a product or service may be meaningful to others. Referent power may be given to you, the project manager, if you have influenced others in a positive way. They enjoy working with you and speak well of you to others. In this case, referent power is earned by your actions and the support you provide your team. Team members willingly accept what you have to say because they genuinely like you. Expert Power
Expert power occurs when another person believes you have knowledge or special skills that make you an expert. One of your project team members may have expert power, and it is expedient for you as the project manager to leverage that expertise. Feigning expertise will be found out in no time and will destroy any power perceived. Reward Power
Reward power is based on positive reinforcement and the ability to award people something of value in exchange for their cooperation. The ability to use this power depends on the project manager’s control over the project and relative position in the organization. For example, you may have money in the project budget for bonuses. The fact that you decide who gets them and when provides you with reward power. Coercive or Penalty Power
Penalty power (also known as punishment or coercive power) is predicated on fear. The employee fears reprisal if expectations are not met. The project manager may have the ability to render penalties, but the ability to use this power depends on the project manager’s control over the project and relative position in the organization. Motivating by fear should never be an option when working with teams, although sadly, it does happen. Personal Power
Personal power works two ways: (1) Team members are attracted to the project manager and their management style and want to work for him or her, or (2) a person with personal power has a negative attitude and brings others down with them into negativity. They may not even know they have this power until someone points it out to them. At any rate, personal power can be the mark of a potential leader if they are able to influence others—down a good path or a bad path, with the result being based on the path they choose.
Performance Issues This is where the rubber meets the road. Project managers must be willing to recognize and analyze performance problems before they act on them. You can use several steps to analyze performance problems: 1. Determine the problem. NN
Is this a training issue?
NN
What makes me think there is a problem?
Task 3.6: Developing and Managing the€Project Team╅
231
2. Determine its importance. NN
Is this problem going to cost the project?
NN
Is correcting the problem worthwhile?
3. Determine whether there is a skill problem. NN
Has the person been allowed to get away with not doing the work?
NN
Do they have the skills necessary to perform the work?
4. Determine the learning curve. NN
Is this person new to the task?
NN
How long has the team member been doing the work?
5. Determine whether you can provide help. NN
Can you show how to do the work?
NN
Are there checklists or other job aids that can help?
6. Determine what is keeping the person from doing the work. NN
NN
Do conflicting demands exist for this person between the project and the line manager? Is the work environment conducive to achieving the task?
7. Determine the solution. NN
What is the cost of the solution?
NN
Is the cost such that it is worth doing?
NN
Ask whether there is anything you can do to help.
NN
Ask the performer what she or he believes is the solution.
In reality, you’ll know the answers to most of these questions; others you’ll have to think about before you act on the issue.
Hands-on 3.12: Testing Your Knowledge of Managing Your Project Team You have a new person on your team, Lucy, who is an expert on procurement issues. You instruct her to find out the least expensive cost of a product you need for the project. Soon you get the invoice and see that she has purchased 1,000 units of the product at the cheapest price and has them stored in a warehouse. You see her signature on the invoice. You immediately call her into your office. You do not want to stifle her initiative, but your main concern is that she signed the invoice. There are two ways to handle this, either positively or negatively.
1. Describe a negative way to handle this scenario. 2. Describe a positive way to handle the scenario.
232â•…
Phase 3╇ ╇ Executing Process n
Hands-on 3.13: Testing Your Knowledge of Motivational Theories For the following, name the theory represented and the individual responsible for developing the theory:
1. Managers hold either of two sets of assumptions about human motivation. These assumptions will affect the manager’s behavior and management style.
2. When a need is satisfied, it no longer motivates and the next-higher need takes its place.
3. Man has two sets of needs, one as an animal to avoid pain (hygiene needs) and a second as a human being to grow psychologically.
Hands-on 3.14: Testing Your Knowledge of Types of Power Describe the type of power represented by the following statements:
1. A senior manager sends specific instructions to his employees and wants immediate action.
2. The project manager has arranged for the project team to attend a three-day retreat to celebrate success.
3. The project manager is asked to be a frequent speaker at industry symposiums. 4. A team member has asked to work on another project with the project manager who is leading the current project.
Leadership and Motivation We discussed leadership and motivation earlier and determined that leadership is being able to influence people to do what they otherwise may not do. The following list shows typical leadership and motivational traits: NN
Have vision, courage, and commitment.
NN
Encourage teamwork and participation.
NN
Adopt a positive attitude.
NN
Don’t criticize the management.
NN
Keep your promises.
NN
Give each person the attention they desire.
NN
Provide constructive counsel.
NN
Provide a harmonious working environment.
NN
Provide honest appraisals.
Task 3.6: Developing and Managing the€Project Team╅
NN
Provide clear performance expectations.
NN
Protect the team.
NN
Make sound and timely decisions.
NN
Communicate effectively.
NN
Empower team members.
NN
Know yourself and your team.
NN
Match skills with resources.
NN
Treat each person as an individual.
NN
Listen effectively.
NN
Emphasize long-term productivity.
NN
Give positive feedback.
NN
Establish direction.
NN
Seek responsibility and accept accountability.
NN
Motivate and inspire.
NN
Align individuals for success.
233
Rewards and Recognition There are differing schools of thought about rewards and recognition systems. Should the team be rewarded collectively? Teams succeed or fail, and the team members should share in the success and failure regardless of their individual contributions. If the team fails but individuals met their performance targets, should those individuals be singled out for rewards? Those are tough questions, and unfortunately there are no perfect answers. Here are a few suggestions for consideration: NN
NN
NN
NN
Rewards must be flexible enough to enable the teams to decide how their team members will be rewarded. It can be demoralizing to promote teamwork and continue to reward individuals. Define goals that can be achieved through collaboration as a team as opposed to a group of people acting as individuals in a cooperative manner. Team behaviors that are expected must be explicitly communicated to all those affected and an explanation given as to what defines success and how those behaviors will be recognized and rewarded.
NN
Be sure that team members perceive that the recognition and rewards are fair.
NN
Some of the most career-enhancing rewards are nonfinancial in nature.
NN
Whatever choice is made, recognize and reward good performance.
Conflict Resolution Conflict is a natural occurrence in the project management experience. Resolving conflicts doesn’t come naturally to most people. It is typically a learned trait, and if done well can be
234â•…
Phase 3╇ ╇ Executing Process n
a great learning experience. You’ll perform conflict resolution many times in your project, and there are several approaches to conflict: NN
NN
NN
NN
NN
NN
Forcing or dictating a solution pushes one viewpoint at the expense of others and offers only win/lose solutions. Hard feelings may come back in other ways. When you avoid conflict, you withdraw or retreat from the actual or potential conflict situation. It does not solve the problem. When you accommodate conflict, you attempt to smooth over the situation. You emphasize areas of agreement rather than areas of difference, but this provides only short-term solutions. When you compromise your position, you are looking for bargains for solutions that bring a degree of satisfaction to all parties. This provides a definitive resolution. You can collaborate and reach consensus by incorporating multiple viewpoints and insights. This leads to consensus and commitment and provides long-term resolution. Confronting the situation treats conflict as a problem to be solved by examining alternatives and requires give-and-take and open dialogue. Confrontation provides the ultimate resolution.
Hands-on 3.15: Testing Your Knowledge of Managing Conflict You are on site at the Portland Apples and Pears store. Todd Franks, the construction superintendent, is in Bellevue. You are anxious to see the final touches to the store, and when you arrive you are surprised to see the electrician high on a ladder putting up can lights and smoking a cigarette. The ladder is on newly installed carpet, and you can’t believe he is smoking, particularly because during your last conversation with Todd, he specified to all the trades that after the carpet was installed, there would be no smoking in the store. You tell the contractor that he shouldn’t be smoking in the store. He tells you to “deal with it.”
1. Describe what the forcing method of dealing with conflict would be in this scenario. What would be the result of using this method?
2. Describe what the withdrawing method of dealing with conflict would be in this scenario. What would be the result of using this method?
3. Describe what the smoothing over method of dealing with conflict would be in this scenario. What would be the result of using this method?
4. Describe what the collaboration method of dealing with conflict would be in this scenario. What would be the result of using this method?
5. Describe what the confronting method of dealing with conflict would be in this scenario. What would be the result of using this method?
Task 3.6: Developing and Managing the€Project Team╅
Hands-on 3.16: Testing Your Knowledge of Professional Responsibility€in€the Execution Phase 1. You were assigned an IT team member who is known to be accurate with his work but is very slow. His productivity numbers have not improved at all in the 2 years that he has been with the company. Was it fair for his supervisor to assign him to your project? Why or why not?
2. A potential vendor, attending a bidder’s conference, was given information from within the project that helped him win the bid. You just found out about it, but the contracts have been signed. What should you do?
235
Phase
4
Monitoring and Controlling Process
The project is underway now, and it is time to monitor the performance of the project against the master project management plan and to control changes that may occur by ensuring that those changes go through the change management process. It is here that you will monitor previously identified risk events and work closely with a contract administrator. Controlling the project simply means keeping it on track. This may well be the most important work of the project; if the deviations are significant and not managed carefully, the objectives of the project may not be met. In this phase you’ll gain an understanding of: NN
Measuring project performance
NN
Implementing approved changes
NN
Ensuring that project deliverables conform to quality standards
NN
Managing risk events
NN
Administering procurements
NN
Assessing corrective action on the issues register
NN
Communicating project status
Task 4.1: Measuring Project Performance As you can see by now, you have been interacting with the other project processes we discussed in the previous phases. The controlling phase has been going on since slightly after the project began. Although we cover this in a separate phase, all phases are iterative and thus need monitoring and control. It is during the work of monitoring and controlling that you can see the progress of a project, which is determined by comparing the actual work results against the project plan. Visibility of project results provides a window of opportunity for you to provide corrective and preventive action as needed.
Scenario The Apples and Pears project is well into the execution phase, and you, as the project manager, have been monitoring and controlling the work for a while. Now James Stevens, your sponsor, is asking for performance information relative to money. You know that the best way to prepare the cost and schedule report is to use the earned value technique. You
Task 4.1: Measuring Project Performanceâ•…
239
discussed the earned value method with your team in the planning phase and told them that you’ll start using it later in the project because it is not useful in the beginning. You explained to the team that the earned value method shows the amount spent on a task and compares those numbers with what should have been spent on each task. This will help you keep the schedule on track. You also scheduled the dates when you’ll use this method. You have decided to explain the process to your team members so they understand the implications to the project if they are late or over budget.
Scope of Task Duration This task will last for the duration of the project.
Setup None.
Caveat None.
Procedure In this task you will: NN
Understand variance management
NN
Verify project scope
NN
Monitor and control scope
NN
Monitor and control the schedule
NN
Monitor and control the cost
NN
Monitor and control quality
NN
Communicate results
Details To verify that the project stays within the approved scope, cost, schedule, resources, and quality (we’ll discuss managing risk events later in this phase), you’ll collect data and report on the performance of the project. The reports should be in a consistent format; the data needs to be measured in regular intervals and include the status of the project, the progress of the project, and a forecast of future project events. If the project is “out of plan,” you’ll have to establish preventive or corrective action to bring the project back on track. Additionally, this phase will cover verification of scope; cost and schedule control; earned value concepts; and quality control.
240â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Variance Management Project variance can be defined as the difference between a planned and actual time, cost, or performance measure. Project variance is a function of change requests or actual work results differing from those designed during the project-planning phase. After variation is identified, corrective action or re-forecasting will follow. You’ll discover variances when you receive status reports. Another way to manage variances is to conduct informal reviews such as these: NN
Managing by walking around
NN
Planning local peer reviews or walk-throughs
NN
Educating the team by exploring these questions: NN
What are the variance and deviation from the plan?
NN
What is the standard variance?
NN
Why are consistency and discipline important?
NN
How can we accept criticism and avoid blaming?
NN
Why is honesty (good and bad news) critical?
Other ways variance management can be of value include using quality checklists that have the quality criteria for product quality; checking status; and configuration management linked to the products, product descriptions, and work packages for cross-checking. The important thing to remember is that identification of variance can not only help control project outcomes, but also help ensure customer satisfaction.
Verify Scope When you verify scope, you are formalizing acceptance of project deliverables. Verification of scope provides an audit trail for changes made to the project. For example, if the deliverable isn’t the same as was planned, there should be an approved change request that caused the deliverable to be different. Verification measures also help you make future decisions based on the outcomes of the deliverables associated with the scope of the project. Scope verification measures the cost and other impacts of project changes. When deliverables are not accepted before the customer sees them, they are considered internal failures and require reworking, perhaps scrapping, and most importantly, a change in the project plan. The rework could cause schedule delays, cost overruns, and the like.
Monitor and Control Scope Scope control requires adjustments to cost, schedule, or other project objectives. Scope changes are iterative and require constant comparison to the original plan. They may require corrective action, must be documented, and may be severe enough to cause a baseline change. Any changes to scope must be integrated into the change control system put in place by your change control plan. A baseline change usually requires approval from the change control board. Work that affects the scope and is not approved falls under the term scope creep. Scope creep is deadly to the project. Failure to manage scope creep will cause unauthorized schedule delays and budget overruns.
Task 4.1: Measuring Project Performanceâ•…
Hands-on 4.1: Testing Your Knowledge of Scope Verification So far, the deliverables on the Apples and Pears project have been accepted because they were produced following the plan. A problem surfaced, however, in the switch room for telecom equipment at the home office. A new cooling system was put in place to control temperature and humidity. It was supposed to be installed without ducts to allow for free flow of air. When you arrived to inspect the new system, the noise was so high you couldn’t hear yourself speak. You then noticed that the cooling system had been ducted. When you asked the vendor why it was ducted, he said that he thought a mistake had been made when the plan called for open cooling and had taken it upon himself to “correct” the problem. He thought Cimarron would be pleased. This task is on the critical path.
1. What action would you take to fix this problem? 2. How should payment of the service be handled? 3. If a change was made without a documented change order, what could be the result and how would it be handled and by whom?
Hands-on 4.2: Testing Your Knowledge of Controlling Project Scope The Apples and Pears project has been moving along quite well, but in the third month of the project, Todd Franks calls you and asked if he could hire a new construction superintendent in Bellevue. Franks is unable to be at both sites at the same time and spends a lot of time and money traveling to both sites. The requested budget is $50,000 for this new hire, and Franks has agreed to interview the candidates. Name the five steps needed for this change request to be processed.
Hands-on 4.3: Testing Your Knowledge of Controlling the Project Schedule You have been given the assignment to “work in” a new task. The task has been approved for cost, but the schedule date is cast in stone per upper management. The name of the new task is review article. You have been told the duration will be three days because many senior managers will want to review it. You have the network diagram shown in Figure€4.1.
241
242â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
F ig u re€ 4 .1 ╇╉╇╉Network diagram 0
2
2
Select sales personnel (2) 2
4 0
6
8
Conduct Phase 1 training (10)
4
8
8 8
8
Prepare Phase 1 training program (8) 0
18
Send sales personnel to training (4)
18
17
Prepare Phase 2 training (9) 9
8
18
20
Start
23
Design customer instruction manual (3) 23
0
10
Determine general marketing approach (10) 0
10
10
16
16
Consolidate advertising plans (6) 10
26
20
Draft and approve brochure (4)
16
16
20
16
26
Prepare regional advertising (10) 18
28
16
22
22
Prepare article for professional journal (6) 17 10
5
7
10
14
Select marketing personnel for training (4) 19
23
23
23
26
12
12
Consolidate specific marketing training plans (2)
25
Review article (3)
20
Proceed with familiarization course (8) 7 14
25 16
Bring marketing personnel to home office (2) 23
25
Task 4.1: Measuring Project Performanceâ•…
18
30
30
Conduct Phase 2 training for sales personnel (12) 18
35
Familiarize sales with brochures and customer manual (5) 30
30
35 35
36
Return sales to territories (1) 35 36 23
24
Approve customer instruction manual (1) 26 27 26
24
26
26
Print customer instruction manual (2) 27 29
25
30
Design layout of brochure (5) 20
25
26
30
25
36
Deliver brochure and manual to marketing (8)
28 30
28
Finish
36
32
Distribute advertising in proper media (2) 32
32 25
34 33
33
26 28
Train marketing personnel (8) 25 33
34 28
35
Release and prepare to carry regional advertising (2)
Publish article in professional journal (8)
20
28
28
Print brochure (3)
Approve regional advertising (4) 28
27
Send customer instruction manual to training center (1) 29 30
34
36
29
Return marketing to territories (1) 33 34
You decide that the review article task needs to come after “prepare article for professional journal” and before “publish article in professional journal.”
1. What is the impact to the project? 2. What is the impact to the project if the task duration is 5 days?
243
244â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
3. What can you do to reduce the schedule risk? 4. Your client comes back to you and wants the project finished 5 days earlier than the 36 days previously planned. You decide to crash the project. How would you do this?
Schedule Control Schedule control is all about managing the schedule baseline. In Phase 2, “Planning Process,” you learned about fast-tracking and crashing a project to stay within the schedule baseline, but if schedule changes are approved, the schedule baseline changes. At every status meeting you should emphasize that the project needs to stay on schedule. For example, if someone tells you that they are one week behind on their task, you should be able to equate that week to money and say, “You are now $2,000 worth of work behind schedule. How will you be making that up?” (We’ll show you how to do this a little later in this task under the topic of “Earned Value.”)
Monitoring and Controlling Cost Keeping the budget under control can happen only if you know exactly where you stand on the budget. Elements that affect costs include the following: NN
Controlling changes to the project budget
NN
Cost estimating
NN
Project cash flow
NN
Company cash flow
NN
Direct labor costing
NN
Overhead rate costing
NN
Others, such as incentives, penalties, profit sharing, and the like
Earned Value
Earned value is a technique that is effective for looking at cost and scheduling elements. When you are collecting status from your team, someone might say to you, “I’m on track.” What does that mean? Does that mean that you are scheduled to be working on week 5 and you are in week 5? If so, that is a good thing. You may ask another person whether she completed her task this week as planned. She replies, “No, I didn’t get to it this week but I will be able to finish it next week.” Many new project managers would simply say, “OK” and slip the date out one week. It may be more helpful if your team members understand the financial and schedule impacts of allowing the schedule to slip and that it is not appropriate to just say, “I didn’t get to it.” For example, the schedule has two parameters: NN
NN
The actual scheduled time to perform the work The cost of the work that has been done or the cost of the work that has not been completed
Task 4.1: Measuring Project Performanceâ•…
245
Earned value combines the project schedule and cost performance to answer the question “What did we get for the money we spent?” Physical progress is measured in dollars, so schedule performance and cost performance can be analyzed in the same terms. Typically, physical progress is not taken into account when analyzing a program or project’s cost performance. Instead, actual costs to date are simply compared to planned costs, often with misleading results. Table€4.1 takes a closer look at earned value concepts. Ta b l e€ 4 .1 ╇╉╇╉Earned value concepts What is it?
What does it mean?
Acronym
How to calculate
Weeks to complete
None How long will it take to complete at the rate we are going?
Determine percentage of tasks completed thus far. Divide the weeks so far by the percentage of work completed to get projected total weeks; then subtract the weeks so far from the projected total weeks to determine the number of weeks of work left.
Expense per week
What does this task cost each week?
None
Use whatever tool you are using to collect cost information; then divide the total cost so far by the number of weeks so far.
Planned value (budgeted cost of work scheduled)
How much work should be done?
PV (BCWS)
Use planned figures.
Budgeted cost of work performed
How much work is done? (Task A, which was supposed to be completed last week, was scheduled to cost $2,000. You are only 75% complete. Therefore, you have done $1,500 worth of work, which is your earned value.)
EV (BCWP)
Determine which tasks are complete and sum the amounts you budgeted for each week and compare where you want to be to where you are.
Actual cost of work performed
How much did the completed work cost?
AC (ACWP)
Use whatever tool you are using to collect actual cost information.
246â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Ta b l e€ 4 .1 ╇╇ ╇╉Earned value concepts╇ (continued) What is it?
What does it mean?
Acronym
Cost variance
CV The difference between what the cost should be and what it actually is. (You have completed $1,000 worth of work [EV], but it cost you $1,200 to do the task [AC]. It has cost you $200 more to do what you have done than was originally planned.)
Cost variance percentage
Cost variances that are converted to percentages of expected cost.
CVP
CV / EV = CVP
Cost performance index
How efficiently has the work been performed? CPI is often used to predict possible cost overruns. (You have performed $1,000 worth of work [EV]. It has cost you $1,100 to do so [AC]. Each dollar of scheduled work generated 90.9 cents worth of work, which is the cost performance index.)
CPI
EV / AC = CPI
BAC Budget at completion What was the total job supposed to cost? The sum of all budgets allocated to the project. To-Complete Cost Performance Index
TCPI is the calculated TCPI projection of cost performance that a project must achieve on the remainder of the project work to reach a specified end result, i.e., maintaining current budget
How to calculate EV – AC = CV
Total budget
(BAC-EV)/(BAC-AC) = TCPI or (BAC-EV)/EAC-AC) when original budget is no longer achievable
Task 4.1: Measuring Project Performanceâ•…
Ta b l e€ 4 .1 ╇╇ ╇╉Earned value concepts╇ (continued) What is it?
What does it mean?
Acronym
How to calculate
Schedule variance
SV The difference between what the schedule should be and what it actually is. (As of today, you were supposed to have completed $1,000 worth of work [PV]. You have only done $900 worth of work [EV]. Therefore, you are behind schedule by $100 worth of work [SV]. Or if you were supposed to complete $1,000 worth of work and you accomplished $1,100 worth of work, then you have completed more than was originally planned.)
Schedule variance percentage
Schedule variances that are converted to percentages.
SVP
SV / PV = SVP
Schedule performance index
Used to measure the performance of the schedule. It is often used to predict possible schedule overruns. (You have done $1,000 worth of work [EV]. The value of the work scheduled [PV] is $750. Therefore, each dollar of scheduled work generated $1.33 worth of work, which is your schedule performance index.) This measures how efficiently the work is being performed.
SPI
EV / PV = SPI
EV – PV = SV
247
248
Phase 4
TA b l E 4 .1
N
Monitoring and Controlling Process
Earned value concepts (continued)
What is it?
What does it mean?
Acronym
How to calculate
Estimate at completion
What do you now expect the total job to cost? The sum of all direct and indirect costs to date plus the estimate of all work remaining.
EAC
AC + ETC = EAC
Estimate to complete What is the expected remaining cost of an activity or group of activities in the project?
ETC
EAC – AC = ETC
Variance at completion
VAC
BAC – EAC = VAC
The difference between what the job was supposed to cost and what you now expect it to cost.
It is not useful to use earned value as a performance tool until the project has been on its way for a number of weeks or even months, depending on the planned duration of the project. You simply don’t know as much at the beginning of a project, and variances can be quite large. When the variances are within 5% to 10% of the plan, earned value can be used to manage variances. If you are planning to take the Project Manager Professional (PMP ® ) exam, you’ll need to know the earned value formulas. Hint: As soon as you sit for the exam, write your memorized formulas on a piece of scratch paper. That way, you won’t get confused. oVERHEAd
When planning the project in Phase 2, you learned about the cost of overhead or “burdened” labor rates. This is a reminder that your company will specify a percentage that includes an average of all labor plus benefits, pensions, and so on. In the absence of this information, it is appropriate to use 100% as overhead. For example, if the total unburdened labor budget is $250,000, you can add a line item on your budget equal to that amount and call it overhead.
Task 4.1: Measuring Project Performanceâ•…
249
Variance Analysis and Forecasting
The variances in cost and schedule can readily be seen in Figure€4.2, which is called an S-curve. By analyzing the results relative to the baseline plan, you can forecast variations at completion. The CPI, SPI, ETC, EAC, and VAC are part of the earned value concepts we discussed earlier in this task and are valuable tools for monitoring, analyzing, and forecasting work performance. S-curves are an important part of your arsenal of project tools because it provides a visual glance of the performance of your project. F ig u re€ 4 . 2 ╇╉╇╉S-curve Estimated Cost at Completion (EAC)
Cost
Variance at Completion (VAC) (Projected overrun)
Baseline Estimate to Complete (ETC)
Actual Cost (AC) Cost Variance (CV) Planned Value (PV) Earned Value (EV)
Schedule Variance (SV)
Project Slippage
Planned Completion Date Reporting date Time
After you are fully comfortable with the earned value concept, you can begin to make useful interpretations of the data. Having said that, it is important not to make project decisions on the numbers alone. You cannot make assumptions. For example, if the actual cost of a particular task was $5,000 and the planned value for that task was $3,000, you might assume that the task manager was out of control—but you might get a different response. “I told you that I didn’t have enough people, and you arbitrarily placed the date and budget on me. I had to pay overtime—we are lucky we accomplished what we did.” Maybe, in response, you should be looking at more realistic expectations. The net is this: Do your homework. Ask the right questions, get the appropriate data, and you’ll be able to defend both the budget and the schedule brilliantly.
250â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Hands-on 4.4: Testing Your Knowledge of Earned Value 1. Consider the scenario shown in Table€4.2. As you can see, the work is linear with time but not linear with cost. One of your team member’s tasks is planned to take five weeks. When you collect status, your team member advises you that he is only 60% complete and has spent $10,000 on the portion that has been completed. You were expecting a report that this particular task was 80% complete and that $8,000 had been spent (weeks 1–4). What is the earned value for this task? Ta b l e€ 4 . 2 ╇╉╇╉Earned value scenario SCHEDULE COST
WEEK 1 (20%)
WEEK 2 (20%)
WEEK 3 (20%)
WEEK 4 (20%)
WEEK 5 (20%)
$2,000
$1,000
$3,000
$2,000
$1,000
2. What is the status of this task? 3. Using your knowledge of earned value, record the formula you’ll use to calculate the earned value elements found in Table€4.3 and the rationale for your choice. Ta b l e€ 4 . 3 ╇╉╇╉Earned value worksheet Earned Value Elements
What Does the Acronym Stand For?
Formula
PV
None
AC
None
EV
None
CV SV CPI SPI BAC ETC EAC VAC
Answer
Rationale
Task 4.1: Measuring Project Performanceâ•…
Hands-on 4.5: Testing Your Knowledge of Performance Reporting The Top Notch Construction Company has received a contractual order from Cimarron to build the new store located in Portland. The project started several months ago. Table€4.4 shows the monthly cost summary for May. Some of the entries in the table have been purposely omitted, but the following additional information is provided to help you answer the following questions: NN
Assume that the overhead of 100% is fixed over the period of performance.
NN
The report you are given is at a month’s end (May).
NN
NN
The 80/20 sharing ratio says that the customer (that is, Cimarron) will pay 80% of the dollars above the target cost up to the ceiling cost, and Top Notch will be responsible for 20% of the overrun. If the cost is below the target, Cimarron will retain 80% of the underrun and Top Notch will receive 20% of the underrun. The ceiling price is based on cost (that is, without profit).
Answer the following questions by extracting data from Top Notch’s monthly summary report shown in Table€4.4:
1. What is the total negotiated value of the contract? 2. What is the budgeted value for all work authorized under this contract? 3. What is the total budgetary amount that Cimarron had originally allocated/released to Top Notch?
4. What is the new/revised total budgetary amount that Cimarron has released to Top Notch?
5. How much money, if any, has Cimarron set aside as a management reserve based on the original released budget (burdened)?
6. Has the management reserve been revised, and if so, by how much (burdened)? 7. Which level-2 WBS elements make up the revised management reserve? 8. Based on the revised PV completion costs, how much profit can Top Notch expect to make on the Cimarron project? (Hint: Don’t forget sharing ratio.)
9. How much of the distributed budget that has been identified for accomplishment of work is only indirectly attributed to this contract (that is, overhead)?
251
252â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Answer the following questions for direct labor only:
10. Of the total direct effort budgeted on this contract, how much work did Top Notch schedule to be performed this month?
11. How much of the work scheduled for accomplishment this month was actually earned (that is, earned value)?
12. Did Top Notch do more or less work than planned for this month? How much was the schedule variance percentage (SVP)?
13. What did it actually cost Top Notch for the work performed this month? 14. What is the difference between the amount that Top Notch budgeted for the work performed this month and the actual cost (that is, CV)?
15. Which WBS level-2 elements are the primary causes for this month’s cost and schedule variances?
16. How much cost variance has Top Notch experienced to date? 17. How much schedule variance has Top Notch experienced to date? 18. Is the cost variance improving or getting worse? 19. Is the schedule variance improving or getting worse? 20. Does it appear that the scheduled end date will be met? 21. What is the new estimated burdened cost at completion? 22. How much profitability/loss (variance at completion) can Top Notch expect from the new estimated cost at completion?
23. If Top Notch’s final burdened cost for the program was $3,150,000, how much profit/ loss would they experience?
1,190,000 2,380,000
1,165,000 2,330,000 2,500,000
156,600
135,000
147,600
TOTAL
100
0
<1,300>
1,250,000
100,000
200,000
300,000
1,165,000
100,000
190,000
275,000
200,000
1,190,000
100,000
190,000
275,000
200,000
225,000
1,250,000
6,000
1,300
0
200,000
200,000
78,300
6,000
75,600
0
1,200
250,000
67,500
Notes:
5,900
74,300
0
<1,800>
<53,000>
73,800
78,300
0
100
73,000
0
93,000
23,700
x100%
67,500
<1,600>
<1,200>
0
94,200
234,700
200,000
73,800
6,000
12,000
0
0
96,000
181,700
200,000
Total Direct Overhead
6,000
10,400
0
<1,600>
1,200
158,000
200,000
5,900
0
Revised PV
At Completion $$ Contracted Original PV Released PV
Quality Control
0
CV
11,600
SV
Construction Support
0
<7,600>
<6,400>
108,000
AC
0
16,800
24,200
108,000
EV
Cumulative to Date $$
<25000>
Variance
Jan 1–Oct 31
May 1–May 31
Construction C
15,200
16,600
0
0 108,000
PV
Contract Period:
Reporting Period
14,000
CV
$3,000,000
80/20
Construction B
SV
Ceiling Price:
Sharing Ratio:
23,000
19,300
AC
12%
$2,500,000
Construction A
19,300
EV
Current Month $$
Target Fee:
Negotiated Cost:
19,300
PV
Eldred Moore
Top Notch Construction
Project Management
Level 2 WBS Items
Project Manager:
Contract:
Monthly Cost Summary: May
Ta b l e€ 4 . 4 ╇╉╇╉Performance reporting data
254â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Task 4.2: Implementing Approved€Changes The change management plan will be the driving force behind integrated change control. Integrated change control is the process of managing changes to the project plan, project documents, and organizational process assets, as well as monitoring changes and seeing that the approval process is followed.
Scenario The Apples and Pears project is well into the execution phase, and you have been executing the project plan for a while. There haven’t been any changes so far, but you are prepared to use integrated change control when any changes occur.
Scope of Task Duration This duration may be hours or days, depending on the complexity of the project.
Setup None.
Caveat None.
Procedure In this task you’ll learn about integrated change control.
Details Changes are inevitable. You know more now than you did when planning the project. Some changes are so minor that you may think they won’t affect the project and that it would be reasonable to accept them without going through the formal change management plan. Think again. The project charter is like a contract between yourself and the project sponsor. The project was approved based on the documented requirements. If small changes were allowed to be made without a process, organizational assets may be affected that you may not ever know about. For example, in the telephone industry a small change was made to a piece of equipment. The original telephone office equipment (OE) was faulty and the installer asked for a
Task 4.2: Implementing Approved€Changes╅
255
different one. It was provided but not changed on the original order. Later when the customer called to report a repair problem, the old OE was still on the records and the repair department had a hard time finding the real one. It took more time to complete the repair than was necessary and the customer was not happy. However, many change requests could affect all parts of the project and even the organization. We’ll use the process here of integrated change control. Unmanaged changes will disrupt the flow of the project; the right hand will not know what the left hand is doing, and the project will be considered out of control. For minor changes, a smaller, less complicated process may be used, but every change should be documented. Many project managers do this informally by using a daily log to track the small, informal changes that need to be addressed or the issues that come up along the way. You can always ask the project’s governance board for the tolerance to address small changes, technical defects, or issues that don’t impact the project’s cost or schedule significantly.
How to Say No While Saying Yes It’s hard to just say no. Some salespeople (and also internal clients) promise their constituency that anything is possible, money is no object, and the schedule can be met whenever they want it. What a nightmare for a project manager—especially if a contract has been signed without your knowing about it! If you do say no to an external or internal client, they may find someone else who will say yes. Saying yes is far easier and avoids a lot of chaos and conflict—but only if you are well prepared to respond properly to the change request. You created your change management plan in Phase 2. You also shared the plan and its processes with your team and showed them how to implement the changes and only change what has been approved. If the change has merit, it will be approved. There are several questions, however, that should be asked so the approvers will have all the information they need to proceed. This will also minimize the number of changes. Table€4.5 lists the questions to be asked and answered by a responsible party before asking for a formal change request. The initial discussion with someone who wants to instigate a change should go something like this: “I would be happy to look into your change request. It sounds reasonable, but first there are some questions that need to be answered. Let’s work on them. Do you have time now?” Ta b l e€ 4 . 5 ╇╉╇╉Change control responsibilities Questions
Answered by:
Why is the change necessary?
