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ISBN 978 0 470 27870 3
PROJ EC TPROJ ECT
M A NAGEMEN TM A NAGEMEN T
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A S Y S T E M S A P P R O AC H
T O P L A N N I N G, S C H E D U L I N G,
A N D C O N T R O L L I N G
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HAROLD KERZNER, PH.D.
K E R Z N E R T E N T H E D I T I O N
T H E L A N D M A R K P R O J E C T M A N A G E M E N
T
R E F E R E N C E , N O W I N A N E W E D I T I O N
Now in a Tenth Edition, this industry-leading project
management “bible” aligns its streamlined approach to the latest
release of
the Project Management Institute’s Project Management Body
of
Knowledge (PMI’s PMBOK® Guide), the new mandatory source
of
training for the Project Management Professional (PMP®)
Certifi cat-
ion Exam. This outstanding edition gives students and
professionals
a profound understanding of project management with insights
from
one of the best-known and respected authorities on the subject.
From the intricate framework of organizational behavior and
structure
that can determine project success to the planning, scheduling,
and
controlling processes vital to effective project management, the
new
edition thoroughly covers every key component of the subject.
This
Tenth Edition features:
■ New sections on scope changes, exiting a project, collective
belief, and managing virtual teams
■ More than twenty-fi ve case studies, including a new case
on the Iridium Project covering all aspects of project
management
■ 400 discussion questions
■ More than 125 multiple-choice questions
Other powerful tools by Harold Kerzner:
Project Management Workbook and PMP®/CAPM® Exam
Study Guide, Tenth Edition
(978-0-470-27872-7)
Project Management Case Studies, Third Edition (978-0-470-
27871-0)
Project Management
T E N T H
E D I T I O N
HAROLD KERZNER,
PH.D., is Senior Executive
Director for Project,
Program and Portfolio
Management at
International Institute of
Learning, Inc. (IIL), a global
learning solutions company
that conducts training
for leading corporations
throughout the world.
ffirs.qxd 1/21/09 4:44 PM Page vi
PROJECT
MANAGEMENT
ffirs.qxd 1/21/09 4:44 PM Page i
Dr. Kerzner’s 16 Points to Project
Management Maturity
1. Adopt a project management methodology and use it
consistently.
2. Implement a philosophy that drives the company toward
project
management maturity and communicate it to everyone.
3. Commit to developing effective plans at the beginning of
each project.
4. Minimize scope changes by committing to realistic
objectives.
5. Recognize that cost and schedule management are
inseparable.
6. Select the right person as the project manager.
7. Provide executives with project sponsor information, not
project
management information.
8. Strengthen involvement and support of line management.
9. Focus on deliverables rather than resources.
10. Cultivate effective communication, cooperation, and trust to
achieve
rapid project management maturity.
11. Share recognition for project success with the entire project
team and
line management.
12. Eliminate nonproductive meetings.
13. Focus on identifying and solving problems early, quickly,
and cost
effectively.
14. Measure progress periodically.
15. Use project management software as a tool—not as a
substitute for
effective planning or interpersonal skills.
16. Institute an all-employee training program with periodic
updates based
upon documented lessons learned.
ffirs.qxd 1/21/09 4:44 PM Page ii
P R O J E C T
MANAGEMENT
A Systems Approach to
Planning, Scheduling,
and Controlling
T E N T H E D I T I O N
H A R O L D K E R Z N E R , P h . D .
Senior Executive Director for Project Managenment
The International Insitute for Learning New York,
New York
John Wiley & Sons, Inc.
ffirs.qxd 1/21/09 4:44 PM Page iii
This book is printed on acid-free paper. �
Copyright © 2009 by John Wiley & Sons, Inc. All rights
reserved
Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any
form or by any means, electronic, mechanical, photocopying,
recording, scanning or otherwise,
except as permitted under Section 107 or 108 of the 1976
United States Copyright Act, without
either the prior written permission of the Publisher, or
authorization through payment of the
appropriate per-copy fee to the Copyright Clearance Center, 222
Rosewood Drive, Danvers, MA
01923, (978) 750-8400, fax (978) 646-8600, or on the web at
www.copyright.com. Requests to the
Publisher for permission should be addressed to the Permissions
Department, John Wiley & Sons, Inc.,
111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax
(201) 748-6008, or online at
http://www.wiley.com/go/permission.
Limit of Liability/Disclaimer of Warranty: While the publisher
and author have used their best efforts
in preparing this book, they make no representations or
warranties with respect to the accuracy or
completeness of the contents of this book and specifically
disclaim any implied warranties of merchantability
or fitness for a particular purpose. No warranty may be created
or extended by sales representatives or
written sales materials. The advice and strategies contained
herein may not be suitable for your situation.
You should consult with a professional where appropriate.
Neither the publisher nor author shall be liable
for any loss of profit or any other commercial damages,
including but not limited to special, incidental,
consequential, or other damages.
For general information about our other products and services,
please contact our Customer Care
Department within the United States at (800) 762-2974, outside
the United States at (317)
572-3993 or fax (317) 572-4002.
Wiley also publishes its books in a variety of electronic
formats. Some content that appears in print may not
be available in electronic books. For more information about
Wiley products, visit our web site at www.wiley.com.
Library of Congress Cataloging-in-Publication Data:
Kerzner, Harold.
Project management : a systems approach to planning,
scheduling, and conrolling/Harold Kerzner.—10th ed.
p. cm.
Includes index.
ISBN 978-0-470-27870-3 (cloth : acid-free paper) 1. Project
management. I. Title.
