Project Management Midterm

The Project Network

A flow chart that graphically depicts the sequence, interdependencies, and start and finish times of the project job plan of activities that is the critical path through the network.
Provides the basis for scheduling labor and equipment.
Enhances communic


an element of the project that requires time

Merge Activity

an activity that has two or more preceding activities on which it depends.

Parallel (Concurrent) Activities

Activities that can occur independently and, if desired, not at the same time.


a sequence of connected, dependent activities.

Critical path

the longest path through the activity network that allows for the completion of all project-related activities; the shortest expected time in which the entire project can be completed. Delays on the critical path will delay completion of the entire projec


a point in time when an activity is started or completed. It does not consume time.

Burst Activity

an activity that has more than one activity immediately following it (more than one dependency arrow flowing from it).

Activity-on-Node (AON)/Activity-on-Arrow (AOA)

Uses a node/arrow to depict an activity.

Basic Rules to Follow in Developing Project Networks

Networks typically flow from left to right.
An activity cannot begin until all preceding connected activities are complete.
Arrows indicate precedence and flow and can cross over each other.
Each activity must have a unique identify number that is greate

Free Slack (or Float)

Is the amount of time an activity can be delayed after the start of a longer parallel activity or activities.
Is how long an activity can exceed its early finish date without affecting early start dates of any successor(s).
Allows flexibility in schedulin


The likelihood the original critical path(s) will change once the project is initiated.
The critical path is the network path(s) that has (have) the least slack in common.


Activities are broken into segments so the following activity can begin sooner and not delay the work.


The minimum amount of time a dependent activity must be delayed to begin or end.

Hammock Activity

An activity that spans over a segment of a project.
Duration of hammock activities is determined after the network plan is drawn.
Hammock activities are used to aggregate sections of the project to facilitate getting the right amount of detail for spec


The process of forecasting or approximating the time and cost of completing project deliverables.
The task of balancing expectations of stakeholders and need for control while the project is implemented.

Top-down (macro) estimates

analogy, group consensus, or mathematical relationships.
Are usually are derived from someone who uses experience and/or information to determine the project duration and total cost.
Are made by top managers who have little knowledge of the processes used

Bottom-up (micro) estimates

estimates of elements of the work breakdown structure
Can serve as a check on cost elements in the WBS by rolling up the work packages and associated cost accounts to major deliverables at the work package level.

Why Estimating Time and Cost Are Important

To support good decisions.
To schedule work.
To determine how long the project should take and its cost.
To determine whether the project is worth doing.
To develop cash flow needs.
To determine how well the project is progressing.
To develop time-phased

Estimating Guidelines for Times, Costs, and Resources

Have people familiar with the tasks make the estimate.
Use several people to make estimates.
Base estimates on normal conditions, efficient methods, and a normal level of resources.
Use consistent time units in estimating task times.
Treat each task as in

Estimating Projects: Preferred Approach

Make rough top-down estimates.
Develop the WBS/OBS.
Make bottom-up estimates.
Develop schedules and budgets.
Reconcile differences between top-down and bottom-up estimates

Top-Down Approaches for Estimating Project Times and Costs

Consensus methods
Ratio methods
Apportion method
Function point methods for software and system projects
Learning curves

Bottom-Up Approaches for Estimating Project Times and Costs

Template methods
Parametric procedures applied to specific tasks
Range estimates for the WBS work packages
Phase estimating: A hybrid

Level of Detail

Template methods
Parametric procedures applied to specific tasks
Range estimates for the WBS work packages
Phase estimating: A hybrid

Direct Costs

Costs that are clearly chargeable to a specific work package.
Labor, materials, equipment, and other

Direct (Project) Overhead Costs

Costs incurred that are directly tied to an identifiable project deliverable or work package.
Salary, rents, supplies, specialized machinery

General and Administrative Overhead Costs

Organization costs indirectly linked to a specific package that are apportioned to the project

Reasons for Adjusting Estimates

Interaction costs are hidden in estimates.
Normal conditions do not apply.
Things go wrong on projects.
Changes in project scope and plans.