Initiator
What is the cost of the change?
Initiator
Does the change improve quality?
Initiator
Is the additional cost for this quality justifiable?
Initiator
256â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Ta b l e€ 4 . 5 ╇╇ ╇╉Change control responsibilities╇ (continued) Questions
Answered by:
Will making this change now as opposed to later save money? If yes, how?
Initiator
What risks are associated with this change?
Initiator and project manager
Are additional resources needed?
Project manager
What is the impact on the delivery date?
Project manager
What is the impact on the budget?
Project manager
Inevitably, some of the changes will be “nice to have” or “nice to do” but fall out of the original scope. If the initiator of the change is passionate about it, that person will provide the necessary details to justify the change. Remember, an approved change necessitates that you change the project plan, the schedule, the budget, and all other documents impacted by the change. Once you have followed all processes from your change management plan, you may communicate back to the originator and be able to say, “Yes, it is possible to make the change you requested. I have done my research and here are the answers that I had to address. There will be changes to scope, cost, and schedule. Those costs will add $$$ to the budget and the schedule will change to thus and so. There is also risk involved since the schedule is so tight and the budget seems to be cast in stone, but once the change is reviewed and approved we can get started on it right away.” Often, when hearing the ramifications to the project, many change initiators will not proceed.
Hands-on 4.6: Testing Your Knowledge of Integrated Change Control You have just received approval that a change is going to be made to the Apples and Pears project. It seems that when the furniture arrived for the two stores in Bellevue and Portland, the chairs were the wrong color and the loveseats were full-sized sofas. The procurement officer investigates and finds that if he reorders the furniture, delivery will take eight weeks—but the stores are due to open in five weeks. He tried to expedite a new order, but it can’t be done. The original order will be refunded. He decides to purchase the new furniture locally for an increased price of $5,000, which will come out of the management reserve fund.
1. What project documents need to be changed to accommodate this change? 2. Who needs to be notified of the change?
Task 4.3: Ensuring Project Deliverables Conform to Quality Standardsâ•…
257
3. Answer the following questions based on this scenario: a. Why is the change necessary? b. What is the cost of the change? c. Does the change improve quality? d. Is the additional cost for this quality justifiable? e. What risks are associated with this change? f.
Are additional resources needed?
g. What is the impact on the delivery date? h. What is the impact on the budget?
Task 4.3: Ensuring Project Deliverables Conform to Quality Standards The project manager has the responsibility to ensure the quality of all deliverables within a project. You have to view deliverables from the customer’s perspective. If customers aren’t happy with a deliverable, it isn’t finished. You want to remove any ambiguity from the acceptance criteria.
Scenario You have made visits to the store sites in Seattle and Portland. Progress at both sites is ahead of schedule, and the workmanship so far has been excellent. You breathe a sigh of relief, but inwardly you are not surprised as you know that Todd Franks, the superintendent, always obtains superior results. Franks was surprised that you wanted to visit and you told him that you were anxious to see the stores. You were authorized to give Franks a bonus because he was ahead of schedule but wanted to give it to him in person. You arrange a lunch date and give him his bonus. He is surprised and pleased. You also give him gift certificates that he can give to his workers as he deems fit. You have also visited the clothing manufacturer to see the quality of the clothes being made. You are shocked to discover that many shortcuts are being taken and that the quality of the clothes is not what you expected. There is single-seam construction where there should be two seams. The wedding dresses and formal wear have inferior fabrics lining the dresses. Fasteners fall off easily, and some of the fabrics used have flaws in them. You review your quality assurance plan and try to determine what went wrong and how much it will cost to either fix the clothing or throw it out and create new pieces.
258â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Scope of Task Duration This task is performed throughout the life of the project as deliverables are being produced and eventually completed.
Setup None.
Caveat None.
Procedure In this task you’ll learn about: NN
Requirements verification and validation
NN
Collecting metrics
NN
Monitoring critical work products
NN
Using quality control tools at predetermined intervals
Details Quality to you may be different from quality to someone else. It is important that everyone be on the same page to avoid surprises in the quality of your deliverables. Earlier, we discussed acceptance criteria for the deliverables on the project. Some may have been ignored, or the workers might not have understood the instructions. In this task you’ll look for ways to make sure your quality process is being followed. Acceptance criteria of a deliverable should include the following: NN
Content properties (documents, software, and so on)
NN
Physical properties
NN
Ownership properties (trademarks, patents, and the like)
The project manager is responsible for performance measurements achieved by comparing planned versus actual results as well as for providing status information to all key stakeholders. The key stakeholders are responsible for reviewing the metrics that were put in place and any variances against those metrics. All team members are responsible for taking whatever action is necessary to keep the variances within acceptable limits.
Requirements Verification and Validation The difference between verification and validation is simple: When you verify a requirement you ask the question “Are you building the product right?” When you validate a
Task 4.3: Ensuring Project Deliverables Conform to Quality Standardsâ•…
259
requirement you ask the question “Are you building the right product?” Verification looks at quality checkpoints along the way to see that standards are correct for the level of quality needed. Validation means that the goal has been met and the customer is delighted. Requirements Traceability Matrix
A requirements traceability matrix (RTM) is used to make sure that all stated requirements can map back to system components or deliverables to fulfill those requirements. This is called a forward trace. It is also used to determine the source of requirements. This is called the backward trace. Table€4.6 illustrates a high-level traceability matrix. In this example, the “U” represents the user and the “S” represents the system. Ta b l e€ 4 . 6 ╇╉╇╉Requirements traceability matrix ID
User requirements
Forward traceability
U1
The user will input all sales codes so the sale price appears automatically.
S3
U2
The system will process all Visa, MasterCard, Discover, and American Express credit cards.
S1
U3
The salesperson will be notified if the card is over its S2 limit by an “unable to process” message.
ID
Functional requirements
Backward traceability
S1
The system will accept Visa, MasterCard, Discover, and American Express credit cards.
U2
S2
The system will calculate total amounts and compare them with the credit limit on the card.
U3
S3
The system will calculate the sales prices based on input codes.
U1
Typically an RTM is used to be sure the requirements are met and, if a change is needed, the requirement is sufficiently and easily located. This approach saves time, cost, and potential scope changes.
Collecting Metrics One of the outputs of the plan quality process is quality metrics. You define what you want to measure to analyze performance. After you collect these measurements, you use the data within the quality control tools previously defined. There is also the issue of collecting or requiring collection of quality metrics from your suppliers. From the previous example, the fabric flaws in some of the clothing may have come from the supplier who provided and/or
260â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
manufactured the cloth. This needs to be addressed contractually and from the perspective of failing to meet the customer’s quality expectations of the clothing. The size of the project should be proportional to the quantity of measurements and the effort it takes to collect them. For example: NN
NN
NN
Small projects should concern themselves with basic information such as how the project is progressing in terms of cost, effort, and duration. There is usually no need to capture more sophisticated metrics on the project deliverables or the internal project work processes, because there is not enough time to make improvements or take any actions based on the results of the metrics. Medium projects should collect the same information as small projects, but additional metric information may be of value. Expand the metric collection to quality of deliverables and how well processes worked. The differentiator would be the length of time available to respond to performance improvements. Large projects should collect the same metrics as for small and medium projects, but additionally it would be appropriate to look for metrics that provide information in the areas of cost, effort, duration, team performance, productivity, and business value, as well as the quality of deliverables and client satisfaction.
The following is a list of metrics that could be collected on your project. This list is not exhaustive but may help provide additional ideas for your project: NN
NN
Cost NN
Actual cost vs. budget (variance) for project, for phase, for activity, and so on
NN
Total support costs for x months after solution is completed
NN
Total cost of employees vs. contract vs. consultant (vs. budget)
NN
Actual labor costs vs. estimated labor costs
NN
Actual equipment costs vs. estimated equipment costs
NN
Actual material costs vs. estimated material costs
NN
Amount of management reserve needed
NN
Amount of contingency reserves actually used
NN
Number of approved changes to the budget
NN
Number of unapproved changes to the budget
NN
Effective cost-reporting process
Schedule NN
List of milestones with days early/late
NN
List of impacted activities
NN
Schedule performance index (SPI) (more about this later in this Phase)
NN
SPI trend over time
NN
Actual vs. estimated time spent on tasks
Task 4.3: Ensuring Project Deliverables Conform to Quality Standardsâ•…
NN
NN
NN
NN
How much slack was needed
NN
Whether the project end date was met
NN
The number of unknown constraints that hindered the project end date
NN
The number of tasks that should have been started but weren’t
NN
The amount of free slack and slack that was used or not used
261
Productivity NN
Work units produced per effort hour
NN
Effort hours reduced from standard project processes
NN
Effort hours saved through reuse of previous deliverables, models, and so forth
NN
Number of process improvement ideas implemented
NN
Number of hours/dollars saved from process improvements
Quality of deliverables NN
Percentage of deliverables going through quality reviews
NN
Percentage of deliverable reviews resulting in acceptance the first time
NN
Number of defects discovered after initial acceptance
NN
Number of client change requests to revise scope
NN
Number of hours of reworking previously completed deliverables
Quality of project NN
Number of best practices identified and applied on the project
NN
Number of risks that were successfully mitigated
NN
Project completed on time within approved schedule
NN
Project completed within approved budget
NN
Deliverable results traceable to requirements
NN
Positive test results
NN
Clear and unambiguous acceptance criteria
There are many other metrics; these are just a few. Remember: Don’t measure something just because you can. Measure something that will provide meaningful information to help you meet the project objectives.
Monitoring Critical Work Products Critical work products are those work products that could cause the project to falter or fail if they do not meet quality expectations. To ensure that the deliverables will meet the acceptance criteria, the project team must make sure that these critical work products contain the requisite quality parameters. Complete one section of Table€4.7 for each critical work product. The first section of Table€4.7 explains what should be included for each item.
262â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Ta b l e€ 4 . 7 ╇╉╇╉Critical work products Section no.
Section items
Description
1
Work product
Provide the name of critical work product (or, possibly, a group of work products that are treated as one).
Rationale
With reference to the acceptance criteria, explain why this work product is regarded as critical.
Quality characteristics
Describe the attribute of the work product that will be used to assess its quality.
Quality criteria
Define the target value of the quality characteristic.
Quality contributors
Describe the factors such as skills, standards, and tools. This can also include the methods and procedures that will contribute to the achievement of the set of quality criteria.
2
Work product Rationale Quality characteristics Quality criteria Quality contributors
3
Work product Rationale Quality characteristics Quality criteria Quality contributors
Task 4.3: Ensuring Project Deliverables Conform to Quality Standardsâ•…
263
Quality Control Quality control in project management requires that the project manager use appropriate tools at predetermined intervals in order to meet project goals. These tools include the following: NN
Cost/benefit analysis
NN
Control charts
NN
Benchmarking
NN
Design of experiments
NN
Statistical sampling
NN
Flowcharting
NN
Cause and effect diagrams
NN
Histograms
NN
Pareto charts
NN
Run charts
NN
Scatter diagrams
NN
Inspections
Cost/Benefit Analysis
It is essential that you perform a cost/benefit analysis when deciding which processes you’ll use to measure or control quality. Although you certainly want to reduce rework and thereby improve productivity or production, the cost of that action should not outweigh the benefit you’ll receive. The items you should include in your cost/benefit analysis include strategic (why this is good for the business or project) as well as operational benefits, true costs using the time value of money, and a financial analysis. Control Charts
A typical control chart is a graphical display of a quality characteristic that has been measured or computed from a sample or as results of a process over time. If you have repeatable processes, slight variation will still occur. The question is, will those variations still allow the process to meet the desired end result? The quality control chart contains a line in the center that represents the average or mean when assessing processes or products. Management uses the upper control limit (UCL) and lower control limit (LCL) to set a control limit that should exceed customer expectations. Control limits are mathematically configured after collecting a sample size of data, so that if the process is in control, nearly all of the sample points will fall between the upper and lower control limits. As long as the points plot within the control limits, the process is assumed to be in control, and no action is necessary. Customer expectations drive the upper and lower specifications on the control chart. The lower specification limit (LSL) is the lowest point in which a process or product is within the acceptable performance limits determined by the customer. Conversely, the upper specification limit (USL) is the highest point at which a process or product remains within the acceptable
264â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
performance limits set by the customer. If your data stays within the control limits, you’ll meet customer expectations most of the time. However, a point that plots outside the control limits is interpreted as evidence that the process is out of control, and if the points get too close to the specification limits, you may not meet customer expectations. Investigation and corrective action are required to find and eliminate the assignable or special causes responsible for this result. The control points are connected with straight-line segments for easy visualization. It is possible, however, that the USL and LSL may fall within the UCL and LCL, in which case, the process you are using is not capable of meeting customer expectations. For example, say that as project manager, part of your job is to make sure your team knows that they will be given only 5 minutes of grace time to make it to your meeting. Although you start your meetings right on time, some people are usually a few minutes late. The meeting typically lasts 30 to 45 minutes. John, who is a key figure in the project, has been late getting to your meetings, so you decide to capture John’s “on-time” status by using a control chart (Figure€4.3). F ig u re€ 4 . 3 ╇╉╇╉Control chart Upper Specification Limit
MEASUREMENT
Upper Control Limit
Average
Lower Control Limit
Lower Specification Limit TIME
Special Causes
You have collected this data for 17 days, and John was late each Wednesday. In fact, in the third week he was so late that he missed the whole meeting. You call John into your office to discuss this with him. He tells you that he is not trying to be late but that on Wednesdays he has to take his daughter to day care and they don’t allow parents to bring their children early. He simply can’t make it on time. You realize that on the other days he is within acceptable guidelines (upper and lower control limits). You discuss probable solutions. John agrees to let his trusted neighbor take
Task 4.3: Ensuring Project Deliverables Conform to Quality Standardsâ•…
265
his daughter to day care. (The neighbor has offered this many times, but he didn’t want to take advantage of her.) He was able to change his process after you and he explored the special or assignable causes. Customers will reject any item that is not within the specification limits they set. In the example, you have set control limits to be sure the specification limits will be met. Whenever you see more data points heading out of control, you’ll realize the process is out of control and needs to be fixed in order to stay within the specification limits. When fixing a process, you also need to realize that this is a cost of conforming to quality. Even if all the points plot inside the control limits, if they behave in a systematic or nonrandom manner, then this is an indication that the process is out of control. For example, if the data points are “within limits” but appear below the average mark and are heading downward toward the lower control limit, you’ll want to look at your process because your process may soon be out of control. Benchmarking
Benchmarking is simply comparing your results or planned project practices with other projects (internal or external) to determine standards with which to measure performance. It is useful to benchmark against other organizations within your own company and within the same industry, but much can be gained by benchmarking against other industries as well. There are typically five steps to the benchmarking process: 1. Define what you want to benchmark and define the content specifically. 2. Design a data structure to collect data. 3. Collect the data. 4. Verify and analyze the data to generate the results. 5. Present findings. Design of Experiments
Design of experiments (DOE) is a technique used in the quality planning process and is associated with engineer and statistician Genichi Taguchi. The basic premise of DOE is that quality should be measured by the deviation from a specification, rather than by conformance to predetermined tolerance limits, and that quality cannot be ensured through inspection and reworking but must be built in through the appropriate design of the process and product. DOE seeks to use the minimum number of trials required to achieve statistically sound results that allow valid conclusions to be drawn about the process. For example, as a manufacturer, you do not want to pay for a top-end suspension to go with mid-grade tires for the model of car being produced. That would be spending money on parts that would not improve the way the ride felt. Spending more than you need to, for functionality you’ll not be able to realize, is one form of “gold plating.” Five steps are associated with Taguchi’s DOE: 1. Design the experiment. 2. Run a simulation and test. 3. Validate and evaluate the result.
266â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
4. Perform multi-objective optimizations. 5. Validate optimization results. Statistical Sampling
Remember the quote “Statistics are like swimsuits; what they reveal is interesting, but what they conceal is vital”? Although the author is unknown, the quote is great at getting to the point. You need to be measuring what matters. Statistics are a tool that can help you make sense of available data. Although measuring the final product within a manufacturer’s lot of products may meet the customer’s specifications as a critical-to-quality (CTQ) characteristic, you may choose to select only a portion of the final lot to confirm that you met the mark. Testing some items, rather than all, can help substantially reduce the cost of conforming to quality, as long as you get a valid representation of the whole in the sample size you select. When you choose to do sample testing, there is a chance for rejecting a good lot and obtaining a bad lot. Let’s take a look at some common statistical terms: NN
An attribute is a characteristic of the product.
NN
Attribute sampling results in either conformance or nonconformance.
NN
Attribute data are sometimes referred to as discrete data.
NN
Variable sampling results are rated on a scale to measure the degree of conformity. The data are infinitely measurable, such as time or money.
NN
The sample size is the number of items in the sample, indicated by n.
NN
The sampling plan describes how sampling will occur. Statistical terms describe numbers by using the following parameters:
NN
NN
NN
NN
The mean is a sum of measurements divided by the number of measurements under consideration (also known as the average). The median is a value having as many observations above it as below it when the observations are arranged in increasing or decreasing sequence of value. (It is the middle number.) The median is the average of the two middle numbers when there is an even number of observations. The mode is the most frequently occurring observation. The range is the difference between the largest measurement and the smallest measurement.
Flowcharting
Flowcharts are used to graphically display the steps within a process and the yes or no decisions that may be made along the way. Two types of flowcharts are generally used: a process flowchart and a system flowchart. An example of a process flowchart is shown in Figure€4.4, which graphically displays how various elements of a process or system relate (in this case, how to manage an issue). As a project progresses, understanding the tasks and decisions that occur in any given process can help the project team anticipate what quality problems might occur and where they may occur, which helps the team develop approaches for dealing with them.
Task 4.3: Ensuring Project Deliverables Conform to Quality Standardsâ•…
267
F ig u re€ 4 . 4 ╇╉╇╉Flowchart example Identify issue
Assess issue
Is issue critical?
No
Manage and monitor issue
Yes Log issue
Manage and report status Yes Track and intervene
No
Resolved?
Record resolution
Review and close
The following steps are used to create a flowchart: 1. Discuss the intended use of the flowchart. 2. Decide on the desired outcome of the charting session: a macro-level chart (high-level
steps) or micro-level chart (very detailed steps). 3. Define the boundaries of the process—clearly establish first and last steps. 4. Document each step in sequence. 5. Determine inputs, outputs, and related steps. 6. Use appropriate charting symbols. 7. Draw the process accurately and consistently.
268â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
8. At each decision point, follow one branch through to completion. 9. If you encounter an unfamiliar segment, make a note of it and keep going. 10. Repeat steps 4, 5, and 6 until the process is completely charted, making sure to complete
all decision branches. 11. Review the completed chart for possible gaps. 12. Determine how to fill in unfamiliar segments and verify the chart’s accuracy. 13. After the chart is accurate and complete, analyze it for reasonableness. Cause-and-Effect Diagrams
Kaoru Ishikawa worked in the Kawasaki shipyards and pioneered the use of a performance measurement tool that could plot the cause and effect of a stated problem that results in a single output. Causes are arranged by level of importance or detail that result in a representation of relationships and hierarchy of events. Many call this tool the Ishikawa diagram, or the fishbone diagram (because it looks like a fish skeleton). Figure€4.5 represents a sample of a fishbone diagram. F ig u re€ 4 . 5 ╇╉╇╉Fishbone diagram Why is the turnover rate so high? Management Right hand doesn’t know what the left is doing
Training
Social Environment Too autocratic Poor communication Bad attitudes Poor management
Lack of trust
Poor management
Workers are filled with fear No budget Not allowed to talk
No budget
No ergonomic chairs Working Conditions
Poor management
Poor management
No budget
Computers are out of date
There is none
Poor management
Root Cause POOR MANAGEMENT
There are none Perks
There are four steps to this process: 1. Identify the problem and identify the factors involved with the problem. 2. Draw the factors off a middle line so that each factor has its own “bone.” 3. Identify possible causes by using the factors you described in step 2. 4. Analyze your diagram and use the “why” question until you get to the root cause of
the problem.
Task 4.3: Ensuring Project Deliverables Conform to Quality Standardsâ•…
269
Histograms
Histograms are used to determine process capability at a snapshot in time. A histogram is a type of bar graph that shows how frequently something occurred. It looks like a bar graph, but there are no spaces between the bars. Without any space between the bars, you can see how the values relate to each other. Suppose a pizza company wants to deliver pizzas in less than 30 minutes, 100% of the time. The first thing you must do is collect data on the subparts of the process, such as taking the order, making the pizza, and delivering it. Figure€4.6 is a histogram that shows that the current process is unable to deliver pizzas within 30 minutes (the average is 37.06 minutes). F ig u re€ 4 . 6 ╇╉╇╉Histogram sample Time Between Order and Delivery of Pizza X=37.06 10
Number of Pizzas
10
6
6 5
4 3 Modal Class 29.5
32.5
36.5
1 38.5
41.5
44.5
47.5
Total Time (Minutes)
Pareto Charts
The Pareto diagram is named after Vilfredo Pareto, a 19th-century Italian economist who postulated that a large share of wealth was owned by a small percentage of the population. This basic principle translates well into quality problems—most quality problems result from a small number of causes. Joseph Juran, a noted quality expert, created a corollary to Pareto’s rule that says 80% of problems are caused by 20% of the potential sources. Quality experts today often refer to the principle as the 80/20 rule. A Pareto chart (Figure€4.7) is a histogram, ordered by frequency of occurrence, which shows how many results were generated by type or category of identified cause. It places data in a hierarchical order from most occurrences to least occurrences, suggesting that the highest number of occurrences, if resolved, would produce the greatest improvement. The before and after charts in the picture are the same except for the reduction in the most frequent cause and the resulting increases in the other percentages.
270â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
F ig u re€ 4 . 7 ╇╉╇╉Pareto chart 100%
Frequency
80
Cumulative Percentage
100 80
75%
60 50% 40
Frequency
100
60
Effect of Improvement
75%
40 25%
20
100%
50%
20
25% Cause
Cause
When seeking operational or process improvement project opportunities within an organization, this can be a helpful tool in deciding what to fix first. While the Pareto diagram will point to the biggest culprit of failed throughput, the other factor to consider is the cost of correcting that error. Although it can summarize all types of data, the Pareto analysis technique is used primarily to identify and evaluate nonconformities. Run Charts
A run chart is a running record of a process over time. The X-axis is your measure of time or sequence and the Y-axis is your item of interest. It looks very much like a control chart but without control limits; instead it has a target with which to compare the data. The dashed line is the target, and the item of interest could be anything meaningful to you—in this case it is percent. Figure€4.8 is an example of a run chart. Scatter Diagrams
Scatter diagrams are another way that you can observe process control data. Scatter diagrams organize data by plotting independent versus dependent data. The independent variables are plotted on the X-axis (horizontal) and the dependent variables on the Y-axis (vertical). If a relationship or correlation can be found between the variables, it can be a predictor that if one variable changes, the other will also. It does not necessarily mean that a cause and effect is in place. Both parameters may be the effect of another independent or variable data set not included in your scatter diagram. Figure€4.9 shows a relationship between the independent variables and dependent variables. In an actual scatter diagram, a key is shown that explains that a circle plot has some meaningful dependent and independent variable while the diamond plot has a different pair of variables. Both sets would appear on the axes.
Task 4.3: Ensuring Project Deliverables Conform to Quality Standardsâ•…
F ig u re€ 4 . 8 ╇╉╇╉Run chart RUN CHART 100 90 80
ITEM OF INTEREST
70 60 50 40 30 20
0
060110 060210 060310 060410 060510 060610 060710 060810 060910 061010 061110 061210 061310 061410 061510 061610 061710 061810 061910 062010 062110 062210 062310 062410 062510 062610 062710 062810 062910 063010
10
DATE
F ig u re€ 4 . 9 ╇╉╇╉Scatter diagram
DEPENDENT VARIABLES
Y
INDEPENDENT VARIABLES
X
271
272â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Inspections
Inspections include reviews, audits, and walk-throughs, among other things. You’ll want to be sure that you, team leaders, or technical specialists are measuring, examining, and testing results to see whether they conform to requirements. These inspections should be conducted at regular intervals but also at unscheduled times.
Hands-on 4.7: Testing Your Knowledge of Quality Tools 1. What information can a fishbone diagram give you? 2. A histogram is used for what purpose? 3. What is a Pareto chart? 4. What quality control tool is used when data are displayed on a graph that shows observed data in a time sequence in order to see the output or performance of a manufacturing or other business process?
5. When should a scatter diagram be used? 6. Describe the Taguchi method (design of experiments). Is this a good tool to use in a society where change is constant? Why or why not?
Hands-on 4.8: Testing Your Knowledge of Problem Solving and Metrics 1. Considering the scenario at the beginning of this task, what quality tools could you use to determine the problem? Why?
2. List two metrics that can be taken during a project in each of the following categories: a. Cost b. Schedule c. Productivity d. Quality of deliverables e. Quality of the project
Task 4.4: Managing Risk Events You identified risks in Phase 2. In this task risks that were previously identified may surface and new risks could occur. Fortunately, you have a risk management plan and know what you have to do when other risks occur.
Task 4.4: Managing Risk Eventsâ•…
273
Scenario You have several balls in the air by this time, and one of the concerns you have is whether a project that is external to the Apples and Pears project could impact the grand opening on November 1. You have been brought into the picture along with Diana Featherston, the telecommunications manager, and Bud Bergstrom, the contracts manager, to discuss the situation. Ms. Featherston explained that Data Mentors Phone Company (DMPC) has just won the business of installing a new communication system for Cimarron Industries. Cimarron has decided to provide a new communications system for all of its organizations and link them together. Currently, Cimarron is served by a 10-year-old system that has served its users well. However, it is not capable of providing the new services required for a progressive institution. The new system must have category 5 data lines, voice, LAN connectivity, and wireless telephones, to name a few features. The new communications system for Cimarron is scheduled for conversion by October€15 according to the contract. The contract is very clear about missed dates, specifically the cutover. Cimarron wants the new system in and ready for use by October 31, two weeks after the cutover, so the users can get used to the new system in time for the completion of the Apples and Pears project. Failure to meet the cutover date would result in liquidated damages of $1,000 per day for DMPC. Brendon Edwards, the experienced project manager for DMPC, just came from a meeting with Olivia Ross and Jim Stevens. Edwards explained that there was an extremely tight timeframe for the implementation of the new system (that is, very little slack time in the schedule to offset unexpected delays). Edwards was advised to set up a meeting with Carrie MacIntyre, the project manager for the Apples and Pears project, and the telecommunications manager, Ms. Featherston, as well as contract manager Bud Bergstrom to discuss some of the finer points of interest. The meeting was typical for a first-time meeting. Edwards wanted to make sure that if there was a possibility of missing the October 15 cutover date, a two-week window would be available between the cutover and the “go live” date. Ms. Featherston replied, “So that there is no misunderstanding, the contract spells out a cutover date of October 15. We expect the system to be working flawlessly well before that time. We need you to provide us with an implementation plan and an analysis of the risks for this system conversion within the next few weeks. I must insist that this cutover to the new system is not, I repeat, not to jeopardize the October 15 date.” Bergstrom then left the meeting to allow Ms. Featherston, Ms. MacIntyre, and Edwards to continue their discussions. Edwards knew the limitations all too well, as a $1,000-per-day penalty was included in the project: “Well, Carrie, the way I see it, to make the conversion date, there are some items that Cimarron must provide us. The date in our contract states that you’ll have an equipment room for us by June 1, so that we can begin installing the system. The date is very critical to us; if you do not meet it, the cutover date may be in jeopardy.” Ms. Featherston thought about that and said, “You’re right, Brendon, but remember, we don’t have much leeway on that October 15 date. Everyone is geared to the October 15 date.”
274â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
The contract had its bad points. It seemed that the only date that Cimarron had to meet was the equipment room to be ready by June 1. Anything else that they missed was not part of the bargain but made it acceptable. However, if DMPC missed their dates, the penalties were high. On May 23, Edwards was becoming frustrated about the promises of Cimarron’s contractor to finish the equipment room. A special meeting was scheduled to discuss the problem. “Diana, your contractor has not even started the job for you. I have been sending you messages regarding the criticality of completing the equipment room per your promise and our contract. You have put the project in jeopardy because of this situation. I need your help in making your contractor comply with the contract,” stated Edwards. “I passed that information along to Carrie, and she advised that the contractor was having difficulties obtaining a permit to remove the steam pipes overhead. Apparently there are some overhead water pipes that must be routed around the new room. He is being delayed by the city. The city must provide a permit before those pipes can be moved. It is some special city ordinance—no one knew about this, not even the contractor. We should have it in a few days, but you know how slow the city can be in these matters. I’m sure you understand,” said Ms. Featherston. “Perhaps you could start placing your equipment, terminating the cable on the new frame, and so on. The contractor said he would have temporary electrical power, lighting, and the floors sealed, but he would have to work in the equipment room overhead and around you while your people are installing the equipment. The other items, such as air conditioning and proper power for your system, will not be available when you start. Can you work around this problem and still make the October 15 cut date?” Edwards was now becoming concerned about meeting that October cutover date.
Scope of Task Duration The duration is the length of the project.
Setup None.
Caveat None.
Procedure In this task you’ll learn how to manage a risk event.
Details Managing risks is something you’ll do throughout the life of the project. It should be a topic covered in every status meeting. Risks pop up unexpectedly, and you can’t possibly predict
Task 4.5: Administering Procurementsâ•…
275
what risks will surface at the beginning of the project. The more time you spend trying to anticipate and plan for risks, the more prepared you’ll be when the unexpected ones arise. You need to manage them as soon as they occur—with help from your team, of course.
Document Newly Identified Risk Events The first thing you have to do is document the risk event on the risk event worksheet you created in Phase 2 (Table€2.19). After documenting the risk event, you’ll post it into your risk register, also found in Phase 2 (Table€2.21) and monitor it as appropriate for the type of risk it is. For example, risks that could jeopardize the objectives of the project should be monitored very closely.
Preventive and Corrective Action You can’t possibly identify all of the risk events that may occur at the planning stage of your project. Risks do occur during all phases and have to be controlled. When you are managing a risk event that was not previously identified, you may think of ways the risk could have been avoided. Preventive action should be documented as part of your lessons learned. Corrective action is simply correcting the situation after it has been identified and updating your risk register to include the risk and what you did, to prevent it from happening again.
Hands-on 4.9: Testing Your Knowledge of Managing Risk Using the scenario at the beginning of this task, answer the following questions:
1. Describe the risk events. 2. What corrective action would you suggest for Edwards to consider? 3. How does DMPC maintain equilibrium between Cimarron and the recommended mitigation strategies?
4. What were the factors that produced the circumstances described in this task? 5. Which of these risk events could have been identified ahead of time? 6. What type of preventive action could Edwards have used to overcome these risk events if they had been identified?
Task 4.5: Administering Procurements Contract administration is the process of ensuring that the company and project obtain the products and services from suppliers as specified in the contract, as well as the seller ensuring they are paid as per terms negotiated. In other words, both parties will be responsible for monitoring the results of contract work for compliance with contract terms. On the buyer side, this means the project manager, working with the contract manager, monitors contractor performance and ensures that all changes are processed as required by
276â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
the change control process specified in the project plan, elements of which have been added to the contract. Contract performance that deviates from contract requirements is addressed, and appropriate remedies, both administrative and legal, for nonperformance are applied as necessary.
Scenario As project manager for Cimarron, you have been assigned a contract administrator, Riley Avalon. Avalon, who also has training as a legal assistant, will assist you on the Apples and Pears project. Avalon has worked on many contracts and will be your team member representing procurements.
Scope of Task Duration This task begins at Phase 3, “Executing Process,” and finishes at the end of Phase 4.
Setup None.
Caveat None.
Procedure In this task you’ll learn about the following: NN
Duties of a contract administrator
NN
Claims administration
NN
Procurement performance reviews
NN
Inspections and audits
NN
Records management system
Details Knowledge and management of contracts usually resides with a contract administrator. Most organizations have contract administrators in either the legal department or procurement department. If this is the case for you, then you are in luck. Contract administrators will take away the stress of having to manage the contract yourself. Typically, they are trained in all aspects of managing contracts and are essential to your project team.
Task 4.5: Administering Procurementsâ•…
277
Duties of a Contract Administrator As you’ll soon see, your contract administrator will become your best friend. The contract administrator has many duties and partners with the project manager as needed to perform these duties. They have to have an understanding of legal perspectives associated with the contract as well. Let’s explore the many duties of a contract administrator. Contract Change Control
Change is inevitable in a project, whether or not that change is related to contracted items. This process defines the types of items that could be affected by a contract change and utilizes the change control procedures identified in Phase 2. Table€4.8 describes the types of changes that could occur within a contract. Ta b l e€ 4 . 8 ╇╉╇╉Types of contract changes Type of change
Description
Administrative change
Change that does not affect project work, such as changing mailing addresses or telephone numbers.
