Preface
Our motivation in writing this text continues to be to provide a realistic, socio-technical view of project management. In the past, textbooks on project management focused almost exclusively on the tools and processes used to manage projects and not the human dimension. This baffled us since people not tools complete projects! While we firmly believe that mastering tools and processes is essential to successful project management, we also believe that the effectiveness of these tools and methods is shaped and determined by the prevailing culture of the organization and interpersonal dynamics of the people involved. Thus, we try to provide a holistic view that focuses on both of these dimensions and how they interact to determine the fate of projects.
The role of projects in organizations is receiving increasing attention. Projects are the major tool for implementing and achieving the strategic goals of the organization. In the face of intense, worldwide competition, many organizations have reorganized around a philosophy of innovation, renewal, and organizational learning to survive.
This philosophy suggests an organization that is flexible and project driven. Project management has developed to the point where it is a professional discipline having its own body of knowledge and skills. Today it is nearly impossible to imagine anyone at any level in the organization who would not benefit from some degree of expertise in the process of managing projects.
Audience
This text is written for a wide audience. It covers concepts and skills that are used by managers to propose, plan, secure resources, budget, and lead project teams to successful completions of their projects. The text should prove useful to students and prospective project managers in helping them understand why organizations have developed a formal project management process to gain a competitive advantage.
Readers will find the concepts and techniques discussed in enough detail to be immediately useful in new-project situations. Practicing project managers will find the text to be a valuable guide and reference when dealing with typical problems that arise in the course of a project. Managers will also find the text useful in understanding the role of projects in the missions of their organizations. Analysts will find the text useful in helping to explain the data needed for project implementation as well as the operations of inherited or purchased software. Members of the Project Management Institute will find the text is well structured to meet the needs of those wishing to prepare for PMP (Project Management Professional) or CAPM (Certified Associate in Project Management) certification exams. The text has in-depth coverage of the most critical topics found in PMI’s Project Management Body of Knowledge (PMBOK). People at all levels in the organization assigned to work on projects will find the text useful not only in providing them with a rationale for the use of project management processes but also because of the insights they will gain on how to enhance their contributions to project success.
Our emphasis is not only on how the management process works, but more importantly, on why it works. The concepts, principles, and techniques are universally applicable. That is, the text does not specialize by industry type or project scope.
Instead, the text is written for the individual who will be required to manage a variety of projects in a variety of different organizational settings. In the case of some small projects, a few of the steps of the techniques can be omitted, but the conceptual framework applies to all organizations in which projects are important to survival. The approach can be used in pure project organizations such as construction, research organizations, and engineering consultancy firms. At the same time, this approach will benefit organizations that carry out many small projects while the daily effort of delivering products or services continues.
Content
In this and other editions we continue to try to resist the forces that engender scope creep and focus only on essential tools and concepts that are being used in the real world. We have been guided by feedback from practitioners, teachers, and students. Some changes are minor and incremental, designed to clarify and reduce confusion. Other changes are significant. They represent new developments in the field or better ways of teaching project management principles. Below are major changes to the seventh edition.
∙ Learning objectives have been established for each chapter and the corresponding segment has been marked in the text.
∙ Chapter 16 Oversight has been eliminated and critical information on project maturity models is now part of Chapter 14.
∙ Chapter 18 Project Management Career Paths has been eliminated and essential information from this chapter is now in Chapter 1.
∙ A new set of network exercises have been developed for Chapter 6.
∙ A new set of crashing exercises have been developed for Chapter 9 which introduce crashing concepts in a developmental way.
∙ The Chapter 2 Appendix on Request for Proposal is now part of Chapter 12.
∙ Terms and concepts have been updated to be consistent with the sixth edition of the Project Management Body of Knowledge (2015).
∙ New student exercises and cases have been added to chapters.
∙ The Snapshot from Practice boxes feature a number of new examples of project management in action as well as new Research Highlights that continue to promote practical application of project management.
∙ The Instructor’s Manual contains a listing of current YouTube videos that correspond to key concepts and Snapshots from Practice.
Overall the text addresses the major questions and challenges the authors have encountered over their 60 combined years of teaching project management and consulting with practicing project managers in domestic and foreign environments. These questions include: What is the strategic role of projects in contemporary organizations?
How are projects prioritized? What organizational and managerial styles will improve chances of project success? How do project managers orchestrate the complex network of relationships involving vendors, subcontractors, project team members, senior management, functional managers, and customers that affect project success?
What factors contribute to the development of a high-performance project team? What project management system can be set up to gain some measure of control? How do managers prepare for a new international project in a foreign culture?