Adjusting Estimates

Time and cost estimates of specific activities are adjusted as the risks, resources, and situation particulars become more clearly defined.

Defining the Project

Step 1: Defining the Project Scope
Step 2: Establishing Project Priorities
Step 3: Creating the Work Breakdown Structure
Step 4: Integrating the WBS with the Organization
Step 5: Coding the WBS for the Information System

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.

Project Scope Checklist

Project objective
Technical requirements
Limits and exclusions
Reviews with customer

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.

Causes of Project Trade-offs

Shifts in the relative importance of criterions related to cost, time, and performance parameters

Managing the Priorities of Project Trade-offs

Constrain: a parameter is a fixed requirement.
Enhance: optimizing a criterion over others.
Accept: reducing (or not meeting) a criterion requirement.

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 t


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

WBS Rules-of-Thumb

Break down the work until you have an estimate accurate enough for your purposes
Conform to the units of measure with which you are going to schedule work
Final activities should have clearly defined Start/End Events (e.g., "research" and "analysis" are t

Work Packages

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).

Organizational Breakdown Structure

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 co

WBS Coding System

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

Responsibility Matrix (RM)

Also called a linear responsibility chart.
Summarizes the tasks to be accomplished and who is responsible for what on the project.
Lists project activities and participants.
Clarifies critical interfaces between units and individuals that need coordinati

Project Communication Plan

What information needs to be collected and when?
Who will receive the information?
What methods will be used to gather and store information?
What are the limits, if any, on who has access to certain kinds of information?
When will the information be co

Information Needs

Project status reports
Deliverable issues
Changes in scope
Team status meetings
Gating decisions
Accepted request changes
Action items
Milestone reports

Challenges to Organizing Projects

The uniqueness and short duration of projects relative to ongoing longer-term organizational activities
The multidisciplinary and cross-functional nature of projects creates authority and responsibility dilemmas

Choosing an Appropriate Project Management Structure

The best system balances the needs of the project with the needs of the organization.

Organizing Projects: Functional organization

Different segments of the project are delegated to respective functional units.
Coordination is maintained through normal management channels.
Used when the interest of one functional area dominates the project or one functional area has a dominant inte

Organizing Projects: Dedicated Teams

Teams operate as separate units under the leadership of a full-time project manager.
In a projectized organization where projects are the dominant form of business, functional departments are responsible for providing support for its teams.

Organizing Projects: Matrix Structure

Hybrid organizational structure (matrix) is overlaid on the normal functional structure.
Two chains of command (functional and project)
Project participants report simultaneously to both functional and project managers.
Matrix structure optimizes the use

Different Matrix Forms

Weak Form
The authority of the functional manager predominates and the project manager has indirect authority.
Balanced Form
The project manager sets the overall plan and the functional manager determines how work to be done.
Strong Form
The project manag

Organizational Culture Defined

A system of shared norms, beliefs, values, and assumptions which bind people together, thereby creating shared meanings.
The "personality" of the organization that sets it apart from other organizations.
Provides a sense of identify to its members.

Challenges for Project Managers in Navigating Organizational Cultures

Interacting with the culture and subcultures of the parent organization
Interacting with the project's clients or customer organizations
Interacting with other organizations connected to the project

Organizing Projects: Network Organizations

An alliance of several organizations for the purpose of creating products or services.
A "hub" or "core" firm with strong core competencies outsources key activities to a collaborative cluster of satellite organizations.

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

Mistakes caused by not understanding the role of projects in accomplishing strategy:

Focusing on problems or solutions with low strategic priority.
Focusing on the immediate customer rather than the whole market place and value chain.
Overemphasizing technology that results in projects that pursue exotic technology that does not fit the s

Strategic Management

Requires every project to be clearly linked to strategy.
Provides theme and focus of firm's future direction.
Responding to changes in the external environment�environmental scanning
Allocating scarce resources of the firm to improve its competitive posit

Strategic Management Process Activities

Review and define the organizational mission.
Set long-range goals and objectives.
Analyze and formulate strategies to reach objectives.
Implement strategies through projects

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 resou

The Implementation Gap

The lack of understanding and consensus on strategy among top management and middle-level (functional) managers who independently implement the strategy

Organization Politics

Project selection is based on the persuasiveness and power of people advocating the projects.