Change order
A written order, following change management processes and signed by the contracting officer, so that a seller can make a change.
Incomplete contractual action
Work that has started before a final contract is complete. Work that begins with a letter of intent as a contract may take longer.
Supplemental agreement
A contract modification that has been agreed to between the buyer and seller.
Constructive change (also known as directive change)
Changes to the contract that may include the following: • Incorrect direction of the buyer that results in an unacceptable product or service • Specifications that are impossible to achieve • Incorrect understanding of the contract • Overinspection • Failure by the buyer to disclose knowledge that changes the seller’s work • Acceleration of performance • Late or unsuitable owner- or customer-furnished property • Misuse of proprietary data
278â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Interpretation of Specifications
The specifications for a project are included in contract documents and consist of written requirements for these elements: NN
Materials
NN
Equipment
NN
Systems
NN
Standards
NN
Workmanship
NN
Performance of related services
The project manager, technical advisor, and/or contract administrator with knowledge of the defined specifications should monitor the project to be sure that specifications are achieved. Subcontractor Management
It is important to understand the relationships between the owner, a prime contractor, and subcontractors. The prime contractor has a two-way relationship with suppliers, a vertical two-way relationship with the project owner, and a downward two-way relationship with subcontractors. It would be inappropriate, for example, for the project owner to engage in a work request with the prime contractor’s subcontractor. The subcontractor’s contract is with the prime contractor and not the owner. Formal, written subcontract agreements are usually signed only after the prime contractor has been awarded the prime contract. Production Surveillance
Production surveillance is usually accomplished through performance reporting and typically includes the results of tests and inspections, as required in the contract or by laws, rules, regulations, and so on. Payment System
There are two types of payments to which a contractor and buyer agree. One of them is progress payments, whereby payment is completed upon reaching certain progress parameters. The second is completion payments, which apply when a specified amount is withheld from a contractor until all contract items have been satisfied, including last-minute punch-list items. Punch-list items refer to unfinished or dissatisfied work that is discovered after the contractor declares he has completed his work. Final payment is not made until all punch-list items are completed to the client’s satisfaction. Progress schedules should be defined in the contract; whatever is agreed upon becomes part of the contract language. You are charged with signing off on completion items so that your accounts payable department is confident that the work was completed as per the contract.
Claims Administration There may be claims against the contract if the buyer and seller disagree on payments or other issues. Let’s take a look at items that could be included in the contract that would minimize claim from a legal perspective.
Task 4.5: Administering Procurementsâ•…
279
Bonds
To avoid these legal claims, bonds and warranties may have been included in the contract. The parties involved in bonds include the following: NN
Project owner, known as the oblige
NN
Contractor, known as the principal
NN
Bonding company, known as the surety
The owner must pay the premium on the bond. There are three types of bonds that might be used, for example, in a construction contract: Bid Bonds╇ ╇ These compensate the owner for the additional costs incurred because of the low bidder’s failure to honor its bid. It is customary for public project owners to require bidders to submit a bid bond with their bid. Options to a bid bond include cash, a certified check, or an irrevocable letter of credit. Performance Bonds╇ ╇ These are legal instruments whereby a third party, usually a corporate surety, guarantees the project contractor’s performance to the project owner. Payment Bonds╇ ╇ These offer security for unpaid subcontractors and suppliers. The purpose is to avoid liens against the owner’s property. Warranties and Product Liability
Warranties apply to owners and sellers as follows: Owner’s Implied Warranty╇ ╇ Exists when the project owner extends an implied warranty to the general contractor that all documents relating to the project, such as user guides, building permits, and so on, are accurate, complete, and legal. If they are not, the contractor is entitled to recovery of damages. Contractor’s Warranty╇ ╇ There are three contractor warranties: NN
Materials/equipment will be of good quality and new unless otherwise permitted.
NN
Work will be free of defects not inherent in the quality permitted.
NN
Work will conform to requirements of the contract document.
Waivers
A waiver is the refusal to accept a legal right. In practice, everyone takes advantage of their rights at appropriate times; neglecting to do so is considered a waiver. In contracts, if, after knowledge of a supposed fraud, surprise, or mistake a party performs the agreement in part, he or she will be considered as having waived any objections to fraud, surprise, or the like. Resolutions of Disputes
Several remedies are available to resolve disputes: Dispute Review Board╇ ╇ A board of three experts is convened shortly after the contract award. Regular meetings are held, and the board’s compensation is split between the owner and the contractor. The board makes recommendations, which may be accepted or rejected. Mediation╇ ╇ Normally created by contract, mediation uses an objective third party to facilitate an amicable resolution.
280â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Binding Arbitration╇ ╇ Binding arbitration is normally created by contract, and there may be one or three arbitrators. Courts will enforce their decisions; therefore, it is binding. Litigation╇ ╇ This remedy uses a judge and jury in a court of law and/or administrative boards (state and federal agencies). Contract Breach
A contract breach is a violation of an obligation, engagement, or duty to fulfill a contract. There are two types of contract breaches: Material Breach╇ ╇ A material breach involves one of the vital aspects of the agreement, such as the contractor failing to appear on the job site for an extended period of time. Immaterial Breach╇ ╇ An immaterial breach involves a less important aspect of the agreement, such as a contractor failing to clean up the job site at the end the day. The following types of legal action can be taken for a breach of contract: NN
NN
NN
Excuse the breach. Rescind the contract—the nonbreaching party elects to rescind the contract (that is, the contract no longer has any legal force or effect). Terminate the contract for default and sue for damages (materials and goods, but not labor).
Contract Termination
There are legal ways to terminate a contract. A buyer can terminate for convenience anytime. Possible reasons for termination for convenience include: NN
The requirement is eliminated.
NN
Technical obsolescence forces the project to close or pursue the new technology.
NN
The budget can no longer support the project.
If a contract is terminated for convenience, the seller is paid for all work completed and accepted by the buyer, including preparation time and money. When a contract is terminated for default—that is, the seller did not perform the work of the contract as stated in the contract—the contractor may not be entitled to payment for work in progress but not yet accepted by the customer. The buyer, depending on the situation, may be entitled to repayment of any payments made to date on the unaccepted work.
Hands-on 4.10: Testing Your Knowledge of Contract Changes Name the type of change associated with the following descriptions:
1. Changes to the contract that may include these elements: NN
Incorrect direction of the buyer that results in an unacceptable product or service
Task 4.5: Administering Procurementsâ•…
NN
Specifications that are impossible to achieve
NN
Incorrect understanding of the contract
NN
Overinspection
NN
Failure by the buyer to disclose knowledge that changes the seller’s work
NN
Acceleration of performance
NN
Late or unsuitable owner- or customer-furnished property
NN
Misuse of proprietary data
281
2. A written order, following change management processes and signed by the contracting officer, so that a seller can make a change
3. Work that has started before a final contract is complete 4. Change that does not affect project work, such as changing mailing addresses or telephone numbers
5. A contract modification agreed to by the buyer and seller
Hands-on 4.11: Testing Your Knowledge of Legal Contract Issues 1. What is the difference between a material and an immaterial breach of contract? 2. Describe termination of a contract for convenience. 3. What is the difference between mediation and binding arbitration? 4. Under what conditions can you terminate a contract for default? 5. Name the three warranties that a seller should provide. 6. What is a surety bond?
Procurement Performance Reviews The essence of procurement performance reviews is to make sure that all procurement items are following the procurement plan. The objective of the reviews is to determine whether the contractor is following the contracted statement of work (CSOW) and if not, according to A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Fourth Edition, p. 339, “the contractor allows the buyer to quantify the seller’s demonstrated ability or inability to perform work.”
282
Phase 4
N
Monitoring and Controlling Process
Items may be identified that do not comply and become part of a punch list, which is a list of all corrections that need to be completed before final payment is made. To assist with the review relative to the contractor’s progress (as stated in the contract), the contract administrator or you (if you don’t have one) should ask these questions: N
Who will review the seller’s documentation?
N
Is the work completed within scope?
N
Does the work completed comply with stated quality parameters?
N
Will a quality audit be necessary?
N
Is the project within budget and on schedule?
N
Will a buyer inspection be needed? You may use status meetings with your contractors to collect some of this information. It is not always wise to have contractors in the same status meetings as your internal team members. Many things are discussed in these meetings that contractors do not need to know.
Inspections and Audits Inspections and audits can be required by the buyer and supported by the seller if they were included in the contract. If they were not included in the contract, they could be misconstrued as overinspection of work. These inspections can be conducted by buyer procurement personnel and others named in the contract.
Contractor Performance Report During this phase you report on the performance of the contractor to determine whether the contractor is meeting the needs of the project according to the contract. You want to identify strengths and weaknesses of the entire owner-contractor relationship. Table 4.9 is a mid-project performance review of your contractor, vendor, or supplier. If the vendor has a grade of C or below, corrections are in order. You don’t want to accept “average” or below work. You want the work to be done well or very well.
Records Management System All records are the responsibility of the project manager, who must use corporate policies, standards, and guidelines to manage procurements records. A records management system should be a part of your project management information system (PMIS) that allows for retrieval of all contracts and associated correspondence and documentation.
Task 4.6: Assessing Corrective Action€on€the Issues Log╅
283
Ta b l e€ 4 . 9 ╇╉╇╉Contractor performance report Please respond with a grade from A to F or N/A to the following statements.
A
B
C
D
F
N/A
1 Does the vendor/contractor keep you informed of project status in a timely manner? 2 Does the vendor/contractor offer alternative recommendations for any requests that could not be granted? 3 Does the vendor/contractor provide an impact analysis of time, cost, or performance for client-initiated scope changes? 4 Does the vendor/contractor maintain strong leadership and control of the project? 5 Does the vendor/contractor maintain a positive and supportive attitude and set an example of flexibility? 6 Does the vendor/contractor ensure timely monitoring and follow-up of project objectives and milestones? 7 Does the vendor/contractor use effective escalation procedures? 8 Did the vendor/contractor provide timely and appropriate documentation to you? 9 Did the vendor/contractor protect proprietary information? 10 Did the vendor/contractor present a competent and professional image? 11 Did the vendor/contractor reflect strong interpersonal skills? 12 Did the vendor/contractor display acceptable technical knowledge of the products and services that were managed in this project?
Task 4.6: Assessing Corrective Action€on€the Issues Log The objective of issue and action item management is to quickly resolve critical issues that arise as the project team undertakes major business and technical initiatives. Critical issues are obstacles that warrant management attention because they: NN
Could prevent the project from achieving scheduled milestones
NN
Are out of a given project team’s realm of control
NN
Present significant risk to the success of a project
NN
Require management escalation or intervention
284â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Scenario So far your meetings have been productive and the project is on track with cost, budget, and scope. However, you have not received closure on the quality issues that were to be completed by this time.
Scope of Task Duration This task is performed throughout the project.
Setup None.
Caveat None.
Procedure In this task you’ll learn how to: NN
Monitor action items
NN
Perform escalations
Details The issue management process encompasses the identification of critical issues, tracking progress, facilitating closure, and recording resolution for future reference. The main things to remember when dealing with issues are as follows: NN
Assign a responsible person to deal with the issue. (This could be you.)
NN
Be sure to follow up at regular intervals.
Monitor Action Items Many times project managers give a due date for resolution of the issue after they have assigned a person to get it resolved. This could be a problem if you don’t follow up until it is supposed to be resolved. Sometimes if the issue is critical, you may want a daily or even an hourly meeting with the appropriate people until it is resolved. Managing issues provides a means of monitoring and resolving those things that may jeopardize a project from meeting scheduled milestones. Sound procedures for managing issues are key to preventing, controlling, and resolving project risk—not only for a single project, but also for interdependent projects. Project team members report issues to the project manager either immediately or on status reports, depending on the issues’ criticality. The project manager then logs the issues and action items (Table€4.10).
8
7
6
5
4
3
2
1
ID
Stakeholder
Project Issues
Ta b l e€ 4 .1 0 ╇╉╇╉Issues and actions log
Owner
Resolution Status Needed By
Issues and Actions Log
Actions
Project Manager Status Report Date
Source
286â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Perform Escalations Nobody likes to go over someone’s head to escalate an issue, but at times this has to happen. Escalations are not comfortable for some project managers. The way to make this less uncomfortable is to establish an escalation process with your project team in advance. Most escalations are not caused by people not doing their work. Work is not getting done because of other factors, such as (1) the boss has pulled those workers away to do other work, (2) you were assigned someone who does not have adequate skills, or (3) work is not getting approved in a timely manner. We discussed earlier that if you set the right expectations ahead of time, you may reduce some of these challenges. For example, say that you, as project manager, had a discussion with a functional line manager about dealing with challenges, problems, or issues. You and the functional manager agreed that the functional manager would handle any challenges that came up in their area of expertise and that the only reason the functional manager would bring it to you is if they are not able to escalate the issue on their own and/or may not be able to meet the commitment made to you to complete the project work. This keeps the project manager from stepping into the functional manager’s work. Table€4.11 is a sample of an escalation matrix that may be useful to you while executing the project. Everyone has brainstormed in advance the types of situations that may need escalating.
Task 4.7: Communicating Project Status Project performance reporting is essential within a project. It ensures that stakeholders stay involved and committed to the project. Positive reports generate a level of confidence by the sponsor that the project will be successful. Negative reports, followed by a swift recovery plan, also generate assurance that the project is in the capable hands of the project manager and team members.
Scenario You communicated with your sponsors in the planning phase to decide how they wanted to receive information. You did this with your team as well. Now is the time to submit the information they require relative to the status of the project.
Scope of Task Duration This task continues for the remainder of the project.
Setup None.
2 hours
1/4 hour
2 hours
Functional Manager
1/4 hour
Functional Manager
2 hours
2 hours
2 hours
1/4 hour
2 hours
Project Manager
1/4 hour
Project Manager
1/4 hour
Project Manager
2nd Escalation
2 hours
2 hours
1/4 hour
2 hours
Sponsor
1/4 hour
Sponsor
1/4 hour
Sponsor
3rd Escalation
Escalation Matrix
1/4 hour
1/4 hour
1/4 hour
Client
Client
Client
2 hours
2 hours
2 hours
4th Escalation
The left side of the columns reflects time spent waiting to get a hold of someone prior to attempting to get a hold of someone else. The right side of the columns reflects time spent not getting a resolution before escalating to the next level.
Error Messages Instructions Incorrect Technical Questions
Technical
Product Delivery Product Is Damaged Missing Product Order Cancellations Order Verification
Logistical
1/4 hour
Functional Manager
Operational
Scheduling Obtaining Instructions Customer Information Service Information Obtaining Materials Performance Issues Service Cancellations
1st Escalation
Type of Escalation
Ta b l e€ 4 .11 ╇╉╇╉Escalation matrix
2 hours
2 hours
1/4 hour
2 hours
Senior Management
1/4 hour
Senior Management
1/4 hour
Senior Management
5th Escalation
288â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
Caveat None.
Procedure This task includes: NN
Status reporting
NN
Progress reporting
NN
Forecast reporting
Details All stakeholders need to be on the same page when it comes to project status. We do this by creating status reports, progress reports, and forecast reports. They can be created using a variety of media, but they must be current and honest.
Status Reporting Status reporting describes where the project now stands since the last status report. It should include: NN
NN
NN
Status summary of the health of the project (red, the project is off track; yellow, the project is on track but will soon be off track; green, the project is on track). Accomplishments for the report period, including the following: NN
Milestones achieved
NN
Milestones planned but not achieved
NN
Deliverables completed
NN
Work packages planned but not completed
NN
Summary of issues regarding:
NN
Risks
NN
Changes
NN
Issues and action items
Accomplishments planned for the next period NN
Milestones to be achieved
NN
Deliverables to be completed
NN
Decisions that will be needed
Progress Reporting Progress reporting describes what the project team has accomplished since the project began. These are elements of a progress report: NN
Progress of deliverables identified in the work statement
Task 4.7: Communicating Project Statusâ•…
NN
Comparisons of expenses to the expected budget to date
NN
Effectiveness of the project to date
NN
Current challenges in completing the project
NN
Quality assessment NN
NN
NN
289
Product assessment provides an assessment of the quality of deliverables to be produced by the project team based on criteria articulated in the quality plan. These may be supported by metrics such as the number of defects and nonconformities. Project assessment provides an assessment of the quality contributors being used in the project. These may be supported by metrics such as number of compliance reviews, test results, and procedural changes.
Risk
Forecast Reporting Now that you have your status, it is time to report on the results. If you have an online electronic PMIS, the form found in Table€4.12 should be completed by the task manager as well as the project manager. This form reports earned value calculations from the data received by the line manager.
Communicate Results You’ll be receiving information from many people, and it is your job to create performance reports that are sent to sponsors and senior management. As you recall from Phase 3, reports typically have cost data related to variances in the project due to scope, budget, schedule, and quality. Now is the time to use your communication plan. Communicating with Your Sponsor, Team, and Executives
The success or failure of a project is directly proportional to the amount of time spent communicating to your sponsor and team as well as the quality of those communications. Communications is 80%–90% of a PM’s job. The right people have to be kept informed in the right way at the right time as per their communication needs. Communicating with Your Sponsor╇ ╇ Other than friendly chatter, there are typically three other types of communications you’ll have with your sponsor: NN
Incident communications
NN
Informal communications
NN
Formal communications
The first type, incident communications, occurs if there is a complaint from a client or a problem that needs solving with the sponsor’s assistance. Base your need to communicate with your sponsor on the urgency of the incident or unfavorable visibility of your organization.
Date
Activity (WBS #)
Percent Complete
Weeks to Complete
Expenses per Week
Responsibilities Task Manager Completes
Project
Ta b l e€ 4 .1 2 ╇╉╇╉Project performance report
PV
Budgeted Cost for Work Scheduled EV
AC
CV
CPI
Cost Performance Cost Cost Variance Performance Index
Project Manager Completes Earned Value Actual Budgeted Cost for Cost for Work Work Performed Performed
Project Manager
Project Performance Report
SV
SVP
Schedule Performance Schedule Schedule Variance $ Performance Index
Task 4.7: Communicating Project Statusâ•…
291
Never just hand over a problem to the sponsor. The sponsor will lose confidence in your ability to handle these situations. It is essential, then, to communicate an objective assessment of the situation, including a recommended approach for dealing with the problem. The sponsor may decide to handle the situation, perhaps because of politics or rank issues, but you’ll not be viewed in a negative way. Do your homework and obtain all the facts on both sides of the issue! Then, before you communicate with the sponsor, follow these steps: 1. Describe the full impact and how it will be addressed. 2. Consult with your management, if necessary. 3. Determine who should receive the information after the sponsor has been notified. 4. Determine who should deliver the communication, if not you. 5. Determine who should be in attendance when the communication is given. (Political
protocol regarding rank, status, or title may be an issue, so be mindful of the corporate culture.) 6. Determine the method of communication. 7. Deliver the communication to the sponsor. 8. Document the communication to the sponsor—this may take the form of a note
that it took place or may be more elaborate. 9. Determine actions and issues that need to be raised. 10. Enter a notation into your correspondence and decision log.
If you receive a written complaint, it is also important to do the following: NN
Respond in writing to each element in the complaint.
NN
Acknowledge the incident and determine whether it is legitimate.
NN
Initiate actions to analyze the situation.
If the incident needs sponsor support, share the written document with your sponsor before sending it out. Otherwise, just copy the sponsor as an FYI or heads-up. The second type is informal communications. You’ll want to meet with the sponsor on a regular basis to informally discuss the project (such items as overall state of the project, progress, and performance, as well as successes). Seek regular feedback to determine whether your sponsor is happy. If the sponsor is not happy, react quickly and discuss expectations once again. Keep the sponsor in the loop. Communicate regularly via whatever media were chosen by the sponsor. You’ll avoid the “meddling sponsor” syndrome if you communicate regularly. The main rule is this: Never let the sponsor find out from someone else something that you should have communicated earlier! The third type is formal communications. This is typically done in report form and includes the following: NN
Summary of accomplishments for the current period and planned accomplishments at the next reporting period at the milestone and deliverable level
NN
Summary of cost and schedule information
NN
Review of change orders, issues, and risks
292â•…
NN
Phase 4╇ ╇ Monitoring and Controlling Process n
Issues or risks that impact the sponsor and require the sponsor’s involvement or support
NN
Discussion of sponsor concerns
NN
Identification of opportunities and threats related to actions requested by the sponsor
Remove technical issues too detailed for a sponsor. Sponsors do not want to be mired in the minutiae. Communicating with Your Project Team
The three types of communications you have with your sponsor will be the same for your project team. During incident communications, again you’ll assess the degree of urgency associated with the incident. Plan your communications accordingly: 1. Provide an objective appraisal of the situation; don’t minimize or overstate either. 2. Be prepared to engage the team in looking for alternatives and make sure the full
impact of the event is understood or determine the impact with the team. 3. Deliver the communication to the team. 4. Work with the team to determine the best course of action. Discuss concerns and
address them immediately or determine a date for responding. 5. Document the communication and the team response.
The second type is informal communication. You’ll meet with the project team (face to face or electronically) on a regular basis (daily, weekly, monthly, as appropriate) to informally discuss the project: NN
NN
NN
NN
Topics include overall state of the project, progress, performance, as well as successes, personnel changes, overview of new technology, and so forth. Meetings should be considered no-rank sessions in which the team members feel that everyone has a contribution to make. Learn to know what items are of special interest to the team. Sometimes the best information is received one-on-one over a cup of coffee or during a private telephone call.
Formal communications are the third type of communication. You should create pre-agreed-upon status reports that include the following: NN
Summary of accomplishments for the current period and planned accomplishments at the next reporting period at the milestone and deliverable level
NN
Summary of cost, effort, and schedule information
NN
Review of changes, issues, and risks
NN
Opportunities and threats related to actions requested by the team
What Executives Really Want to Know
Remember, executives are looking out for the needs of the business, so your communications with them should include those items important for the business. When seeking help
Task 4.7: Communicating Project Statusâ•…
293
from an executive with a problem that you want them to do something about, make sure you have the answers to the following questions: NN
Why was this undertaken?
NN
What is being done? By whom? Why?
NN
What exactly is the problem?
NN
What is the magnitude and importance of the problem?
NN
What approaches have been used so far to handle it?
NN
Was the approach thorough and complete?
NN
Do you have any suggested solution?
NN
Have you considered others?
NN
What’s next?
NN
Who does it?
NN
What are the time factors?
NN
What do you expect me to do?
What to Do When the Communications Plan Is Not Being Followed
If your project team is not following the communications plan, you should gather your team, sponsor, and others as necessary to have a meeting and discuss the problem. There are seven steps you can follow that do not assign blame but that provide an open forum for discussion: 1. Apologize to everyone and tell them what this meeting is about: “I am sorry; I must not
have communicated with you the expectations I have regarding our communications plan. As a result, several items have come to my attention that require revisiting the plan and hopefully gaining agreement from everyone today regarding those expectations.” 2. Explain to them specific actions that did not comply with the communications plan,
such as failure to report status on time, hearing from someone else something that should have been communicated to you, and so on. 3. Describe the impact of not following the plan, such as, “Because I did not receive timely
status, I reported incorrect information to our sponsor that made it look as if we weren’t on track with the schedule or the budget. Because status was late, our sponsor did not have the correct information when meeting with senior management. This made it impossible for our sponsor to respond to their questions. I should have contacted you, so I will take responsibility for that, but it was our agreement that you would proactively report status to me so that I would not have to ask everyone for status.” 4. Ask for feedback: “Is there anything else I can do that will bring us into compliance
with the plan? 5. Ask your meeting participants, “Is there anything you would like to do differently to
bring us into compliance? What questions do you have about everything we have discussed today?”
294â•…
Phase 4╇ ╇ Monitoring and Controlling Process n
6. Ask for commitment: “Are we now in agreement that we’ll follow the plan with the
changes we have discussed today?” 7. Thank them for their participation.
If the communications plan is not working for you, you may consider changing it so that it does work for you and your team. The success or failure of a project is directly proportional to the amount of time spent communicating to your sponsor and team as well as the quality of those communications. Communication is 80%–90% of a project manager’s job. The right people have to be kept informed in the right way at the right time as per their communication needs.
Hands-on 4.12: Testing your Knowledge of Communicating with€Your€Sponsor and Team 1. If a sponsor did not receive timely or accurate information, what might you as the project manager expect the sponsor to do?
2. You are in a meeting with your sponsor. You give the sponsor timely and accurate information about status, but the news is not good. There are unresolved issues. Before you can deliver your plan to deal with the problem, the sponsor says to you, “That is not what I want to hear, so let me ask again, what is the status of the project?” You tell the sponsor the same thing. He asks you the same question again. What should you do?
3. What items can you informally communicate with your project team? 4. What items must have a written response?
Hands-on 4.13: Testing your Knowledge of Professional Responsibility€in€the Monitoring and Controlling Phase 1. You have just found out that your earned value reports are not accurate because the data from one individual is false. What would you do?
2. What should you do if you find that your sponsor is in collusion with one of the project suppliers?
3. You take your responsibility for the project very seriously. You find that some of your internal team members are putting their regular work ahead of their project work. Can you do something about this? If so, what? How could this be avoided in the future?
4. You visited the job sites and saw that one of the subcontractors was disrespecting another subcontractor. What would you do?
Phase
5
Closing Process
Projects close for many reasons. They can close because they become an ongoing operation or lack funds and resources. The need for the project may have gone away because of technological advances, or the project may simply become extinct because it is completed and accepted by all stakeholders. The Apples and Pears project is coming to a close because it is almost finished. There are a few things left to do, however. You want to be sure that all work has been completed and accepted by the customer. The closing phase consists of the following: Project Closure╇ ╇ Finalize all activities across all of the project process groups to formally close the project or a project phase. Contract Closure╇ ╇ Complete and settle each contract, including the resolution of any open items.
Task 5.1: Formalizing Project€Acceptance It has been said that no project is 100% complete. That may be true on IT projects to some degree and also for research and development (R&D) projects. R&D projects continue as long as they are funded or finally obtain the intended result, but most projects have a formal project acceptance and closure process. This task applies to end-of-phase reviews as well. Why wait until the end of the project to verify deliverables or to provide feedback to your team and client?
Scenario The project is just about over. All issues have been resolved, and the Apples and Pears stores will be ready to open by November 1 as planned. As project manager, you know that even if the work is done, some things still have to happen before you can formally close out the project, such as formal acceptance by the customer, closing out the contract, and record keeping.
Task 5.1: Formalizing Project€Acceptance╅
297
Scope of Task Duration This task occurs throughout the project, but most of the activities will be performed after the monitoring and controlling phase, through the end of the closure phase.
Setup None.
Caveat None.
Procedure In this task you will learn how to obtain acceptance from the customer.
Details It is time to obtain signed acceptance from the customer. A formal acceptance document (see Table€5.1 in a moment) officially records the results of reviews, inspections, and tests conducted throughout the project to validate that deliverables meet acceptance criteria. The product as a whole receives final acceptance upon project completion. This final acceptance comes from the customer and the organizations that will use and support the product.
Purpose of Formal Acceptance The formal acceptance by the customer captures the consensus of the customer, sponsor, and other stakeholders that the project has been completed and meets its objectives. Acceptance criteria should be reviewed and mapped back to the requirements/scope document. The most common form of formal acceptance document is the customer acceptance document, acknowledging that the project has met its requirements and contractual agreements.
Application of Formal Acceptance Formal acceptance is used as the legal acknowledgment that the project deliverables have been delivered as intended. It is used to certify the project as complete and to release the project organization from any future obligations. Because of the important and heavily contractual nature of the formal acceptance document, it is normally developed early in the project and reviewed with the customer. It is then preserved and used during the phase or project closeout processes.
298â•…
Phase 5╇ ╇ Closing Process n
Acknowledgment That Objectives Are Met When the objectives have been met, you need to get acknowledgment from the customer and others to officially end the project. This acknowledgment may be formal acceptance, usually the signing of an acceptance document (sign-off), as shown in Table€5.1, or it may come in a more informal way, such as when the customer pays for the product and uses it over a period of time. Ta b l e€ 5 .1 ╇╉╇╉Project acceptance document Project name Date project started Name of client What deliverables have been completed that need to be accepted? These could include deliverables due at the close of the project, as well as any deliverables created during the life cycle that have not been formally approved.
Statement of formal acceptance
This document establishes formal acceptance of all the deliverables for the
project. The project has met all the acceptance criteria as defined in the requirements document and project scope statement. A project audit has been performed to verify that all deliverables meet performance and product requirements. Additionally a product evaluation has been performed and determined that all products meet the quality and functional requirements defined within this project. The Project Manager is authorized to continue with the formal closeout of this project. The closeout process will include a postproject review, documentation of lessons learned, release of the Project Team, closeout of all procurements, and archiving of all relevant project documents. Once the closing process is completed the Project Sponsor will be notified and the Project Manager will then be released from the project.
Degree of acceptance Changes needed Defects found
Accepted ¨
Accepted with Changes ¨
Not Accepted ¨
Task 5.2: Transferring Ownership of€Deliverables╅
299
Outstanding change requests Product changes Signature sponsor
Date
Signature owner
Date
Hands-on 5.1: Testing Your Knowledge of Formal Project Acceptance 1. What should the project manager do if the final outcome of the project is not accepted? 2. Does formal project acceptance release you, the project manager, from further obligations?
3. What do you do if the customer says he will sign the document but wants additional concessions from you?
Task 5.2: Transferring Ownership of€Deliverables We said earlier that a deliverable is not complete until the client has accepted it. Once the client has accepted the deliverable, then there are activities that must be performed to transfer ownership to the owner of those deliverables.
Scenario You are meeting with your sponsor to review all of the deliverables to make sure they are accurate and complete. Later when all is finished you will present the final project report to Olivia Ross.
Scope of Task Duration This should only take a day or two depending on the size of the project.
300â•…
Phase 5╇ ╇ Closing Process n
Setup None.
Caveat None.
Procedure In this task you will learn how to transfer deliverables.
Details It is important to plan for the turnover. A meeting should be held to discuss knowledge transfer and documentation transfer as well as the physical product or service. Be sure that the people with the right skills are available and that those who will take responsibility for the product are in attendance.
Deliverable Acceptance Deliverable acceptance should be based on an evaluation of the deliverable using acceptance criteria set during the early phases of the project. You set requirements when the project began, and those have to be met for the deliverable to be accepted. Testing the deliverable against the acceptance criteria validates it. Table€5.2 is a template that can be used when reviewing deliverables with users or owners.
Non-Acceptance of the Deliverable As the project draws to a close, you shouldn’t have any deliverables that are not acceptable. You have been monitoring and controlling the progress of deliverables since the execution phase started. You cannot expect the client to accept anything that is not complete or correct. If you find that the deliverables are incomplete or not correct, penalties may be assessed for non completion (if spelled out in the contract) and final payment to the contractor may be withheld.
Turnover to Operations Those products that have a long life may require manufacturing, ongoing maintenance, ongoing support, and/or ongoing operational use. Turning the product over requires that training, documentation, and initial support activities be part of the project deliverables. A formal document should be signed by the operations manager and the project manager acknowledging transfer and control. Table€5.3 is a sample of a formal transfer document.
Task 5.2: Transferring Ownership of€Deliverables╅
Ta b l e€ 5 . 2 ╇╉╇╉Deliverable acceptance document Deliverable Acceptance Date
Project #
Project Name
Sponsor
Telephone #
Project Manager
Telephone #
Description of Deliverable
Acceptance Criteria
Reviews, Inspections, and Test Results (Attach supporting documents.)
Business, Operations, and/or Support Areas Involved Support Desk
Operations
Sales
Management
Users
Others
Accepted By Sponsor
Date
External Customer
Date
Internal Customer
Date For Project Office Use Only
301
302â•…
Phase 5╇ ╇ Closing Process n
Ta b l e€ 5 . 3 ╇╉╇╉Formal product transfer to operations Formal Product Transfer to Operations Project Name
Project Completion Date
Project Manager Name of Product or Service
Operations Owner Signature
Turnover Date
Project Manager Signature
Turnover Date
Name of Product or Service
Operations Owner Signature
Turnover Date
Project Manager Signature
Turnover Date
Name of Product or Service
Operations Owner Signature
Turnover Date
Project Manager Signature
Turnover Date
Name of Product or Service
Operations Owner Signature
Turnover Date
Project Manager Signature
Turnover Date
Name of Product or Service
Operations Owner Signature
Turnover Date
Project Manager Signature
Turnover Date
Hands-on 5.2: Testing Your Knowledge of Transferring Ownership€of€Deliverables 1. What happens when a deliverable is not accepted? 2. Can the contract be closed out if a deliverable is not accepted? Why or why not? 3. A service representative works the help desk in her IT department. She receives a call concerning a new product that was just released. She has never heard of the product. What has happened?