HD69.P75K47 2009
658.4�04—dc22
2008049907
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
ffirs.qxd 1/21/09 4:44 PM Page iv
www.wiley.com
www.wiley.com/go/permissions
To
Dr. Herman Krier,
my Friend and Guru,
who taught me well the
meaning of the word “persistence”
ffirs.qxd 1/21/09 4:44 PM Page v
ffirs.qxd 1/21/09 4:44 PM Page vi
Contents
Preface xxi
1 OVERVIEW 1
1.0 Introduction 1
1.1 Understanding Project Management 2
1.2 Defining Project Success 7
1.3 The Project Manager–Line Manager Interface 8
1.4 Defining the Project Manager’s Role 12
1.5 Defining the Functional Manager’s Role 14
1.6 Defining the Functional Employee’s Role 17
1.7 Defining the Executive’s Role 17
1.8 Working with Executives 18
1.9 The Project Manager as the Planning Agent 19
1.10 Project Champions 20
1.11 The Downside of Project Management 21
1.12 Project-Driven versus Non–Project-Driven Organizations
22
1.13 Marketing in the Project-Driven Organization 24
1.14 Classification of Projects 26
1.15 Location of the Project Manager 27
1.16 Differing Views of Project Management 29
1.17 Concurrent Engineering: A Project Management Approach
30
1.18 Studying Tips for the PMI® Project Management
Certification Exam 30
Problems 33
Case Study
Williams Machine Tool Company 35
vii
ftoc.qxd 1/19/09 2:27 PM Page vii
2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND
DEFINITIONS 37
2.0 Introduction 37
2.1 General Systems Management 38
2.2 Project Management: 1945–1960 38
2.3 Project Management: 1960–1985 39
2.4 Project Management: 1985–2009 45
2.5 Resistance to Change 50
2.6 Systems, Programs, and Projects: A Definition 54
2.7 Product versus Project Management: A Definition 57
2.8 Maturity and Excellence: A Definition 58
2.9 Informal Project Management: A Definition 59
2.10 The Many Faces of Success 60
2.11 The Many Faces of Failure 63
2.12 The Stage-Gate Process 66
2.13 Project Life Cycles 68
2.14 Gate Review Meetings (Project Closure) 74
2.15 Project Management Methodologies: A Definition 74
2.16 Organizational Change Management and Corporate
Cultures 76
2.17 Project Management Intellectual Property 81
2.18 Systems Thinking 82
2.19 Studying Tips for the PMI® Project Management
Certification Exam 85
Problems 88
3 ORGANIZATIONAL STRUCTURES 91
3.0 Introduction 91
3.1 Organizational Work Flow 94
3.2 Traditional (Classical) Organization 95
3.3 Developing Work Integration Positions 98
3.4 Line–Staff Organization (Project Coordinator) 102
3.5 Pure Product (Projectized) Organization 103
3.6 Matrix Organizational Form 106
3.7 Modification of Matrix Structures 113
3.8 The Strong, Weak, Balanced Matrix 117
3.9 Center for Project Management Expertise 117
3.10 Matrix Layering 118
3.11 Selecting the Organizational Form 119
3.12 Structuring the Small Company 125
3.13 Strategic Business Unit (SBU) Project Management 128
3.14 Transitional Management 129
3.15 Studying Tips for the PMI® Project Management
Certification Exam 131
Problems 133
viii CONTENTS
ftoc.qxd 1/19/09 2:27 PM Page viii
Case Study
Jones and Shephard Accountants, Inc. 138
4 ORGANIZING AND STAFFING THE PROJECT OFFICE
AND
TEAM 141
4.0 Introduction 141
4.1 The Staffing Environment 142
4.2 Selecting the Project Manager: An Executive Decision 144
4.3 Skill Requirements for Project and Program Managers 148
4.4 Special Cases in Project Manager Selection 154
4.5 Selecting the Wrong Project Manager 154
4.6 Next Generation Project Managers 158
4.7 Duties and Job Descriptions 159
4.8 The Organizational Staffing Process 163
4.9 The Project Office 169
4.10 The Functional Team 174
4.11 The Project Organizational Chart 175
4.12 Special Problems 178
4.13 Selecting the Project Management Implementation Team
180
4.14 Studying Tips for the PMI® Project Management
Certification Exam 183
Problems 185
5 MANAGEMENT FUNCTIONS 191
5.0 Introduction 191
5.1 Controlling 193
5.2 Directing 193
5.3 Project Authority 198
5.4 Interpersonal Influences 206
5.5 Barriers to Project Team Development 209
5.6 Suggestions for Handling the Newly Formed Team 212
5.7 Team Building as an Ongoing Process 216
5.8 Dysfunctions of a Team 217
5.9 Leadership in a Project Environment 220
5.10 Life-Cycle Leadership 221
5.11 Organizational Impact 225
5.12 Employee–Manager Problems 227
5.13 Management Pitfalls 230
5.14 Communications 233
5.15 Project Review Meetings 242
5.16 Project Management Bottlenecks 243
5.17 Communication Traps 244
Contents ix
ftoc.qxd 1/19/09 2:27 PM Page ix
5.18 Proverbs and Laws 245
5.19 Human Behavior Education 248
5.20 Management Policies and Procedures 249
5.21 Studying Tips for the PMI® Project Management
Certification Exam 249
Problems 254
Case Studies
The Trophy Project 264
Leadership Effectiveness (A) 266
Leadership Effectiveness (B) 271
Motivational Questionnaire 277
6 MANAGEMENT OF YOUR TIME AND STRESS 285
6.0 Introduction 285
6.1 Understanding Time Management 286
6.2 Time Robbers 286
6.3 Time Management Forms 288
6.4 Effective Time Management 289
6.5 Stress and Burnout 290
6.6 Studying Tips for the PMI® Project Management
Certification Exam 292
Problems 293
Case Study
The Reluctant Workers 294
7 CONFLICTS 295
7.0 Introduction 295
7.1 Objectives 296
7.2 The Conflict Environment 297
7.3 Conflict Resolution 300
