11 Lecture 2 Planning and Control in Projects (Part 1) 1

22 Why Strategy? Changes in the Organization’s Mission and Strategy Changes in the Organization’s Mission and Strategy – Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects. – Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission.

33 The Strategic Management Process: An Overview Strategic Management Strategic Management – Provides the theme and focus of the future direction for the firm. Responding to changes in the external environment— environmental scanning Responding to changes in the external environment— environmental scanning Allocating scarce resources of the firm to improve its competitive position—internal responses to new action programs Allocating scarce resources of the firm to improve its competitive position—internal responses to new action programs – Requires strong links among mission, goals, objectives, strategy, and implementation.

44 Partial Analysis of Project Failure

55 Organisational strategy does not include role fo projects in delivery of organisation objectives Organisational strategy does not include role fo projects in delivery of organisation objectives Project management not viewed as a strategic capability Project management not viewed as a strategic capability Organisation lacks a coordination mechanism for resources Organisation lacks a coordination mechanism for resources Project goals not in line with organisational goals Project goals not in line with organisational goals

66 The Strategy Process

77 Four of Activities of the Strategic Management Process Four of Activities of the Strategic Management Process 1.Review and define the organizational mission. 2.Set long-range goals and objectives. 3.Analyze and formulate strategies to reach objectives. 4.Implement strategies through projects.

88 Characteristics of Objectives S Specific Be specific in targeting an objective M Measurable Establish a measurable indicator(s) of progress A Assignable Make the objective assignable to one person for completion R Realistic State what can realistically be done with available resources T Time related

99 Strategic Management Process

10 Strategic Management Process

11 The Aggregate Project Plan Steps: Steps: – Assessed workload of staff – Stock take allocated resources – Evaluate requirements of projects – Rank the relative importance of project – Re-allocate resources

12 The Aggregate Project Plan Do the followings: Do the followings: – Assesses contribution – Determine the criteria – Rank the importance – Sets the timing – Assesses the resources, capability and logic requirements

13 The Aggregate Project Plan Help to avoid the followings: Help to avoid the followings: – Take on too many projects – Failure to limit the scope of projects – “Emotional” projects with low yield – Setting goals that are not in line with organisational objectives – Ignore key issues – Lack balance between short-term and long- term goals

14 The Project Office Assist all aspects of management of project work Assist all aspects of management of project work Provides a central facility of skills and knowledge Provides a central facility of skills and knowledge Supporting role in training and mentoring Supporting role in training and mentoring Enhance checks and controls Enhance checks and controls Juggle and co-ordinate three objectives of cost, quality and time – Trade-off decisions Juggle and co-ordinate three objectives of cost, quality and time – Trade-off decisions

15 The Project Office

16 The Trade-off Decisions

17 Causes of Project Trade-offs – Shifts in the relative importance of criterions related to cost, time, and performance parameters Budget–Cost Schedule–Time Performance–Scope Managing the Priorities of Project Trade-offs – Constrain: a parameter is a fixed requirement. – Enhance: optimizing a parameter over others. – Accept: reducing (or not meeting) a parameter requirement. The Trade-off Decisions

18 Project and Organisational Goals Dilemma of Dilemma of Conformance vs Performance – Time – planned vs shortest possible – Cost – planned vs cheapest possible – Quality – planned vs highest level

19 FIGURE 4.2 The Trade-off Decisions

20 Good strategy deployment will result in : Good strategy deployment will result in : – Objectives aligned, visible and understood – Conflicts between functional and project objectives resolved – All members in organisation responsible for process thru’ contribution – Progress monitored with visible measures – Objectives based on customer needs Project and Organisational Goals