Project managers must deal with all these concerns to be effective. All of these issues and problems represent linkages to an integrative project management view.
The chapter content of the text has been placed within an overall framework that integrates these topics in a holistic manner. Cases and snapshots are included from the experiences of practicing managers. The future for project managers appears to be promising. Careers will be determined by success in managing projects.
Student Learning Aids
Student resources include study outlines, online quizzes, PowerPoint slides, videos, Microsoft Project Video Tutorials and web links. These can be found in Connect.
Acknowledgments
We would like to thank Scott Bailey for building the end-of-chapter exercises for Connect and Tracie Lee for reviewing them; Pinyarat Sirisomboonsuk for revising the PowerPoint slides; Oliver F. Lehmann for providing access to PMBOK study questions; Ronny Richardson for updating the Instructor’s Manual; Angelo Serra for updating the Test Bank; and Pinyarat Sirisomboonsuk for providing new Snapshot from Practice questions.
Next, it is important to note that the text includes contributions from numerous students, colleagues, friends, and managers gleaned from professional conversations. We want them to know we sincerely appreciate their counsel and suggestions. Almost every exercise, case, and example in the text is drawn from a real-world project.
Special thanks to managers who graciously shared their current project as ideas for exercises, subjects for cases, and examples for the text. Shlomo Cohen, John A. Drexler, Jim Moran, John Sloan, Pat Taylor, and John Wold, whose work is printed, are gratefully acknowledged. Special gratitude is due Robert Breitbarth of Interact Management, who shared invaluable insights on prioritizing projects. University students and managers deserve special accolades for identifying problems with earlier drafts of the text and exercises.
We are indebted to the reviewers of past editions who shared our commitment to elevating the instruction of project management. The reviewers include Paul S. Allen, Rice University; Denis F. Cioffi, George Washington University; Joseph D. DeVoss, DeVry University; Edward J. Glantz, Pennsylvania State University; Michael Godfrey, University of Wisconsin–Oshkosh; Robert Key, University of Phoenix; Dennis Krumwiede, Idaho State University; Nicholas C. Petruzzi, University of Illinois–Urbana/Champaign; William R. Sherrard, San Diego State University; S. Narayan Bodapati, Southern Illinois University at Edwardsville; Warren J. Boe, University of Iowa;
Burton Dean, San Jose State University; Kwasi Amoako-Gyampah, University of North Carolina–Greensboro; Owen P. Hall, Pepperdine University; Bruce C. Hartman, University of Arizona; Richard Irving, York University; Robert T. Jones, DePaul University; Richard L. Luebbe, Miami University of Ohio; William Moylan, Lawrence Technological College of Business; Edward Pascal, University of Ottawa; James H.Patterson, Indiana University; Art Rogers, City University; Christy Strbiak, U.S. Air Force Academy; David A. Vaughan, City University; and Ronald W. Witzel, Keller Graduate School of Management. Nabil Bedewi, Georgetown University; Scott Bailey, Troy University; Michael Ensby, Clarkson University; Eldon Larsen, Marshall University;
Steve Machon, DeVry University–Tinley Park; William Matthews, William Patterson University; Erin Sims, DeVry University–Pomona; Kenneth Solheim, DeVry University–Federal Way; and Oya Tukel, Cleveland State University. Gregory Anderson, Weber State University; Dana Bachman, Colorado Christian University; Alan Cannon, University of Texas, Arlington; Susan Cholette, San Francisco State; Michael Ensby, Clarkson University; Charles Franz, University of Missouri, Columbia; Raouf Ghattas, DeVry University; Robert Groff, Westwood College; Raffael Guidone, New York City College of Technology; George Kenyon, Lamar University; Elias Konwufine, Keiser University; Rafael Landaeta, Old Dominion University; Muhammad Obeidat, Southern Polytechnic State University; Linda Rose, Westwood College; Oya Tukel, Cleveland State University; and Mahmoud Watad, William Paterson University.
Victor Allen, Lawrence Technological University; Mark Angolia, East Carolina University; Alan Cannon, University of Texas at Arlington; Robert Cope, Southeastern Louisiana University; Kenneth DaRin, Clarkson University; Ron Darnell, Amberton University; Jay Goldberg, Marquette University; Mark Huber, University of Georgia;
Marshall Issen, Clarkson University; Charles Lesko, East Carolina University; Lacey McNeely, Oregon State University; Donald Smith, Texas A&M University; Peter Sutanto, Prairie View A&M University; Jon Tomlinson, University of Northwestern Ohio. We thank you for your many thoughtful suggestions and for making our book better. Of course we accept responsibility for the final version of the text.
