Project management theory summary

8/7/2019 Project management theory summary

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PM theory

Program management vs portfolio mng vs project mng

Project Program Portfolio

Vision Short/middle term operation Long term vision Corporate vision

Organization Ad-hoc org Matrix org

Structure May have sub-projs Group of multiple relatedprojs

Collection of projs &programs

Scope Progressively elaboratedthroughout the proj life cycle

Larger scope Business scope thatchanges with the strategicgoals of the organization

Change PM expects change &implements processes tokeep change managed &controlled

PrM expects change fromboth inside & outside theprogram & be prepared tomanage it

PoM continually monitor changes in the broadenvironment

Planning PM progressively elaboratehigh-level information intodetailed plans throughoutthe proj life cycle

PrM develops the overallprog plan & create high-level plans to guidedetailed planning at the

component level

PoM create & maintainnecessary processes &communication relative tothe aggregate portfolio

Management Manage proj team, provideproj leadership to meet proj’sobjs

Manage prog staff & PM,provide vision & overallleadership

Coordinate portfoliomanagement staff

Success Measured by product & projquality, timeline, budget &cust satisfaction

Measured by the degree towhich the prog satisfiesthe needs & benefitsundertaken

Measured in terms of aggregate performance of portfolio components

Monitoring PM monitor & control thework of producing products& services & results of theproj

PrM monitor the progressof prog to ensure overallgoals, budget, schedules& benefits of the prog

PoM monitor aggregateperformance & valueindicators

Project characteristics1. Temporary2. Uncertainty3. New vs. routine process4. Inter dependant activities5. Negative cash-flow6. Open process7. Instrument of change8. Technical Complexity



9 areas of project management

Proj integraT Plan dev/Plan execution/Change control

Scope Planning/definiT/verificaT/Change control

Time Acvt definiT/Acvt sequencing/DuraT estimating/Scheduling developM/Schedule controlCost Resource planning/Cost estimating/Cost budgeting/Cost control

Quality Quality planning/Quality assurance/Quality control

HR Organizational planning/Staff acquisition/Team develop

Comm Comm planning/InformaT distribuT/Performance reporting/AdministraT closure

Risk Risk mng planning/Risk identificaT/Risk analysis/Response planning/Monitoring & control

ProcureM ProcureM planning/SolicitaT planning/Source select/Contract administraT/Contract control

Project life cycle



Project stakeholders

What to put in a business case1. Obj, scope2. Existing solutions limits

3. (General) Requirements4. Client5. Strategy compliancy6. Value creaT & financial evaluaT (NPV, IRR)7. Possible solutions8. DuraT, Risk, constraint

Project IntegraT

Develop project charter –document of initial requirements that satisfy the stakelholders’ needs &expectationsDev proj mng plan – actions necessary to define, prepare, integrate & coordinate all subsidiaryplans

Direct & manage proj execuT - Perform work defined in Proj planMonitor & control proj work – Tracking, reviewing, regulating the progress to meet the objsdefined in proj mng planPerform integrated change control – review all changes request, approve changes, managechanges to the deliverables, assets, proj docs, proj mng planClose project / phase – finalize all activities to formally complete the proj or phase

Proj scope/time/costScope: the work that needs to be done to deliver a product, service or result with the specifiedfeatures & functions



Tools: WBSLowest level: work package (can be scheduled, cost estimated, monitored & controlled)

Time Actvt definiT => Actvt sequencing (actvt resources estimaT) => Actvt duration estimaT =>Schedule dev => Schedule control => Critical path with critical tasks

Cost Resource planning => Cost estimating => Cost budgeting => Cost controlCost estimate = Total (chargeable time x variable cost rate + fixed cost)Initial budget = cost estimate / actvtRevised budget = initial budget + authorized change costEstimate cost at terminaT = cost of ended actvt + cost of to do actvt

S curve

However, as Global estimate is usually difficult to get, we use Earned Value approach.Time variance TG = EV – PVCost variance CG = EV – RVTime progress = EV/PVCost progress = EV/RV

Project team org chart & Operating difference

Crisis process (*early warnings)Pbm analysis process:

Identify pbm -> find the cause -> set solution requireM -> generate alternatives -> select analternative -> cost-benefit-risk analysis ->make decision & action planCrisis process

PV = budgetEV = budget of work at dateRV = actual cost for task done

Tribal: Strong relationship, Challenged oriented, Oral

comm., quality 1st => Consultancy

Holomorphic: Shared vision, goals & methods,

individual initiaves, customer oriented => Start up

Mecanisthic: centralized power, process, control,

written comm., effectiveness => manufacturer

Individualistic: Mercenaries, high turnover, tailored

prod, individual procedure & tools => Consultancy



Change managementChange management life cycle

Frequent approaches: pressure, persuasion, recogniT, regulaT, motivaT

3 key actors: Target to change/Sponsor to justify/ Allies to support

7 forces levers

Target diversity

Vision: communicaT about target & roadmapNecessity: comm. about risks of “non-doing” + influential’s

involveM

Success: quick wins + comm.