21 Checklist Selection Model Strategy alignment: What specific organization does this project align with? Strategy alignment: What specific organization does this project align with? Driver: What business problem does the project solve? Driver: What business problem does the project solve? Success metrics: How will we measure success? Success metrics: How will we measure success? Sponsorship: Who is the project sponsor? Sponsorship: Who is the project sponsor? Risk: What is the impact of not doing this project? Risk: What is the impact of not doing this project? Risk: What is the project risk to our organization? Risk: What is the project risk to our organization? Benefits: What is the value of the project to this organization? Benefits: What is the value of the project to this organization? Organization culture: Is our organization culture right for this type of project? Organization culture: Is our organization culture right for this type of project? Approach: Will we build or buy? Approach: Will we build or buy? Training/resources: Will staff training be required? Training/resources: Will staff training be required? Finance: What is estimated cost of the project? Finance: What is estimated cost of the project? Portfolio: How does the project interact with current projects? Portfolio: How does the project interact with current projects?

22 Non-financial Criteria To capture larger market share To capture larger market share To make it difficult for competitors to enter the market To make it difficult for competitors to enter the market To develop an enabler product To develop an enabler product To develop core technology that will be used in next-generation products To develop core technology that will be used in next-generation products To reduce dependency on unreliable suppliers To reduce dependency on unreliable suppliers To prevent government intervention and regulation To prevent government intervention and regulation

23 Project Screening Matrix

24 Applying a Selection Model Project Classification Project Classification – Deciding how well a strategic or operations project fits the organization’s strategy. Selecting a Model Selecting a Model – Applying a weighted scoring model to bring projects to closer with the organization’s strategic goals. Reduces the number of wasteful projects Reduces the number of wasteful projects Helps identify proper goals for projects Helps identify proper goals for projects Helps everyone involved understand how and why a project is selected Helps everyone involved understand how and why a project is selected

25 Project Proposals Sources and Solicitation of Project Proposals Sources and Solicitation of Project Proposals – Within the organization – Request for proposal (RFP) from external sources (contractors and vendors) Ranking Proposals and Selection of Projects Ranking Proposals and Selection of Projects – Prioritizing requires discipline, accountability, responsibility, constraints, reduced flexibility, and loss of power Managing the Portfolio Managing the Portfolio – Senior management input – The priority team (project office) responsibilities

26 Major Project Proposal

27 Risk Analysis

28 Managing the Portfolio Senior Management Input Senior Management Input – Provide guidance in selecting criteria that are aligned with the organization’s goals – Decide how to balance available resources among current projects The Priority Team Responsibilities The Priority Team Responsibilities – Publish the priority of every project – Ensure that the project selection process is open and free of power politics – Reassess the organization’s goals and priorities – Evaluate the progress of current projects

29 Project Screening Process

30 Priority Analysis

31 Project Portfolio Matrix

32 Project Portfolio Matrix Dimensions Bread-and-Butter Projects Bread-and-Butter Projects – Involve evolutionary improvements to current products and services. Pearls Pearls – Represent revolutionary commercial advances using proven technical advances. Oysters Oysters – Involve technological breakthroughs with high commercial payoffs. White Elephants White Elephants – Projects that at one time showed promise but are no longer viable.

33 Project Performance Measurement Process measures Process measures – Product development cost, time and conformance to quality procedures Short-term outcome measures Short-term outcome measures – Product performance level, desirability to market, flexibility of design to be changed to meet emergent customer needs

34 Project Performance Measurement Long-term outcome measures Long-term outcome measures – Payback period, customer satisfaction, percentage of business being generated by the new product, market share, customisability for high-margin markets

35 Concept Development Steps: Steps: – External customers provide brief or terms of reference – Project manager develop proposal or Project Initiation Document (PID) – Project personal used creativity and options to provide conceptualisation

36 Concept Development

37 Concept Development During conceptualisation: During conceptualisation: – Allow time and space for exploration – Protect ownership of ideas – Encourage rapid prototyping to try ideas and see how they work – Management support of project – Rapid development process from concept into implementation

38 Defining the Project Scope Important to ensure that concept development is within project scope Project Scope Management consist of three parts: – Initiation – Scope change control – Scope plan

39 Project Scope Management

40 Project Scope Management Project Scope – A definition of the end result or mission of the project—a product or service for the client/customer—in specific, tangible, and measurable terms. Purpose of the Scope Statement – To clearly define the deliverable(s) for the end user. – To focus the project on successful completion of its goals. – To be used by the project owner and participants as a planning tool and for measuring project success.