In addition, we would like to thank our colleagues in the College of Business at Oregon State University for their support and help in completing this project. In particular, we recognize Lacey McNeely, Prem Mathew, Keith Leavitt and Pauline Schlipzand for their helpful advice and suggestions. We also wish to thank the many students who helped us at different stages of this project, most notably Neil Young, Saajan Patel, Katherine Knox, Dat Nguyen, and David Dempsey. Mary Gray deserves special credit for editing and working under tight deadlines on earlier editions. Special thanks go to Pinyarat (“Minkster”) Sirisomboonsuk for her help in preparing the last four editions.
Finally, we want to extend our thanks to all the people at McGraw-Hill Education for their efforts and support. First, we would like to thank Dolly Womack, and Christina Holt, for providing editorial direction, guidance, and management of the book’s development for the seventh edition. And we would also like to thank Melissa Leick, Jennifer Pickel, Egzon Shaqiri, Bruce Gin, and Karen Jozefowicz for managing the final production, design, supplement, and media phases of the seventh edition.
Established Learning Objectives
Learning objectives have been added to this edition to help students target key areas of learning. Learning objectives are listed both at the beginning of each chapter and are called out as marginal elements throughout the narrative in each chapter.
End-of-Chapter Content
Both static and algorithmic end-of-chapter content, including Review Questions and Exercises, are now assignable in Connect.
SmartBook
The SmartBook has been updated with new highlights and probes for optimal student learning.
Snapshots
The Snapshot from Practice boxes have been updated to include a number of new examples of project management in action. New questions based on the Snapshots are also now assignable in Connect.
New and Updated Cases
Included at the end of each chapter are between one and five cases which demonstrate key ideas from the text and help students understand how Project Management comes into play in the real world. New cases have been added across several chapters in the 7th edition.
Contents
1.1 What Is a Project? 6
What a Project Is Not 7
Program versus Project 7
The Project Life Cycle 8
The Project Manager 9
Being Part of a Project Team 11
1.2 Current Drivers of Project Management 12
Compression of the Product Life Cycle 12
Knowledge Explosion 12
Triple Bottom Line (Planet, People, Profit) 12
Increased Customer Focus 12
Small Projects Represent Big Problems 15
1.3 Project Governance 15
Alignment of Projects with Organizational Strategy 16
1.4 Project Management Today: A Socio-Technical Approach 17
Summary 18
2.1 The Strategic Management Process: An Overview 29
Four Activities of the Strategic Management Process 29
2.2 The Need for a Project Priority System 34
Problem 1: The Implementation Gap 34
Problem 2: Organization Politics 35
Problem 3: Resource Conflicts and Multitasking 36
2.3 A Portfolio Management System 37
Classification of the Project 37
2.4 Selection Criteria 38
Financial Criteria 38
Nonfinancial Criteria 40
2.5 Applying a Selection Model 43
Project Classification 43
Sources and Solicitation of Project Proposals 44
Ranking Proposals and Selection of Projects 46
2.6 Managing the Portfolio System 48
Senior Management Input 48
The Governance Team Responsibilities 49
Balancing the Portfolio for Risks and Types of Projects 50
Summary 51
3.1 Project Management Structures 68
Organizing Projects within the Functional Organization 68
Organizing Projects as Dedicated Teams 71
Organizing Projects within a Matrix Arrangement 75
Different Matrix Forms 76
3.2 What Is the Right Project Management Structure? 79
Organization Considerations 79
Project Considerations 79
3.3 Organizational Culture 81
What Is Organizational Culture? 81
Identifying Cultural Characteristics 83
3.4 Implications of Organizational Culture for Organizing Projects 86
Summary 89
4.1 Step 1: Defining the Project Scope 102
Employing a Project Scope Checklist 103
4.2 Step 2: Establishing Project Priorities 106
4.3 Step 3: Creating the Work Breakdown Structure 108
Major Groupings Found in a WBS 108
How WBS Helps the Project Manager 108
A Simple WBS Development 109
4.4 Step 4: Integrating the WBS with the Organization 113
4.5 Step 5: Coding the WBS for the Information System 113