Ability: training progr

RecogniT: Empowerment + comm. + support

Systems: Method + tools

Structures: Procedures (migraT, operaT, change, control)



Risk: future event that might affect your achieving goals (either opp or threath)Issues use to have risk: critical tasks, new tech, third party, component based on assumpT,

indirect controlled resources, change in external environM

Risk analysis:Cause/effectQualitative

quantitative (EMV)

Aligned: RecogniT, system, structure

Influential: vision, ability

Undecided: necessity

Opponents: success

Heart torn: success , recogniT



Control tools*7s: Strategy, Systems, Style,Staff,Skills,Structure,Shared values

*Review check-list

*DICE framework score: 7-14/>17: risky

D (duration)

I (integrity of performance)

C (commitment)

E (effort)

Fixed price vs Ad-cost contract

Ad-cost contract or Cost plus contract refer to a contract where the price is based upon the actual cost of production and any agreed upon rates of profit or fees.

Fixed price is a price that has been set and in most circumstances no bargaining is permitted over that

price. The price is held constant regardless of the cost of production.

• Advantages of Fixed Price

The most significant benefit of a fixed price model is that it allows the buyer to set in advance an exact

budget. The buyer is aware of the total cost before the project even begins. The fixed price model

typically limits the number of changes that occur during the implementation phase of the project.

Contractors know their budget confines and therefore usually deliver detailed plans at the start. The seller

is able to charge a high upfront cost under the fixed price model. Once the price has been agreed upon,the buyer does not experience sticker shock or contest the amount owed.

• Advantages of Cost Plus

The primary benefit of cost plus pricing is the ease of calculation. Although there are a couple of

calculation methods, the common thread is including the cost of the product and a profit amount. Very

little information is necessary to use this model. Cost plus pricing lets the business owner know

immediately if the product will be profitable. A business that uses cost plus pricing can justify price

increases when costs rise. This method provides an easy and convenient way for businesses to set

product pricing. Cost plus pricing ensures the business, the seller, against unexpected costs. The seller

has the flexibility to increase prices, at the consumer's expense, to cover cost increases.

• Disadvantages of Fixed Price

Fixed price contracts tend to be less flexible for managing changes or requests. Any new requirements

that arise during implementation may lead to price re-negotiation and changes to the project's schedule.

Excessive focus on maintaining a fixed price may come at the expense of quality, creativity and

timeliness. The value of the work often becomes less important than the price. A fixed price model may

cost the buyer more than anticipated, if the job is completed early or if materials cost less than estimated.



• Disadvantages of Cost Plus/ Ad-cost

Cost plus pricing ignores the role of consumers. If consumers place a higher value on a product than the

set price, then business loses out on profits. In addition, consumer demand and competitive pricing do not

factor into cost plus pricing. Accuracy is a critical component in cost plus pricing. This model relies on

variable cost and sales estimates. If either of these estimates is inaccurate, then the entire cost structure

is also incorrect. Cost plus pricing also requires that business overhead be estimated. The allocationprocess, of overhead against products, is always arbitrary. Businesses have little incentive to reduce or

control prices because as prices rise, profits increase. Customers may pay a potentially inflated rate for a

product.

When to use fixed price & when to use ad-hoc price?

Balanced scorecard (BSC):

A scorecard is a way of tracking a firm’s performance. To recap, the BSC looks at the following 4

perspectives of a business:

1> The Financial Perspective or the traditional perspective which focuses on the financial measure suchas ROI, profitability, growth, D/E etc. These are the measures that a shareholder would be interested and

are available via the financial statements released by the company ( if it is a publicly held company).

2> The Process Perspective that looks at the processes of the company, their efficiency and more

importantly their effectiveness.

3> The Development (or Learning) perspective that looks at learning new skills. knowledge enhancement

and improvement of employee morale as a by-product.

4> The Customer Perspective that looks at how the customer perceives the organization: customer

satisfaction, the no. of new clients, customer loyalty et al.

The scorecard is “Balanced” because it combines both external and internal aspects of the business.

So why would Project Management need a scorecard?

As mentioned earlier, scorecards indicate performance & are also a vehicle for communicating

performance, while a project is a temporary organization or endeavor to achieve a defined result or goal

within a specified time.

Therefore, a scorecard that project management would require would need to tackle the following 4

perspectives:

1> Financial: What is the expected ROI from the project? Tangible and intangible benefits. What kind of

measures would be used?

2> Processes: Are the project management processes in place both efficient & effective?

3> Learning: What are the lessons taken from the project? What are the benefits to the project manager &

team members? Can these be quantified? Are lessons learnt incorporated to assist other projects? What

is the effect on morale of the project team members? What is the effect on attrition? Does employee

churn reduce?



4> Customer: What is the customer reaction to the project? How is our organization perceived by our

customer? Is there repeat business? Is customer loyalty inspired?

So yes, a scorecard could be applied to a project and especially a projectized organization.

Book: The Project Management Scorecard: Measuring The Success of Project Management

Solutions by Jack J. Philips, Timothy W. Bothell & G. Lynne Snead .

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Project management theory summary