7.4 Understanding Superior, Subordinate, and Functional
Conflicts 301
7.5 The Management of Conflicts 303
7.6 Conflict Resolution Modes 304
7.7 Studying Tips for the PMI® Project Management
Certification Exam 306
Problems 308
Case Studies
Facilities Scheduling at Mayer Manufacturing 311
Telestar International 312
Handling Conflict in Project Management 313
x CONTENTS
ftoc.qxd 1/19/09 2:27 PM Page x
8 SPECIAL TOPICS 319
8.0 Introduction 319
8.1 Performance Measurement 320
8.2 Financial Compensation and Rewards 327
8.3 Critical Issues with Rewarding Project Teams 333
8.4 Effective Project Management in the Small Business
Organization 336
8.5 Mega Projects 338
8.6 Morality, Ethics, and the Corporate Culture 339
8.7 Professional Responsibilities 342
8.8 Internal Partnerships 345
8.9 External Partnerships 346
8.10 Training and Education 348
8.11 Integrated Product/Project Teams 350
8.12 Virtual Project Teams 352
8.13 Breakthrough Projects 354
8.14 Studying Tips for the PMI® Project Management
Certification Exam 355
Problems 361
9 THE VARIABLES FOR SUCCESS 365
9.0 Introduction 365
9.1 Predicting Project Success 366
9.2 Project Management Effectiveness 370
9.3 Expectations 371
9.4 Lessons Learned 372
9.5 Understanding Best Practices 373
9.6 Studying Tips for the PMI® Project Management
Certification Exam 380
Problems 381
10 WORKING WITH EXECUTIVES 383
10.0 Introduction 383
10.1 The Project Sponsor 384
10.2 Handling Disagreements with the Sponsor 393
10.3 The Collective Belief 394
10.4 The Exit Champion 395
10.5 The In-House Representatives 396
10.6 Studying Tips for the PMI® Project Management
Certification Exam 397
Problems 398
Contents xi
ftoc.qxd 1/19/09 2:27 PM Page xi
xii CONTENTS
Case Study
Corwin Corporation 401
11 PLANNING 411
11.0 Introduction 411
11.1 Validating the Assumptions 414
11.2 General Planning 415
11.3 Life-Cycle Phases 418
11.4 Proposal Preparation 421
11.5 Kickoff Meetings 421
11.6 Understanding Participants’ Roles 424
11.7 Project Planning 424
11.8 The Statement of Work 426
11.9 Project Specifications 431
11.10 Milestone Schedules 433
11.11 Work Breakdown Structure 434
11.12 WBS Decomposition Problems 440
11.13 Role of the Executive in Project Selection 444
11.14 Role of the Executive in Planning 449
11.15 The Planning Cycle 449
11.16 Work Planning Authorization 450
11.17 Why Do Plans Fail? 451
11.18 Stopping Projects 452
11.19 Handling Project Phaseouts and Transfers 453
11.20 Detailed Schedules and Charts 454
11.21 Master Production Scheduling 457
11.22 Project Plan 459
11.23 Total Project Planning 464
11.24 The Project Charter 468
11.25 Management Control 469
11.26 The Project Manager–Line Manager Interface 472
11.27 Fast-Tracking 474
11.28 Configuration Management 475
11.29 Enterprise Project Management Methodologies 476
11.30 Project Audits 479
11.31 Studying Tips for the PMI® Project Management
Certification Exam 480
Problems 483
12 NETWORK SCHEDULING TECHNIQUES 493
12.0 Introduction 493
12.1 Network Fundamentals 495
ftoc.qxd 1/19/09 2:27 PM Page xii
12.2 Graphical Evaluation and Review Technique (GERT) 500
12.3 Dependencies 501
12.4 Slack Time 502
12.5 Network Replanning 508
12.6 Estimating Activity Time 512
12.7 Estimating Total Project Time 513
12.8 Total PERT/CPM Planning 514
12.9 Crash Times 516
12.10 PERT/CPM Problem Areas 519
12.11 Alternative PERT/CPM Models 522
12.12 Precedence Networks 523
12.13 Lag 526
12.14 Scheduling Problems 528
12.15 The Myths of Schedule Compression 528
12.16 Understanding Project Management Software 530
12.17 Software Features Offered 530
12.18 Software Classification 532
12.19 Implementation Problems 533
12.20 Critical Chain 534
12.21 Studying Tips for the PMI® Project Management
Certification Exam 536
Problems 539
Case Study
Crosby Manufacturing Corporation 552
13 PROJECT GRAPHICS 555
13.0 Introduction 555
13.1 Customer Reporting 556
13.2 Bar (Gantt) Chart 557
13.3 Other Conventional Presentation Techniques 564
13.4 Logic Diagrams/Networks 567
13.5 Studying Tips for the PMI® Project Management
Certification Exam 568
Problems 569
14 PRICING AND ESTIMATING 571
14.0 Introduction 571
14.1 Global Pricing Strategies 572
14.2 Types of Estimates 573
14.3 Pricing Process 576
14.4 Organizational Input Requirements 578
14.5 Labor Distributions 580
14.6 Overhead Rates 584
Contents xiii
ftoc.qxd 1/19/09 2:27 PM Page xiii
14.7 Materials/Support Costs 586
14.8 Pricing Out the Work 589
14.9 Smoothing Out Department Man-Hours 590
14.10 The Pricing Review Procedure 592
14.11 Systems Pricing 594
14.12 Developing the Supporting/Backup Costs 595
14.13 The Low-Bidder Dilemma 599
14.14 Special Problems 599
14.15 Estimating Pitfalls 600
14.16 Estimating High-Risk Projects 601
14.17 Project Risks 602
14.18 The Disaster of Applying the 10 Percent
Solution
to Project Estimates 605
14.19 Life-Cycle Costing (LCC) 606
14.20 Logistics Support 613
14.21 Economic Project Selection Criteria: Capital Budgeting
614
14.22 Payback Period 614
14.23 The Time Value of Money 615
14.24 Net Present Value (NPV) 616
14.25 Internal Rate of Return (IRR) 617
14.26 Comparing IRR, NPV, and Payback 618
14.27 Risk Analysis 618
14.28 Capital Rationing 619
14.29 Project Financing 620
