1. Project Management in Practice
The World of Project Management

2. Outline: Projects and their characteristics. Project life cycle.
Selection methods.
Exercise.
Homework: 21, 22, 25, 26

3. What are Projects?
A temporary endeavor undertaken to create a unique product, service or result (PMI-PMBOK)
Specific, timely, usually multidisciplinary, and always conflict ridden (Mantel et al.)
Series of activities or tasks, specific objectives, defined start and end dates, funding limits, consumes resources, multifunctional (Kerzner)

4. Characteristics of Projects
Unique
Specific Deliverable
Specific Due Date
Multidisciplinary
Complex
Conflict
Part of Programs

5. PMI Definition
“A project is a unique temporary endeavor, with a set beginning and end ” PMI defines project management as “the application of knowledge, skills, tools and techniques to a broad range of activities in order to meet the requirements of a particular project “

6. Why Projects? Why organize an activity or job as a project?
It allows you to better structure and organize the tasks that need to be performed
Well developed approaches and tools are available for managing projects
Easy-to-use software is available for scheduling and budgeting projects
Experience has shown that the work/job can be done faster, cheaper, and better when managed as a project

7. Three Goals / Objectives
Time/Schedule
Budget
Results / Performance Objectives

8. Projects and Operations

9. Examples of Projects and Goals
What are some examples of projects you’ve worked on?
What were the desired deliverables/outcomes?
What was the project time frame?
What was the biggest challenge during the project?
Which goals were more important?
Were all goals fully met?

10. Abilities Needed For Effective Project Management
Conflict Resolution
Creativity and Flexibility
Ability to Adjust to Change
Good Planning
Negotiation

11. Project Life Cycles
There are many patterns that project life cycles can follow, but the following chart depicts a fairly common pattern:
slow start
quick momentum
slow finish
Initiate
Plan
Execute
Monitor
And
Control
Close
Stages or Process Groups in the Project Life Cycle

12. A Common Project Life Cycle
Time
100
Slow start
Quick momentum
Slow finish
% Project completion

13. A Different Project Life Cycle
Time
100
% Project completion

14. Implications of Project Life Cycles
Project life cycle shape will affect the timing of resource and funding needs.
Understanding the general project life cycle may help the stakeholders better understand and accept the current status of the project.
Understanding the general project life cycle may also help the PM make better goal tradeoff decisions at particular times during the project.

15. Selecting Projects
Who decides which projects will be undertaken by an organization?
What are some examples of criteria that might be used in selecting projects?
Why should the PM be made aware of why a project was selected?

16. Some Nonnumeric Selection Methods
Sacred Cow
Operating/Competitive Necessity
Comparative Benefits

17. Numeric Selection Methods
Financial Assessment Methods
payback period
discounted cash flow
Scoring Methods
Unweighted factor method
weighted factor scoring method

18. Payback Period

19. Payback Period Example
Expected project costs are $700,000
Expected returns are $200,000 per year

20. 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

21. Discounted Cash Flow

22. Discounted Cash Flow
Initial cost = $700,000; 4-year annual cash flow = $200,000; required rate of return = 15%
NPV = -700, ,000/(1.15)1
+ 200,000/(1.15) ,000/(1.15)3
+ 200,000/(1.15)4
NPV = -700, , , ,503
+ 114,351=-129,004

23. Risk & Uncertainties

24. Risk & Uncertainties
Outcome
Prob
Pay 3H
100 2H 75 1H 10 0H EV

25. Risk & Uncertainties
Define
Assumption
Define
Forecast

26. Risk & Uncertainties

27. Risk & Uncertainties
Distribution Means

28. Risk & Uncertainties

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. Weighted Factor Scoring Method
Example: 3 projects, 4 factors, 1-5 (5=best)
Factor
Wt.
ProjectA
ProjectB
ProjectC
Cost .4 2 4 3
Risk .3 1
Suitable .1 5
Skills .2
Wtd. Score
1.0
2.8
3.1
3.0

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

32. Mix of Projects
The mix of projects undertaken should support the firm’s corporate strategy.
Derivative projects—small improvements
Platform projects—develop new line of products using existing technology
Breakthrough projects—new generation of products using new technology
R&D projects—develop new knowledge

33. Project Selection Exercise
Quality Fleet Ads case
Divide into small groups
Read case (5 min.)
Assignment: (25 min.)
Discuss the advantages of each project
Discuss the cost and budget implications
Rank the projects from most important to least
Which set of projects do you recommend?
What is your proposed budget?