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What is a project
A project consists of a series of tasks or activities that have
several distinguishing characteristics:
-The project has specific starting and ending dates
-It has well defined objectives-It achieves a specified product or result
-It is unique in that it is not a routine operation, but a specific set
of operations designed to accomplish a singular goal
-Cost, time schedules and resources are consumed
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A project has an expected output, a start and end date, and
limited resources.
The unique characteristic of output of the project does not
mean that a project will not include various repetitive tasks.
Projects are composed of processes:A process is a series of
actions bringing a result oran output.
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PMI Definition
A temporary endeavor undertaken to createa unique product or service
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Project management is the discipline ofplanning, organizing, motivating, and controllingresources to achieve specific goals.
A project is a temporary endeavor with a definedbeginning and end (usually time-constrained,and often constrained by funding ordeliverables),1.undertaken to meet unique goals
and objectives,2. typically to bring aboutbeneficial change or added value.
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Project Attributes
A project:
Has a unique purpose.
Is temporary.
Is developed using progressive elaboration.
Requires resources.
Should have a primary sponsor. The project sponsorusually provides the
direction and funding for the project.
Involves uncertainty.
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Project managers work with projectsponsors, project teams, and other peopleinvolved in projects to meet project goals.
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The Triple Constraint
Every project is constrained in different ways by its:
Scope goals: What work will be done?
Time goals: How long should it take to complete?
Cost goals: What should it cost?
It is the project managers duty to balance these threeoften-competing goals.
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The Triple Constraint of ProjectManagement
Successful projectmanagement meansmeeting all threegoals (scope, time,and cost) and
satisfying theprojects sponsor.
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What is Project Management?
Project management is the applicationof knowledge, skills, tools and techniquesto project activities to meet project
requirements.
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Project Management Basics
No matter what the type of project, projectmanagement typically follows the same pattern:
Definition
Planning
Execution
Control Closure
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Defining the Project
-In this stage the project manager defineswhat the project is and what the usershope to achieve by undertaking theproject. This phase also includes a list ofproject deliverables, the outcome of a
specific set of activities
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Planning the Project- In this stage, the project manager lists allactivities or tasks, how the tasks are related,how long each task will take, and how each
tasks is tied to a specific deadline.- for example, if one task is x number of dayslate, the project tasks related to it will also reflecta comparable delay.
-Likewise, the project manager can setmilestones, dates by which important aspects ofthe project need to be met.
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Executing the Project
-In this phase, the project manager knowshow many resources and how much
budget he or she has to work with for theproject.
-The project manager then assigns those
resources and allocates budget to varioustasks in the project. Now the work of theproject begins.
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Controlling the Project
-The project manager is in charge ofupdating the project plans to reflect actualtime elapsed for each task.
-By keeping up with the details ofprogress, the project manager is able tounderstand how well the project isprogressing overall.
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Project Management
Complex and numerous activities
Unique - a one time set of events
Finite - a begin and end date Limited resources and budget
Many people involved
Sequenced activities End product or service must result
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Project A project is an endeavor to accomplish a specific objective
through a unique set of interrelated tasks and the effective
utilization of resources.
It has a well-defined objective stated in terms ofscope,
schedule, and costs.
Project s are born when a need is identified by the customer
the people or organization willing to provide funds to have
the need satisfied.
It is the people (project manager and project team), not the
procedures and techniques, that are critical to accomplishing
the project objective.
Procedures and techniques are merely tools to help the people
do their jobs.
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Examples of Projects
Planning a wedding
Designing and implementing a computer
system
Hosting a holiday party
Designing and producing a brochure Holding a high school reunion
Performing a series of surgeries on an
accident victim
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Phases of the Project LifeCycle
The first phase involves theidentification of a need, problem, or
opportunity. The need and requirements are usually written by
the customer into a document called a request for
proposal (RFP).
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Phases of the Project LifeCycle
The second phase is thedevelopment of a proposed solution
to the need or problem. This phase results in the submission of a
proposal.
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Phases of the Project LifeCycle
The third phase is performing theproject.
Different types of resources are utilized
Results in the accomplishment of the projectobjective
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Phases of the Project LifeCycle
The final phase is terminating theproject.