14.30 Studying Tips for the PMI® Project Management
Certification Exam 622
Problems 624
15 COST CONTROL 629
15.0 Introduction 629
15.1 Understanding Control 633
15.2 The Operating Cycle 636
15.3 Cost Account Codes 637
15.4 Budgets 644
15.5 The Earned Value Measurement System (EVMS) 645
15.6 Variance and Earned Value 647
15.7 The Cost Baseline 666
15.8 Justifying the Costs 668
15.9 The Cost Overrun Dilemma 671
15.10 Recording Material Costs Using Earned Value
Measurement 672
15.11 The Material Accounting Criterion 675
15.12 Material Variances: Price and Usage 676
15.13 Summary Variances 677
15.14 Status Reporting 678
15.15 Cost Control Problems 685
xiv CONTENTS
ftoc.qxd 1/19/09 2:27 PM Page xiv
15.16 Studying Tips for the PMI® Project Management
Certification Exam 686
Problems 689
Case Studies
The Bathtub Period 708
Franklin Electronics 709
Trouble in Paradise 711
16 TRADE-OFF ANALYSIS IN A PROJECT ENVIRONMENT
715
16.0 Introduction 715
16.1 Methodology for Trade-off Analysis 718
16.2 Contracts: Their Influence on Projects 735
16.3 Industry Trade-off Preferences 736
16.4 Conclusion 739
16.5 Studying Tips for the PMI® Project Management
Certification Exam 739
17 RISK MANAGEMENT 741
17.0 Introduction 741
17.1 Definition of Risk 743
17.2 Tolerance for Risk 745
17.3 Definition of Risk Management 746
17.4 Certainty, Risk, and Uncertainty 747
17.5 Risk Management Process 753
17.6 Plan Risk Management 753
17.7 Risk Identification 755
17.8 Risk Analysis 761
17.9 Qualitative Risk Analysis 766
17.10 Quantitative Risk Analysis 771
17.11 Probability Distributions and the Monte Carlo Process
772
17.12 Plan Risk Response 782
17.13 Monitoring and Control Risks 788
17.14 Some Implementation Considerations 788
17.15 The Use of Lessons Learned 790
17.16 Dependencies between Risks 793
17.17 The Impact of Risk Handling Measures 798
17.18 Risk and Concurrent Engineering 801
17.19 Studying Tips for the PMI® Project Management
Certification Exam 804
Problems 808
Case Studies
Teloxy Engineering (A) 815
Teloxy Engineering (B) 815
Contents xv
ftoc.qxd 1/19/09 2:27 PM Page xv
18 LEARNING CURVES 817
18.0 Introduction 817
18.1 General Theory 818
18.2 The Learning Curve Concept 818
18.3 Graphic Representation 820
18.4 Key Words Associated with Learning Curves 822
18.5 The Cumulative Average Curve 822
18.6 Sources of Experience 824
18.7 Developing Slope Measures 827
18.8 Unit Costs and Use of Midpoints 828
18.9 Selection of Learning Curves 829
18.10 Follow-on Orders 830
18.11 Manufacturing Breaks 830
18.12 Learning Curve Limitations 832
18.13 Prices and Experience 832
18.14 Competitive Weapon 835
18.15 Studying Tips for the PMI® Project Management
Certification Exam 835
Problems 836
19 CONTRACT MANAGEMENT 839
19.0 Introduction 839
19.1 Procurement 840
19.2 Plan Procurement 842
19.3 Conducting the Procurements 845
19.4 Conduct Procurements: Request Seller Responses 847
19.5 Conduct Procurements: Select Sellers 847
19.6 Types of Contracts 851
19.7 Incentive Contracts 855
19.8 Contract Type versus Risk 858
19.9 Contract Administration Cycle 859
19.10 Contract Closure 862
19.11 Using a Checklist 863
19.12 Proposal-Contractual Interaction 864
19.13 Summary 867
19.14 Studying Tips for the PMI® Project Management
Certification Exam 868
20 QUALITY MANAGEMENT 873
20.0 Introduction 874
20.1 Definition of Quality 875
20.2 The Quality Movement 877
20.3 Comparison of the Quality Pioneers 880
20.4 The Taguchi Approach 881
xvi CONTENTS
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20.5 The Malcolm Baldrige National Quality Award 884
20.6 ISO 9000 885
20.7 Quality Management Concepts 887
20.8 The Cost of Quality 890
20.9 The Seven Quality Control Tools 893
20.10 Process Capability (CP) 910
20.11 Acceptance Sampling 912
20.12 Implementing Six Sigma 912
20.13 Lean Six Sigma and DMAIC 914
20.14 Quality Leadership 915
20.15 Responsibility for Quality 916
20.16 Quality Circles 916
20.17 Just-in-Time Manufacturing (JIT) 917
20.18 Total Quality Management (TQM) 919
20.19 Studying Tips for the PMI® Project Management
Certification Exam 923
21 MODERN DEVELOPMENTS PROJECT MANAGEMENT
927
21.0 Introduction 927
21.1 The Project Management Maturity Model (PMMM) 928
21.2 Developing Effective Procedural Documentation 932
21.3 Project Management Methodologies 936
21.4 Continuous Improvement 937
21.5 Capacity Planning 942
21.6 Competency Models 943
21.7 Managing Multiple Projects 945
21.8 End-of-Phase Review Meetings 947
22 THE BUSINESS OF SCOPE CHANGES 949
22.0 Introduction 949
22.1 Need for Business Knowledge 951
22.2 Timing of Scope Changes 952
22.3 Business Need for a Scope Change 953
22.4 Rationale for Not Approving a Scope Change 954
23 THE PROJECT OFFICE 955
23.0 Introduction 955
23.1 Present-Day Project Office 956
23.2 Implementation Risks 957
23.3 Types of Project Offices 958
23.4 Networking Project Management Offices 959
23.5 Project Management Information Systems 959
23.6 Dissemination of Information 961
23.7 Mentoring 962
Contents xvii
ftoc.qxd 1/19/09 2:27 PM Page xvii
23.8 Development of Standards and Templates 963
23.9 Project Management Benchmarking 963
23.10 Business Case Development 964
23.11 Customized Training (Related to Project Management)
965
