1. The World of Project Management
Chapter 1
The World of Project Management
EUT443 – Engineering Management

2. EUT443 – Engineering Management
WHAT IS A PROJECT?
Project means an individual or collaborative enterprise that is CAREFULLY PLANNED and DESIGNED to achieve a particular aim
EUT443 – Engineering Management

3. Why the emphasis on project management?
Many tasks do not fit neatly into business-as-usual.
Need to assign responsibility and authority for achievement of organizational goals.

4. Characteristics of Projects
Unique
Specific Deliverable
Specific Due Date

5. Other Common Characteristics of Projects
Multidisciplinary
Complex
Conflict
Part of Programs

6. PMI Definition
“A temporary endeavor undertaken to create a unique product or
service”
Project Management Institute, 2000

7. PROJECT MANAGEMENT VS. GENERAL MANAGEMENT
EUT443 – Engineering Management

8. Skill Requirements for Effective Project Management
Conflict Resolution
Creativity and Flexibility
Ability to Adjust to Change
Good Planning
Negotiation
win-win versus win-lose

9. WHAT IS MANAGED? THE THREE GOALS OF A PROJECT
EUT443 – Engineering Management

10. Figure 1-1: Performance, Cost, and Time Project Targets

11. Project Management

12. Here is an example of a project that cut quality because the project costs were fixed. The P-36 oil platform ([link]) was the largest floating production platform in the world capable of processing 180,000 barrels of oil per day and 7.2 million cubic meters of gas per day. Located in the Roncador Field, Campos Basin, Brazil the P-36 was operated by Petrobras

13. In March 2001, the P-36 was producing around 84,000 barrels of oil and 1.3 million cubic meters of gas per day when it became destabilized by two explosions and subsequently sank in 3900 feet of water with 1650 short tons of crude oil remaining on board, killing 11 people.
The sinking is attributed to a complete failure in quality assurance and pressure for increased production led to corners being cut on safety procedures. It is listed as one of the most expensive accidents with a price tag of $515,000,000.
The following quote is from a Petrobras executive, citing the benefits of cutting quality assurance and inspection costs on the project, while the accompanying pictures are the result of this proud achievement in project management by Petrobras.

14. "Petrobras has established new global benchmarks for the generation of exceptional shareholder wealth through an aggressive and innovative program of cost cutting on its P36 production facility."

15. "Conventional constraints have been successfully challenged and replaced with new paradigms appropriate to the globalized corporate market place."
"Through an integrated network of facilitated workshops, the project successfully rejected the established constricting and negative influences of prescriptive engineering, onerous quality requirements, and outdated concepts of inspection and client control."

16. "Elimination of these unnecessary straitjackets has empowered the project's suppliers and contractors to propose highly economical solutions, with the win-win bonus of enhanced profitability margins for themselves."

17. "The P36 platform shows the shape of things to come in the unregulated global market economy of the 21st century."

20. THE LIFE CYCLES OF PROJECTS
EUT443 – Engineering Management

21. Figure 1-2 The Project Life Cycle

22. Figure 1-3 An Alternate Project Life Cycle

23. EUT443 – Engineering Management
SELECTING PROJECTS
EUT443 – Engineering Management

24. Nonnumeric Selection Methods
The Sacred Cow
The Operating/Competitive Necessity
Comparative Benefits

25. Figure 1-4 The Q-Sort Method

26. Numeric Selection Methods
Financial Assessment Methods
payback period
discounted cash flow
Scoring Methods
unweighted 0-1 factor method
weighted factor scoring method

27. Payback Period

28. Discounted Cash Flow where I0 = the initial investment
Ft = the net cash flow in period t
k = the required rate of return or hurdle rate

29. The Weighted Scoring Model
where
Si = the total score of the ith project
sij = the score of the ith project on the jth criterion
wj = the weight or importance of the jth criterion

30. Confronting Uncertainty – The Management of Risk
EUT443 – Engineering Management

32. What uncertainties are encountered in project management?
Time required to complete a project
Availability of key resources
Cost of resources
Timing of solutions to technological problems
Actions taken by competitors

33. Can uncertainty surrounding projects ever be eliminated?
No, but it can be managed

34. Risk Analysis
Estimate probabilities or distributions associated with key parameters
Develop analytic or simulation model
Analyze distribution of outcomes generated by model

35. Risk Analysis with Crystal Ball
Assumption Cells
Distribution Gallery
Forecast Cells

36. THE PROJECT PORTFOLIO PROCESS
EUT443 – Engineering Management

37. The Project Portfolio Process
Step 1: Establish a Project Council
Step 2: Identify Project Categories and Criteria
Step 3: Collect Project Data
Step 4: Assess Resource Availability
Step 5: Reduce the Project and Criteria Set
Step 6: Prioritize the Projects within Categories
Step 7: Select the Projects to be Funded and Held in Reserve
Step 8: Implement the Process

38. The Aggregate Project Plan

39. Figure 1-12 An Example Aggregate Project Plan

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