Perform close-out activities
Evaluate performance
Invite customer feedback
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The Project Team is the groupresponsible for planning and executing theproject.
It consists of a Project Manager and avariable number of Project Teammembers, who are brought in to deliver
their tasks according to the projectschedule .
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The Project Team Members areresponsible for executing tasks andproducing deliverables as outlined in the
Project Plan and directed by the ProjectManager, at whatever level of effort orparticipation has been defined for them
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The Project Sponsoris a manager withdemonstrable interest in the outcome ofthe project who is responsible for securing
spending authority and resources for theproject.
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Stakeholders are all those groups, units,individuals, or organizations, internal orexternal to our organization, which are
impacted by, or can impact, the outcomesof the project.
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Deadlines:
A project manager must always be able tocarry out his role in a very effective
manner.Client Satisfaction:
Satisfaction of the client however does not
mean that you rush to finish the work ontime without ensuring that standards aremet.
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No Budget Overrun
Requirements Coverage:
Another goal of a project manager involvesmeeting all requirements of the client
Team Management
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The Oxford English Dictionary definesproject as An individual or collaborativeenterprise that is carefully planned and
designed to achieve a particular aim. As per PMI: A project is a temporary endeavor
undertaken to create a unique product, service,or result.
Project is a concept which serves to organiseaction.
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Projects have a purpose
Projects are realistic
Projects are limited in time and space
Projects are complex
Projects are collective
Projects are unique
Projects can be assessed
Projects are made up of stages
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Projects are authorized as a result of one or more of following
strategic considerations:
A market demand (e.g., a telecom service providerauthorizes a project to install a new tower in response tocustomer needs in an area)
An organizational need (e.g., a training companyauthorizes a project to create a new course in order to
increase its revenues) A customer request (e.g., an electric utility authorizes a
project to build a new substation to serve a new industrialpark)
A technological advance (e.g., a software firm authorizes
a new project to develop a new generation of video gamesafter the introduction of new game playing equipment byelectronics firms)
A legal requirement (e.g., a paint manufacturerauthorizes a project to establish guidelines for the handling
of a new toxic material).
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What is Project Management?
Project management is the application of knowledge, skills,tools and techniques to project activities to meet projectrequirements.
Project management is accomplished through the applicationand integration of the project management processes of
initiating, planning, executing, monitoring ,controlling, andclosing.
Managing a project includes: Identifying requirements
Establishing clear and achievable objectives
Balancing the competing demands for quality, scope, timeand cost
Adapting the specifications, plans, and approach to thedifferent concerns and expectations of the variousstakeholders.
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TRIPLE CONSTRAINT
Triple Constraint is the balance of the projects
scope, schedule (time) and cost.
It is sometimes called Dempsters triangle
wherein one of the sides or corners represent
the scope, time and cost of a project being
managed by the project managers.
Triple constraint is used to gauge whether a
projects objectives are being met.
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Project selection is the process ofevaluating individual projects or groups ofprojects, and then choosing to implement
some set of them so that the objectives ofthe organization will be achieved.
For example: - A television station canselect which of several syndicated comedyshows to rerun in its 7:30 p.m. weekdaytime-slot.
- A hospital can find the best mix of
psychiatric, orthopedic, obstetric, and
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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 problems structure and can be
useful in selecting and evaluating projects
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Realism: For example, Project A may strengthen a firm's
market share by extending its facilities, andProject B might improve its competitive position
by strengthening its technical staff. Other thingsbeing equal, which is better? The model should take into account the realities
of the firm's limitations on facilities, capital,personnel, and so forth.
The model should also include factors thatreflect project risks, including the technical risksof performance, cost, and time as well as themarket risks of customer rejection etc.
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Capability:
The model should be sophisticatedenough to deal with multiple time periods,simulate various situations both internaland external to the project and optimizethe decision.
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Flexibility:
It should have the ability to be easilymodified, or to be self-adjusting inresponse to changes in the firm'senvironment; for example, tax lawschange, new technological advancements
alter risk levels, and, above all, theorganization's goals change.
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Ease of Use:
The model should be reasonablyconvenient, not take a long time to
execute, and be easy to use andunderstand.