4.6 Process Breakdown Structure 116
4.7 Responsibility Matrices 117
4.8 Project Communication Plan 119
Summary 121
5.1 Factors Influencing the Quality of Estimates 130
Planning Horizon 130
Project Complexity 130
People 131
Project Structure and Organization 131
Padding Estimates 131
Organization Culture 131
Other Factors 131
5.2 Estimating Guidelines for Times, Costs, and Resources 132
5.3 Top-Down versus Bottom-Up Estimating 134
5.4 Methods for Estimating Project Times and Costs 136
Top-Down Approaches for Estimating Project Times and Costs 136
Bottom-Up Approaches for Estimating Project Times and Costs 140
A Hybrid: Phase Estimating 141
5.5 Level of Detail 143
5.6 Types of Costs 144
Direct Costs 145
Direct Project Overhead Costs 145
General and Administrative (G&A) Overhead Costs 145
5.7 Refining Estimates 146
5.8 Creating a Database for Estimating 148
5.9 Mega Projects: A Special Case 149
Summary 151
Appendix 5.1: Learning Curves for Estimating 157
6.1 Developing the Project Network 163
6.2 From Work Package to Network 164
6.3 Constructing a Project Network 166
Terminology 166
Basic Rules to Follow in Developing Project Networks 166
6.4 Activity-on-Node (AON) Fundamentals 167
6.5 Network Computation Process 171
Forward Pass—Earliest Times 171
Backward Pass—Latest Times 173
Determining Slack (or Float) 175
6.6 Using the Forward and Backward Pass Information 177
6.7 Level of Detail for Activities 178
6.8 Practical Considerations 178
Network Logic Errors 178
Activity Numbering 179
Use of Computers to Develop Networks 179
Calendar Dates 182
Multiple Starts and Multiple Projects 182
6.9 Extended Network Techniques to Come Closer to Reality 182
Laddering 182
Use of Lags to Reduce Schedule Detail and Project Duration 183
An Example Using Lag Relationships—The Forward and Backward Pass 186
Hammock Activities 188
Summary 189
7.1 Risk Management Process 208
7.2 Step 1: Risk Identification 210
7.3 Step 2: Risk Assessment 212
Probability Analysis 215
7.4 Step 3: Risk Response Development 216
Mitigating Risk 216
Avoiding Risk 217
Transferring Risk 217
Accept Risk 218
7.5 Contingency Planning 219
Technical Risks 220
Schedule Risks 222
Cost Risks 222
Funding Risks 222
7.6 Opportunity Management 223
7.7 Contingency Funding and Time Buffers 223
Budget Reserves 224
Management Reserves 224
Time Buffers 225
7.8 Step 4: Risk Response Control 225
7.9 Change Control Management 226
Summary 230
Appendix 7.1: PERT and PERT Simulation 240
8.1 Overview of the Resource Scheduling Problem 252
8.2 Types of Resource Constraints 254
8.3 Classification of a Scheduling Problem 255
8.4 Resource Allocation Methods 255
Assumptions 255
Time-Constrained Project: Smoothing Resource Demand 256
Resource-Constrained Projects 257
8.5 Computer Demonstration of Resource-Constrained Scheduling 262
The Impacts of Resource-Constrained Scheduling 266
8.6 Splitting Activities 269
8.7 Benefits of Scheduling Resources 270
8.8 Assigning Project Work 271
8.9 Multiproject Resource Schedules 272
8.10 Using the Resource Schedule to Develop a Project Cost Baseline 273
Why a Time-Phased Budget Baseline Is Needed 273
Creating a Time-Phased Budget 274
Summary 279
Appendix 8.1: The Critical-Chain Approach 294
9.1 Rationale for Reducing Project Duration 306
9.2 Options for Accelerating Project Completion 307
Options When Resources Are Not Constrained 308
Options When Resources Are Constrained 310
9.3 Project Cost–Duration Graph 313
Explanation of Project Costs 313
9.4 Constructing a Project Cost–Duration Graph 314
Determining the Activities to Shorten 314
A Simplified Example 316
9.5 Practical Considerations 318
Using the Project Cost–Duration Graph 318
Crash Times 319
Linearity Assumption 319
Choice of Activities to Crash Revisited 319
Time Reduction Decisions and Sensitivity 320
9.6 What If Cost, Not Time, Is the Issue? 321
Reduce Project Scope 322
Have Owner Take on More Responsibility 322
Outsourcing Project Activities or Even the Entire Project 322
Brainstorming Cost Savings Options 322
Summary 323
10.1 Managing versus Leading a Project 340
10.2 Managing Project Stakeholders 341
10.3 Influence as Exchange 345
Task-Related Currencies 345
Position-Related Currencies 346
Inspiration-Related Currencies 347
Relationship-Related Currencies 347
Personal-Related Currencies 348
10.4 Social Network Building 348
Mapping Stakeholder Dependencies 348
Management by Wandering Around (MBWA) 350