Task 5.3: Obtaining Final Legal and€Administrative Closure╅
303
Task 5.3: Obtaining Final Legal and€Administrative Closure Closing a contract includes the formal acceptance of the product, service, or result purchased and agreement that the contract has met all line items. There may be many contracts for the project that could be closed out during the life cycle of the project as well as the end of the project.
Scenario As project manager for Cimarron, you have just completed a walk-through with Todd Franks, the superintendent of construction at the Apples and Pears store in Portland. The vision has for the most part become a reality, but several items are not totally completed. Franks has prepared a punch list (a list of all items not completed) and has reviewed this list with the contractor. The contractor advises he will have it done in a few days.
Scope of Task Duration This task starts as soon as contract items are completed and could last for the duration of the project.
Setup None.
Caveat None.
Procedure In this task you will learn how to close out a contract at any time during the project life cycle.
Details Most of the time a procurement officer and someone in the legal department actually close out the contracts, but they need information from you as the project manager. Procurement personnel want to know that all contract line items are fulfilled so that final payments can be made, and that a contractor closeout letter has been sent to the contractor.
Contract Closeout Template It’s difficult to remember everything that has to be done during this phase, so using a template will guide you through the process of closing out a contract. Table€5.4 is a sample of a contract closeout template you may wish to use.
304â•…
Phase 5╇ ╇ Closing Process n
Ta b l e€ 5 . 4 ╇╉╇╉Contract closeout template Contract Closeout Template Contract #
Last Modification # and Date Task
Contract Amount Completed: Yes or No
1. Does the contract file contain an executed copy of the contract, negotiation background data, appropriate determinations, and all required documentation?
Yes
No
2. Have all contract changes been formalized, and does the file contain executed copies of the related modifications with appropriate backup information?
Yes
No
3. Does the contract file contain copies of all applicable delegations of authority to administer the contract?
Yes
No
4. Have all financial matters been resolved (disputes, liabilities, credits or refunds, etc.)?
Yes
No
5. Does the file include adequate documentation to evidence receipt, inspection, and acceptance of all deliverables?
Yes
No
6. Have all reports required under clauses been received? a. Reporting of royalties b. Notice and assistance regarding patent and copyright infringement c. Patent rights
Yes
No
7. Have security items been retrieved, such as badges and building access entry?
Yes
No
8. Has equipment been returned, such as laptops and printers?
Yes
No
9. Has there been a closeout meeting with the supplier?
Yes
No
10. Has the supplier performance evaluation been sent to the contract administrator?
Yes
No
11. Has a final invoice for this supplier been sent to accounting?
Yes
No
12. Have lessons learned been documented for this supplier?
Yes
No
13. Have all unused funds been closed from financial systems?
Yes
No
14. Have all other outstanding actions been taken and adequately documented in the file?
Yes
No
If Not, Why Not?
Task 5.3: Obtaining Final Legal and€Administrative Closure╅
305
Contract Closeout Letter to Contractor Figure€5.1 represents a memorandum that can be used to formally acknowledge that the contract has been closed. This memo should be sent to each vendor, contractor, or seller that has a negotiated contract. Your procurement department typically has a letter such as this and will send it out, but if you don’t, this will suffice. F ig u re€ 5 .1 ╇╉╇╉Sample project closeout letter MEMORANDUM TO: FROM: Procurement officer DATE: SUBJECT: Formal contract closeout letter Section I 1. The contractor has completed the required deliveries and/or performed all services, and the client has inspected and accepted the deliverables and/or services. 2. Below is information: Contractor administration office name Contractor administration address 3. Below is information: Contractor name Contractor address Section II 1. Dollar amount of excess funds, if any. 2. Voucher number and date, if final payment has been made, or invoice number and date, if the final approved invoice has been forwarded to contract administration. 3. All required contract administration actions have been fully and satisfactorily accomplished (see Section III). Name of contracting officer Signature
Date
Section III The following requirements have been met for closure of the subject contract: 1. Disposition of confidential or proprietary material is completed. 2. Final patent report is cleared. 3. Final royalty report is cleared. 4. There is no outstanding value engineering proposal. 5. All interim or disallowed costs are settled. 6. Price revision is completed. 7. Subcontracts are settled by the prime contractor. 8. Prior year indirect cost rates are settled. 9. Contract audit is completed. 10. Contractor’s closing statement is completed. 11. Contractor’s final invoice has been submitted. 12. Contractor’s closing statement is completed.
(continues)
The following requirements have been met for closure of the subject contract: 1. Disposition of confidential or proprietary material is completed.
306â•…
2. Final reportProcess is cleared. Phase 5╇ ╇patent Closing n
3. Final royalty report is cleared. 4. There is no outstanding value engineering proposal. 5. All interim or disallowed costs are settled.
F ig u re 5 .1 ╇ ╇╇ (continued)
6. Price revision is completed. 7. Subcontracts are settled by the prime contractor. 8. Prior year indirect cost rates are settled. 9. Contract audit is completed. 10. Contractor’s closing statement is completed. 11. Contractor’s final invoice has been submitted. 12. Contractor’s closing statement is completed. 13. Contractor’s final invoice has been submitted.
Hands-on 5.3: Testing Your Knowledge of Legal and€Administrative€Contract Closure 1. In the scenario at the beginning of this task, the contractor has still not returned to finish up the punch list. The store will open on November 1, whether the items are fixed or not. Should you close out the contract? After all, the items are just little things. Why or why not?
2. If the contractor never returns, what should you do?
Task 5.4: Distributing Final Reports In this task you will make sure you have captured all relevant data about the project and will create and distribute the final project report. Then all of this data will be archived according to your company procedures and retained according to statutory guidelines.
Scenario You have gathered all pertinent information and are well on your way to finalizing all of the documents.
Scope of Task Duration The duration of this task should be two to three hours or more, depending on the complexity and duration of the project. You have all of your phase reports and logs to get the information for your final report.
Task 5.4: Distributing Final Reportsâ•…
307
Setup None.
Caveat None.
Procedure In this task you will learn to do the following: NN
Apply appropriate updates to organizational process assets
NN
Comply with statutory requirements
NN
Release project participants
NN
Create a final project report
Details You can see by now just how many documents you have prepared for the project. Some of those documents caused changes to your organizational process assets. You will need to update them. Also, you must retain the organizational knowledge you have learned from the project as well as comply with statutory requirements. This task has actually been ongoing across the life of the project as well as needing to be done for the last time at the end of the project.
Update Organizational Process Assets Many times during a project, particularly if the project has significant duration or high complexity, normal processes will be bypassed by using workarounds. In fact, some workarounds may improve the bypassed process, so it is important to keep process records up-to-date. For example, on telephone company projects, a variety of equipment is used. Most of the equipment is assigned from existing inventories. If the assigned piece of equipment fails, another will be used. But unless the completed records show the actual piece of equipment used, it would be a maintenance and inventory nightmare if the records were not updated. The updating is needed on construction projects or any other type of project for which the final records must reflect the approved and accepted deliverable. You always want the records to match all of the change orders. These records are sometimes called as built. You sure wouldn’t want to look at a set of working plans showing that a wall was missing or that the electrical plan had changed but was not reflected on the as-built document, or find that hardware used on an IT project wasn’t the hardware that was planned. Table€5.5 is a checklist that mirrors the organizational process assets in A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Fourth Edition, p. 32. You can use it as a reminder of what items need to be updated.
308â•…
Phase 5╇ ╇ Closing Process n
Ta b l e€ 5 . 5 ╇╉╇╉Organizational process assets Organizational Process Assets Process and Procedures Organizational standard processes
Guidelines
Templates
Organizational communication requirements
Standards
Y
N
Policies
Y
N
Standard product and life cycles
Y
N
Quality policies and procedures
Y
N
Standardized guidelines
Y
N
Work instructions
Y
N
Evaluation criteria
Y
N
Performance measurement criteria
Y
N
Risk
Y
N
WBS
Y
N
Network diagram
Y
N
Contract templates
Y
N
Specific technology available
Y
N
Allowed communication technology Y
N
Record retention policies
Y
N
Security requirements
Y
N
Y
N
Final project audit
Y
N
Project evaluations
Y
N
Product validations
Y
N
Acceptance criteria
Y
N
Time reporting
Y
N
Required expenditure and disbursement reviews
Y
N
Accounting codes
Y
N
Standard contract provisions
Y
N
Issue/defect identification and resolution
Y
N
Action item tracking
Y
N
How documents will be modified
Y
N
How changes will be approved
Y
N
How changes will be validated
Y
N
Risk categories
Y
N
Probability definition and impact
Y
N
Probability and impact matrix
Y
N
Y
N
Organization’s set of standard processes tailored to fit the project Project closure guideline or requirements
Financial controls procedures
Issue and defect management procedures defining issue and defect controls Change control procedures that determine:
Risk control procedures
Procedures for prioritizing, approving, and issuing work authorizations
Task 5.4: Distributing Final Reportsâ•…
309
Corporate Knowledge Base (Process measurement databases used to store and retrieve information.) Again, use this reminder checklist to determine what if anything needs to be updated based on your project. Y
N
Scope baseline
Y
N
Cost baseline
Y
N
Schedule baseline
Y
N
Quality baseline
Y
N
Performance measurement baselines
Y
N
Project calendars
Y
N
Network diagrams
Y
N
Risk registers
Y
N
Planned risk-response actions
Y
N
Defined risk impacts
Y
N
Project documents
Y
N
Project closure information
Y
N
Project closure documentation
Y
N
Results of previous project selection decisions
Y
N
Previous performance information
Y
N
Information from the risk management effort
Y
N
Process measurement databases Project files
Historical information and lessons learned knowledge bases
Y
N
Configuration management knowledge bases
Baselines of all company standards
Y
N
Policies and procedures
Y
N
Financial databases
Labor hours
Y
N
Incurred costs
Y
N
Budgets
Y
N
Project cost overruns
Y
N
Issue and defect management database
Comply with Statutory Requirements Your organization has a record retention policy for all types of records. Most project management documents are kept indefinitely. Why? Some project results, such as building a bridge, have a very long life span, and if the bridge should fail, going back to the original project documents might help uncover the cause of the failure.
Release Project Participants Some employees have been on your project temporarily, others part-time, and a few for the entire duration. In any case, you must make sure that their working hours on your project are accounted for and are included in your final report. Team members who work in a matrix organization should return to their regular position with appropriate feedback to their
310â•…
Phase 5╇ ╇ Closing Process n
manager. If team members are in a projectized organization and are no longer needed, the project manager may have to lay them off or find them another position within the organization.
Create Final Project Report Table€5.6 is a template you may consider using in order to create a final project report. This report is a key document summarizing the project and its results, and should be sent to your sponsor and others in senior management with a need to know. Ta b l e€ 5 . 6 ╇╉╇╉Ten-step final report template Ten-Step Final Project Report Project Name
Completion Date
Project Manager
Telephone Number
#
Item
1. Executive Summary 2. Project introduction 3. Major Project Activities 4. Project Results 5. Communications 6. Key Project Changes 7. How Defects Were Managed 8. Vendor Performance 9. Project Challenges 10. Transition to Operations
Task 5.4: Distributing Final Reportsâ•…
311
Perform Final Project Closure Finally, you are done with the project. Or are you? Use the checklist found in Table€5.7. If any of your answers are no, you must revisit the item to be sure it is complete before final project closure occurs. Ta b l e€ 5 . 7 ╇╉╇╉Closure phase checklist CLOSURE PHASE CHECKLIST 1. Are any deliverables outstanding?
Yes
No
2. Are there any internal outstanding commitments?
Yes
No
3. Have all costs, internal and external, been appropriately charged to the project?
Yes
No
4. Have all work packages and work orders been completed?
Yes
No
5. Have any incomplete work packages been documented and rationalized?
Yes
No
6. Has management been notified regarding the availability of project personnel?
Yes
No
7. Has management been notified regarding the availability of project facilities?
Yes
No
8. Has the project plan been archived with all support data?
Yes
No
9. Has agreement been reached with the project sponsor on disposition of remaining deliverables?
Yes
No
10. Have suppliers been notified regarding any outstanding commitments?
Yes
No
11. Have operations and maintenance procedures been put into place and activated?
Yes
No
12. Has the final project report been written and sent back to the sponsor?
Yes
No
13. Have project team concerns regarding future assignments been addressed if this project took place in a projectized organization?
Yes
No
14. Is the project team dedicated to the remaining project commitments?
Yes
No
15. Have personnel been reassigned or notified of reassignment methodology?
Yes
No
PERSONNEL
312â•…
Phase 5╇ ╇ Closing Process n
Hands-on 5.4: Testing Your Knowledge of Creating and Documenting the Project’s Final Report 1. What would happen if a knowledge database or similar instrument did not exist in your organization?
2. If a knowledge database is in place, what could happen if it wasn’t regularly maintained?
3. If a process was improved during the execution and completion of a project, what should the project manager do?
4. Should the final project report be given to team members?
Task 5.5: Collating Lessons Learned On a project of any size, there will be lessons learned. There is no value to these lessons, however, if they are not heeded or if they are simply documented and filed away.
Scenario As project manager at Cimarron, you have been capturing lessons learned throughout the project and are preparing the lessons learned thus far. You keep your lessons learned in a folder you created on Cimarron’s intranet. You have prepared a document that you will send to team members ahead of your lessons-learned meeting so the team can ponder the questions prior to the meeting. You have monitored corrective and preventive actions, and your team is well versed on lessons learned because you and your team have held lessonslearned meetings after each phase as well as after challenges have been overcome. You are now about to conduct the lessons-learned meeting for the project and are going to use a template so you do not forget anything.
Scope of Task Duration This task is performed throughout the life of the project.
Setup None.
Task 5.5: Collating Lessons Learnedâ•…
313
Caveat None.
Procedure In this task you will learn how to determine and document lessons learned.
Details Lessons learned are meant to be a learning tool. They are simply that—a means for learning from issues, challenges, and successes. This learning should not be limited to the current project team members but should include anyone who will work on projects in the future, provided the lessons are archived appropriately.
Lessons Learned During the Project Lessons learned during the life cycle of the project help the project manager use what was learned throughout the remainder of the project. They are performed (but not limited to) the end of each phase, after major issues have been resolved or after risk events or major successes. They are documented by the project manager. After these questions have been answered, you will want to document the answers in a lessons learned by phase template, such as the one in Table€5.8. Notice that this template doesn’t include a box for what went wrong. When people start thinking about what went wrong, negatives come to mind, and finger-pointing and blame enter the picture. As project manager, you may wish to facilitate what can be done differently next time to be sure no blame is cast. You are here to fix a problem, not to affix the blame.
Independent Evaluators When a very large project is complete, we recommend that a third party or parties not connected with the project conduct the evaluation. The evaluators should have access to people with the technical and business expertise needed to evaluate the various aspects of the project and the product.
Project Team Reviews If an external review is not conducted, the project team itself can perform the review because they most likely have all project records available to them and will have been intimately involved throughout the project. It is important to remember to invite team members who have left the project, not just those who remain at the end.
Planning for the Review A post-project review requires some planning; unless the project is quite small, you may not be able to conduct it in one meeting. The following represents what needs to be done to prepare for the final evaluation: NN
Review the project files.
NN
Conduct interviews.
314â•…
Phase 5╇ ╇ Closing Process n
Ta b l e€ 5 . 8 ╇╉╇╉Lessons learned by phase template LESSONS LEARNED BY PHASE Project Name/Number:
Prepared by:
Date:
Phase:
Project Manager:
Project Sponsor:
PROJECT MANAGEMENT Consider what went well, what can be done differently next time, and how we celebrated success. Resource Management: Change Control: Cost Performance: Quality Control: Status Reports: Vendor Selection: TECHNICAL PERFORMANCE Consider what went well, what can be done differently next time, and how we celebrated success. Requirements/Specifications: Test Plan: Construction: Testing Results: Training: Documentation: Vendor Management: COMMUNICATION FACTORS Consider what went well, what can be done differently next time, and how we celebrated success. Interaction with Team Members: Interaction with Sponsor: Interaction with Customer: Interaction with Management: Interaction with Suppliers: OTHER Consider what went well, what can be done differently next time, and how we celebrated success. Schedule Performance: Risk Events: Deliverable Management: Corrective Action Taken: Preventive Action Taken: Issues Management:
Task 5.6: Archiving Project Documentsâ•…
NN
Gather and analyze data.
NN
Review client/user acceptance.
NN
315
Evaluate realized costs, benefits, operational efficiency, and product performance—this may not be known until a product has been in the marketplace for a while and can produce measurable results.
NN
Measure operating efficiency and product performance.
NN
Evaluate the technical approach.
NN
Evaluate training and documentation provided to external customers and internal clients.
NN
Evaluate relationships and communications.
NN
Evaluate vendors and vendor-provided products.
NN
Verify attainment of project goals.
NN
Measure the success of quality improvement.
NN
Evaluate work efforts.
NN
Recommend changes to standards and procedures.
Project Evaluation Review Questions The purpose of a post-project assessment is to assess product, project, and contract acceptance. The assessment can be conducted by independent evaluators or by the project team. Table€5.9 contains project evaluation review questions to assist you in preparing your lessons learned.
Hands-on 5.5: Testing Your Knowledge of Lessons Learned 1. If an action item that is not completed exists on your lessons-learned document, can you close out the project? Why or why not?
2. How do you handle a problem identified in your lessons-learned meeting that is clearly attributable to a team member who left the project in an earlier phase because their work was completed?
Task 5.6: Archiving Project Documents The overall project management process should include procedures for transferring knowledge to people throughout the organization as well as retain that knowledge for future use.
No No No No No No No No No No
Yes Yes Yes Yes Yes Yes Yes Yes Yes
Were meetings and reviews well organized?
Were project phases well planned?
Were checkpoints adequate for control?
Were the roles and responsibilities of all project participants clearly defined?
Was the project schedule well coordinated?
Was the schedule followed?
Was project documentation prepared so that it met professional project standards?
Was project status provided in a timely fashion?
Did internal customers fulfill their responsibilities to provide resources?
3
4
5
6
7
8
9
10
11
2
Yes
Were project expectations well managed, defined, and met?
1
Were products thoroughly analyzed and acceptance criteria clearly stated?
Yes or No No
Questions
Date
Name of Evaluator
Yes
#
Project End Date
Name of Project
PROJECT EVALUATION REVIEW QUESTIONS
Ta b l e€ 5 . 9 ╇╉╇╉Project evaluation review questions
Why or Why Not?
Were approvals provided in a timely fashion?
Did internal and external customers take part in work sessions, reviews, and testing of the product, and did they provide accurate information?
Were issues adequately researched and appropriate decisions made?
Was the change control procedure agreed upon in advance?
Was the change control procedure followed?
Did the product satisfy the expectations of its sponsors, clients, and users?
Did the product conform to its specifications, including performance constraints?
Were training programs effective?
Were business objectives (including quality improvements) achieved?
12
13
14
15
16
17
18
19
20
No No
No No No No No No No
Yes Yes
Yes Yes Yes Yes Yes Yes Yes
318â•…
Phase 5╇ ╇ Closing Process n
Scenario You know how important it is to be able to refer back to original project documents. In the past, each project manager kept their own project’s records. You have decided to create a knowledge learning center where project records can be archived and reviewed by anyone.
Scope of Task Duration This task should not exceed one week; however, if a repository for project records does not exist, this may become a separate project for IT.
Setup None.
Caveat None.
Procedure In this task you will learn how to retain organizational knowledge.
Details A knowledge database creates the foundation for both coaching and peer group activities. The database takes the lessons learned from individuals and projects and records them so that they are easily accessible to anyone with a need to learn. A knowledge database is particularly useful for project managers who want to learn from previous projects. Knowledge databases can be placed wherever appropriate for your organization but are typically maintained by the project management office (PMO), if there is one. If a knowledge database doesn’t already exist, you will have to create your own and see that it is maintained. They are certainly useful, but it should be required that whoever posted a particular piece of knowledge should consistently keep the information current. If this doesn’t happen, the information may be erroneous or out-of-date.
Project Documents to Be Retained Project documents to be included in the knowledge database could include, but are not limited to, the following: NN
Project control book
NN
Phase 1 initiation documents including project charter
Task 5.7: Measuring Project Team Performanceâ•…
NN
Phase 2 project plans
NN
Phase 3 execution documents
NN
Phase 4 project management monitoring and control documents
NN
Phase 5 project and contract closure documents
NN
All phases’ correspondence, meeting notes, technical files, and so on
319
Task 5.7: Measuring Project Team Performance Performance reviews are a critical part of personal development, yours as well as the team’s. Most of the project personnel have come and gone, and vendors may have come and gone, but you have been managing the project from beginning to end. You want to be sure that you provide performance feedback for your team members and are willing to receive feedback from them.
Scenario Most of the team members have left the project, and you are ready to provide feedback to their managers about their performance on your project. This will be easy because the hard work is already done. At the beginning of the project, you shared with your team what items they would be measured on and spent time at regular intervals with each of them to share their strengths and weaknesses.
Scope of Task Duration This task starts soon after the project starts, and ends soon after the project is complete. You may also find yourself performing this task as team members change across the project life cycle.
Setup None.
Caveat None.
320â•…
Phase 5╇ ╇ Closing Process n
Procedure In this task you will learn about the following: NN
Providing team performance reviews
NN
Your team’s performance review of you, the project manager
NN
Buyers’ evaluations of sellers
Details Providing feedback on team and project manager performance is essential. Even though your team members may not directly report to you, you must provide their managers with feedback on their performance on your project so the managers will have the information necessary to write an appraisal on their direct report. If you are in a projectized organization, you would, of course, write an appraisal rather than just provide feedback because the team members would be your direct reports. You should also provide feedback throughout the life of the project or any time a team member has completed a task and left the project. Many times lessons learned are conducted only at the end of the project, and the team members who have left the project are forgotten. Project managers also need feedback on their performance. A project manager’s boss needs the input from those who interacted with the project manager so that an accurate assessment of their performance can be documented on their appraisal.
Provide Feedback on the Team’s Performance Table€5.10 represents a sample of feedback from the project manager to a team member. Because many of the questions are subjective, you must be specific with the feedback if the score was below or above a C. Some project managers take the easy way out and only provide a C, or average, rating to their team. However, you have been working with your team for weeks, and it is vital that you spend the extra time documenting above-average or superior performance with specific examples. The same is true for below-average performance, though if performance was poor, as project manager you should have handled the performance issue during the project.
Provide Feedback on the Project Manager’s Performance One of the most useful tools you will use is feedback on yourself as the project manager. Ask your team, sponsor, and customer to be candid and truthful with the feedback they provide because it is important for your personal development as a project manager. Take the feedback graciously and be honest with yourself about the improvements you need to make. Table€5.11 is a sample of a project manager’s performance review. Your manager will also want to write an appraisal of you. Although you have received feedback from your team, your manager may be appraising other things, such as feedback from vendors, other internal personnel, and those external to the project.
Task 5.7: Measuring Project Team Performanceâ•…
Ta b l e€ 5 .1 0 ╇╉╇╉Team member performance report Team Member Performance Report Name of Project Project End Date Project Manager Please respond with a grade from A to F or N/A to the following statements. My team member: Was punctual at meetings and conference calls. Met quantitative and qualitative commitments. Participated with high energy and a good attitude. Reported status in a timely manner as agreed. Was supportive and respectful of team members and others. Was willing to accept responsibility and accountability. Solved conflicts without alienating others. Accepted challenges cheerfully. Displayed a total commitment to the project. Applied technical judgment when necessary. Communicated effectively with other team members, the project manager, and others associated with the project. Set an example of flexibility. Used timely, effective escalation procedures. Met individual project objectives and milestones. Was an honest steward of time and expenses. Added value to the project.
A
B
C
D
F
N/A
321
322â•…
Phase 5╇ ╇ Closing Process n
Ta b l e€ 5 .11 ╇╉╇╉Project manager performance review Project Manager Performance Review Name of Project Project End Date Name (Optional) Please respond with a grade from A to F or N/A to the following statements. My team member: Displayed a total commitment to the project. Clearly defined team member roles and responsibilities and held them accountable. Met due date commitments or provided the best possible alternative if the original due date could not be met. Communicated customer/project goals to all team members and kept them involved. Maintained strong leadership and support of the project team; set an example of flexibility. Effectively utilized project management tools when applicable (e.g., network diagrams and Gantt charts). Ensured timely monitoring and follow-up of project objectives and milestones. Used timely, effective escalation to ensure customer satisfaction. Conducted timely project meetings and conference calls with team members; had control of meetings. Negotiated and published project plans. Provided on-site support or was otherwise available. Added value to the project. Had good knowledge of products and services involved in the project. Conducted a post-project evaluation and provided feedback on successes or suggestions for improvement. Was courteous and professional. Comments:
A
B
C
D
F
N/A
Task 5.7: Measuring Project Team Performanceâ•…
323
Provide Feedback on the Seller’s Performance Most organizations have a preferred vendor list, consisting of vendors who have proved themselves to you in the past. But as everything else changes, so do your vendor organizations. There may be new ownership or new leadership or a myriad of other changes that could cause a decline in the quality level of their performance. A vendor evaluation should be provided to your procurement department so they can see whether this vendor should continue to be on the preferred list. Table€5.12 is a sample vendor evaluation questionnaire you may consider using.
Hands-on 5.6: Testing Your Knowledge of Performance Reviews 1. Why should the project manager write a performance review of team members when feedback has been provided to the team members since the project began?
2. What should you do if you are uncomfortable providing less-than-satisfactory feedback? 3. Is it appropriate to ask your team members to write their own performance reports?
Hands-on 5.7: Testing Your Knowledge of Professional Responsibility€in€the€Closure Phase 1. Now that the project is over, you are preparing feedback documents for team members. The feedback will eventually go to their supervisors. One of the team members performed poorly but you don’t want to give a bad report so you simply say that the individual was an “average” performer. Does this help or hurt the individual? Why or why not?
2. A contractor who worked on your project is on the “preferred vendor list” at your company. He was very difficult to work with, and was rude to your people as well as his own. He completed his work well. Should he remain on the “list”? Why or why not?
3. You are a team member and have received feedback from your project manager. On a scale of 1 to 5, with 5 being excellent, she rated you a 2. There was no other feedback. What do you do?
Did the vendor/contractor display a total understanding and commitment to the project?
Did the vendor/contractor keep you informed of project status in a timely manner?
Did the vendor/contractor offer alternative recommendations for any requests that could not be granted?
Did the vendor/contractor provide an impact analysis of time, cost, or performance for client-initiated scope changes?
If the vendor/contractor was also the project manager, did the vendor/contractor maintain strong leadership and control of the project?
Did the vendor/contractor ensure timely monitoring and follow-up of project objectives and milestones?
Did the vendor/contractor use effective escalation procedures?
Did the vendor/contractor provide timely and appropriate documentation for you?
Was a post-project assessment meeting conducted with the client?
Did the vendor/contractor protect proprietary information?
2
3
4
5
6
7
8
9
10
Questions No No No No No
No No No No No
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes or No
Date
Project Manager
1
#
Project End Date
SELLER EVALUATION
Project Name
Ta b l e€ 5 .1 2 ╇╉╇╉Sample seller evaluation
Why or Why Not?
Did the vendor/contractor present a competent and professional image?
Did the vendor/contractor reflect strong interpersonal skills?
Did the vendor/contractor display acceptable technical knowledge of the products and services that were managed in this project?
Were appropriate vendors/contractors identified?
Did the vendor/contractor provide an adequate description of products and services they were to provide?
Were roles and responsibilities understood among vendors/contractors?
Was the vendor/contractor aware of the criteria for evaluation? (product acceptance criteria)?
Was the vendor/contractor made aware of actual costs vs. expected costs?
Did the vendor/contractor adhere to the schedule?
Was the vendor/contractor cooperative?
Did the vendor/contractor maintain a positive and supportive attitude and set an example of flexibility?
Were any specific problems or issues attributable to the vendor/contractor?
Would you recommend the vendor/contractor used on this project for future projects?
11
12
13
14
15
16
17
18
19
20
21
22
23
No No No No No No No No No No No No No
Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
326â•…
Phase 5╇ ╇ Closing Process n
The project is now complete. As with most projects, you and your team have learned many new things that you may be able to use in future project assignments As you have seen, project management is never boring. And it is now considered a key management business strategy. Hopefully, you will eargerly continue your project management voyage. Our best wishes to you on your journey.
Appendix
Solutions
328â•…
Appendix╇ ╇ Solutions n
Phase 1 Solutions Hands-on 1.1: Testing Your Knowledge of€Corporate€Strategy 1. Project managers want to be able to answer the question “Why are we doing this?”
and focus only on the elements of the project that support the corporate strategy. If a project manager does not understand the corporate strategy, the project could easily fall into scope creep mode. 2. The following are three elements of corporate strategy: NN
What kind of image do we want?
NN
Where do we want to be five years from now?
NN
What do we want to be known for?
3. Portfolio management is important because project selection is determined by what is
good for the business based on all of the corporate strategy elements for a given time period instead of what is good for a particular business unit. If a business unit ties their project requests to corporate strategy, the project is more likely to be approved. There are several other advantages to portfolio management, such as more efficient use of resources, a greater understanding of funding, and the fact that it exposes redundant projects. 4. The business needs for Apples and Pears include the following: NN
Increased revenue
NN
Promotion of competitive advantage
NN
Creation of new products and services
NN
Improved customer satisfaction
Hands-on 1.2: Testing Your Knowledge of€Finance€Principles Here are the correct answers and how we arrived at them. 1. $98.00 now is equivalent to $105.60 one year from now.
False: Total amount accrued = $98.00 (1.05) = $102.90 2. $200.00 one year past is equivalent to $205.00 now.
False: Required investment = $205.00/1.05 = $195.24 3. $3,000.00 now is equivalent to $3,150.00 one year from now.
True: Total amount accrued = $3,000.00 (1.05) = $3,150.00
Phase 1 Solutionsâ•…
4. $3,000.00 now is equivalent to $2,887.14 one year ago.
False: Total amount accrued = $2,887.14 (1.05) = $3,031.50 5. Interest accumulated in one year on an investment of $2,000.00 is $100.00.
True: Interest = $2,000.00 (1.05) = $2,100.00; $2,100.00 - $2,000.00 = $100.00
Hands-on 1.3: Testing Your Knowledge of NPV 1. The following table shows the answers to the net present value (NPV) questions and
how the answers were derived. Period
Cash flow
Present value factor
Present value
0
– $12,337
1.000
1
$10,000
0.9091
$9,091.00
2
$5,000
0.8264
$4,132.00
NPV =
$886.00
– $12,337.00
2. The following table shows how present value (PV) is used to calculate the NPV of a
project. Always remember to show your initial investment as a negative number. Period
Cash flow
Present value factor
0
– $5,000,000
1.000
– $5,000,000
1
$1,000,000
0.9174
$917,400
2
$900,000
0.8417
$757,530
3
$900,000
0.7722
$694,980
4
$750,000
0.7084
$531,300
5
$750,000
0.6499
$487,425
6
$750,000
0.5963
$447,225
NPV=
– $1,164,140
3. The NPV for the remodel project is –$1,164,140.00.
Present value
329
330â•…
Appendix╇ ╇ Solutions n
4. The present values for each year of the Apples and Pears project are shown here: Period
Cash flow
Present value factor
Present value
0
-$7,000,000
1.000
– $7,000,000
1
$3,000,000
0.9174
$2,752,200
2
$2,000,000
0.8417
$1,683,400
3
$2,000,000
0.7722
$1,544,400
4
$1,500,000
0.7084
$1,062,600
5
$1,500,000
0.6499
$974,850
6
$1,500,000
0.5963
$894,450
NPV=
$1,911,900
5. The NPV of the Apples and Pears project is $1,911,900. Because this is a positive
number, it is a good project to pursue. 6. The new NPV would be $161,900. The number is positive so it is still a good project
to pursue. 7. The Apples and Pears project. 8. Other ways to select a project include cost benefit analysis, IRR, and comparative
analysis as well as a weighted scoring model.
Hands-on 1.4: Testing Your Knowledge of Benefit Measurement Methods—Scoring Models 1. Additional information that can be provided for the eight criteria is as follows: NN
Provide a synopsis of the project that shows how it aligns with corporate strategy. For example, use a presentation that shows how the business goals map to the project objectives.
NN
Provide the results of an NPV comparison.
NN
Provide a document that maps how the projects are related and the impacts of each.
NN
Provide results of alternative analysis (for example, IRR or payback period).
Phase 1 Solutionsâ•…
NN
NN
NN
NN
331
Describe how the project meets standards; but if it does not, explain what the impacts might be. Provide a skills and availability matrix. Describe how the other projects relate and the advantage of continuing with this one. If other projects are discontinued, explain why.
