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

2. EUT443 – Engineering Management
WHAT IS A PROJECT?
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
S.M.A.R.T. Objective(s)
Scope / Boundary

5. Additional Characteristics of Projects
Multidisciplinary – input from different kinds of knowledge & expertise
Complex – many interconnected problem, input from group outside the project
Conflict ridden – schedule, budget etc.
Part of Programs
Resources
Limitation

6. PMI Definition
“A temporary endeavor undertaken to create a unique product or service”
Project Management Institute, 2000
Achieving strategic goals
Achieving routine goals
Improving project effectiveness
Virtual projects
Quasi-projects

7. PROJECT MANAGEMENT VS. GENERAL MANAGEMENT
More detailed project planning
Different project budgeting
Globalization issue
Managerial hierarchy
EUT443 – Engineering Management

8. Why Projects?
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

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

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

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

12. Project Goals Performance (Outcomes/Quality) deliverables and quality
exactly what needs to be accomplished at what quality level
Time
doing it quickly or on schedule
Cost
doing it cheaply or on budget

13. Project Goals Which goal is more important: time, cost, or outcomes?
Who decides which goal is more important?
Why is it important for the Project Manager (PM) to know which goal is more important?

14. THE LIFE CYCLES OF PROJECTS
EUT443 – Engineering Management

15. Figure 1-2 The Project Life Cycle

16. Common Project Life Cycle
Slow Start
manager is selected
team is assembled
initial resources are allocated
work program is organized
Quick Momentum
work progresses
momentum builds
Slow Finish
many loose ends to tie up

17. Figure 1-3 An Alternate Project Life Cycle

18. Figure 1-4 Resources & Project Life Cycle
Start
Time
Finish
Resources
Concept
Planning
Execution
Wrap-up
Required Resources

19. Implications of Project Life Cycle
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

20. EUT443 – Engineering Management
SELECTING PROJECTS
EUT443 – Engineering Management

21. Project Selection
Project selection is the process of evaluating individual projects or groups of projects, and then choosing to implement some set of them so that the objectives of the parent organization will be achieved
Managers often use decision-aiding models to extract the relevant issues of a problem from the details in which the problem is embedded
Models represent the problem’s structure and can be useful in selecting and evaluating projects

22. Criteria For Project Selection
Realism - reality of manager’s decision
Capability- able to simulate different scenarios and optimize the decision
Flexibility - provide valid results within the range of conditions
Ease of Use - reasonably convenient, easy execution, and easily understood
Cost - Data gathering and modeling costs should be low relative to the cost of the project
Easy Computerization - must be easy and convenient to gather, store and manipulate data in the model

23. Nonnumeric Selection Methods
Sacred Cow (president’s pet project)
Do you want to keep your job?
Examples
Operating or Competitive Necessity
You must do this project to stay in business
Comparative Benefits
Examine +/- of each potential project

24. Figure 1-5 The Q-Sort Method

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

26. 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

27. Factor Scoring Method
Example: 3 projects; 4 factors; 1-5 scale (5=best) Factor ProjectA ProjectB ProjectC Cost Risk Suitable Skills Total Score:

28. Weighted Factor Scoring Method
Example: 3 projects; 4 factors; 1-5 scale (5=best) Factor Wt. ProjectA ProjectB ProjectC Cost Risk Suitable Skills Wtd. Score:

29. Payback Period Expected project costs are $700,000
Expected returns are $200,000 per year
How long is the payback period?

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

31. Discounted Cash Flow
Initial cost = $700,000; 4-year annual cash flow = $200,000; required rate of return = 15% NPV = -700, ,000/(1.15) ,000/(1.15) ,000/(1.15) ,000/(1.15)4 NPV = -700, , , , ,351 NPV = $-129,004 Should they do this project?

32. Discounted Cash Flow
If NPV > 0, the investment would add value to the firm/organization, thus project is accepted.
If NPV < 0, the investment would substract value from the firm/organization, thus project is rejected.
If NPV = 0, the investment neither gain nor lose value for the firm/organization, decision is made on other criteria.

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

34. 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

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

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

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

38. THE PROJECT PORTFOLIO PROCESS
EUT443 – Engineering Management

39. 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

40. The Aggregate Project Plan

41. Figure 1-12 An Example Aggregate Project Plan

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