It should not require special interpretation,
data that are difficult to acquire, excessivepersonnel, or unavailable equipment.
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Cost:
Data gathering and modeling costs shouldbe low relative to the cost of the project
and must surely be less than the potentialbenefits of the project.
All costs should be considered, including
the costs of data management and ofrunning the model.
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Nature of Project Selection Models
2 Basic Types of Models
Numeric
Nonnumeric
Two Critical Facts:
Models do not make decisions - People do
All models, however sophisticated, are only
partial representations of the reality they aremeant to reflect
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2-2-5757
Nonnumeric Models
Models that do not return a numeric valuefor a project to be compared with otherprojects.
These are really not models but ratherjustifications for projects.
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Nonnumeric Models
Sacred Cow - project is suggested by a senior and powerful official in the
organization
Operating Necessity - the project is required to keep the system running
Competitive Necessity - project is necessary to sustain a competitive
position Product Line Extension - projects are judged on how they fit with current
product line, fill a gap, strengthen a weak link, or extend the line in a new
desirable way.
Comparative Benefit Model- several projects are considered and the one
with the most benefit to the firm is selected
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SACRED COW
Sacred cow decisions are made becausesomeone-generally in upper managementreally wants a particular project to be
done. These decisions are not always in the best
interest of the organization but of one
individual or a group.
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SACRED COW
A senior manager from a non-ITdepartment picks up a trade magazineand reads about show all the best
companies are doing XYZ to becompetitive. He then schedules a meetingwith an IT manager and explains that XYZ
is something we have to implement.
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The Operating Necessity:
If a flood is threatening the plant, a projectto build a protective dike does not require
much formal evaluation.
If the project is required in order to keepthe system operating.
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The Competitive Necessity:Using this criterion, XYZ Steel undertook a major plant
rebuilding project in the late 1960s in its steel barmanufacturing facilities near Chicago. It had becomeapparent to XYZ's management that the company's bar
mill needed modernization if the firm was to maintain itscompetitive position in the Chicago market area.Although the planning process for the project was quite
sophisticated, the decision to undertake the project wasbased on a desire to maintain the company's competitive
position in that market.In a similar manner, many business schools arerestructuring their undergraduate and Masters inBusiness Administration (MBA) programs to staycompetitive with the more forward looking schools.
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The Product Line Extension:
In this case, a project to develop anddistribute new products would be judged
on the degree to which it fits the firm'sexisting product line, fills a gap,strengthens a weak link, or extends the
line in a new, desirable direction.
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Comparative Benefit Model:
-Assume that an organization has many projects toconsider, perhaps several dozen. Senior managementwould like to select a subset of the projects that would
most benefit the firm, but the projects do not seem to beeasily comparable.
-For example, some projects concern potential newproducts, some concern changes in production methods,others concern computerization of certain records etc.
-The organization has no formal method of selectingprojects, but members of the selection committee thinkthat some projects will benefit the firm more than others,even if they have no precise way to define or measure"benefit."
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Numeric Models
Models that return a numeric value for aproject that can be easily compared withother projects
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Payback Period
The length of time until the originalinvestment has been recouped by theproject
A shorter payback period is better
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Payback Period:
-The payback period for a project is the initial fixed
investment in the project divided by the
estimated annual net cash inflows from theproject. The ratio of these quantities is the
number of years required for the project to repay
its initial fixed investment.
The faster the investment is recovered, the lessthe risk to which the firm is exposed
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Payback Period Example
4000,25$
000,100$
PeriodPayback
FlowCashAnnual
CostProjectPeriodPayback
==
=
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Machine A Machine B
Payback
period 2 years 3 years
Machine A will recover its outlay one yearsooner than Machine B. Where machinesare ranked by the shortest Paybackperiod, machine A is selected inpreference to machine B.
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Average Rate of Return
Average annual profit/Average investment
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The Net Present Value (NPV) of a projectis defined as the difference betweenpresent value of cash inflow (revenue PV
in) and present value of cash outflow (costPV out) of that project over the project lifecycle time.
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The Profitability Index of a project is theratio of present value of cash inflow andpresent value of cash outflow of that
project over the project life cycle time.
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Internal Rate of Interest