2. The scores for Projects 1 and 2 were 108 and 104, respectively. Adding these scores
changes the choice from accepting Project 1 to accepting Project 2 instead. Questions
Project 1 Weight
Rating
Project 2 Score
Weight
Rating
Score
1. Does project enhance corporate image?
4
2
8
4
4
16
2. Will project create competitive advantage?
5
5
25
5
5
25
3. Will project increase public awareness?
3
3
9
3
3
9
4. Will project enhance process improvement?
3
1
3
3
3
6
5. Does project improve infrastructure?
2
2
4
2
1
2
Total Score
49
Total Score
58
3. Scoring models are simple and provide consistency in the approach. 4. For small projects (and your company would have to decide what is considered small),
a comparative approach may be enough. But most companies use an economic model as well. There could be challenges with scoring models. Projects may be ranked and scored subjectively (without data and facts) instead of objectively. There may be inconsistencies in the selection committee based on politics, personal agenda, and so on. Senior management may override the decision. If these challenges do exist, consider revamping the criteria so that all are in agreement.
332â•…
Appendix╇ ╇ Solutions n
Hands-on 1.5: Testing Your Knowledge of Business Cases 1. A business case is usually created by a team—which may or may not include the project
manager. A project manager is not expected to be on the selection committee or the scoring committee. He or she acts more as a consultant, providing data and facts as needed to complete the case. 2. Project managers are closer to the real-world implications of high-level decision making
and can help avoid major pitfalls if brought into the process early enough. 3. There may be disadvantages if the project manager does not understand financial,
corporate, and internal issues at a high level. Project managers are typically a lower rank than those who create and approve business cases. Other team members may not understand the internal workings of the business and override a project manager of lesser rank. Trust issues may develop between the PM and the business case team if they do not see added value in the PM’s participation. 4. It can be—but if it is not thorough enough, wrong decisions can be made, and the
implications of those decisions may not be known until too many costs have been expended. Then a cycle of “Well, we’ve spent this much money on it—let’s make it work” exists. If it is perceived that the business case is not complete, it may be tabled in favor of a less demanding comparative or financial-only approach.
Hands-on 1.6: Testing Your Knowledge of€Goals€and€Objectives The following table shows the SMART goals and objectives of the Apples and Pears project. SMART
Business goals (what)
Project objectives (how)
Specific
To increase revenue, promote competitive advantage, create new products and services, and improve customer satisfaction.
Cimarron will create two new stores—one in Bellevue, Washington, and the other in Portland, Oregon—that will showcase a new line of clothing for customers who are shaped either as an “apple” or a “pear.”
Measurable
The measure of financial success will not be known until two years of revenues have occurred. Marketing will determine whether we have increased our market share and competitive advantage.
Surveys will be conducted to determine customer satisfaction. The project manager will stay within the approved project budget of $8,750,000.
Phase 1 Solutionsâ•…
333
SMART
Business goals (what)
Project objectives (how)
Accurate
To determine measurements of success, Cimarron will follow corporate guidelines and financial practices already in place. Accuracy of the data is paramount.
All reports to management will follow the corporate project management system for quality and accuracy.
Realistic
Cimarron’s other line of business is children’s clothing. Those stores typically launch within the same time and budget constraints.
The project team has sufficient background and skills to determine that the order-of-magnitude budget and the approved schedule are adequate. Approved change orders may alter the budget and schedule.
Time-bound
The project is to be completed by Because the project will be comOctober 25 so that the store can plete by October 25, we will have open by November 1. the two-month holiday shopping window, from November 1 through December 31, to launch the new line of clothing.
Hands-on 1.7: Testing Your Knowledge of€the€Product€Scope Description The following list shows the initial scope of the Apples and Pears project. The A&P project has two major products that will be produced: 1. The stores in Bellevue and Portland are to be elegant and will include the following: NN
Plush carpeting
NN
Nonintrusive overhead music
NN
Designer showcasing
NN
Private dressing rooms with complete doors
NN
Ambient lighting
NN
Displays for jewelry, accessories, and perfume items
NN
Second-floor bridal gallery
2. Items of clothing will have style and quality for bridal wear, evening wear, daywear,
sportswear, outerwear, and lingerie: NN
They will fit properly.
NN
They will be manufactured with no defects.
NN
Ninety percent of the clothing will be machine washable.
334â•…
Appendix╇ ╇ Solutions n
NN
They will be available in all sizes.
NN
They will be affordable (including the bridal wear).
Hands-on 1.8: Testing Your Knowledge of Requirements This table shows the requirements of the Apples and Pears project. Requirements
R
U
M
B
A
1. Clothing manufactured in the United States
Y
Y
Y
Y
Y
2. Both stores opened by November 1
Y
Y
Y
Y
Y
3. Clothing line meets Cimarron’s standards of affordability, quality, and style
Y
Y
Y
Y
Y
4. Order-of-magnitude budget to be $8,750,000
Y
Y
Y
Y
Y
5. Advertising plan to be completed by June 30
Y
Y
Y
Y
Y
Hands-on 1.9: Testing Your Knowledge of€Organizational€Structures 1. Strong matrix. 2. Cimarron has a director of project managers who is on equal footing with other directors. 3. The organization chart for Cimarron is shown here: CEO VP Finance
VP Human Resources
VP Information Technology
VP Sales and Marketing
Operations
Director Project Management
Director
Director
Director
Director
Manager Project Managers
Manager
Manager
Manager
Manager
Project Managers
Manager
Manager
Manager
Manager
Phase 1 Solutionsâ•…
Hands-on 1.10: Testing Your Knowledge of€Project€Scope€Statements This table shows the completed scope statement of the Apples and Pears project. High-Level Scope Statement Template Describe business goals
• Increase revenue
Describe major objectives of this project
• Build two new stores—one in Bellevue, Washington and the other in Portland, Oregon • Design clothing for apples and pears • Manufacture clothing according to designs • Advertise products in newspapers and television • Develop brand
• Promote competitive advantage • Improve customer satisfaction
• Stay within approved budget of $8,750,000 • Meet the October 25 due date Describe background for the project
The clothing line for Cimarron’s children’s clothing has been very successful. Ms. Ross is aware that one of the major demographics for marketing is the baby boomers who are seniors now. Body shapes have changed over the years and so Ms. Ross wants to develop high quality and stylish clothing that will appeal to this demographic but will not be limited by it. Market studies have been positive and the NPV of the project is positive.
Describe the expected benefits
The expected benefits are increased revenue, increased market share, and customer satisfaction.
List the stakeholders and their role in the project
• Megan Holly is a marketing manager who participated in the original market study. She has a sales background and is already planning her marketing strategy. • James Stevens is on the finance committee with Ms. Reese. He believes that even though the initial numbers looked positive, it is risky to assume that the current economy will support the increasing revenue projections for the project. • Jacob Patrick is the manager of engineering and construction. He believes that the cost of materials is going down because of the slowdown in new home sales and that the project could provide many jobs during its implementation. • Jordyn Kelly is the human resources vice president and is all for the project because it will create new jobs in many new cities. • Skylar Janes is the advertising manager for Cimarron Industries and is eager to pursue the brand project this will create. • Carolyn Lee is the union representative for the manufacturing facility. She represents those who will ultimately design and manufacture the clothing. • Madison Adams is the webmaster of Cimarron’s web pages. She wants to know if A&P customers will order clothing through the Internet and if so, will adequate funding be provided for additional servers, and the like. • Allison Jones is the IT manager and is concerned that traffic may double without adequate support systems being added. • Darcy Moore is the operations director for the West Coast children’s stores.
335
336â•…
Appendix╇ ╇ Solutions n
• Louise Rose is the Operations Director for the east coast Children’s Stores • Todd Franks is a site superintendent for new stores • Harry Edwards is the Procurement Director for Cimarron Describe 5 high level requirements
1. Clothing manufactured in the US 2. Both stores opened by November 1 3. Clothing line meets Cimarron’s standards of affordability, quality, and style 4. Order of magnitude budget to be $8,795,000.00 5. Advertising plan to be completed by June 30
Describe project organization
The project organization is a strong matrix. It has a director of project management on equal footing with other managers. All project managers and their managers report to the director. All project managers assigned to projects come from here. Training and mentoring are provided.
Hands-on 1.11: Testing Your Knowledge of€Leadership€Analysis If you circled most of your answers in the 1, 2, and 3 columns, project management may not be the best fit for you. If you had several 4s or 5s, leverage those so that project management can be in your future. If you circled most of your answers in the 3, 4, and 5 columns, project management may be a good fit for you. Most individuals are not gifted in all of these characteristics. If you circled mostly 3s, 4s, and 5s but had one or two or three 1s and 2s, then those are the ones you need to work on. You may also ask your supervisor or mentor to do the test based on their opinions of you. Then compare your answers with theirs to get a truer picture of your skills. You can also use the 360-degree feedback process with your peers. The feedback you receive can assist in making changes if needed, or provide reinforcement that you are doing well.
Hands-on 1.12: Testing Your Knowledge of€Identifying€Team Members The following table provides a sample defining the team members associated with a given task or set of tasks as well as their responsibilities, accountabilities, the support they may provide, and whether they will provide consulting services or simply provide information. The important thing to remember is that there should be only one accountable person for the task or set of tasks. Tasks
Project Team Line Dept. manager PMO members managers manager
Senior Sponsor management
Project management
R
S
S
S
I
A
I
Advertising
C
S
S
R
A
I
I
Phase 1 Solutionsâ•…
Tasks
Project Team Line Dept. manager PMO members managers manager
337
Senior Sponsor management
Space planning
I
C
S
R
A
I
I
Construction
C
S
S
R
A
I
I
Noninventoried furnishings
C
S
-
R
A
I
I
Design of clothing
I
-
S
R
A
I
I
Hiring and training of personnel
I
-
-
R
A
I
I
Information technology
I
S
S
R
A
I
I
Manufacturing
C
S
S
R
A
I
I
Hands-on 1.13: Testing Your Knowledge of€Roles€and€Responsibilities The following table represents an up-to-date roles and responsibilities chart for the team members who have been identified thus far. This table is different from the RAM in that you describe the responsibilities and accountabilities of your team members. Team member
Role
Category
Responsibility/accountability
Allison Jones
IT
Project execution
Responsible for Apples and Pears IT issues
Carolyn Lee
Union rep
Project execution
Responsible for ensuring that manufacturing employees follow the union contract
Carrie MacIntyre
Project manager
Project execution
Accountable for project results
Darcy Moore
Operations director
Project execution
Responsible for operations for both Portland and Seattle stores
338â•…
Appendix╇ ╇ Solutions n
Team member
Role
Category
Responsibility/accountability
Eric Nash
Manufacturing director
Project execution
Responsible for meeting delivery dates for all manufactured clothing
Harry Edwards
Procurement director
Business
Accountable for all procurement needs
Jacob Patrick
Manager engineering and construction
Project execution
Accountable for construction of stores
James Stevens
Project sponsor
Business
Liaison between project management and upper management
Jeness Hopkins Clothing designer
Project execution
Responsible for designing clothing lines
Jocelyn Greer
Liaison in Europe for clothing design
Project execution
Accountable for all clothing design
Jordyn Kelly
VP HR
Business
Responsible for assisting in resource issues
Madison Adams
Webmaster
Project execution
Responsible for updating web page to include catalog ordering online
Megan Holly
Marketing manager
Business Project execution
Accountable for marketing strategy and implementation
Michelle Price
Coordinator
Project execution
Responsible for the flow of work between designers and manufacturing
Olivia Ross
CEO
Business
Accountable for funding the project
Skylar Janes
Advertising manager
Project execution
Accountable for advertising
Skylar Reese
CFO
Business
Responsible for financial decisions
Todd Franks
Construction superintendent
Project execution
Responsible for construction of stores in Portland and Seattle
Phase 1 Solutionsâ•…
339
Hands-on 1.14: Testing Your Knowledge of€Stakeholder€Analysis 1. See the following table for concern, interests, support, impact, and strategies. You can
see that you do not have enough information on Darcy Moore, Louise Rose, Todd Franks, and Harry Edwards. Now is the time to get that information! Identify and interview stakeholders
Determine concern or interest
Impact assessment
Strategies to reduce challenges and gain support
Megan Holly
Megan has high support for the project but she has low influence.
May be overzealous in the beginning.
Megan needs to be reined in so she doesn’t begin work prematurely. Keep Megan informed and include her opinions and ideas as appropriate.
James Stevens
James has high power but low support for the project.
James can block the project.
James should be one of the recipients of a progressive business case, participate in risk management tasks, and receive budget and cost information as often as he wants.
Jacob Patrick
Jacob has low power and high support.
None.
Keep Jacob informed and let him head up the construction piece of the project because it will be a subproject all by itself.
Jordyn Kelly
Jordyn has high support and high power.
Keep Jordyn satisfied about project issues and concerns that affect HR.
Leverage Jordyn to assist in obtaining resources.
Skylar Janes
Skylar has high support but low power.
Keep Skylar in the loop.
Make sure Skylar uses other stakeholders’ opinions about the brand for A&P.
Carolyn Lee
Carolyn has high support but low power.
Keep Carolyn informed.
Whenever a union is involved, it is important that the project manager have a reasonable understanding of the union contract.
Madison Adams
Madison has low power but high concern.
Keep Madison satisfied every step of the way.
IT issues can make or break a project. Involve Madison early and often.
340â•…
Appendix╇ ╇ Solutions n
Identify and interview stakeholders
Determine concern or interest
Impact assessment
Strategies to reduce challenges and gain support
Allison Jones
Allison has low power but high concern.
Keep Allison satisfied every step of the way.
IT issues can make or break a project. Involve Allison early and often.
Darcy Moore
Not enough info.
Not enough info.
Not enough info.
Louise Rose
Not enough info.
Not enough info.
Not enough info.
Todd Franks
Not enough info.
Not enough info.
Not enough info.
Harry Edwards
Not enough info.
Not enough info.
Not enough info.
2. The benefits of interviewing stakeholders and conducting a stakeholder analysis are as
follows: NN
NN
NN
NN
NN
High-level individuals who are engaged early in the process can help build personal support and trust. The stakeholders’ input and opinions may increase the quality of your project. You may be able to obtain the right people at the right time, and this could improve the outcome of the project. Keeping stakeholders informed builds their confidence in your ability to manage the project. Using stakeholders’ opinions and other input will also lend additional trust and support when you need it.
3. Other stakeholders may include shareholders, suppliers, customers, your team,
government agencies, local agencies, and lenders. 4. The information you may want to know to help understand stakeholders includes
the following: NN
What information they want
NN
How and how often they wish to receive information
NN
Emotional interests
NN
If they are positive about the project
NN
If they are negative about the project
NN
Financial interests
NN
Who else might be influenced by their opinions
Phase 1 Solutionsâ•…
341
5. Some project managers feel they can plan the project on their own and assign people
to tasks. But a team of one is not a team. By including as many people as you can, you develop support with those who are positive about the project. You may even earn trust with those who are not positive about the project, because you have heard their concerns and mapped a strategy to help overcome their fears and concerns.
Hands-on 1.15: Testing Your Knowledge of€Stakeholder€Mapping The following diagram represents a completed stakeholder map, given the information you have so far on the Apples and Pears project. High
Low Concern/Interest/Support High Power
High Concern/Interest/Support High Power James Stevens
Keep Satisfied
Manage Closely
Power
Jordyn Kelly
Low Concern/Interest/Support Low Power
High Concern/Interest/Support Low Power Allison Jones Megan Holly Keep Informed
Normal Monitoring
Jacob Patrick
Carolyn Lee
Skylar Janes Madison Adams
Low
Low
Concern
High
342â•…
Appendix╇ ╇ Solutions n
Hands-on 1.16: Testing Your Knowledge of€Project€Organizational Structures 1. The challenges associated with working in a horizontal reporting structure are
as follows: NN
Some people can’t take off their hierarchical hat.
NN
If high rank is in the room, it may thwart straight talk.
NN
Some people may make their own decision without talking to the project manager.
2. The following are two challenges associated with managing a project within a vertical
structure: NN
NN
It is hard to have two bosses; if the performer receives requests from both the project manager and their boss, which do they act on? The project manager may have to follow the chain of command, so it takes longer to make decisions.
3. You can overcome the challenges of a horizontal structure by doing the following: NN
Setting expectations among the members of the team
NN
Using the communications plan
NN
Treating everyone as an equal member of the team
4. The following diagram represents a vertical hierarchy project organizational structure. VP
Director
Steering Committee
Sponsor
Group Leader
Leaderless Team
Project Manager
Contractor
Functional Manager
Performer
Performer
Phase 1 Solutionsâ•…
343
Hands-on 1.17: Testing Your Knowledge of€Project€Limitations The boundaries of the Apples and Pears project are as follows: 1. There are only two stores—one in Bellevue, Washington, and the other in
Portland, Oregon. 2. IT will follow the project plan and not make any changes unless directed and approved
to do so. 3. We will use designers from the United States and Europe if necessary. 4. Clothing will be manufactured in the United States only. 5. We will hire only personnel within the local communities around Bellevue, Washington,
and Portland, Oregon. Nobody from Cimarron will be transferred. 6. Advertising for the stores will include the Seattle and Portland metro areas only. 7. Advertising will use local publications and television only.
Hands-on 1.18: Implementation Approaches This project includes subprojects: the store in Bellevue and one in Portland. These projects will be implemented in parallel to meet the tight schedule, but each store project will be done in phases.
Hands-on 1.19: Testing Your Knowledge of Milestones This table shows the milestones associated with the Apples and Pears project: Milestone
Date
Contracts and lease signed
February 15
Clothing designed
March 15
Advertising plan complete
June 30
Clothing manufactured
August 1
Construction complete
September 15
Personnel hired
October 1
Interior finishes complete
October 1
Stores furnished
October 5
Clothing delivered
October 10
344â•…
Appendix╇ ╇ Solutions n
Milestone
Date
Personnel trained
October 25
Stores open
November 1
Hands-on 1.20: Testing Your Knowledge of€an€Estimated€Budget This table shows the estimated budget of the Apples and Pears project: Item
Amount
Advertising
$1,000,000
Space planning
$5,000
Construction
$3,600,000
Non-inventoried furnishings
$50,000
Design of clothing
$1,250,000
Hiring and training of personnel
$50,000
Information technology
$700,000
Manufacturing costs
$2,075,000
Delivery and set
$20,000
Total
$8,750,000
Hands-on 1.21: Testing Your Knowledge of High-Level Project Risks These are the high-level risks associated with the Apples and Pears project: 1. Opportunity: Because of the economic downturn, there may be more qualified employees
and construction people available. 2. Risk: Designers may not meet their deadline because of the difference between United
States and European vacation time (that is, typically no one works in Europe in August).
Phase 1 Solutionsâ•…
345
3. Risk: The dollar vs. the euro could impact the amount budgeted for European designers. 4. Risk: We may not get all of the products for the stores because of the poor economy. 5. Opportunity: We may be able to buy products at reduced rates now that demand
is lower.
Hands-on 1.22: Testing Your Knowledge of€Project€Assumptions This table shows the assumptions associated with the Apples and Pears project. Assumption
T/F?
1. There exists high-level support—the CEO wanted this project and the sponsor is also the champion for the cause.
True
2. The budget is sufficient.
True
3. Local labor force will be available.
True
4. Designers will finish on time.
Not Sure
5. Advertising will be launched on time.
Not Sure
6. Materials will be available when needed.
Not Sure
Hands-on 1.23: Testing Your Knowledge of Project Constraints and Response Strategies This table shows the constraints and response strategies associated with the Apples and Pears project: Constraint
Response strategy
1. The project must finish by October 25, Every risk identified that could lengthen the so that the store can open by November 1. duration will be overcome in the planning phase. 2. The budget available should not exceed Ask for management reserves and contingency $8,750,000. funds. 3. Designers must finish by March 31, so clothing can be manufactured in time.
Use as many designers as needed. They will be part of the team so that the lines of clothing are in keeping with Ms. Ross’s vision.
346â•…
Appendix╇ ╇ Solutions n
Hands-on 1.24: Testing Your Knowledge of€Putting€It€All€Together You have finally done it! Here is the completed project charter of the Apples and Pears project. The Project Charter Summary of Milestones
Summary of Costs
Contracts and Lease Signed
February 15
Clothing Designed
March 15
Advertising Plan Complete
June 30
Clothing Manufactured
August 1
Construction Complete
September 15
Personnel Hired
October 1
Store Finishes Complete
October 5
Stores Furnished
October 10
Clothing Delivered
October 25
Personnel Trained
November 1
Stores Open
February 15
Advertising
$1,000,000.00
Space planning
$5,000.00
Construction Noninventoried furnishings Design of clothing Hiring and training of personnel Information technology Manufacturing costs Delivery and set Total High Level Risks
1. Opportunity: Due to the economic downturn, there may be more qualified employees and construction people available. 2. Risk: Designers may not meet their deadline because of the difference between US and European vacation time (i.e., typically no one in Europe works in August). 3. Risk: The dollar vs. the euro could impact the amount budgeted for European designers. 4. Risk: We may not get all of the products for the stores due to the economy. 5. Opportunity: We may be able to buy products at reduced rates now that demand is lower.
$3,600,000.00 $50,000.00 $1,250,000.00 $50,000.00 $700,000.00 $2,075,000.00 $20,000.00 $8,750,000.00
Phase 1 Solutionsâ•…
Configuration Management
Configuration management will follow our standard change management process.
Assumptions
1. There exists high-level support—the CEO wanted this project, and the sponsor is also the champion for the cause.
True
2. The budget is sufficient.
True
3. Local labor force will be available.
True
4. Designers will finish on time.
Not Sure
5. Advertising will be launched on time.
Not Sure
6. Materials will be available when needed.
Not Sure
Constraints
Constraints
Response Strategies
1. The project must finish by October 25, so the store can open by November 1.
Every risk identified that could lengthen the duration will be overcome in the planning phase.
2. The budget available should not exceed $8,750,000.
Ask for management reserves and contingency funds. (More about these in Phase 2.)
3. Designers must finish by March 31, so that clothing can be manufactured in time.
Use as many designers as needed. They will be part of team so that the lines of clothing are in keeping with Ms. Ross’s vision.
Project approvals
We will follow our progressive business case, and if the scorecard meets or exceeds the minimum score then the project will proceed to planning.
Project acceptance criteria
• All work has been inspected. • All deliverables have been accepted. • Training of staff has been completed. • Manuals and procedures have been provided. • As-built drawings have been received and approved. • Punch list items are completed and approved. • Supplier contracts and agreements have been closed out. • Contractors have received final payment.
347
348â•…
Appendix╇ ╇ Solutions n
Hands-on 1.25: Testing Your Knowledge of Phase 1 Professional Responsibility Answer the following questions as they pertain to Phase 1. 1. I took our budget and schedule information and posted them into our knowledge
transfer database. That information will be compared to the actual information when completed so that we will be more accurate next time. 2. I declared a potential conflict of interest. I excused myself from the vendor selection
process and was advised that I could manage the project. 3. Since this is one of my first big projects, I took a finance class where I learned a great
deal about finance principles, corporate strategy, and the like. Next time I won’t be a novice to these activities and will know how it’s done. 4. Appropriate stakeholders were identified early and I kept them informed every step of
the way. I listened to their concerns and acted on them when necessary. 5. I would provide him with the details on how we arrived at the budget.
Phase 2 Solutions Hands-on 2.1: Testing Your Knowledge of Deliverables These are the deliverables expected from the Apples and Pears project: 1. Brand established for stores that includes logo for the stores, stationery, envelopes,
receipts, invoices, business cards, and catalogs 2. Advertising plan to include newspapers and television promos 3. Designs for clothing to include bridal, evening wear, daywear, sportswear, lingerie,
and outerwear 4. Clothing for Apples and Pears manufactured in the United States 5. Hired and trained personnel for counter, sales, and management 6. Retail stores open in Belleview, Washington, and Portland, Oregon, according to con-
struction documents, space planning, lease requirements, and furnishings layout
Hands-on 2.2: Testing Your Knowledge of€Product€Acceptance Criteria This table shows the product acceptance criteria of the Apples and Pears project:
Phase 2 Solutionsâ•…
Schedule Dates
All clothing must be ready for shipment at least two weeks before the stores open.
Functionality
All clothing should fit properly based on the body type for “apples” and “pears.”
Appearance
All clothing should match the designs that were approved and the materials that were designated for them. They should be stylish and fresh (wrinkle resistant or wrinkle free).
Performance Levels
The clothing should be well made with tailoring where appropriate. Buttons should be fastened so they will not drop off, and zippers should have no mistakes. There should be no flaws in the fabric.
Practicality
Ninety percent of the clothing should be washable.
Clarity
Clothing tags should be noticeable and understandable.
Capacity
Clothing variety will include bridal, evening wear, daywear, sportswear, outerwear, and lingerie.
Accuracy
Clothing should have correct sizing on the garment and the tag.
Availability
Depending on the market studies, sets of clothing should be available in all sizes.
Maintainability
Extra buttons should be included with clothing, and fabric should be colorfast.
Reliability
The clothes should last for years.
Flexibility
The line of styles should mix and match.
Hands-on 2.3: Testing Your Knowledge of€Creating€a€List€of Work The following represents a more detailed WBS for the task described as “determine furnishings”: NN
Determine furnishings NN
First-floor clothing display area NN
Determine all clothing racks and displays needed.
NN
Identify furniture needed.
NN
Identify accessories.
NN
Identify jewelry displays.
NN
Identify accessory displays.
NN
Determine mannequins for store front area.
349
350â•…
NN
NN
NN
NN
NN
NN
Appendix╇ ╇ Solutions n
First-floor customer service and pay stations NN
Identify types of rubber flooring available.
NN
Determine equipment needed for customer service counter.
NN
Identify equipment needed for pay stations.
Main-floor dressing rooms NN
Determine type of upholstered chairs needed.
NN
Determine types of mirrors to be installed.
NN
Identify clothing hooks available.
Restrooms NN
Identify love seat or sofa to be purchased for sitting area.
NN
Determine types of end tables to be used in sitting area.
NN
Determine types of decorative lamps to be purchased for sitting area.
NN
Identify type of decorative 7´ by 9´ Chinese area rug to be used in sitting area.
NN
Determine air-dry hand units to be purchased.
NN
Determine type of toilet paper dispensers needed.
NN
Determine type of soap dispensers to be purchased.
NN
Determine accessories for vanity counter.
Office NN
Identify types of desks with side returns.
NN
Determine type of 48˝ two-drawer file cabinets needed.
NN
Determine type of adjustable ergonomic chairs.
NN
Determine hardware and software.
Break room NN
Identify type of refrigerator to be purchased.
NN
Identify microwave to be purchased.
NN
Determine set of table and chairs to be used.
NN
Identify type of coffeemaker needed.
NN
Identify dishes and silverware needed.
NN
Determine types of vending machines to be used.
Bridal room NN
Identify mannequins for bridal area to be purchased.
NN
Determine furniture for bridal dressing rooms.
Phase 2 Solutionsâ•…
NN
NN
NN
Determine type of two-step raised dais.
NN
Identify accessories display.
NN
Identify type and quantity of bridal gown racks.
NN
Identify types of bridesmaid dresses racks.
NN
Determine type of veil displays needed.
Tailoring room NN
Identify types of sewing machines needed.
NN
Identify type of sewing station needed.
NN
Identify type of ergonomic chair for sewing station.
NN
Determine storage needs for tailoring room.
Inventory storage room NN
NN
Identify storage needs for inventory.
Maintenance room NN
Identify storage needs for maintenance items.
NN
Determine type of vacuum cleaner needed.
NN
Determine other maintenance items needed.
Hands-on 2.4: Testing Your Knowledge of Organizing€Tasks into Logical Groupings 1. The following are the logical groupings associated with training of sales personnel,
training of marketing personnel, preparation of advertising, and printing brochures and the manual:
Training of Sales Personnel NN
Prepare phase 1 of the training program.
NN
Select sales personnel.
NN
Send sales personnel to training.
NN
Conduct phase 1 training.
NN
Prepare phase 2 training.
NN
Conduct phase 2 training for sales personnel.
NN
Familiarize sales with the brochure and customer manual.
NN
Return sales to territories.
351
352â•…
Appendix╇ ╇ Solutions n
Training of Marketing Personnel NN
Determine general marketing approach.
NN
Select marketing personnel for training.
NN
Bring marketing personnel to the home office.
NN
Consolidate specific marketing training.
NN
Proceed with familiarization course.
NN
Train marketing personnel.
NN
Return marketing to territories.
Preparation of Advertising NN
Consolidate the advertising plan.
NN
Prepare an article for a professional journal.
NN
Publish the article in the professional journal.
NN
Prepare regional advertising.
NN
Approve regional advertising.
NN
Distribute advertising to the proper media.
NN
Release and prepare to carry regional advertising.
Printing Brochure and Manual NN
Draft and approve the brochure.
NN
Design the layout of the brochure.
NN
Print the brochure.
NN
Design the customer instruction manual.
NN
Approve the customer instruction manual.
NN
Print the customer instruction manual.
NN
Deliver brochures and manuals to the training center.
2. These are some of the challenges of not using a WBS: NN
The scope may not be thoroughly defined. You may miss something, or you may have things in your scope that are not needed.
NN
Resources may not be fully defined or understood.
NN
Estimates may not be valid.
NN
Schedules may not be correct.
NN
Budgets may not be correct.
Phase 2 Solutionsâ•…
353
Hands-on 2.5: Testing Your Knowledge of€Reviewing€and€Adjusting a WBS The following construction WBS was reviewed and adjusted. You added tasks and activities that made you feel you can produce appropriate deliverables: 1. Obtain working plans. 2. Submit plans for approval. 3. Obtain permits. 4. Set up temporary power. 4.1. Call power company. 4.2. Set up temporary power pole. 5. Set up job shack. 5.1. Bring in temporary trailer. 5.2. Bring power to trailer. 5.3. Set up temporary phone line. 6. Perform dirt work. 6.1. Stake the corners and offsets. 6.2. Establish a monument (set pin) for points of reference. 6.3. Inspect dirt work for grade. 6.4. Dig out foundation. 6.5. Sell or save the dirt. 7. Bring utilities to site. 7.1. Establish water lines. 7.2. Establish cable. 7.3. Establish Internet. 7.4. Establish telephone. 8. Order materials per plan. 8.1. Order drywall. 8.2. Order acoustical. 8.3. Order doors and jams. 8.4. Order hardware. 8.5. Order millwork. 8.6. Order floor covering.
354â•…
Appendix╇ ╇ Solutions n
8.7. Order electrical. 8.8. Order mechanical (HVAC/heating). 8.9. Order plumbing. 8.10. Order marble/stone/tile 8.11. Order appliances. 8.12. Order windows. 8.13. Order fire protection. 8.14. Order specialties. 9. Establish foundation. 9.1. Set up forms. 9.2. Install rebar. 9.3. Pour concrete. 9.4. Pour test cylinders. 9.5. Strip and clean forms. 9.6. Allow concrete to age. 9.7. Analyze test cylinders. 9.8. Order inspection. 10. Rough in plumbing. 11. Rough in electrical. 12. Begin framing. 12.1. Install floor joists. 12.2. Install plywood for floors. 12.3. Frame walls. 12.4. Frame windows. 12.5. Frame doors. 13. Set up material delivery in back of building. 14. Set up sidewalks, walkways, and blacktop. 15. Install rafters. 16. Sheet the roof. 17. Create traces for wiring. 18. Put up roofing. 19. Bring electrical to roof.
Phase 2 Solutionsâ•…
355
20. Bring plumbing vents to roof. 21. Install wiring. 21.1. Install electrical wiring 21.2. Install cable TV wiring. 21.3. Install Internet wiring. 21.4. Install sound system wiring. 21.5. Install security wiring. 21.6. Inspect wiring. 22. Install insulation. 23. Install sheetrock. 24. Install cabinets. 25. Install tile and linoleum. 26. Install millwork. 27. Install plumbing finishes. 28. Install electrical finishes. 29. Install heating finishes. 30. Clean house. 31. Install carpeting.
Hands-on 2.6: Testing Your Knowledge of Cost Budgeting 1. Activity estimating should be performed by employees and then compared to historical
estimates if they are available. 2. There is a place for both types of estimating. Top-down estimating is often used during
the initiation phase to give you an idea of how much the project could cost. The main thing to remember is that these estimates should be qualified as top down and management advised that until you go into bottom-up estimating, those numbers could change. Bottom-up estimating occurs after a detailed WBS has been created, contingency reserves have been established, and management reserves have been approved. 3. Two scenarios: NN
NN
You planned for an expert worker, but that worker is no longer available. Someone with average skills may take a bit longer than planned. A resource manger promised a resource for a task in the future but has forgotten his commitment, and the resource is no longer available.