23.12 Managing Stakeholders 966
23.13 Continuous Improvement 967
23.14 Capacity Planning 967
23.15 Risks of Using a Project Office 968
24 MANAGING CRISIS PROJECTS 971
24.0 Introduction 971
24.1 Understanding Crisis Management 971
24.2 Ford versus Firetone 973
24.3 The Air France Concorde Crash 974
24.4 Intel and the Pentium Chip 975
24.5 The Russian Submarine Kursk 975
24.6 The Tylenol Poisonings 976
24.7 Nestlé’s Marketing of Infant Formula 979
24.8 The Space Shuttle Challenger Disaster 981
24.9 The Space Shuttle Columbia Disaster 982
24.10 Victims versus Villains 983
24.11 Life-Cycle Phases 984
24.12 Project Management Implications 985
25 THE RISE, FALL, AND RESURRECTION OF IRIDIUM:
A PROJECT MANAGEMENT PERSPECTIVE 987
25.0 Introduction 987
25.1 Naming the Project “Iridium” 989
25.2 Obtaining Executive Support 990
25.3 Launching the Venture 990
25.4 The Iridium System 992
25.5 The Terrestial and Space-Based Network 992
25.6 Project Initiation: Developing the Business Case 993
25.7 The “Hidden” Business Case 995
25.8 Risk Management 995
25.9 The Collective Belief 997
25.10 The Exit Champion 997
25.11 Iridium’s Infancy Years 999
25.12 Debt Financing 1001
25.13 The M-Star Project 1002
25.14 A New CEO 1003
25.15 Satellite Launches 1003
xviii CONTENTS
ftoc.qxd 1/19/09 2:27 PM Page xviii
25.16 An Initial Public Offering (IPO) 1004
25.17 Signing up Customers 1004
25.18 Iridium’s Rapid Ascent 1005
25.19 Iridium’s Rapid Descent 1007
25.20 The Iridium “Flu” 1012
25.21 Searching for a White Knight 1012
25.22 The Definition of Failure (October, 1999) 1012
25.23 The Satellite Deorbiting Plan 1013
25.24 Iridium Is Rescued for $25 Million 1014
25.25 Epilogue 1015
25.26 Shareholder Lawsuits 1015
25.27 The Bankruptcy Court Ruling 1016
25.28 Autopsy 1016
25.29 Financial Impact of the Bankruptcy 1018
25.30 What Really Went Wrong? 1018
25.31 Lessons Learned 1020
25.32 Conclusion 1023
Appendix A.
ISBN 978 0 470 27870 3PROJ EC TPROJ ECT  M A NAGEMEN TM .docx

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ISBN 978 0 470 27870 3PROJ EC TPROJ ECT M A NAGEMEN TM .docx

  • 1. ISBN 978 0 470 27870 3 PROJ EC TPROJ ECT M A NAGEMEN TM A NAGEMEN T P R O JE C T P R O JE C T M A N A G
  • 2. E M E N T M A N A G E M E N T A S Y S T E M S A P P R O AC H T O P L A N N I N G, S C H E D U L I N G, A N D C O N T R O L L I N G A S Y S T
  • 4. D U LIN G , A N D C O N T R O LLIN G HAROLD KERZNER, PH.D. K E R Z N E R T E N T H E D I T I O N T H E L A N D M A R K P R O J E C T M A N A G E M E N T R E F E R E N C E , N O W I N A N E W E D I T I O N Now in a Tenth Edition, this industry-leading project management “bible” aligns its streamlined approach to the latest release of
  • 5. the Project Management Institute’s Project Management Body of Knowledge (PMI’s PMBOK® Guide), the new mandatory source of training for the Project Management Professional (PMP®) Certifi cat- ion Exam. This outstanding edition gives students and professionals a profound understanding of project management with insights from one of the best-known and respected authorities on the subject. From the intricate framework of organizational behavior and structure that can determine project success to the planning, scheduling, and controlling processes vital to effective project management, the new edition thoroughly covers every key component of the subject. This Tenth Edition features: ■ New sections on scope changes, exiting a project, collective belief, and managing virtual teams ■ More than twenty-fi ve case studies, including a new case on the Iridium Project covering all aspects of project management ■ 400 discussion questions ■ More than 125 multiple-choice questions Other powerful tools by Harold Kerzner: Project Management Workbook and PMP®/CAPM® Exam Study Guide, Tenth Edition (978-0-470-27872-7)
  • 6. Project Management Case Studies, Third Edition (978-0-470- 27871-0) Project Management T E N T H E D I T I O N HAROLD KERZNER, PH.D., is Senior Executive Director for Project, Program and Portfolio Management at International Institute of Learning, Inc. (IIL), a global learning solutions company that conducts training for leading corporations throughout the world. ffirs.qxd 1/21/09 4:44 PM Page vi PROJECT MANAGEMENT ffirs.qxd 1/21/09 4:44 PM Page i Dr. Kerzner’s 16 Points to Project Management Maturity
  • 7. 1. Adopt a project management methodology and use it consistently. 2. Implement a philosophy that drives the company toward project management maturity and communicate it to everyone. 3. Commit to developing effective plans at the beginning of each project. 4. Minimize scope changes by committing to realistic objectives. 5. Recognize that cost and schedule management are inseparable. 6. Select the right person as the project manager. 7. Provide executives with project sponsor information, not project management information. 8. Strengthen involvement and support of line management. 9. Focus on deliverables rather than resources. 10. Cultivate effective communication, cooperation, and trust to achieve rapid project management maturity. 11. Share recognition for project success with the entire project team and line management. 12. Eliminate nonproductive meetings.