Managing Upward Relations 351
Leading by Example 353
10.5 Ethics and Project Management 356
10.6 Building Trust: The Key to Exercising Influence 357
10.7 Qualities of an Effective Project Manager 359
Summary 362
11.1 The Five-Stage Team Development Model 377
11.2 Situational Factors Affecting Team Development 379
11.3 Building High-Performance Project Teams 381
Recruiting Project Members 381
Conducting Project Meetings 383
Establishing Team Norms 385
Establishing a Team Identity 387
Creating a Shared Vision 388
Managing Project Reward Systems 391
Orchestrating the Decision-Making Process 392
Managing Conflict within the Project 394
Rejuvenating the Project Team 398
11.4 Managing Virtual Project Teams 399
11.5 Project Team Pitfalls 403
Groupthink 403
Bureaucratic Bypass Syndrome 404
12.1 Outsourcing Project Work 420
12.2 Request for Proposal (RFP) 424
Selection of Contractor from Bid Proposals 425
12.3 Best Practices in Outsourcing Project Work 426
Well-Defined Requirements and Procedures 426
Extensive Training and Team-Building Activities 428
Well-Established Conflict Management Processes in Place 429
Frequent Review and Status Updates 431
Co-Location When Needed 432
Fair and Incentive-Laden Contracts 432
Long-Term Outsourcing Relationships 433
12.4 The Art of Negotiating 434
1. Separate the People from the Problem 435
2. Focus on Interests, Not Positions 436
3. Invent Options for Mutual Gain 437
4. When Possible, Use Objective Criteria 138
Dealing with Unreasonable People 438
12.5 A Note on Managing Customer Relations 439
Summary 442
Appendix 12.1: Contract Management 451
13.1 Structure of a Project Monitoring Information System 460
What Data Are Collected? 460
Collecting Data and Analysis 460
Reports and Reporting 460
13.2 The Project Control Process 461
Step 1: Setting a Baseline Plan 461
Step 2: Measuring Progress and Performance 461
Step 3: Comparing Plan against Actual 462
Step 4: Taking Action 462
13.3 Monitoring Time Performance 462
Tracking Gantt Chart 463
Control Chart 463
Milestone Schedules 464
13.4 Development of an Earned Value Cost/Schedule System 467
Percent Complete Rule 467
What Costs Are Included in Baselines? 467
Methods of Variance Analysis 468
13.5 Developing a Status Report: A Hypothetical Example 470
Assumptions 470
Baseline Development 470
Development of the Status Report 471
13.6 Indexes to Monitor Progress 475
Performance Indexes 477
Project Percent Complete Indexes 474
Software for Project Cost/Schedule Systems 477
Additional Earned Value Rules 478
13.7 Forecasting Final Project Cost 476
13.8 Other Control Issues 481
Technical Performance Measurement 481
Scope Creep 483
Baseline Changes 483
The Costs and Problems of Data Acquisition 485
Summary 486
Appendix 13.1: The Application of Additional Earned Value Rules 505
Appendix 13.2: Obtaining Project Performance Information from MS Project 2010 or 2015 511
14.1 Types of Project Closure 516
14.2 Wrap-up Closure Activities 518
14.3 Project Audits 521
The Project Audit Process 522
Project Retrospectives 525
Project Audits: The Bigger Picture 529
14.4 Post-Implementation Evaluation 532
Team Evaluation 532
Individual, Team Member, and Project Manager Performance Reviews 534
Summary 537
Appendix 14.1: Project Closeout Checklist 539
Appendix 14.2: Euro Conversion—Project Closure Checklist 541
15.1 Environmental Factors 546
Legal/Political 546
Security 547
Geography 548
Economic 549
Infrastructure 550
Culture 551
15.2 Project Site Selection 553
15.3 Cross-Cultural Considerations:
A Closer Look 554
Adjustments 555
Working in Mexico 556
Working in France 559
Working in Saudi Arabia 560
Working in China 562
Working in the United States 563
Summary Comments about Working in Different Cultures 565
Culture Shock 565
Coping with Culture Shock 567
15.4 Selection and Training for International Projects 568
Summary 571
16.1 Traditional versus Agile Methods 580
16.2 Agile PM 582
16.3 Agile PM in Action: Scrum 585
Roles and Responsibilities 586
Scrum Meetings 587
Product and Sprint Backlogs 588
Sprint and Release Burndown Charts 589
16.4 Applying Agile PM to Large Projects 592
16.5 Limitations and Concerns 593
Summary 595
Appendix One: Solutions to Selected Exercise 603
Appendix Two: Computer Project Exercises 616
Glossary 633
Acronyms 640
Project Management Equations 641
Cross Reference of Project Management 642
Socio-Technical Approach to Project Management 643
Index 644