2
10
2
10
10
0
2
6
E8 Build Out 0 Switch Room
2
0
6
2
D4 Create 4 Network Cable Design
15
10
5
13
C2 Create Station Designs
3
B2 Obtain Network Requirements
13
10
A3 Conduct Station Reviews
10
3
0
12
12
10
12
F2 Install Patch 0 Panel in Switch Room
10
10
0
12
H2 Install Cable
10
12
12
G3 Install Hardware
10
15
15
2
13
15
I3 Tie Down 0 Cables to Patch Panel
12
17
15
17
J2 Install, 0 Program and Test Stations
15
Critical Path
17
K4 Conduct Continuity Tests
17
21
0
21
LF LS Backward Pass
Forward Pass ES EF
21
L1 Install and Test Software
21
Float (sl:
22
0
22
Hands-on 2.7: Testing Your Knowledge of Network Logic
Phase 2 Solutionsâ•…
357
Hands-on 2.8: Testing Your Knowledge of Network Logic The PDM diagram is as follows: 1. The ES, EF, LS, and LF are found in the diagram. 2. The amount of float for each path is as follows:
Path B, D, E G, N = 2
Path A, I, S, T, U, V, N = 2
Path C, E, G, H, N = 0
Path A, I, W, X, V, N = 2
Path C, F, G, H, N = 1
Path A, Y, Z, AA, V, N = 2
Path A, J, K, L, M, N = 19
Path A, BB, CC, V, N = 2
Path A, I, O, P, Q, R, N = 0 3. Is there any free float? If there is, which tasks have it?
Task X has 2 days of free float Task AA has 4 days of free float Task CC has 4 days of free float 0
2
2
4
0
6
4
8
8
8 0
F9
8
9 10
0
18 E10 0 8 18
2
D4
8 C8
0
2 2
B2
10 A10 0 0 10
18 30 G12 0 10 30
17 1 18
13 J3 19 29 32
13
14 K1 19 32 33
14 16 L2 19 33 35
16 17 M1 19 35 36
10
16 20 O4 0 16 20
20
I6 10
16 0 16
16 26 S10 2 18 28
12
16
10 14 BB4 10 20 24
25 28 Q3 0 25 28
28 36 R8 0 28 36
30 2 32
30 32 U2 2 32 34
32
T4 28
10
12 6 18
25 0 25
26
26
Y2
P5 20
10 22 W6 4 20 26
22
18
30 36 H6 0 30 36
X8
30 4 34
Z8
20 6 26
14 16 CC2 10 24 26
20 28 AA8 6 26 34
V2 34
36 37 N1 0 36 37
34 2 36
Critical Path
Forward Pass ES EF Float
LS LF Backward Pass
358â•…
Appendix╇ ╇ Solutions n
4. What is the difference between float and free float? Float is shared by the entire path.
Tasks that have free float can have additional time to complete their task without affecting the duration of the path. 5. There are two critical paths:
C, E, G, H, N and A, I, O, P, Q, R, N 6. If you have more than one critical path, there is added risk that the schedule may
not be completed on time. In this example there are 11 tasks that have no float. That means that 38% of the tasks can have no margin for error. The amount of float in each path isn’t sufficient to abate this risk. While six tasks do have free float, unless resources can be moved to more critical tasks, they do not help the situation. 7. The project manager should pay very close attention to the schedule and reiterate
to the managers who have provided the team members (assuming a matrix environment) that there is no margin for error and no extra time to complete these tasks without extending the schedule. It should be up to the functional manager to ensure that the work will get done on time—even if it means adding another person, if possible, to help with the task. That would add additional cost, so the project manager must know from a priority perspective which of the three items (scope, schedule and cost) are most important.
Hands-on 2.9: Testing Your Knowledge of PERT The following diagram represents the answer to the PERT exercises. The table reveals how the durations and variances to the tasks on the critical path were derived and answers question 4: What is the total variation of the project? The following diagram answers questions 1–3. 8
18 B10 0.44
8 0
8
8
A8 1.77 0
18 15 D7
8
11 8
18
18
18
14
14
E6 13
22
C4 0.11 22 17 F3 19
19
22
22
24
G2 0.11 22
24
Phase 2 Solutionsâ•…
Activity
Predecessor
Successor
Optimistic
Most Likely
Pressimistic
PERT Duration
Variance
A
None
B, D, E
6
7
14
8
1.77
B
A
C
8
10
12
10
0.44
C
B, D
G
3
4
5
4
0.11
D
A
C
6
7
8
7
0.00
E
A
F
5
5.5
9
6
0.00
F
E
G
2
3
4
3
0.00
G
C, F
None
1
2
3
2
0.11
Total Project Variation 2.43
Answer 4: Variation = 2.43 Answer 5: SD = 1.56 Answer 6: 15.85% Answer 7: 2.3% Answer 8: 0.15% Answer 9: 25.56 Answer 10: 27.12 Answer 11: 28.68 The following diagram represents an illustration of answers 6 through 11. (#6) 15.85%
34.15% 100% – 68.3% %/2 = 15.85% 68.3% 47.7%
(#7) 2.30%
49.85%
(#8) 0.15%
100% – 95.4%/2 = 2.30% 95.4%
100% – 95.7%/2 = 1.5% 99.7% –3σ
–2σ
–1σ
MEAN
+1σ 25.56 (24 + 1.56) #9
+2σ
+3σ
28.68 27.12 (25.56 + 1.56) (27.12 + 1.56) #11 #10
359
360â•…
Appendix╇ ╇ Solutions n
Hands-on 2.10: Testing Your Knowledge of€Reducing€a€Project’s Duration The following diagram is the answer to questions 1 and 2, which were used to reduce a project’s duration by “crashing” the project. The table provides the answers to question 3. 0
4
4
A4
7 B3
1
5
5
8
0
5
5
8
8
11 E3
C5 0
8
11
D3 5
5
8
Activity
Predecessor
Successor
Normal Time
Normal Cost
Crash Time
Crash Cost
A
None
B
4
$3,200
2
$5,200
B
A
E
3
$6,000
1
$12,000
C
None
D
5
$5,000
2
$9,500
D
C
E
3
$3,000
1
$5,400
E
B and D
None
3
$1,200
1
$2,200
You start by reducing the least costly task on the critical path. The first task to decrease is the least costly, E. You will reduce it by one week at a cost of $1,000 ($2,200 – $1,200 = $1,000). Path C, D, E is still the critical path, which has been reduced from 11 weeks to 10 weeks. The next least costly task is C for $2,250. You will reduce this task by one week ($9,500 – $5,000 = $4,500, and then $4500 ÷ 2 weeks = $2,250). The next least costly task on the critical path is D, which is $2,400 ($5,400 – $3,000€= $2,400). By reducing C, you have changed the critical path because path A, B, D is now nine weeks, so you need to reduce it by one week, thus creating two critical paths that have eight weeks each. The next least costly task is A, at a crash cost of $1,000 ($5,200 – $3,200 = $2,000/2 = $1,000). As a result, your cost to crash the project to eight weeks is $6,650. You have also introduced total risk to this project because there is no room for error.
Phase 2 Solutionsâ•…
361
Hands-on 2.11: Testing Your Knowledge of Staffing Risks See the following table for suggestions on the risks and strategies associated with resources. Resource
Risk
Strategy
Sole source human resource
• What happens if this resource is no longer able to perform the task?
• Create a backup by training someone else to do the work.
Sole source supplier in your geographic area
• What if this supplier has scarce inventory?
• Order way in advance.
• What if there are price increases?
• Lock in price in the contract.
• What if there are distribution problems? • What if this supplier goes out of business? Internal resources
• What if resources are overburdened? • What if they don’t have the proper skill set for the task? • What if the resource is not available when you need them?
• Order materials ahead of time. • Arrange for substitute materials and find backup suppliers. • Use resource leveling. • Negotiate in advance with the resource’s manager to be sure the skill sets are in place when assigning the resource. • Use Microsoft® Project or other project scheduling software to create a resource calendar to remind the resource manager in plenty of time to arrange for the resource to be available when needed.
Hands-on 2.12: Testing Your Knowledge of€Communications 1. To acquire the information needs of the various stakeholders, you need to carefully
analyze them to determine the information that will be provided and the sources of that information. The following steps can assist in this effort: NN
Review the sponsor’s, suppliers’, and your company’s organizational charts to determine official communication channels.
362â•…
NN
NN
NN
Appendix╇ ╇ Solutions n
Interview stakeholders to understand the information needs and the informal communication channels. Interview others within your company who may have a history or knowledge of the sponsor or the delivery organization’s management. Document the information requirements of each stakeholder group in the communications plan.
2. The factors that may influence the selection of communications technology include, but
are not limited to, the following: NN
Immediacy of the need for information
NN
Interaction required
NN
Location of the team
NN
Availability of technology
NN
Cost of technology
NN
Expected project staffing
NN
Length of the project
3. These are some of the metrics you could put in place that would measure the efficacy
of your communications: NN
Tell your team that, if at any time they have not received a message, they should let you know immediately. The project manager will investigate the cause and take appropriate action. For example: NN
NN
NN
If email messages are not received, make sure you have the correct email address and use the confirm feature. If you are receiving something you should not receive, investigate the distribution of that information. If team members cannot access what you have put in place, make sure they are accessing it correctly.
Hands-on 2.13: Testing Your Knowledge of Contract Types 1. The cost plus incentive fee contract is primarily used when contracts involve a
long performance period with a substantial amount of hardware development and test requirements. When projects have significant duration (more than five years), the project manager should focus estimates at a defined level for the first phase and at the parametric estimate level beyond that. This means that iterative refinement of the budget and schedule will be the order of the day. The project manager must pay particular attention that change orders are fully analyzed by a
Phase 2 Solutionsâ•…
363
technical team. Additionally, projects such as these may be obsolete before they are complete if technology upgrades during the project are not factored in during the course of the project. 2. The project manager assumes high risk, whereas the seller assumes minimum risk. This
type of contract is also susceptible to abuse in that there is a ceiling placed on profit potential, but there is no motivation for the seller to decrease costs. 3. The project manager should keep tight control on labor and material costs. This type
of contract is primarily used in research projects in which the effort required to achieve success is uncertain until well after the contract is signed. 4. The seller has no incentive to decrease costs. In fact, increasing the costs will increase
profit potential. This type of contract is illegal in the federal government. 5. The project manager should pay particular attention to controlling labor and material
costs so that the seller (contractor) will not be able to purposefully increase these costs. Although this type of contract is prohibited for federal government use, it is used in the private sector, particularly in the construction industry. As you can see, 100% of the risk is borne by the buyer. 6. The seller bears the greatest degree of risk, whereas the potential for profit is at a
maximum. The seller should be motivated to decrease costs by producing efficiently because regardless of what the costs are, the seller receives the agreed-upon amount. As a consequence, the seller should place emphasis on controlling costs.
Hands-on 2.14: Testing Your Knowledge of€Contract€Calculations 1. If contractor A’s cost was $720,000, what would have been the cost for contractor A’s
CPPC bid? $720,000 (cost) + 28,800 (4% of $725,000) = $748,800 2. What would the cost of the contract be if Ms. Ross had chosen contractor D’s CPIF bid?
$720,000 (cost) + 25,000 (incentive for one month early) = $745,000 3. What is the cost of contractor C’s CPIF contract if its cost was $700,000 and the cost-
sharing ratio was 80% for the client and 20% for the seller? Target cost = $725,000 Target profit = $20,000
364â•…
Appendix╇ ╇ Solutions n
Target price = $745,000 Ceiling price = $775,000 Actual cost = $700,000 Sharing ratio = $5,000 (20% of $25,000 cost under run) Price of contract = $725,000 (cost $700,000 + $25,000 fee) 4. What is the profit of contractor E’s contract if the target cost is $720,000, target profit
is $10,000, target price is $730,000, and actual cost was $700,000 and the ceiling price is $750,000? $10,000 = target profit $5000 = incentive for bringing schedule in one month early $2000 = 10% of $20,000 $17,000 = actual profits including incentives $717,000 = cost of contract
Hands-on 2.15: Testing Your Knowledge of€Quality€Planning 1. To make maximum contributions to the project, team members must meet the
following qualifications: NN
Know what is expected to meet the specifications
NN
Know how to perform the functions to meet the specifications
NN
Have adequate tools to perform the function
NN
Be able to measure performance during the process
NN
Be able to adjust the process to match the desired outcome
2. The differences between product results and project results are detailed here: NN
NN
The product result is what you want to end up with at the end of the project. All work products in the project should meet all quality standards associated with it and meet all acceptance criteria negotiated with the client. The project result describes whether you met cost, schedule, and performance parameters. Even if you did meet those parameters, the project is not successful unless the customer is happy. An unhappy customer is equal to a failed project.
Phase 2 Solutionsâ•…
365
3. The quality elements that you want to see associated with the construction of the stores
include these: NN
Construction work done on time and within budget
NN
Construction performed according to state and local building codes
NN
Construction performed within safety guidelines
NN
Construction follows working plans
NN
Millwork done with expert craftsmanship
NN
All finishes free of defects
NN
All furnishings free of defects
Hands-on 2.16: Testing Your Knowledge of Identifying€and Qualifying Risk Events 1. Identify two risk events that could occur on the Apples and Pears Project in each of the
following categories: NN
NN
NN
NN
Organizational NN
Key team members may not be available when needed.
NN
Reorganization may hinder functional manager commitments.
Technical NN
The phone system may not be installed on time.
NN
New IT software may not be compatible with current software.
Project management NN
The project manager delivers unclear communications and directions.
NN
The project manager may have to have surgery.
External NN
Inventory may not arrive on time.
NN
The labor pool may go on strike.
2. The probability of occurrence, the impact of occurrence, and your risk response can be
found in the following table.
AVOID: All overseas personnel will be available for communications whether or not they are on vacation. MITIGATE: Assign backup PM who will be kept in the loop. AVOID: Monitor inventories closely and intervene with backup purchases of additional inventory.
Issues regarding manufacturing may not be immediately known. Learning curve for NW PM could stall decision-making at critical intervals in the project. Could cause delay in store openings.
Communications overseas may be difficult in August.
Project manager may need to have surgery.
Designed clothing inventory may not arrive on time.
Communications labor pool may go on strike.
5.
6.
7.
8.
None.
AVOID: Increase test parameters and time for tests—adjust durations for this task.
MITIGATE: Hire non-union communications workers.
ACCEPT: Use cell phones and email.
AVOID: Discuss problem with sponsor and gain commitment in writing that personnel will engage in the project in spite of reorganization.
Could delay catalog sales.
1.
New IT software may not be compatible with existing software.
AVOID: Train additional personnel in these three positions.
Risk Response
4.
High
None.
Med.
IMPACT
Phone system may not be installed on time.
Low
3.
DESCRIBE IMPACT ON PROJECT
Schedule will be delayed and costs could increase.
High
Reorganization may hinder functional manager commitments.
Med.
PROBABILITY
2.
Low There are three key individuals on the project who are sole source providers.
RISK EVENT DESCRIPTION
Key team members may not be available when needed.
RISK #
Project Risk Register Owner
Status
Phase 3 Solutionsâ•…
367
Hands-on 2.17: Professional Responsibility in€the€Planning Phase 1. Say something similar to, “My budget has only been approved for the work already
stated in our charter. If you can get approval from my sponsor for additional funds and added time in the schedule, I would be happy to add this work for you.” 2. Immediately call the meeting to a halt and ask the offending party to apologize—
not only to her but to the entire team. Not only was she disrespectful but clearly she doesn’t understand the organization’s diversity policy. You later recommend to her supervisor that she attend diversity and anger management classes. 3. What do you do? Call him out on the potential conflict of interest and review with him
and the rest of the team what should be done when there is a potential conflict of interest. 4. Confront the supervisor. Explain what is occurring with this individual and ask
what he would like to do about it. The answer he provides will drive your subsequent remarks and activities.
Phase 3 Solutions Hands-on 3.1: Testing Your Knowledge of€Acquiring€Resources 1. Challenges associated with obtaining resources include the following: NN
NN
Trying to staff the team with superstars Not looking at personal aspirations of team members (Would they rather manage the project than do the work?)
NN
Using poor interviewing techniques
NN
Not letting resources know their value to the new position
NN
Accepting a resource without the requisite skills simply because they are available
NN
NN
Not checking prior commitments of the team member—they may have booked a cruise during a critical portion of your project Choosing a technical specialist for a leadership role if you do not know their management and leadership abilities
2. The new member may not know the goals and objectives of the project or the tools that
will be used. They may not know where they fit into the project plan. This could make a new team member uncomfortable in their role. They may not speak up because they may assume that they should already know about these things and try to just fit in.
368â•…
Appendix╇ ╇ Solutions n
Mistakes can and will happen. For example, say you have been told to create a report. It sounds easy enough, so you create a report with all of the requested items and put it in the project manager’s inbox. You find out later that reports have to follow a certain format and be posted online to a website you didn’t even know exists. As a result, the project manager has to explain to critical recipients why the report was not posted on the site. As another example, a team member may ask you to do something, and you do it, not knowing that the task has to be done by a particular union person. You find out later that the union has filed a grievance against you.
Hands-on 3.2: Testing Your Knowledge of Expertise 1. It takes an exceptional individual to manage a project without project management
training. However, it has been done. The assigned project manager must have superior communication skills, excellent conflict-resolution skills, and known organizational and leadership skills. Hiding the fact that you are a novice will quickly be found out. You should acknowledge to your team that you are new to the process and will rely on them to help you along the way. You should also state that everyone on the team needs to be successful in order for the project to succeed. When you are assigned work for which you feel you are lacking the skills needed, you should do everything you can to address the issue, such as seeking help from a mentor, attending training classes, speaking to your supervisor about what you perceive are your strengths and weaknesses, and personal research. If you have a project management office (PMO), many resources should be available to you, such as previous project documentation, books on project management, and the like. Let your team members know that you need their help and that you would appreciate any feedback as soon as possible so the project doesn’t get in trouble. 2. It is time for the team member to have a chat with the project manager. The team mem-
ber should tell the project manager about the problems as she sees them and say that as a team member, she sees the project beginning to fall apart. She should advise the project manager that the team is willing to help if the project manager gives them a chance, but if things continue the way they are, she will be forced to escalate the problem.
Hands-on 3.3: Testing Your Knowledge of PMIS 1. The elements of an electronic PMIS include the following: NN
Information collection and distribution process
NN
Access to intranet or Internet sites
NN
Scheduling and presentation software
Phase 3 Solutionsâ•…
NN
Configuration management databases
NN
Project management forms and checklists
369
2. In the absence of a PMIS, you should create your own. This may be in the form of a
literal project control book. This book needs to be current at all times, in a secure location, with access provided to it when needed. Ask yourself, “What if I had to leave the project? What information is needed so that my replacement knows exactly where the project stands?” 3. You should consider who needs access to the PMIS and should create passwords inter-
nally for those with a need to know. You should also provide a nonproprietary portal for external contractors working on the project.
Hands-on 3.4: Testing Your Knowledge of€Expectations€and Commitments Sponsor expectations of the project manager: NN
The project will be delivered on time and within budget.
NN
Deliverables will meet all quality attributes associated with them.
NN
True status, good or bad news, will be delivered immediately.
NN
You will have a recommendation or solution to problems or challenges.
NN
We will be supportive and respectful of each other.
NN
You are willing to accept responsibility for the project.
NN
You will solve conflicts without alienation and accept challenges cheerfully.
NN
You will apply technical judgment when necessary.
NN
You will be an honest steward of time and expenses.
NN
You will assert your creative abilities with flexibility. Sponsor commitments to the project manager:
NN
I will involve you in appropriate planning efforts.
NN
I will value and utilize your input.
NN
I will honor your role as leader of the project and not micromanage.
NN
I will keep our lines of communication open.
NN
NN
I will listen to your challenges and trust you with your solutions to them unless I have information that would not support your solution. I will keep you informed of decisions made by senior management that may affect the project.
370â•…
Appendix╇ ╇ Solutions n
Hands-on 3.5: Testing Your Knowledge of€Listening€Habits You have conducted your listening test and documented your answers in Table€3.10. The following table interprets your answers. Test answers on listening Group 1 Effective listening habits
The higher the points, the more effective the active listening. 35–40: Excellent active listening 30–35: Good active listening < 30: Active listening needs work
Group 2 Ineffective listening habits
The higher the points, the more ineffective the active listening. > 10: Active listening needs work 5–10: Good active listening 0–5: Excellent active listening
Group 3 Active listening in meetings
The higher the points, the more ineffective the active listening. > 10: Active listening in meetings needs work 5–10: Good active listening in meetings 0–5: Excellent active listening in meetings
Phase 3 Solutionsâ•…
371
Hands-on 3.6: Testing Your Knowledge of€Quality€Assurance 1. Items that are considered a cost of quality include prevention efforts such as training
and appraisals; these appraisal techniques may include testing and inspections as well as quality audits. Cost of quality items are processes put in place to identify opportunities for improvement and potential sources of nonconformance of quality. They are put in place before the project is launched—a preventive action such as training. Nonconformance items such as rework, scrapping, and so on are the results of actions that do not conform to quality standards during the course of the project. The loss of business after a project is launched is incalculable. 0.3 x <$100> = <$30> 2. The purpose of a quality audit is to ensure that planned quality requirements are
met, products are safe and fit for use, all applicable laws have been followed, and Year 1 data systems are in place that track, measure, P1 and report quality attributes so they P2 are adequate and accurate. 0.7 x $2000 = $1400 $1370
Hands-on 3.7: Testing Your Knowledge of€Expected€Value and NPV
0.4 x <$200> = <$80>
Year 2
The following diagram shows how to use expected P1 value and decision trees to formulate an NPV answer. The answer is B, $2,158, and this is aP2project to pursue. 0.6 x $5000 = $3000 $2920
0.3 x <$100> = <$30> Year 1 P1 P2 0.7 x $2000 = $1400 $1370 0.4 x <$200> = <$80> Year 2 P1 P2 0.6 x $5000 = $3000 $2920
PV = FV/(1 + i)n Present Value Year 1 = $1370/(1 + 0.10)1 = $1245 Present Value Year 2 = $2920/(1 + 0.10)2 = $2413 Present Value = $1245 + $2413
= $3658
Investment
= <$1500>
Net Present Value
= $2158
PV = FV/(1 + i)n Present Value Year 1 = $1370/(1 + 0.10)1 = $1245 Present Value Year 2 = $2920/(1 + 0.10)2 = $2413 Present Value = $1245 + $2413
= $3658
Investment
= <$1500>
Net Present Value
= $2158
372â•…
Appendix╇ ╇ Solutions n
Hands-on 3.8: Testing Your Knowledge of€Obtaining€Sellers 1. The importance of a bidders’ conference is to ensure that all potential sellers have an
opportunity to ask questions, listen to other sellers’ comments and questions, and hear the answers to those questions all at the same time. All potential sellers will then have identical information with which to decide how to respond to the buyer. 2. The bidders’ conference should take place prior to the submission deadlines. 3. The bidder’s contract should be conducted by the procurement officer. A procurement
officer knows the ins and outs of procurement. The project manager and contract manager also participate in these proceedings and are used for clarifications and expertise about the project and/or contracts.
Hands-on 3.9: Testing Your Knowledge of€Selecting€Sellers 1. The differences and similarities among a weighting system, a screening system, and a
compliance matrix are as follows: NN
NN
NN
NN
All are used to assist in selecting sellers. A weighting system tries to minimize the effect of personal prejudice by using the same scale to evaluate potential sellers. A screening system establishes minimum requirements for performance suitable for the buyer. A compliance matrix is used as a tool to be sure that vendors follow certain guidelines; for example, the RFP guidelines the vendor was given prior to their proposal.
2. Red flags should be addressed as follows: NN
NN
NN
NN
NN
Allow sufficient time for submission of bids so all suppliers have adequate time to prepare bids or proposals. Do not reveal information to one contractor that is not revealed to all. Do not conduct a bidders’ conference that allows improper communications among contractors. Ensure a sufficient number of potential competitors are aware of the solicitation. Do not use obscure publications to publish bid solicitations or publish bid solicitations during holiday periods. Bid solicitations should be precise as to the time, place, and other requirements for submitting acceptable bids.
Phase 3 Solutionsâ•…
NN
NN
NN
373
Ensure that internal controls over the number and destination of bid packages are sent to interested bidders. Ensure that only proper communication by purchasers or contractors at trade or professional meetings occur. Declare a conflict of interest if the purchaser has a financial interest in the business of the contractor.
NN
Do not discuss the possibility of employment with the contractor.
NN
Do not assist the contractor with preparing his or her bid.
NN
Do not refer a contractor to a specific subcontractor, expert, or source of supply.
NN
Do not tell only one contractor of changes that can be made after the bid.
NN
Do not accept late submissions.
NN
NN
NN
If a bidder withdraws to become subcontractor on the same contract, monitor that work and the accompanying money trail closely. If you find that there is collusion between bidders, do not allow them to bid. If you find that a vendor has falsified their qualifications, work history, facilities, equipment, or personnel, do not allow them to bid.
Hands-on 3.10: Testing Your Knowledge of€Awarding€Contracts 1. The differences between excusable delays and compensable delays are situational. An
excusable delay is where something happens that is beyond the control of any party in the project, such as bad weather, terrorist attacks, and so on. Compensable delays are allowed if the purchaser/owner fails to enact any part of their contractual obligations that would cause a delay, such as access to a building, a delay in decision making, and so forth. 2. It is important to get an independent estimate so that the purchaser has a level of con-
fidence in the data supplied by a contractor—especially the amount of the bid and the elements that comprised it. 3. Research and preparations that need to be made before contract negotiations begin
include the following: NN
Decide on the techniques you will use to win your opponent to your point of view.
NN
Do your homework on financial and other aspects of the seller.
NN
Make sure you know what the contract should cost.
NN
Specify where and when the negotiations will occur and other hygiene factors.
Your confidence level in your ability to win the negotiation is greatly enhanced when you have made thorough preparations in advance of the negotiation.
374â•…
Appendix╇ ╇ Solutions n
4. An example of a term contract would be when hiring personnel to work for a specified
time (decorations during the holidays), ends when a specific task is done (all decorations are in place). 5. In the Cimarron manufacturing scenario: a. The project manager should do nothing. Project managers are to provide support
to the procurement officer and participate only when asked to do so by the procurement officer. b. The procurement officer should simply recommend that issues need to be identified
before any bargaining or concessions are made. A quick break would be in order so the potential manufacturer can recover and think about the issues. When the meeting resumes, the procurement officer points out issues that Cimarron has and asks whether there are any issues the opposing side would like to see addressed. c. The next step is bargaining and decision making, during which the two positions
are summed up and concessions are made. After that, resolution happens—that is, the two positions are summed up, and final concessions are made and documented. The final step is closing: Both parties have identical agreements, and the negotiations are closed.
Hands-on 3.11: Testing Your Knowledge of€Developing€Your Project Team 1. The following are examples of what can be done to develop a team without using money: NN
NN
NN
Partner a new member of the team with a more experienced one. This approach does two things: (1) it enables team members to learn more about the project, and (2) it enables team members to learn who they can call on for information that relates to their own work. Establish an appreciation system providing ways for people to show appreciation to their team members. This activity reinforces the momentum of the team when someone notices another person’s hard work. Meet after work for a game of softball, soccer, or another sport that all can participate in. Seeing your workmates in a casual, nonwork setting changes how you view them. For example, say you see someone you thought was stuffy and unapproachable at a picnic. This stuffy person is in shorts and a T-shirt with his ball cap on backward. He is comforting his small child who just fell down. That picture is different from your first impression of him. You go over and speak to him about children and find him witty and easy-going.
2. The following are additional ground rules: NN
You must all understand the strategic reason for the project in order to test for strategic fit in all planning efforts. For example, your project is aligned with a
Phase 3 Solutionsâ•…
375
strategic goal to improve customer satisfaction. Anything else that tries to sneak into your project that doesn’t fulfill that goal should not be allowed unless senior management decides differently. NN
NN
NN
NN
If it’s not scheduled, it won’t get done. Every project leader is to determine the standards of performance and see that all team members adhere to those standards. An open-door policy, open communication, no-rank sessions—everyone’s input is valuable, and everyone’s commitment is to the ultimate goal. Do not use planning sessions to control but to coordinate.
Hands-on 3.12: Testing Your Knowledge of€Managing€Your Project Team 1. You let her know how angry you are that she overstepped her boundaries, particularly
by signing the invoice. You tell her that she is never to sign her name on an invoice again and that if she doesn’t listen to your instructions, you will remove her from the team. You tell her you don’t trust her anymore and to leave your office. 2. You invite her in to sit down. You thank her for her quick response but apologize that
you must not have communicated your instructions clearly to her. You review what happened and give her guidance on what to do in the future. You also apologize that you did not give her an alternate signatory and that in the future you would provide her with one because it is not appropriate for her to sign for you. You ask for feedback; she reiterates your expectations and thanks you for speaking to her. In scenario 1 you used coercive power by threatening her with the loss of her participation on the project. In scenario 2 she leaves feeling that she is still a valuable member of the team and that you, her project manager, provided excellent coaching.
Hands-on 3.13: Testing Your Knowledge of€Motivational€Theories 1. The concept that managers who hold one of two sets of assumptions about human
motivation that will affect the manager’s behavior and management style is called theory X and Y. The individual responsible for the theory is Douglas McGregor. 2. The concept of a need being satisfied and no longer motivating until the next-higher
need takes its place is called the hierarchy of needs. The individual responsible for the theory is Abraham Maslow. 3. The theory that describes two sets of needs—one as an animal to avoid pain
(hygiene needs) and a second as a human being to grow psychologically—is called the hygiene theory. The individual responsible for the theory is Frederick Herzberg.
376â•…
Appendix╇ ╇ Solutions n
Hands-on 3.14: Testing Your Knowledge of Types of Power 1. When a senior manager sends specific instructions to employees and wants immediate
action, the type of power being used is formal power. Just because an individual has formal power doesn’t necessarily mean that the individual deserves that power, however. It happens again and again that a new person gets promoted and is immediately on a “power trip.” Most people dislike seeing that type of behavior. But a promotion is a huge deal to some people and can mark a turning point in their career. It might be better to let that person have their “power time” (and see the humor in their actions until they float back to earth and perform as they should). 2. When a project manager has arranged for the project team to attend a three-day retreat
to celebrate success, the type of power being used is reward power. Reward power also can be misused. Project managers have been offered incentives and gifts by vendors so they will choose that vendor on the next project, for example. It is unethical to partake in that behavior. It is also unethical to promise rewards you may not be able to deliver. 3. When a project manager is asked to be a frequent speaker at industry symposiums,
the type of power the project manager has is expert power. If you are considered an expert, other people who recognize your expertise (including team members) are more likely to trust your opinion as well as what you say. 4. When a team member has asked to work on another project with the project manager
who is leading the current project, the type of power being used is referent power. Referent power is the ultimate compliment if it is earned. You should be able to detect whether a person is sincere or simply patronizing.
Hands-on 3.15: Testing Your Knowledge of€Managing€Conflict 1. You tell Todd, your construction project superintendent, to fire the electrician for gross
insubordination. Forcing would result in a win/lose for the project. 2. You pretend not to see what is happening and don’t say anything to anybody. With-
drawing accomplishes nothing. 3. You ask the electrician to come down from the ladder and ask whether he understands
that he is not to smoke in the building now that carpet is laid. Assume he says yes and promises not to do it again. This smoothing activity produces only a short-term solution. 4. You ask the electrician to come down from the ladder and ask whether he understands
that he is not to smoke in the building now that carpet is laid. He says yes. You tell him that he may have as many smoking breaks as he needs but that the work must still be done on time. He agrees not to smoke while working. This collaboration effort leads to consensus and commitment as well as providing a long-term solution.
Phase 3 Solutionsâ•…
377
5. You opt for a confrontation and ask the electrician to come down from the ladder and to
step into your office in 15 minutes. When he arrives, you ask him to sit down at the round table in your office. You join him there and ask, “Do you know why you are here?” He says, “Because I was smoking.” You advise him that smoking wasn’t the issue; the issue was smoking over new carpet after a specific request not to do so was in place. You also bring up that by ignoring the rule, he was blatantly insubordinate, not only to his foreman but to you. You ask him what he would do if the tables were turned. He says that he would probably fire the person who did that to him. You reply that, yes, you certainly have grounds to do that, but that he is a valued member of the team and you would like very much to keep him on the project. You ask him whether there is anything you can do to help him understand this issue more fully. He says that he understands the policy but needs to smoke more often than three times a day (over breaks and lunches). You advise him that he may take as many smoking breaks as he needs during the day but that the work must be done on time. You also tell him that you will discuss this with his foreman so that he is on board. You then ask him whether he understands why there is to be no smoking over carpet. He advises that he does but can’t commit that he won’t ever do it again. You say to him, “Then you have left me no choice but to fire you. I will be speaking to your foreman to arrange for you to pick up your pay at the end of the day.” An alternate ending to this scenario would be that if he does make a commitment, you will trust that he keeps his promise and send him back to work.