  • 8. 13. Focus on identifying and solving problems early, quickly, and cost effectively. 14. Measure progress periodically. 15. Use project management software as a tool—not as a substitute for effective planning or interpersonal skills. 16. Institute an all-employee training program with periodic updates based upon documented lessons learned. ffirs.qxd 1/21/09 4:44 PM Page ii P R O J E C T MANAGEMENT A Systems Approach to Planning, Scheduling, and Controlling T E N T H E D I T I O N H A R O L D K E R Z N E R , P h . D . Senior Executive Director for Project Managenment The International Insitute for Learning New York, New York John Wiley & Sons, Inc.
  • 9. ffirs.qxd 1/21/09 4:44 PM Page iii This book is printed on acid-free paper. � Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permission. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically
  • 10. disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com. Library of Congress Cataloging-in-Publication Data: Kerzner, Harold. Project management : a systems approach to planning, scheduling, and conrolling/Harold Kerzner.—10th ed. p. cm. Includes index. ISBN 978-0-470-27870-3 (cloth : acid-free paper) 1. Project management. I. Title. HD69.P75K47 2009 658.4�04—dc22
  • 11. 2008049907 Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1 ffirs.qxd 1/21/09 4:44 PM Page iv www.wiley.com www.wiley.com/go/permissions To Dr. Herman Krier, my Friend and Guru, who taught me well the meaning of the word “persistence” ffirs.qxd 1/21/09 4:44 PM Page v ffirs.qxd 1/21/09 4:44 PM Page vi Contents Preface xxi 1 OVERVIEW 1
  • 12. 1.0 Introduction 1 1.1 Understanding Project Management 2 1.2 Defining Project Success 7 1.3 The Project Manager–Line Manager Interface 8 1.4 Defining the Project Manager’s Role 12 1.5 Defining the Functional Manager’s Role 14 1.6 Defining the Functional Employee’s Role 17 1.7 Defining the Executive’s Role 17 1.8 Working with Executives 18 1.9 The Project Manager as the Planning Agent 19 1.10 Project Champions 20 1.11 The Downside of Project Management 21 1.12 Project-Driven versus Non–Project-Driven Organizations 22 1.13 Marketing in the Project-Driven Organization 24 1.14 Classification of Projects 26 1.15 Location of the Project Manager 27 1.16 Differing Views of Project Management 29 1.17 Concurrent Engineering: A Project Management Approach 30 1.18 Studying Tips for the PMI® Project Management Certification Exam 30 Problems 33 Case Study Williams Machine Tool Company 35 vii ftoc.qxd 1/19/09 2:27 PM Page vii 2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS 37
  • 13. 2.0 Introduction 37 2.1 General Systems Management 38 2.2 Project Management: 1945–1960 38 2.3 Project Management: 1960–1985 39 2.4 Project Management: 1985–2009 45 2.5 Resistance to Change 50 2.6 Systems, Programs, and Projects: A Definition 54 2.7 Product versus Project Management: A Definition 57 2.8 Maturity and Excellence: A Definition 58 2.9 Informal Project Management: A Definition 59 2.10 The Many Faces of Success 60 2.11 The Many Faces of Failure 63 2.12 The Stage-Gate Process 66 2.13 Project Life Cycles 68 2.14 Gate Review Meetings (Project Closure) 74 2.15 Project Management Methodologies: A Definition 74 2.16 Organizational Change Management and Corporate Cultures 76 2.17 Project Management Intellectual Property 81 2.18 Systems Thinking 82 2.19 Studying Tips for the PMI® Project Management Certification Exam 85 Problems 88 3 ORGANIZATIONAL STRUCTURES 91 3.0 Introduction 91 3.1 Organizational Work Flow 94 3.2 Traditional (Classical) Organization 95 3.3 Developing Work Integration Positions 98 3.4 Line–Staff Organization (Project Coordinator) 102 3.5 Pure Product (Projectized) Organization 103 3.6 Matrix Organizational Form 106 3.7 Modification of Matrix Structures 113
  • 14. 3.8 The Strong, Weak, Balanced Matrix 117 3.9 Center for Project Management Expertise 117 3.10 Matrix Layering 118 3.11 Selecting the Organizational Form 119 3.12 Structuring the Small Company 125 3.13 Strategic Business Unit (SBU) Project Management 128 3.14 Transitional Management 129 3.15 Studying Tips for the PMI® Project Management Certification Exam 131 Problems 133 viii CONTENTS ftoc.qxd 1/19/09 2:27 PM Page viii Case Study Jones and Shephard Accountants, Inc. 138 4 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM 141 4.0 Introduction 141 4.1 The Staffing Environment 142 4.2 Selecting the Project Manager: An Executive Decision 144 4.3 Skill Requirements for Project and Program Managers 148 4.4 Special Cases in Project Manager Selection 154 4.5 Selecting the Wrong Project Manager 154 4.6 Next Generation Project Managers 158 4.7 Duties and Job Descriptions 159 4.8 The Organizational Staffing Process 163 4.9 The Project Office 169 4.10 The Functional Team 174