41 Project Scope Checklist 1.Project objective 2.Deliverables 3.Milestones 4.Technical requirements 5.Limits and exclusions 6.Reviews with customer

42 Project Scope: Terms and Definitions Scope Statements – Also called statements of work (SOW) Project Charter – Can contain an expanded version of scope statement – A document authorizing the project manager to initiate and lead the project. Scope Creep – The tendency for the project scope to expand over time due to changing requirements, specifications, and priorities.

43 The Project Planning Process

44 The Project Planning Model

45 The Project Planning Benefits Break down complex activities into manageable chunks Determining logical sequences of activities Providing an input schedule including time and resources requirement Provide logical basis for making decisions Showing effects on other systems

46 The Project Planning Benefits Filtering ideas and activities Provide assessment framework for programmes Essential for revision and refinement process Accumulate learning experiences Facilitating communication of ideas in a logical form

47 Project Planning Benefits and Costs

48 Should the Project Plan be: Should the Project Plan be: – Working Tool or Straitjacket ? – Accuracy or Precision ? Project Planning Benefits and Costs

49 Creating the Work Breakdown Structure Work Breakdown Structure (WBS) – An hierarchical outline (map) that identifies the products and work elements involved in a project – Defines the relationship of the final deliverable (the project) to its subdeliverables, and in turn, their relationships to work packages – Best suited for design and build projects that have tangible outcomes rather than process-oriented projects

50 How WBS Helps the Project Manager WBS – Facilitates evaluation of cost, time, and technical performance of the organization on a project – Provides management with information appropriate to each organizational level – Helps in the development of the organization breakdown structure (OBS), which assigns project responsibilities to organizational units and individuals – Helps manage plan, schedule, and budget – Defines communication channels and assists in coordinating the various project elements

51 Hierarchical Breakdown of the WBS FIGURE 4.3

52 Work Breakdown Structure

53 Work Breakdown Structure

54 Work Packages A Work Package Is the Lowest Level of the WBS. – It is output-oriented in that it: Defines work (what) Identifies time to complete a work package (how long) Identifies a time-phased budget to complete a work package (cost) Identifies resources needed to complete a work package (how much) Identifies a single person responsible for units of work (who)

55 Work Breakdown Structure FIGURE 4.4

56 Integrating the WBS with the Organization Organizational Breakdown Structure (OBS) – Depicts how the firm is organized to discharge its work responsibility for a project Provides a framework to summarize organization work unit performance Identifies organization units responsible for work packages Ties the organizational units to cost control accounts

57 Work Breakdown Structure

58 FIGURE 4.5 Integration of WBS and OBS

59 Coding the WBS for the Information System WBS Coding System – Defines: Levels and elements of the WBS Organization elements Work packages Budget and cost information – Allows reports to be consolidated at any level in the organization structure

60 WBS Coding

61 Process Mapping

62 Process Mapping

63 THE GATED PROCESSES Use of check points or gates between phases provides check for manager of progress Use of check points or gates between phases provides check for manager of progress Do not have to wait until project budget to discover fundamental problem Do not have to wait until project budget to discover fundamental problem

64 THE GATED PROCESSES

65 Advantages of halting activities : Advantages of halting activities : – Majority benefits already achieved – Initial plans wildly inaccurate – New, more attractive alternatives THE GATED PROCESSES

66 Advantages of halting activities : Advantages of halting activities : Organisational strategy changes Organisational strategy changes Key personnel resigns Key personnel resigns Higher level capability needed Higher level capability needed Endanger organisation financially Endanger organisation financially THE GATED PROCESSES