Hands-on 3.16: Testing Your Knowledge of Professional Responsibility in the Execution Phase 1. There are several things to consider. Can your project support a person who is accurate
but slow? If the answer is yes, then both sides win and fairness doesn’t enter into it. If the project cannot support someone who is slow, then no, the supervisor shouldn’t have assigned that person—but did the project manager explain what level of skill was needed? If there was good communication and the assignment was still made, then the assignment is unfair and further negotiation is needed. 2. There is not much you can do to the vendor after the contract has been signed. It is
imperative, however, that you find out how this happened and put steps in place to prevent it from happening again. 3. Work with your team to find a better way to communicate status. For example, one
project manager assigned “reporting status” days to his large team. Some reported on Mondays, or Tuesdays, and so forth. They were given a secure web page where they could update their status. What this did was allow the team members to report once a week without a lengthy meeting. The project manager collected data every day. Then, once a week he conducted a brief conference call to share information with the team that was pertinent to the entire team. The team was allowed to bring up issues that affected the entire team only. Individual issues were handled one on one.
378â•…
Appendix╇ ╇ Solutions n
Phase 4 Solutions Hands-on 4.1: Testing Your Knowledge of€Scope€Verification 1. You should tell the vendor to remove the ducting and prepare the cooling system as per
the contract. If the schedule is to remain on track, either of two processes (fast tracking or crashing) can be used to maintain the schedule date if this item impacted the critical path. 2. There would be no payment to the vendor for the time it took to install the ducts or for
removing them. There would be no payment for the cost of the ducting, or to reconfigure and test the cooling system. 3. If a change was made without a change order, the results could be minimal (no impact)
or high impact. A high-impact result could affect scope, schedule, cost, quality, and risk. It is the project manager’s job to make sure that all documents that have been affected by the change be modified so that the end result reflects what really happened. Also, the project manager would have to educate whoever made the change about the change process and the monetary effects it had on the project. Remember, do not change the baseline budget or schedule as the baseline can only be changed with approved change orders.
Hands-on 4.2: Testing Your Knowledge of€Controlling€Project Scope The steps needed to process a change request are: 1. Submit the change request as per the change management plan. 2. Perform an impact analysis relative to budget schedule, scope, quality, and risk. 3. Make the decision through those authorized to approve changes. 4. Escalate to the change review board or funding board if necessary. 5. Manage the approved change request.
Hands-on 4.3: Testing Your Knowledge of€Controlling€the€Project Schedule 1. The impacts to the project are: a. It changes the ES and EF of task “publish article in professional journal” to 25
and 33.
Phase 4 Solutionsâ•…
379
b. It changes the ES and EF of task “release and prepare to carry regional advertising”
to 33 and 35. c. It changes the LS and LF of task “prepare article for professional journal” to 17
and 23. d. The slack in that path changed from 4 to 1. 2. The impacts to the project if the duration is days are: a. It changes the ES and EF of task “publish article in professional journal” to 27
and 35. b. It changes the ES and EF of task “release and prepare to carry regional advertising”
to 35 and 37. c. This path then becomes the only critical path and all the backward pass dates
will change. d. The slack in the previous critical paths is only 1, which tells you that you now have
a high-risk project. 3. The main thing you can do to reduce schedule risk is to communicate to your team
exactly what has happened and that they must keep you informed of any deviations to the current project plan. Your performance reports should be done more often, perhaps weekly instead of monthly, or even daily if you are about to reach a major milestone. 4. First the project manager will want to seek tasks on the critical path that may poten-
tially be crashed. Then, if using scheduling software, the critical path can be sorted by length of tasks—the longer the task, the more opportunity to crash. Once you have identified the best tasks to crash, options to crash the schedule include: a. Offering overtime to employees whose tasks are on the critical path you have
identified b. Finding additional resources who can work on tasks on the critical path you have
identified to crash
Hands-on 4.4: Testing Your Knowledge of Earned Value 1. The earned value is $6,000 (add weeks 1–3, which is 60%). He should have completed
$8,000 worth of work (weeks 1–4) but only accomplished $6,000. 2. The project is over budget by $4,000 ($10,000 that was spent minus the $6,000 worth
of work accomplished) and behind schedule by $2,000 (80% would have been $8,000, so $8,000 – $6,000 equals $2,000.) 3. The following table provides the answer to the earned value questions.
None
None None EV – AC EV – PV EV/AC EV/PV
None EAC – AC AC + ETC BAC – EAC
Planned value or budgeted cost of work scheduled (BCWS) The actual cost of work performed (ACWP) Earned value Cost variance Schedule variance Cost performance index Schedule performance index Budget at completion Estimate to complete Estimate at completion Variance at completion
PV
AC
EV
CV
SV
CPI
SPI
BAC
ETC
EAC
VAC
Formula
What Does the Acronym Stand For?
Earned Value Elements
$6,000
$15,000
$5,000
$9,000
0.75
0.60
<$2,000>
<$4,000>
$6,000
$10,000
$8,000
Answer
The difference between what the job was supposed to cost versus what we now expect the project to cost. This amount includes the $4,000 overrun plus the $2,000 worth of work left to do.
The sum of all direct and indirect costs to date plus the estimate of all work remaining.
The expected additional cost of an activity or group of activities in the project.
The sum of all budgets originally allocated to the project. Total of all weeks = $9,000.
This shows us how efficiently we are using the project schedule relative to money. In this example, we can say that for every dollar that we have spent, we have earned 75 cents, or 75% efficiency.
This shows us how efficiently we are using the project budget. In this example, we can say that for every dollar that we have spent, we have earned 60 cents, or 60% efficiency.
What this is really telling us is that we are $2,000 worth of work behind schedule. We haven’t actually spent this money yet but we have to spend it in the future to make up what we lost.
What this is telling us is that we have thus far spent $4,000 more than we planned to date for the work that was done.
The amount of work that was actually accomplished.
Provided by the performer. The amount of money spent exceeds what was scheduled to be spent through week 3.
The amount of work scheduled to be completed in four weeks.
Rationale
Phase 4 Solutionsâ•…
381
Hands-on 4.5: Testing Your Knowledge of€Performance€Reporting The following answers the questions regarding performance reporting: 1. $2,800,000. The negotiated cost + the target fee = negotiated value; thus $2,500,000 +
$300,000 = $2,800,000. 2. $2,500,000. All work authorized is equal to negotiated cost. 3. $2,330,000. Contracted funds ($2,500,000) do not need to be released in the budget
all at once. In this case, $2,500,000 was the contracted price for authorized work, but the project manager built the funding allocation somewhat less ($2,330,000), allowing a buffer, typically called management reserve. 4. $2,380,000. The manager still has a management reserve and so added $50,000 to the
original release amount. 5. $170,000. 2,500,000 – $2,330,000 = $170,000. 6. Reduced by $50,000. Revised PV ($2,380,000) – Original PV ($2,330,000) = $50,000. 7. Construction A, Construction C, Construction Support. These elements have release
amounts less than contracted amounts. 8. $324,000. If the project came in $120,000 under budget, a 20% bonus occurs per the
sharing ration concept. Thus $300,000 + 20% ($120,000) = $324,000. (Remember, if the contractor goes over budget, then they must pay 20% of the overrun. If the budget is underrun, the contractor receives 20% of the underrun.) 9. $1,190,000. This figure represents 100% overhead of the amount of the revised
BCWS, which is also $1,190,000. 10. $73,800 worth of work. This represents the total of the PV. 11. $67,500. By definition, the earned value is equal to the budgeted cost of work performed. 12. Less by $6,300; <8 1/2%>. Schedule variance (SV) = EV ($67,500) – PV ($73,800) =
<$6,300>. (SVP)=SV/PV(100)=<8.5%>. 13. $78,300. Total of AC. 14. <$10,800>; <16%> Cost Variance (CV) = EV ($67,500) – AC ($78,300) = <$10,800>.
Cost variance percentage (CVP)=CV/EV(100)= <16%> 15. Construction A, Construction C, Construction Support. A has significant cost and
schedule overrun; B has significant schedule variance; and construction support has significant cost and schedule overrun. 16. <$53,100>; <11.4%>. CV ($53,100) = EV ($464,200) – AC ($78,300) CVP = CV [EV
($464,200) – AC ($517,300)] ÷ EV ($464,200) (100) = <11.4%> 17. $23,300; <5.28%>. SV = EV ($464,200) – PV ($440,900) = 23,300.
SVP = SV [EV ($464,200) – PV ($440,900)] ÷ PV ($440,900) (100) = <5.28%>
382â•…
Appendix╇ ╇ Solutions n
18. Getting worse. The cumulative cost variance is –11.4%. This month is –16%. (See
question 14.) 19. Getting worse. The cumulative schedule variance is –5.28%. This month is –8.5%. 20. Cannot be answered without a network diagram (CPM or PERT). 21. $2,652,249. EAC = AC/EV(BAC) thus, $517,300 / $464,200 ($2,380,000) =
$2,652,000. 22. <$272,249>. VAC = BAC ($2,380,000) – EAC ($2,652,249) = <$272,249>. 23. $250,000. Since the project overran the ceiling price, the contractor must pay for 100% of
the amount over the ceiling price, which is $150,000. The contract calls for an 80/20 sharing ratio, thus the contractor must bear 20% of the targeted profit. The targeted profit is $500,000. Multiply that amount by 20%, which equals $100,000. Now sum the amount of overrun beyond the ceiling price ($150,000) and the contractor’s 20% “share” of the overage ($1000,000), which equals $250,000. Finally, subtract $250,000 from the target profit of $500,000 to arrive at the answer.
Hands-on 4.6: Testing Your Knowledge of€Integrated€Change Control 1. The documents that must be changed include: a. The scope document, which had the requirements of the first set of furniture and
now needs the actual furniture information b. Inventory documents c. Procurement records to show what was actually purchased d. Budget e. Risk documents f.
Change order documents
2. Those that need to be notified of the change include: a. The contractor so he won’t turn the new furniture away b. The interior designers so they can adjust the accessories and color palate to accom-
modate the change c. The sponsor, so there will be no surprises d. The store manager, so she will know the plan was changed 3. These answers are based on the scenario. a. Original furniture was wrong size and color. b. $5,000 c. Yes, these are better-quality items.
Phase 4 Solutionsâ•…
383
d. Yes, they will hold up longer than the original furniture. e. None. f.
No.
g. None, as it allows the schedule to stay on target. h. This will come out of the management reserve budget.
Hands-on 4.7: Testing Your Knowledge of Quality Tools 1. The fishbone diagram is designed to help you understand the root cause of a problem. 2. Histograms are used to determine process capability at a snapshot in time. 3. A Pareto chart is an ordered histogram that shows how many results were generated
by type or category of identified causes. It helps to focus on a given problem because it shows the problem that occurs the most, and focusing on correcting the biggest problem first can bring about the most improvement. 4. When data is displayed on a graph that shows observed data in a time sequence in
order to see the output or performance of a manufacturing or other business process, it is called a run chart. 5. A scatter diagram should be used to see if there is a correlation between dependent and
independent variables in a process. 6. The Taguchi method, called design of experiments, works on the premise that quality
should be built into the product and measured against the deviation from a specification, rather than by conformance to predetermined tolerance limits. If change is a constant, the Taguchi method may not be the best tool to use because bringing products to market would take longer and competitors would probably achieve market share more quickly. Consider Japanese pickup trucks. It took Japanese manufacturers many years to develop a full-size pickup truck. So even though Japan did not have US market share for full-size pickup trucks for those many years, their trucks today are considered by many to be number one in quality and enjoy a healthy market share today.
Hands-on 4.8: Testing Your Knowledge of€Problem€Solving and Metrics 1. Several tools can be used to determine a problem: NN
Control charts can be used to capture data in a process over time to determine whether a process is working. The construction steps of a mass-marketed garment depend on the quality of the design and the accompanying garment package. Several processes have to occur before manufacturing even begins. Determine what those processes are, collect and interpret the data, and make improvements
384â•…
Appendix╇ ╇ Solutions n
accordingly. In this case, however, you may not have the luxury of time to create a control chart. NN
NN
Inspection is another tool that can be used; however, inspection is costly. You can use statistical sampling but it can be risky. For example, say you inspect 10 of 100 garments. They are perfect, so you accept the lot of 100. The risk involved is that you picked out 10 perfect garments, but there may be many more that are imperfect. Don’t forget: In statistical sampling you must know the difference between attribute and variable data. Attribute data indicates product characteristics, which either conform or don’t, as in the preceding example. Variable data are rated on a scale to determine the degree of conformance and are infinitely divisible, such as time and money. For example, from start to finish a garment should take one week from design to manufacturing. If manufacturing does not receive the garment in one week, variable data will show how much time passed before they did receive it.
The following could have been used to avoid the problem or reduce its impact: NN
NN
Benchmarking: Because Cimarron has never marketed or manufactured wedding dresses before, a team could have been selected that would research how other companies manufacture the gowns. Flowcharting: Using a flowchart to map each process would have identified areas of strength or weakness. Those strengths and weaknesses could have been leveraged or avoided.
2. Metrics that can be taken during a project include: NN
NN
NN
NN
NN
Cost metrics could include actual vs. planned budgets and the number of approved changes to the budget. Schedule metrics could include whether the end date was met or a list of milestones that were late. Productivity metrics could include work units produced per hour or number of process improvements that saved hours and dollars. Metrics indicating the quality of deliverables could include the number of defects found or the number of hours of rework needed. Metrics indicating the quality of the project could include the number of risks successfully mitigated, or clear and unambiguous acceptance criteria.
Hands-on 4.9: Testing Your Knowledge of€Managing€Risk€Events 1. The risk events identified include: NN
If we release Cimarron from their obligations to meet the completion date for the switch room, we are still bound to the October 15 date with potential penalties.
Phase 4 Solutionsâ•…
385
NN
The project schedule is built too tight to absorb any delays.
NN
The deadline is unknown for on-site construction of equipment room.
NN
Implementation could be delayed.
NN
The lack of environmental protection (fire, dust, etc.) could cause equipment damage.
NN
Our equipment may not arrive on time.
NN
There could be damage to equipment due to leakage of steam pipes and/or incorrect power supply.
2. Corrective action for Brendon Edwards to consider includes: NN
NN
Negotiate an addendum to the contract to do away with the $5,000 penalty, provide an alternate site for equipment, with Cimarron to absorb the cost and negotiate a phased approach for implementation. Based on the above, negotiate costs associated with additional resources or “fast tracking” to stay on schedule.
NN
Negotiate a “drop dead” date for completion of equipment room.
NN
Insure against damage and time lost.
NN
Carry extra inventory to cover any potential delays.
NN
Work closely with Cimarron’s contractor.
NN
Arrange for a backup power supply.
3. Edwards can do the following to maintain equilibrium between Cimarron and the rec-
ommended mitigation strategy(s): NN
Offer a range of options so the customer can make a choice.
NN
Identify the risks and associated costs of the risks.
NN
Negotiate with the customer based on their interests—try to determine what the underlying reasons are for the October 15 date. If there is a different way of satisfying their need and still slip the deadline if necessary, that would be a win-win for both parties.
4. The following factors produced the circumstances: NN
There was a need for overall project management by DMPC.
NN
DMPC needed to perform risk planning in the beginning of the project.
NN
Edwards could have included the Cimarron project team as well as the contractor to improve communications across all facets of the project.
5. The following risk events could have been identified ahead of time: NN
Construction room delay
NN
Electrical power issues
NN
Possible break in the steam line, given the condition of the existing system
386â•…
Appendix╇ ╇ Solutions n
6. Edwards could have done the following to overcome the risk events: NN
NN
NN
He could have integrated the project plans with the construction company and the electric company subcontractor. He could have done a preliminary site survey and physically inspected the conditions or assigned someone to do that task. He could have used a risk log noted with risk triggers and assigned owners empowered to take action when triggers were hit.
Hands-on 4.10: Testing Your Knowledge of€Contract€Changes 1. These types of changes are called constructive changes. 2. A written order, following change management processes and signed by the contracting
officer so that a seller can make a change, is called a change order. 3. Work that has started before a final contract is complete is called an incomplete con-
tractual action. 4. Change that does not affect project work, such as changing mailing addresses or tele-
phone numbers, is called administrative change. 5. A contract modification that is agreed to between the buyer and seller is called a sup-
plemental agreement.
Hands-on 4.11: Testing Your Knowledge of€Legal€Contract Issues 1. The difference between a material and immaterial breach of contract is as follows: NN
NN
A material breach involves one of the vital aspects of the agreement, such as a contractor failing to appear on the job site for an extended period of time. An immaterial breach involves a less important aspect of the agreement, such as a contractor failing to clean up the job site at the end the day.
2. Termination for convenience means that a buyer can terminate for convenience at any
time. For example, if the project runs out of funds it can be terminated for convenience. 3. Mediation is normally created by contract and uses an objective third party to facilitate
an amicable resolution, whereas binding arbitration is normally created by contract and there may be one or three arbitrators. Courts will enforce mediation and arbitration decisions; therefore, they are binding. 4. When a contract is terminated for default—that is, the seller did not perform the work
of the contract as stated in the contract—the contractor may not be entitled to payment
Phase 4 Solutionsâ•…
387
for work in progress but not yet accepted by the customer. The buyer, depending on the situation, may be entitled to repayment of any payments made to date on the unaccepted work. 5. The three warranties that a seller should provide are: a. Materials/equipment will be of good quality and new unless otherwise permitted. b. Work will be free of defects not inherent in the quality permitted. c. Work will conform to requirements of the contract document. 6. A surety bond is provided by a bonding company. The owner must pay monthly
premiums for the bond of choice, which may be a bid bond, performance bond, or payment bond.
Hands-on 4.12: Testing Your Knowledge of Communicating with Your Sponsor and Team 1. The sponsor may not trust you to manage the project and may begin to meddle into
its minutia. A sponsor may even take over the project or assign another individual. In any case, failure to provide accurate and timely information would be a huge mistake because your credibility as a project manager would diminish. If the project manager begins to hide bad news from the sponsor (even by omission), it places the sponsor in a difficult position of having to explain your behavior when the truth is finally revealed. A sponsor knows that mistakes will occur and expects the project manager to “own up” to them and offer resolutions to the situation without hiding behind bad information or excuses. 2. Be sure to say something to this effect: “I am sorry the information is not to your
liking, but my answer is the same. I will tell you the way things really are—not halftruths, but the whole truth. I would like to share with you my plan to solve the situation. Would you like to hear that now or should I come back at a later time?” 3. Items that can be informally communicated to the project team include the overall
state of the project, progress, performance, and so forth, as well as successes, personnel changes, overview of new technology, and so on. 4. Any type of complaint that is received in writing must have a written response.
Hands-on 4.13: Testing Your Knowledge of Professional Responsibility in the Monitoring and Controlling Phase 1. You should have a conversation with the owner of that task and try to find out why he
is not reporting correct data. Also, try to find out if he is fearful that bad news would affect him personally. Reassure him that you value his input, but that he must be forthright with his data.
388â•…
Appendix╇ ╇ Solutions n
2. If a sponsor is in collusion with someone on your project, you must confront him. Tell
him that you expect the collusion to cease or you will report him to the owner of the business. This is difficult to do—especially when he outranks you. But it must be done. If you don’t confront the situation, you will be considered in collusion with him. 3. Yes. Go to the task owner and explain what is happening. Tell the task owner what the
impact to the project is and gain commitment from the task owner to allow sufficient time for team members to do their work on the project. If the task owner tells you that he can’t get his work done with these members working on your project, tell him that force and load issues are his responsibility and that he should pursue getting additional help for the duration of the team members’ involvement on the project. To avoid this in the future, gain a commitment from the task owner to provide team members and if he has a challenge that surface because of it, ask the task owner to contact you immediately. Maybe there is a way to change the schedule without affecting the due date. 4. Go immediately to the subcontractor’s boss and explain what you observed. Make sure
the boss knows that this is unacceptable on the project and that your expectation is that he will take care of it.
Phase 5 Solutions Hands-on 5.1: Testing Your Knowledge of Formalizing Project Acceptance 1. Nonacceptance of a deliverable typically requires a review of the original acceptance
criteria. Perhaps the client forgot the parameters of acceptance, and the deliverable should be accepted given the acceptance criteria. If the acceptance criteria reveal that the deliverables were not met, then rework has to occur. When the deliverable is accepted, the task is complete—and not before. 2. The contract cannot be closed out until all deliverables are accepted. If the contract
was closed out before all of the deliverables were complete and they were accepted, you would have a difficult time asking the vendor to come back and fix the deliverable. 3. The project was not turned over to operations correctly. It is essential that those people
who will be maintaining the product or service generated by a project be fully trained and have adequate documentation so they can perform their work.
Hands-on 5.2: Testing Your Knowledge of Transferring Ownership of Deliverables 1. When a deliverable is not accepted, rework has to happen in order to get it right. This
could delay project closure and increase the budget. Resources may no longer be available to perform the work.
Phase 5 Solutionsâ•…
389
2. It depends on the user or owner of the deliverable and the importance of the deliver-
able. If the owner approves project closeout without that particular deliverable, then the project can be closed out, but the deliverable still needs to be corrected and records updated to reflect the changes. On the other hand, the owner may not close out the project if they feel the project is not complete without the corrected deliverable. 3. The IT department was not notified of the new product or trained in its use. This is
embarrassing for the service representative. This could also affect the company’s reliability and reputation.
Hands-on 5.3: Testing Your Knowledge of Legal and€Administrative Contract Closure 1. You should not close out the contract. Failure to complete all items of the contract is
not only a breach of contract, but Cimarron can terminate the contract “with cause” as long as the architect certifies that sufficient cause exists. 2. Typically, money is withheld from the final payment to the contractor until all con-
tracted items are complete. You would have to hire someone else to complete the work, and if the cost exceeds the amount withheld from the contract, Cimarron can bill the contractor for the excess or sue the contractor for that amount if it is not paid.
Hands-on 5.4: Testing Your Knowledge of Creating and Documenting the Project’s Final Report 1. If a knowledge database did not exist, a new project manager could not refer to it for
necessary background information that would help on a current project. Problems and solutions recorded in a knowledge database can help project managers working on similar projects. For example, say you are a telecommunications project manager with one of the Bell operating companies. Your project was to change out the telephone lines to a newer and more robust system. Your standard process is to check your portion of the line, and if all goes well, it is turned over to the equipment vendor. You are not responsible for the features—the vendor is. When the customer tries to use their new system, all of the stations have dial tones but many of the features of the phone do not work. According to FCC rules, when the Bell company has completed its work, it is not responsible for the equipment that ties to the system. It doesn’t matter who you can blame for the problem; the customer still can’t use their system, and you are the project manager. On a previous project, the same thing happened, but the project manager worked with the equipment vendor and arranged for call-through tests to make sure all lines and features worked properly. Having a knowledge database for the previous project would have allowed this solution to be recorded and would have saved the current project time and money.
390â•…
Appendix╇ ╇ Solutions n
2. If a knowledge database is not maintained—that is, kept up-to-date—current infor-
mation would not be available to anyone who uses the knowledge database. If the information has been changed, the project manager will not have access to updated information regarding workarounds, challenges that were overcome, and so on. 3. Workarounds performed in the project sometimes work so well that a process change
is in order. Any changes to organizational process assets have to be approved by the process owner. Whoever manages the process documentation is responsible for updating the process and making sure that everyone who uses the process is either informed or trained on the new process. Again, this is a follow-up task for the project manager. Otherwise, you may not know that the process was changed. 4. There are different schools of thought on whether team members should be given a
copy of the final report. These documents can be several pages long. The team already knows most of the information, and additional information such as vendor and contract information do not fall under “need to know.”
Hands-on 5.5: Testing Your Knowledge of€Lessons€Learned 1. No, the project should not be closed out. An action item might include “Collect data
over next six months to evaluate realized costs, benefits, operational efficiency, and product performance.” Many times projects are closed out, and ongoing measurements that cannot be completed at the end of the project are forgotten. You may be so anxious for the project to end that you close down the project and move to the next one. That is not to say that the contract cannot be closed out. As long as all contract items are completed and accepted, the contract can be closed out. However, the final report on the project should include the measurable results to see whether the project truly met its goals and objectives. An action item such as this would typically be given to a person other than the project manager to do. Follow-up on the action item is still the project manager’s responsibility, though. 2. Most project problems occur because of poor management, poor communication, or
lack of training. No one comes to work and decides they are going to create problems. (If they do, you have a much bigger problem that should have been addressed as soon as the problem occurred.) It is never appropriate to name an individual as the reason for the problem. Finger-pointing and bad feelings exist, especially if the person is in the room. The problem should be addressed by asking, “What can be done differently to avoid this problem in the future?” For example, suppose your
Phase 5 Solutionsâ•…
391
team member failed to do a particular task because they thought the task was unnecessary and reported it as complete. Later, because the task was skipped, a lot of rework had to be done. You ask your team members how to avoid this problem in the future, and they respond as follows: NN
NN
NN
You should define those tasks that are significant to the project. You should change our ground rules so that if anyone is confused about a task, that person should speak to the project manager about it and never mark a task complete unless it truly is. Make sure that team members understand their importance in the overall project effort.
The problem was identified in the lessons learned as: “A task was not completed but was reported as completed. As a result, rework had to be done on tasks 3.1 and 4.6 that were also on the critical path. The schedule was not affected because other tasks were crashed.” As you can see, the problem has been addressed without naming an individual.
Hands-on 5.6: Testing Your Knowledge of€Performance€Reviews 1. Informal feedback is not enough. If you are not the team member’s reporting man-
ager, that manager has no way of knowing about the person’s performance unless you provide it. 2. No one likes to receive bad news, and it is difficult sometimes to provide that feedback.
Some project managers (and managers for that matter) would rather opt for the “satisfactory” category because it is much easier than reporting bad news. However, it is vital that you provide truthful feedback. If the project manager had truly “managed” team members as well as the project, unsatisfactory results shouldn’t occur. The project manager should have dealt with any performance issues long before project closure. If the team member was not apprised of poor performance up to this point, it is unfair to them to provide negative feedback. If it was important enough to put it in the report, why wasn’t it important enough to address it when the problems occurred? 3. There are differences of opinion about whether this is a good idea. We feel that
it is not a good idea because some team members will be too hard on themselves and others will overplay their significance in their role as a team member. Honest, truthful, and helpful feedback is always preferred and should be written by the project manager.
392â•…
Appendix╇ ╇ Solutions n
Hands-on 5.7: Testing Your Knowledge of Professional Responsibility in the Closure Phase 1. This hurts the employee. The truth should always be portrayed in documented per-
formance reviews. You are providing the supervisor with false information and the employee cannot learn from their inefficiencies. There is another problem with this as well: Why would the project manager wait until the project is over to provide this kind of feedback to the supervisor? If the performance was not up to par, the project manager should have confronted the team member when the problem(s) occurred. If that didn’t work, the project manager should have worked with the supervisor early on, when the problem(s) first arose. The final feedback may have been much better when the team member had an opportunity to correct their mistakes, behavior, and so on. This also reflects that the project manager has not adhered to their professional responsibility regarding honesty. 2. It is not your call to decide who lands on the “list.” There are many factors that com-
prise the qualifications relative to being on this type of list, such as volume discounts, history with the company, financial stability, and so forth. Feedback should be given to the procurement officer about the behavior of this contractor. As project manager, you should be looking out for your team in the area of respect and confronting the contractor when his actions were first made known to you, as the procurement director may ask, “What did you do about it?” If you did everything you could to keep the contractor from disrespecting others, the procurement director may indeed have the contractor removed. 3. Go to the person who provided the feedback and ask for specifics. If that person can-
not provide you with specifics, then you have every right to challenge this feedback with your immediate supervisor or project manager who should insist on specifics by this person and provide a better score. There are many people who would rather provide an “average” score that does not require documentation than provide extra documentation on excellent or poor behavior.
Index Note to the Reader: Throughout this index boldfaced page numbers indicate primary discussions of a topic. Italicized page numbers indicate illustrations.