  • 15. 4.11 The Project Organizational Chart 175 4.12 Special Problems 178 4.13 Selecting the Project Management Implementation Team 180 4.14 Studying Tips for the PMI® Project Management Certification Exam 183 Problems 185 5 MANAGEMENT FUNCTIONS 191 5.0 Introduction 191 5.1 Controlling 193 5.2 Directing 193 5.3 Project Authority 198 5.4 Interpersonal Influences 206 5.5 Barriers to Project Team Development 209 5.6 Suggestions for Handling the Newly Formed Team 212 5.7 Team Building as an Ongoing Process 216 5.8 Dysfunctions of a Team 217 5.9 Leadership in a Project Environment 220 5.10 Life-Cycle Leadership 221 5.11 Organizational Impact 225 5.12 Employee–Manager Problems 227 5.13 Management Pitfalls 230 5.14 Communications 233 5.15 Project Review Meetings 242 5.16 Project Management Bottlenecks 243 5.17 Communication Traps 244 Contents ix ftoc.qxd 1/19/09 2:27 PM Page ix
  • 16. 5.18 Proverbs and Laws 245 5.19 Human Behavior Education 248 5.20 Management Policies and Procedures 249 5.21 Studying Tips for the PMI® Project Management Certification Exam 249 Problems 254 Case Studies The Trophy Project 264 Leadership Effectiveness (A) 266 Leadership Effectiveness (B) 271 Motivational Questionnaire 277 6 MANAGEMENT OF YOUR TIME AND STRESS 285 6.0 Introduction 285 6.1 Understanding Time Management 286 6.2 Time Robbers 286 6.3 Time Management Forms 288 6.4 Effective Time Management 289 6.5 Stress and Burnout 290 6.6 Studying Tips for the PMI® Project Management Certification Exam 292 Problems 293 Case Study The Reluctant Workers 294 7 CONFLICTS 295 7.0 Introduction 295 7.1 Objectives 296 7.2 The Conflict Environment 297 7.3 Conflict Resolution 300
  • 17. 7.4 Understanding Superior, Subordinate, and Functional Conflicts 301 7.5 The Management of Conflicts 303 7.6 Conflict Resolution Modes 304 7.7 Studying Tips for the PMI® Project Management Certification Exam 306 Problems 308 Case Studies Facilities Scheduling at Mayer Manufacturing 311 Telestar International 312 Handling Conflict in Project Management 313 x CONTENTS ftoc.qxd 1/19/09 2:27 PM Page x 8 SPECIAL TOPICS 319 8.0 Introduction 319 8.1 Performance Measurement 320 8.2 Financial Compensation and Rewards 327 8.3 Critical Issues with Rewarding Project Teams 333 8.4 Effective Project Management in the Small Business Organization 336 8.5 Mega Projects 338 8.6 Morality, Ethics, and the Corporate Culture 339 8.7 Professional Responsibilities 342 8.8 Internal Partnerships 345 8.9 External Partnerships 346 8.10 Training and Education 348
  • 18. 8.11 Integrated Product/Project Teams 350 8.12 Virtual Project Teams 352 8.13 Breakthrough Projects 354 8.14 Studying Tips for the PMI® Project Management Certification Exam 355 Problems 361 9 THE VARIABLES FOR SUCCESS 365 9.0 Introduction 365 9.1 Predicting Project Success 366 9.2 Project Management Effectiveness 370 9.3 Expectations 371 9.4 Lessons Learned 372 9.5 Understanding Best Practices 373 9.6 Studying Tips for the PMI® Project Management Certification Exam 380 Problems 381 10 WORKING WITH EXECUTIVES 383 10.0 Introduction 383 10.1 The Project Sponsor 384 10.2 Handling Disagreements with the Sponsor 393 10.3 The Collective Belief 394 10.4 The Exit Champion 395 10.5 The In-House Representatives 396 10.6 Studying Tips for the PMI® Project Management Certification Exam 397 Problems 398 Contents xi
  • 19. ftoc.qxd 1/19/09 2:27 PM Page xi xii CONTENTS Case Study Corwin Corporation 401 11 PLANNING 411 11.0 Introduction 411 11.1 Validating the Assumptions 414 11.2 General Planning 415 11.3 Life-Cycle Phases 418 11.4 Proposal Preparation 421 11.5 Kickoff Meetings 421 11.6 Understanding Participants’ Roles 424 11.7 Project Planning 424 11.8 The Statement of Work 426 11.9 Project Specifications 431 11.10 Milestone Schedules 433 11.11 Work Breakdown Structure 434 11.12 WBS Decomposition Problems 440 11.13 Role of the Executive in Project Selection 444 11.14 Role of the Executive in Planning 449 11.15 The Planning Cycle 449 11.16 Work Planning Authorization 450 11.17 Why Do Plans Fail? 451 11.18 Stopping Projects 452 11.19 Handling Project Phaseouts and Transfers 453 11.20 Detailed Schedules and Charts 454 11.21 Master Production Scheduling 457 11.22 Project Plan 459 11.23 Total Project Planning 464 11.24 The Project Charter 468
  • 20. 11.25 Management Control 469 11.26 The Project Manager–Line Manager Interface 472 11.27 Fast-Tracking 474 11.28 Configuration Management 475 11.29 Enterprise Project Management Methodologies 476 11.30 Project Audits 479 11.31 Studying Tips for the PMI® Project Management Certification Exam 480 Problems 483 12 NETWORK SCHEDULING TECHNIQUES 493 12.0 Introduction 493 12.1 Network Fundamentals 495 ftoc.qxd 1/19/09 2:27 PM Page xii 12.2 Graphical Evaluation and Review Technique (GERT) 500 12.3 Dependencies 501 12.4 Slack Time 502 12.5 Network Replanning 508 12.6 Estimating Activity Time 512 12.7 Estimating Total Project Time 513 12.8 Total PERT/CPM Planning 514 12.9 Crash Times 516 12.10 PERT/CPM Problem Areas 519 12.11 Alternative PERT/CPM Models 522 12.12 Precedence Networks 523 12.13 Lag 526 12.14 Scheduling Problems 528 12.15 The Myths of Schedule Compression 528 12.16 Understanding Project Management Software 530 12.17 Software Features Offered 530