Resource Conflicts and Multitasking

Multiproject environment creates interdependency relationships of shared resources which results in the starting, stopping, and restarting projects

Benefits of Project Portfolio Management

Builds discipline into the project selection process.
Links project selection to strategic metrics.
Prioritizes project proposals across a common set of criteria, rather than on politics or emotion.
Allocates resources to projects that align with strategi

Design of a project portfolio system:

Classification of a project
Selection criteria depending upon classification
Sources of proposals
Evaluating proposals
Managing the portfolio of projects.

Selection Criteria

Financial: payback, net present value (NPV), internal rate of return (IRR)
Non-financial: projects of strategic importance to the firm.

Multi-Weighted Scoring Models

Use several weighted selection criteria to evaluate project proposals.

The Payback Model

Measures the time the project will take to recover the project investment.
Uses more desirable shorter paybacks.
Emphasizes cash flows, a key factor in business.
Limitations of Payback:
Ignores the time value of money.
Assumes cash inflows for the invest

The Net Present Value (NPV) model

Uses management's minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows.
Positive NPV: project meets minimum desired rate of return and is eligible for further consideration.
Negative NPV: project is rejected

Nonfinancial Strategic Criteria

To capture larger market share
To make it difficult for competitors to enter the market
To develop an enabler product, which by its introduction will increase sales in more profitable products
To develop core technology that will be used in next-generatio

Checklist Model

Uses a list of questions to review potential projects and to determine their acceptance or rejection.
Fails to answer the relative importance or value of a potential project and doesn't to allow for comparison with other potential projects.

Multi-Weighted Scoring Model

Uses several weighted qualitative and/or quantitative selection criteria to evaluate project proposals.
Allows for comparison of projects with other potential projects

Applying a Selection Model

Project Classification
Deciding how well a strategic or operations project fits the organization's strategy.
Selecting a Model
Applying a weighted scoring model to bring projects to closer with the organization's strategic goals.
Reduces the number of was

Managing the Portfolio

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
Publish the priority of every project

Project Defined

A complex, nonroutine, one-time effort limited by time, budget, resources, and performance specifications designed to meet customer needs.

Major Characteristics of a Project

Has an established objective.
Has a defined life span with a beginning and an end.
Requires across-the-organizational participation.
Involves doing something never been done before.
Has specific time, cost, and performance requirements.

Program Defined

A series of coordinated, related, multiple projects that continue over an extended time and are intended to achieve a goal.
A higher level group of projects targeted at a common goal.
Project: completion of a required course in project managem

The Project Manager

Manages temporary, non-repetitive activities and frequently acts independently of the formal organization.
Marshals resources for the project.
Is linked directly to the customer interface.
Provides direction, coordination, and integration to the project

The Importance of Project Management

Factors leading to the increased use of project management:
Compression of the product life cycle
Knowledge explosion
Triple bottom line (planet, people, profit)
Corporate downsizing
Increased customer focus
Small projects represent big problems

Benefits of an Integrative Approach to Project Management

Integration (or centralization) of project management provides senior management with:
An overview of all project management activities
A big picture of how organizational resources are used
A risk assessment of their portfolio of projects
A rough metric

Problems resulting from the use of piecemeal project management systems:

Do not tie together the overall strategies of the firm.
Fail to prioritize selection of projects by their importance of their contribution to the firm.
Are not integrated throughout the project life cycle.
Do not match project planning and controls with o

Major Functions of Portfolio Management

Oversee project selection.
Monitor aggregate resource levels and skills.
Encourage use of best practices.
Balance projects in the portfolio in order to represent a risk level appropriate to the organization.
Improve communication among all stakeholders.