A abilities factor in staffing plans, 123 acceleration in precedence diagramming method, 103 in procurement contracts, 219–220 acceptance. See project acceptance accountability in RASCI model, 56 accumulation factor, 23 accuracy data quality, 202–203 in SMART method, 38 achievable requirements in RUMBA, 40 achievement theory, 229 acknowledgments in project acceptance, 298, 298–299 acquiring resources, 183 action items in issues log, 284, 285 activating resources, 183–184 activities in arrow and precedence diagramming method, 101–102 durations, 105 in quality management plans, 146 schedule, 100, 100 sequencing, 100–101, 101–103 acts of God, 158 actual cost of work performed in earned value, 245 addition rule in present value, 22 adjourning stage in team building, 225 ADM (arrow diagramming method), 101–102 administration, contract, 139 administrative changes for contracts, 277 administrative closure, 303–304, 305–306 advertising in procurement process, 212–213 agendas for kickoff meetings, 177 alternative risk strategies, 168–169 analogy cost estimating, 96 approvals charters, 77–79 contract, 220–221 plan, 174–175
approved changes implementation, 254–257 reports, 194 archiving documents, 315, 318–319 arrow diagramming method (ADM), 101–102 as built records, 307, 308–309 aspirational standards fairness, 7 honesty, 9 respect, 5–6 responsibility, 3–4 assimilating teams, 184 assessment, project. See project assessment Associated General Contractors of America, 105 assumptions in charters, 74–75, 75 deliverables, 84 in quality management plans, 147 resource, 122, 124 risk identification, 160 attentive listening, 199 attributes in statistics, 266 audiences column in communication plans, 128 audits procurement, 282 quality, 203–204 average time in PERT, 111, 114 awarding contracts, 217 approval process, 220–221 cost-related components, 219 forms, 220 hands-on test, 220–221 negotiations, 217–218 schedule-related components, 219–220 scope-related components, 218–219
B backward passes, 106, 108 backward traces, 259
394â•…
balanced matrix organizations╇ –╇ closing process
balanced matrix organizations, 43, 44, 45–46, 46 bargaining and decision making stage in procurement negotiations, 218 baselines budgets, 95 master project management plans, 173 basic physical needs stratum, 227, 228 believable requirements in RUMBA, 40 benchmarking in quality control, 265 benefit measurement methods comparative approach, 28, 28 weighted scoring models, 29–30, 29 Bergstrom, Bud, 211 beta distributions in risk assessment, 206 bid bonds, 279 bidder conferences, 212 binding arbitration, 280 Blanchard, Kenneth, 226 bonds, 279 brainstorming in risk identification, 160 breach, contract, 280 budget plans, 94–95 in charters, 98 cost budgeting, 96–97, 97 cost control, 97 cost estimating, 96 procedure, 95 scenario, 95 scope of task, 95 budgets budget/actual reports, 128 capital, 19 controlling, 244–252, 249 in earned value techniques, 245–246 estimated, 72, 72 business cases, 30–35, 30–35 business communities information needs, 127 business goals in scope statement, 38–39, 39 business needs, 18
C calendars in master project management plans, 173 in planning process, 122–123 Campbell, Donald T., 202 capital budgeting, 19, 96 capital improvement projects, 50 cash flow concepts, 19–20, 20
categories of risk, 161–162 cause-and-effect diagrams, 268, 268 certainty in risk, 158–159 change control change management plans, 147–148 change request process, 148–154, 150–157 procedure, 148 scenario, 148 scope of task, 148 in contract administration hands-on test, 280–281 overview, 277–278, 277 change orders, 277 change reports, 128 change requests (CRs), 147–154, 150–157 change review boards (CRBs), 148 changes, approved implementation, 254–257 reports, 194 charters, 70 acceptance criteria, 76 approval, 77–79 assumptions, 74 configuration management requirements, 73–74 constraints, 74–75, 76 estimated budget costs, 72, 72 hands-on test, 77, 77 high-level project risks, 72–73 milestones, 71, 71 procedure, 70 scenario, 70 scope of task, 70 charts control, 263–265, 264 organizational, 64–66, 66 checklists for risk identification, 160 checkpoints in quality management plans, 146 choice in risk, 158–159 claims administration, 278–280 client roles and responsibilities, 58 closeout letters to contractors, 304, 306 closing process, 296 archiving documents, 315, 318–319 checklist, 311, 311 contracts, 304, 305 deliverables ownership transfer, 299–301, 301–302 final reports. See final reports legal and administrative, 303–304, 305–306
closure╇ –╇ control accountsâ•…
lessons learned. See lessons learned in procurement negotiations, 218 project acceptance. See project acceptance closure, contract, 139, 304, 305 coaching, 226–227, 226 coercive power, 230 collaboration approach in conflict resolution, 234 commitments of project team leaders, 178 communicating with executives, 292–293 hands-on test, 294 with sponsors, 289, 291–292 with teams, 292 communication plans developing, 124–125 deliverable templates, 128–133, 130, 130 hands-on test, 133 objectives, 126 procedure, 125–126 questions for, 132–133 report timing in, 128, 129 report types in, 126–128 scenario, 125 scope of task, 125 stakeholders needs, 126, 127 executing, 191 communication model, 191, 196 information distribution, 194–195 listening skills, 199, 200–201 problems in, 293–294 stakeholder expectations, 197–198 status reports, 196–197, 197 comparative selection approach, 28, 28 compensable delays in contracts, 220 competency levels of team members, 122 completeness in data quality, 202 completion contracts, 220 completion payments, 278 compliance matrices, 214, 214–216 compromise approach in conflict resolution, 234 configuration management master project management plans, 173–174 requirements, 73–74 conflict resolution, 233–234 conformance cost of, 203 to quality standards. See deliverables conformance
395
confrontation approach in conflict resolution, 234 consequences assessment for risk, 162–164, 163–164 consolidated work plans, 128 constraints charters, 74–76, 76 resource estimates, 104 constructive changes to contracts, 277 consultants in PMIS, 191, 194 contingency plans, 168 contingency reserves baseline budgets, 95 vs. management reserves, 168 continuous probability distributions, 206 contract administration, 139, 275–276 change control hands-on test, 280–281 overview, 277–278, 277 claims administration, 278–280 hands-on test, 281 payment system, 278 procedure, 276 procurement performance reviews, 281 procurement procedures, 281–282, 283 production surveillance, 278 scenario, 276 scope of task, 276 specification interpretations, 278 subcontractors, 278 contract sums, 219 contractors closeout letters to, 304, 306 daily work reports, 191, 195 in organizational charts, 66 performance reports, 282, 283 contractor’s warranties, 279 contracts administering. See contract administration awarding. See awarding contracts closure, 139, 304, 305 in procurement plans, 137–139, 141–142 contractual statements of work (CSOW), 38, 137, 219 contributors quality management plans, 146 RASCI model, 56 roles and responsibilities, 58 control. See monitoring and controlling process control accounts, 89
396â•…
control charts╇ –╇ Delphi technique
control charts, 263–265, 264 controlled information in communication plans, 132 convenience, termination for, 280 Cook, Thomas D., 202 core teams information needs, 127 in organizational structure, 64 corrective actions on issues log, 283–286, 285, 287 quality management plans, 147 risk management, 168, 275 correspondence logs, 189, 192 cost/benefit analysis, 263 cost performance index (CPI), 246 cost plus award fee (CPAF) contracts, 138–139 cost plus fixed fee (CPFF) contracts, 138 cost plus incentive fee (CPIF) contracts, 138 cost plus percentage of cost (CPPC), 139 cost-related contract components, 219 costs budgeting, 72, 72, 96–97, 97 controlling, 97, 244–252, 249 in earned value, 245 modeling, 96 plans developing, 94 hands-on test, 98 quality, 203, 260 quality management plans, 146, 147 variances in, 249, 249 CPAF (cost plus award fee) contracts, 138–139 CPFF (cost plus fixed fee) contracts, 138 CPI (cost performance index), 246 CPIF (cost plus incentive fee) contracts, 138 CPM (critical path method), 105–108, 107–109, 117 CPPC (cost plus percentage of cost), 139 CRBs (change review boards), 148 criteria acceptance, 76, 144 deliverables, 85–86, 86 quality management plans, 144, 146 critical path method (CPM), 105–108, 107–109, 117 critical-to-quality (CTQ) characteristics, 266 critical work products, 261–262, 262 CRs (change requests), 147–154, 150–157 CSOW (contractual statements of work), 38, 137, 219
CTQ (critical-to-quality) characteristics, 266 customers in communication plans, 126 plan approval from, 174–175
D daily work reports, 191, 195 data collection for quality management plans, 145 data quality definitions, 202–203 databases, knowledge, 318–319 date column in communication plans, 128 dates of commencement in procurement contracts, 219 DCF (discounted cash factor), 20–22 decision trees, 208–209, 208–209 decisions change requests, 149, 156 logging, 189, 193 default, termination for, 280 defining project scope, 89 definitive cost estimating, 96 delays in precedence diagramming method, 104, 104 in procurement contracts, 219–220 delegating mode, 227 deliverables, 83 acceptance, 85–86, 86, 300 communication plans, 128–133, 130 documenting, 84 hands-on test, 85–86, 86 ownership transfer, 299–301, 301–302 procedure, 84–85 scenario, 83 scope of task, 83–84 deliverables conformance, 257 critical work products, 261–262, 262 metrics, 259–261 procedures, 258 quality control. See quality control requirements verification and validation, 258–259 risk management, 272–275 scenario, 257 scope of task, 258 Delphi technique, 160
dependencies╇ –╇ extra work authorization formsâ•…
dependencies activity sequencing, 100–101, 101–103 quality management plans, 147 schedule development, 105–108, 107–109 dependent variables in scatter diagrams, 270, 271 design of experiments (DOE) in quality assurance, 265–266 diagrams networks, 118 PDM, 101–102, 103 quality assurance, 268–270, 268, 270–271 risk identification, 160 discounted cash factor (DCF), 20–22 discretionary dependencies, 100 dispute resolution, 279–280 dispute review boards, 279 documentation reviews, 160 documenting deliverables, 84 risk events, 275 documents, archiving, 315, 318–319 DOE (design of experiments) in quality assurance, 265–266 dotted line relationships in organizational charts, 64–66, 66 drawings in procurement negotiations, 219
E earned value, 244–250 economic models, 23 internal rate of return, 27, 27 net present value, 24–25, 24–26 effectiveness of NPV, 25 80/20 rule, 269 EMV (expected monetary value), 207–208, 210 engineering and construction projects, 50 escalations change requests, 149 issues log, 286, 287 estimates costs overview, 72, 72 in work breakdown structure, 89 in earned value, 248 resources, 104–105, 105 evaluation review questions, 315, 316–317
397
events, risk documenting, 275 hands-on test, 166 managing, 272–275 worksheets, 163–164, 164, 166 excusable delays in procurement contracts, 219 executing process, 182 execution direction and management. See execution direction and management procurement procedures. See procurement procedures quality plans implementation, 201–204 quantitative risk assessment. See quantitative risk assessment resources, 182–184 team development and management. See team development and management execution direction and management, 184–185 communications plans execution. See communication plans expert judgment, 186 PMIS. See project management information system (PMIS) procedure, 185–186 scenario, 185 scope of task, 185 executives, communicating with, 292–293 expectancy theory, 230 expectations kickoff meetings, 177–178 stakeholder, 197–198 expected monetary value (EMV), 207–208, 210 expected time in PERT, 111, 114 expenses per week in earned value, 245 expert judgment, 186 expert power, 230 exploring stage in procurement negotiations, 218 extended project teams information needs, 127 external customer requests, 51 external dependencies, 100–101 external risks, 161 extra work authorization forms, 187, 188
398â•…
facts in procurement negotiations╇ –╇ hygiene theory
F facts in procurement negotiations, 217 fairness, 7–8 fast-tracking in schedules reductions, 117 feasibility analyses, 30–35, 30–35 feedback kickoff meetings, 178, 179 performance project manager, 320, 322 seller, 323, 324–325 team, 320, 321 FFP (firm fixed price) contracts, 137 filing structures in communication plans, 131 final payments, 219 final reports, 304 creating, 310, 310 hands-on test, 312 organizational process assets, 307 procedure, 307 project participants release, 309–310 scenario, 304 scope of task, 304 statutory requirements, 309 finance plans, 94–95 finance principles, 23 finish to finish activity relationships, 102, 102 finish to start activity relationships, 102, 102 firm fixed price (FFP) contracts, 137 fishbone diagrams, 268, 268 fixed-price incentive (FPI) contracts, 137–138 fixed-unit arrangements, 139 flexibility of NPV, 25 float in schedules, 106–108, 109 flowcharts quality control, 266–268, 267 risk management, 170, 171 forcing approach in conflict resolution, 234 Ford, Henry, 217 forecast reports, 127, 289, 290 forecasting costs, 249, 249 formal communications, 291–292 forming stage in team building, 225 forms, contract, 220 forward passes, 106, 107 forward traces, 259 FPI (fixed-price incentive) contracts, 137–138 free float in schedules, 106 functional managers in organizational charts, 65 roles and responsibilities, 58
functional organizations, 41, 42 future value (FV), 23
G Gantt, Henry L., 111 Gantt charts, 111, 112–113, 119 general marketplace in procurement plans, 136 glossary definitions in work breakdown structure, 89–90 goals in scope statement hands-on test, 39 vs. objectives, 38, 39 ground rules in team development and management, 224 group leaders in organizational charts, 66 groupings for work tasks, 90–92
H Hamilton, Booz Allen, 111 hard logic in mandatory dependencies, 100 Hays, Anna Mae, 53 Herzberg, Frederick, 228 Herzberg’s hygiene theory, 228 hierarchical work breakdown structure, 100, 100 hierarchy of needs, 227–228, 228 high-level projects requirements, 40–41 risks, 72–73, 73 high power and high concern stakeholders, 61, 62, 64 high power and no concerns stakeholders, 61, 62, 64 high risks likelihood and severity, 162–163 histograms, 269, 269 honesty, 9–10 horizontal organizational charts, 65, 66 human resource plans, 120 hands-on test, 124, 124 procedure, 121 scenario, 120 scope of task, 120–121 steps, 121–122 template, 123–124 hygiene theory, 228
immaterial breaches╇ –╇ legal closureâ•…
I immaterial breaches, 280 impact analysis change requests, 149, 154 risk assessment, 162–164, 163–164 implementation approaches, 67–69, 69 quality plans. See quality plans implementation implied warranties, 279 incident communications, 289 incomplete contractual actions, 277 independent estimates in seller selection, 213 independent evaluators for lessons learned, 313 independent variables in scatter diagrams, 270, 271 indicators, quality, 145 informal communications, 291 information distribution, 194–195 information-gathering techniques in risk identification, 160 information in RASCI model, 56 information needs in communication plans, 131 information technology projects, 50 initiating process, 12 charters. See charters project assessment. See project assessment project limitations and implementation approach, 67–69, 69 scope statements. See scope statements stakeholders. See stakeholders inspections procurement, 282 quality control, 272 integrated change control, 254–257 integrity in data quality, 203 interfaces, project, 66 internal rate of return (IRR), 27, 27 Internet searches in procurement, 213 interpersonal interfaces, 66 interviews risk assessment, 206 risk identification, 160 IRR (internal rate of return), 27, 27 Ishikawa, Kaoru, 268 Ishikawa diagrams, 268, 268 issues reports, 128, 194 vs. risks, 159
399
issues log, 283 action items, 284, 285 escalations, 286, 287 procedure, 284 scenario, 284 scope of task, 284
J Jagger, Mick, 163 Johnson, Spencer, 226 judgment, expert, 186 Juran, Joseph, 203, 269
K Kerzner, Harold, 191, 220 key decision makers roles and responsibilities, 58 kickoff meetings, 175 expectations, 177–178 feedback, 178, 179 hands-on test, 180 plan evaluation, 180 pre-meeting preparations, 176–177, 177 procedure, 175–176 projects presentations, 177 scenario, 175 scope of task, 175 knowledge databases, 318–319 known risks with known recovery costs, 168
L lag relationships in PDM, 104, 104 large projects, quality metrics for, 260 Lax, David A., 4 LCLs (lower control limits) in control charts, 263–264, 264 lead relationships in PDM, 103, 103 leaderless teams in organizational charts, 66 leadership project managers, 53, 54 team development and management, 232–233 legal closure, 303–304, 305–306
400â•…
legal issues in contract claims administration╇ –╇ monitoring and controlling process
legal issues in contract claims administration, 278 bonds, 279 breaches, 280 dispute resolution, , 279–280 hands-on test, 280–281 termination, 280 waivers, 279 warranties and product liability, 279 legal mandates, 51 legitimate power, 229 lessons learned, 312 evaluation review questions, 315, 316–317 hands-on test, 315 independent evaluators for, 313 phase templates, 313, 314 planning reviews, 313, 315 procedure, 313, 314 reports, 194 scenario, 312 scope of task, 312 teams for, 313 leveling, resource, 118 liability, product, 279 limitations, identifying, 67–69, 69 liquidated damages, 219 list of work in work breakdown structure, 89–90 listening skills, 199, 200–201 litigation, 280 logical groupings for work tasks, 90–92 logs issues, 283–286, 285, 287 PMIS, 189, 192–193 low power and low interest stakeholders, 62, 62, 64 low power but high concern stakeholders, 62, 62, 64 low risks likelihood and severity, 162–163 lower control limits (LCLs) in control charts, 263–264, 264 lower specification limits (LSLs) in control charts, 263–264, 264 lump sum contracts, 137
M make or buy decisions, 135 management, plan approval from, 174 management review process, 174
mandatory dependencies, 100 Maslow, Abraham, 227 Maslow’s hierarchy of needs, 227–228, 228 master project management plans, 170, 172–175 material breaches, 280 matrices communications, 128, 129, 131 compliance, 214, 214–216 RAM, 56, 57 risk probability and impact, 163–164, 163 matrix organizations, 43–46, 43–44, 46 McClelland, David, 229 McGregor, Douglas, 228 mean in statistics, 266 measurable objectives in SMART method, 38 measurable requirements for quality plans, 146 in RUMBA, 40 measurements quality management plans, 144 for success, 17 media column in communication plans, 128 median in statistics, 266 mediation, 279 medium projects, quality metrics for, 260 medium risk likelihood and severity, 162–163 meetings kickoff, 175–180, 176, 179 PMIS, 188–189, 190 messages column in communication plans, 128 metrics assurance, 259–261 deliverables acceptance criteria, 85 deliverables conformance, 259–261 quality management plans, 144 milestones hands-on test, 71, 71 master project management plans, 172–173 scheduled, 71 mode in statistics, 266 money, time value of, 18–19 monitoring and controlling process, 238 approved changes, 254–257 costs, 97 deliverables conformance. See deliverables conformance hands-on test, 294 issues log, 283–286, 285, 287 performance. See performance project status. See performance reporting schedules, 119
Monte Carlo simulation╇ –╇ performance reportingâ•…
Monte Carlo simulation, 210 most likely duration in PERT, 111 motivation achievement theory, 230 expectancy theory, 230 hands-on test, 232 hygiene theory, 228 Maslow’s hierarchy of needs, 227–228, 228 procurement negotiations, 217 team development and management, 232–233 theory X and theory Y, 228–229
organizational process assets updating, 307, 308–309 organizational risks, 161 organizational structures, 40–46, 42–45 organizing schedules, 89 orientation stage in procurement negotiations, 218 orienting teams, 184 overhead, 248 overruns, cost, 97 owner column in communication plans, 128 owner’s implied warranties, 279 ownership transfer of deliverables, 299–301, 301–302
N negative slopes in schedule reductions, 118 negotiations in procurement, 217–218 net present value (NPV) economic models, 24–25, 24–26 hands-on test, 25 overview, 25–26 network diagrams, 118 network logic, 109–110, 110 nonacceptance of products, 300 nonconformance, cost of , 203 nonexcusable delays, 220 nonlabor resources elements, 123 requirements, 121 norming stage in team building, 225 notice to proceed, 219 NPV (net present value) economic models, 24–25, 24–26 hands-on test, 25 overview, 25–26
O objectives deliverables, 84 vs. goals, 38–39, 39 met, acknowledging, 298, 298–299 procurement negotiations, 217 oblige party in bonds, 279 operations turnover, 300 optimistic duration in PERT, 111 organizational charts in communication plans, 129 creating, 64–66, 66
401
P parametric cost modeling, 96 Pareto, Vilfredo, 269 Pareto diagrams, 269–270, 270 Parkinson’s Law, 106 participants, releasing, 309–310 participating mode in situational leadership, 227 payment bonds, 279 payment system in contract administration, 278 PDM (precedence diagramming method), 101–102, 103 penalty power, 230 performance, 238 costs, 244–252 procedure, 239 scenario, 238–239 schedules, 241–244, 242–244 scope, 240–241, 244 scope of task, 239 team, 230–231. See also project team performance variance management, 240 performance bonds, 279 performance reporting, 286 communicating, 289–294 contractors, 282, 283 forecasting, 289, 290 hands-on test, 251–252, 253 procedure, 288 progress, 288–289 scenario, 286 scope of task, 286 status, 288
402â•…
performing stage in team building╇ –╇ professional responsibility
performing stage in team building, 225 personal power, 230 PERT (program evaluation and review technique) hands-on test, 116–117, 116–117 overview, 111, 114–116, 114–115 pessimistic duration in PERT, 111 phase templates for lessons learned, 313, 314 planned value in earned value, 245 planning process, 82–83 approvals, 174–175 budget plans, 94–98, 97 change management plans, 147–154, 150–157 communication plans. See communication plans contingency plans, 168 deliverables, 83–86, 86 human resource plans, 120–124 kickoff meetings, 175–180, 176, 179 master project management plans, 170, 172–175 procurement plans. See procurement plans quality management plans, 143–147 risk management. See risk management plans schedules. See schedules work breakdown structure. See work breakdown structure (WBS) plans lessons learned reviews, 313, 315 strategic, 15–17 PMIS. See project management information system (PMIS) PMO (project management office), 36 for knowledge databases, 318 roles and responsibilities, 58 Polaris mobile submarine project, 111 portfolio management, 17–18 power types hands-on test, 232 overview, 229–230 pre-meeting preparations for kickoff meetings, 176–177, 177 precedence diagramming method (PDM), 101–102 precedence relationships, 103 precision in data quality, 203 preferred logic in discretionary dependencies, 100
preferred vendors lists, 323 in procurement plans, 136 present value (PV), 20–22, 21–22 presenting projects, kickoff meetings, 177 prevention in risk management, 275 price/cost analyses, 218 prime contractors daily work reports, 191, 195 and subcontractors, 278 principal party in bonds, 279 probabilities in risk assessment, 162–164, 163–164, 206 probability theory, 159 process analysis in quality control, 204 procurement plans, 134 contract types, 137–139 hands-on test, 141–142 make or buy decisions, 135 procedure, 134 responsibilities, 140 scenario, 134 scope of task, 134 solicitation, 135–136 template, 140–141 vendors and subcontractors, 136 procurement procedures, 211 contract administration. See contract administration contract awards, 217–221 contractor performance reports, 282, 283 hands-on test, 220–221 inspections and audits, 282 performance reviews, 281 records management systems, 282 scenario, 211 scope of task, 211 seller responses, 212–213 seller selection, 213–217, 214 product development projects, 50 product liability, 279 product scope descriptions hands-on test, 39 overview, 38 production surveillance, 278 productivity, metrics for, 261 productivity rates, 106 professional responsibility, 2 fairness, 7–8 honesty, 9–10 relevance, 3 respect, 5–6 responsibility, 3–5
program evaluation and review technique (PERT)╇ –╇ quality management plansâ•…
program evaluation and review technique (PERT) hands-on test, 116–117, 116–117 overview, 111, 114–116, 114–115 progress payments, 278 progress reports, 126, 288–289 project acceptance, 296 acknowledgments, 298, 298–299 application, 297 charter criteria, 76 deliverables criteria, 85–86, 86 hands-on test, 299 purpose, 297 quality plan criteria, 144 scenario, 296 scope of task, 297 project assessment, 12–13 benefit measurement methods, 28–30 business cases, 30–35, 30–35 business needs, 18 capital budgeting concepts, 19 cash flow concepts, 19–20, 20 economic models, 23 future value, 23 internal rate of return, 27, 27 measurement system for success, 17 net present value, 24–26, 24–26 present value, 20–22, 21–22 procedure, 15 project portfolio management, 17–18 scenario, 13–14, 13–14 scope of task, 14–15 strategic plans, 15–17 time value of money, 18–19 project control books, 186 project management information system (PMIS), 186 daily work reports, 191, 195 extra work authorization forms, 187, 188 logs, 189, 192–193 meetings, 188–189, 190 vendors and consultants, 191, 194 work authorization forms, 187, 187 project management office (PMO), 36 for knowledge databases, 318 roles and responsibilities, 58 project managers in communication plans, 126 information needs, 127 leadership roles, 53, 54 management roles, 52–54 in organizational charts, 65
performance feedback, 320, 322 roles and responsibilities, 57 project objectives. See objectives project portfolio management, 17–18 project records, 194–195 project status. See performance reporting project team leaders, 178 project team performance, 319 hands-on test, 323 procedure, 320 project managers, 320, 322 scenario, 319 scope of task, 319 sellers, 323, 324–325 teams, 320, 321 project types, 50–51 projectized organizations, 42, 42 proposal evaluations in seller selection, 213–216, 214 punch lists, 282 PV (present value), 20–22, 21–22
Q qualitative risk assessment hands-on test, 166 impact, 162–164 probabilities, 162 probability and impact matrixes, 163–164, 163–164 triggers, 164, 165–166 quality control, 263 benchmarking in, 265 cause-and-effect diagrams, 268, 268 control charts, 263–265, 264 cost/benefit analysis, 263 design of experiments, 265–266 flowcharts in, 266–268, 267 hands-on test, 272 histograms, 269, 269 inspections, 272 metrics collection, 259–261 Pareto diagrams, 269–270, 270 run charts, 270, 271 scatter diagrams, 270, 271 statistical sampling, 266 quality management plans, 143 data collection, 145 hands-on test, 147 measurements, 144
403
404â•…
quality of deliverables╇ –╇ rewards systems
procedure, 143–144 quality planning, 144–145 requirements, 145–146 scenario, 143 scope of task, 143 templates, 146–147 quality of deliverables, 261 quality of project, 261 quality plans implementation, 201 audits, 203–204 cost of quality, 203 data quality definitions, 202–203 hands-on test, 204 procedure, 202 process analysis, 204 scenario, 201 scope of task, 202 quality standards, conformance to. See deliverables conformance quantitative risk assessment, 204 decision trees, 208–209, 208–209 expected monetary value, 207–208 interviews, 206 performing, 206 probability distributions, 206 procedure, 205 scenario, 205 scope of task, 205 sensitivity analyses, 207 simulation, 210 questions for communication plans, 132–133 evaluation review, 315, 316–317 Quinn, Richard T., 17
R RAM (responsibility assignment matrix), 56, 57 randomness in probability theory, 159 range in statistics, 266 RASCI model, 56, 57 realistic objectives in SMART method, 38 recognition systems, 233 record retention requirements, 309 records management systems, 282 red flags in seller selection, 216–217 reducing schedules hands-on test, 119–120, 120 overview, 116–118
referent power, 230 relationships in organizational charts, 64–66, 66 releasing participants, 309–310 reliability data quality, 202 NPV, 25 report cards, 128 reports final. See final reports performance. See performance reporting requests for information (RFIs), 136, 212–213 requests for proposals (RFPs), 136 requests for quotes, 136 requirements high-level, 40–41, 41 quality plans, 145–146 verification and validation, 258–259 requirements traceability matrices (RTMs), 259, 259 research and development projects, 50 reserves, contingency vs. management, 168 resolution conflict, 233–234 dispute, 279–280 in procurement negotiations, 218 resource leveling, 118 resource loading, 118 resources, 182 acquiring, 183 activating, 183–184 assumptions, 122, 124 calendars, 122–123, 173 estimates, 104–105, 105 managing, 118 procedure, 183 project teams, 184 requirements, 121–122 risks, 122, 124 scenario, 182 scope of task, 182–183 respect, 5–6 responsibilities. See roles and responsibilities responsibility, 3–5 responsibility assignment matrix (RAM), 56–57 responsible requirements in RUMBA, 40 retention amount in procurement contracts, 219 reward power, 230 rewards systems, 233
RFIs (requests for information)╇ –╇ scope statementsâ•…
RFIs (requests for information), 136, 212–213 RFPs (requests for proposals), 136 risk averse individuals, 159 risk events documenting, 275 hands-on test, 166 managing, 272–275 worksheets, 163–164, 164, 166 risk management, 272 documenting risk events, 275 hands-on test, 275 preventive and corrective actions, 275 procedure, 274–275 scenario, 273–274 scope of task, 274 risk management plans, 154–155 alternative strategies, 168–169 categories, 161–162 contingency plans, 168 contingency reserves vs. management reserves, 168 corrective actions, 168 management plans, 169–170, 171 probability theory, 159 procedure, 158 risk identification, 160–161 risk-response plans, 167–169 scenario, 156 scope of task, 157–158 stakeholder tolerance, 159–160 uncertainty, choice, and certainty, 158–159 risk neutral individuals, 160 risk registers, 164, 165–166, 173 risk seeker individuals, 160 risks high-level, 72–73, 73 qualitative. See qualitative risk assessment quality management plans, 147 quantitative. See quantitative risk assessment resources, 122, 124 staffing, 124, 124 roles and responsibilities in communication plans, 128 hands-on test, 60, 60 in procurement plans, 140 in quality management plans, 146 in RASCI model, 56 stakeholders, 57–60 rolling wave planning, 83
405
root cause analysis in risk identification, 160 RTMs (requirements traceability matrices), 259, 259 run charts, 270, 271
S S-curves in variance analysis, 249, 249 sampling in statistics, 266 Sawyer, Diane, 199 scatter diagrams, 270, 271 schedule-related contract components, 219–220 schedules, 99 activities defining, 100, 100 sequencing, 100–101, 101–103 in communication plans, 130 controlling, 119 hands-on test, 241–244, 242–244 overview, 244 in planning process, 119 developing, 105–108, 107–109 in earned value, 247 Gantt charts, 111, 112–113 meetings, 189, 190 procedure, 99 quality control, 259–260 quality management, 146 reducing hands-on test, 119–120, 120 overview, 116–118 resource management, 118 scenario, 99 scope of task, 99 template elements, 119 in uncertainty, 111, 114–116, 114–115 variances in, 246–247, 249, 249 in work breakdown structure, 89 scope control deliverables, 84 verification, 240–241 scope creep, 68, 240 scope-related contract components, 218–219 scope statements, 35 business goals vs. project objectives, 39 hands-on test, 46 high-level project requirements, 40–41 organizational structures, 40–46, 42–45 procedure, 37–38
406â•…
scorecards and scoring models╇ –╇ strengths
product scope descriptions, 38 scenario, 36–37, 36–37 scope of task, 37 scorecards and scoring models for business cases, 30–34, 30–35 in project charter, 78, 78 in seller selection, 213–214, 214 weighted, 29–30, 29 screening systems in seller selection, 214 SD (standard deviation) of project duration, 114–116, 115 Sebenius, James K., 4 selecting sellers, 213–217, 214 self-actualization stratum, 227, 228 sellers performance feedback, 323, 324–325 responses, 212–213 selecting, 213–217, 214 selling mode in situational leadership model, 227 senior managers information needs, 127 in organizational charts, 65 sensitivity analysis of risk, 207 sequencing activities, 100–101, 101–103 simulation in risk assessment, 210 situational leadership model, 226–227, 226 skills of team members, 121–122, 123 slack in schedules, 106 slope in schedule reductions, 117–118, 118 small projects, quality metrics for, 260 SMART method, 38 smooth over approach in conflict resolution, 234 soft logic in discretionary dependencies, 100 solicitation, procurement, 135–136 specific objectives in SMART method, 38 specifications contracts, 278 quality management plans, 146 sponsors communicating with, 289, 291–292 in communication plans, 126 in organizational charts, 65 roles and responsibilities, 51–52, 57 Sputnik crisis, 111 staffing plans hands-on test, 124, 124 human resource plans. See human resource plans template, 123–124
stakeholders, 47 analysis, 60–63, 62, 63–64 in communication plans, 126, 127, 131 expectations, 197–198 limiting factors, 66–67 organizational charts, 64–66, 66 procedure, 49–50 project interfaces, 66 project managers, 52–54 project types, 50–51 responsibility assignment matrix, 56–57 risk tolerance, 159–160 roles and responsibilities, 57–60 scenario, 47–49 scope of task, 49 sponsors, 51–52 stakeholder list, 51 team leaders, 55 standard deviation (SD) of project duration, 114–116, 115 standards fairness, 7 honesty, 9 quality, 146 respect, 5–6 responsibility, 3–4 start to finish activity relationships, 102–103, 102 start to start activity relationships, 102–103, 102 statements of work, 38, 137, 218–219 statistical sampling, 266 status, project. See performance reporting status reports communicating, 127 communications plans execution, 196–197, 197 elements, 288 statutory requirements for record retention, 309 steering committees, 65 storming stage in team building, 225 strategic plans, 15–16 description, 16 elements, 16–17 strategic projects, 50 strategy and tactics in procurement negotiations, 217 reviewing, 85 strengths, weaknesses, opportunities, and threats (SWOT) analysis, 160
strong matrix organizations╇ –╇ typical organizational structuresâ•…
strong matrix organizations, 43, 43, 45–46 subcontractors managing, 278 overview, 136 subject matter experts, 58 substantial completion, 219 successor tasks in precedence diagramming method, 103 supplemental contract agreements, 277 suppliers roles and responsibilities, 58 support in RASCI model, 56 surety party in bonds, 279 SWOT (strengths, weaknesses, opportunities, and threats) analysis, 160
T T&M (time and materials) contracts, 139 Taguchi, Genichi, 265 tasks in arrow and precedence diagramming method, 101–102 logical groupings, 90–92 team development and management, 221 achievement theory, 230 coaching, 226–227, 226 conflict resolution, 233–234 expectancy theory, 230 ground rules, 224 hands-on test, 227, 231 leadership and motivation, 232–233 Maslow’s hierarchy of needs, 227–228, 228 performance issues, 230–231 power types, 229–230 procedure, 222–224 rewards and recognition systems, 233 scenario, 221–222 scope of task, 222 team building, 224–225, 225 theory X and theory Y, 228–229 training, 226 team directory in communication plans, 129 team leaders, 55 team members in communication plans, 126 competency levels, 122 identifying, 55, 59, 59
obtaining, 55 responsibility assignment matrix, 56–57 roles and responsibilities, 57–60 teams communicating with, 292 developing. See team development and management information needs, 127 for lessons learned, 313 members. See team members orienting and assimilating, 184 performance feedback, 320, 321 technical interfaces, 66 technical risks, 160 technical specifications in quality management plans, 146 technology projects, 50 telling mode in situational leadership model, 227 templates contract closure, 304, 305 deliverables, 128–133, 130 final report, 310, 310 lessons learned, 313, 314 procurement plans, 140–141 quality plans, 146–147 schedules, 119 staffing plans, 123–124 term contracts, 220 termination, contract, 280 theory X and theory Y, 228–229 time and materials (T&M) contracts, 139 time-bound objectives in SMART method, 38 time value of money, 18–19 timeliness in data quality, 203 tolerance for risk, 159–160 tools for communication plans, 131–132 total float in schedules, 106 total variance of projects in PERT, 114 training for teams, 226 transferring ownership deliverables, 299–301, 301–302 triangular distributions in risk assessment, 206 triggers, risk, 164, 165–166 Tuckman, Bruce, 224 turnover, operations, 300 typical organizational structures, 40–46, 42–45
407
408â•…
UCLs (upper control limits) in control charts╇ –╇ y-axis in scatter diagrams
U
W
UCLs (upper control limits) in control charts, 263–264, 264 uncertainty in risk, 158–159 schedules in, 111, 114–116, 114–115 understandable requirements in RUMBA, 40 updating organizational process assets, 307, 308–309 upper control limits (UCLs) in control charts, 263–264, 264 upper specification limits (USLs) in control charts, 263–264, 264
waivers in contracts, 279 warranties in contracts, 279 WBS. See work breakdown structure (WBS) weak matrix organizations, 43, 44, 45–46, 46 weeks to complete in earned value, 245 weighted scoring models overview, 29–30, 29 seller selection, 213–214, 214 Wells, Joseph T., 216 withdraw approach in conflict resolution, 234 work authorization forms, 187, 187 work breakdown structure (WBS), 87, 87 deconstructing and adjusting, 92 glossary definitions, 89–90 hands-on test, 92–93 hierarchical, 100, 100 level of detail, 94 list of work in, 89–90, 90 obstacles, 94 organizing work in, 90 procedure, 88 project schedule management plans, 119 scenario, 88 scope of task, 88 verifying, 94 work lists, 89–90, 90 work organization in work breakdown structure, 90 work packages, 89 work products in quality management plans, 146 work reports in PMIS, 191, 195
V valid requirements for quality plans, 145–146 validation of requirements, 258–259 validity of NPV, 24 variable sampling, 266 variables in scatter diagrams, 270, 271 variance in analysis and forecasting, 249, 249 in earned value, 246–247 managing, 240 PERT, 111, 114, 114 vendors information reports, 128 overview, 136 performance feedback, 323, 324–325 PMIS, 191, 194 procurement plans, 136 responses, 212–213 selecting, 213–217, 214 verifiable requirements for quality plans, 146 verifying communications, 199 requirements, 258–259 scope, 240–241 work breakdown structure, 94 very high risk likelihood and severity, 162–163 very low risk likelihood and severity, 162–163 Vroom, Victor, 229
X x-axis in scatter diagrams, 270
Y y-axis in scatter diagrams, 270