  • 21. 12.18 Software Classification 532 12.19 Implementation Problems 533 12.20 Critical Chain 534 12.21 Studying Tips for the PMI® Project Management Certification Exam 536 Problems 539 Case Study Crosby Manufacturing Corporation 552 13 PROJECT GRAPHICS 555 13.0 Introduction 555 13.1 Customer Reporting 556 13.2 Bar (Gantt) Chart 557 13.3 Other Conventional Presentation Techniques 564 13.4 Logic Diagrams/Networks 567 13.5 Studying Tips for the PMI® Project Management Certification Exam 568 Problems 569 14 PRICING AND ESTIMATING 571 14.0 Introduction 571 14.1 Global Pricing Strategies 572 14.2 Types of Estimates 573 14.3 Pricing Process 576 14.4 Organizational Input Requirements 578 14.5 Labor Distributions 580 14.6 Overhead Rates 584 Contents xiii ftoc.qxd 1/19/09 2:27 PM Page xiii
  • 22. 14.7 Materials/Support Costs 586 14.8 Pricing Out the Work 589 14.9 Smoothing Out Department Man-Hours 590 14.10 The Pricing Review Procedure 592 14.11 Systems Pricing 594 14.12 Developing the Supporting/Backup Costs 595 14.13 The Low-Bidder Dilemma 599 14.14 Special Problems 599 14.15 Estimating Pitfalls 600 14.16 Estimating High-Risk Projects 601 14.17 Project Risks 602 14.18 The Disaster of Applying the 10 Percent Solution to Project Estimates 605 14.19 Life-Cycle Costing (LCC) 606 14.20 Logistics Support 613 14.21 Economic Project Selection Criteria: Capital Budgeting 614 14.22 Payback Period 614 14.23 The Time Value of Money 615 14.24 Net Present Value (NPV) 616 14.25 Internal Rate of Return (IRR) 617 14.26 Comparing IRR, NPV, and Payback 618 14.27 Risk Analysis 618
  • 23. 14.28 Capital Rationing 619 14.29 Project Financing 620 14.30 Studying Tips for the PMI® Project Management Certification Exam 622 Problems 624 15 COST CONTROL 629 15.0 Introduction 629 15.1 Understanding Control 633 15.2 The Operating Cycle 636 15.3 Cost Account Codes 637 15.4 Budgets 644 15.5 The Earned Value Measurement System (EVMS) 645 15.6 Variance and Earned Value 647 15.7 The Cost Baseline 666 15.8 Justifying the Costs 668 15.9 The Cost Overrun Dilemma 671 15.10 Recording Material Costs Using Earned Value Measurement 672 15.11 The Material Accounting Criterion 675 15.12 Material Variances: Price and Usage 676 15.13 Summary Variances 677 15.14 Status Reporting 678
  • 24. 15.15 Cost Control Problems 685 xiv CONTENTS ftoc.qxd 1/19/09 2:27 PM Page xiv 15.16 Studying Tips for the PMI® Project Management Certification Exam 686 Problems 689 Case Studies The Bathtub Period 708 Franklin Electronics 709 Trouble in Paradise 711 16 TRADE-OFF ANALYSIS IN A PROJECT ENVIRONMENT 715 16.0 Introduction 715 16.1 Methodology for Trade-off Analysis 718 16.2 Contracts: Their Influence on Projects 735 16.3 Industry Trade-off Preferences 736
  • 25. 16.4 Conclusion 739 16.5 Studying Tips for the PMI® Project Management Certification Exam 739 17 RISK MANAGEMENT 741 17.0 Introduction 741 17.1 Definition of Risk 743 17.2 Tolerance for Risk 745 17.3 Definition of Risk Management 746 17.4 Certainty, Risk, and Uncertainty 747 17.5 Risk Management Process 753 17.6 Plan Risk Management 753 17.7 Risk Identification 755 17.8 Risk Analysis 761 17.9 Qualitative Risk Analysis 766 17.10 Quantitative Risk Analysis 771 17.11 Probability Distributions and the Monte Carlo Process 772 17.12 Plan Risk Response 782 17.13 Monitoring and Control Risks 788 17.14 Some Implementation Considerations 788 17.15 The Use of Lessons Learned 790 17.16 Dependencies between Risks 793 17.17 The Impact of Risk Handling Measures 798
  • 26. 17.18 Risk and Concurrent Engineering 801 17.19 Studying Tips for the PMI® Project Management Certification Exam 804 Problems 808 Case Studies Teloxy Engineering (A) 815 Teloxy Engineering (B) 815 Contents xv ftoc.qxd 1/19/09 2:27 PM Page xv 18 LEARNING CURVES 817 18.0 Introduction 817 18.1 General Theory 818 18.2 The Learning Curve Concept 818 18.3 Graphic Representation 820 18.4 Key Words Associated with Learning Curves 822 18.5 The Cumulative Average Curve 822 18.6 Sources of Experience 824
  • 27. 18.7 Developing Slope Measures 827 18.8 Unit Costs and Use of Midpoints 828 18.9 Selection of Learning Curves 829 18.10 Follow-on Orders 830 18.11 Manufacturing Breaks 830 18.12 Learning Curve Limitations 832 18.13 Prices and Experience 832 18.14 Competitive Weapon 835 18.15 Studying Tips for the PMI® Project Management Certification Exam 835 Problems 836 19 CONTRACT MANAGEMENT 839 19.0 Introduction 839 19.1 Procurement 840 19.2 Plan Procurement 842 19.3 Conducting the Procurements 845 19.4 Conduct Procurements: Request Seller Responses 847 19.5 Conduct Procurements: Select Sellers 847 19.6 Types of Contracts 851 19.7 Incentive Contracts 855 19.8 Contract Type versus Risk 858 19.9 Contract Administration Cycle 859
  • 28. 19.10 Contract Closure 862 19.11 Using a Checklist 863 19.12 Proposal-Contractual Interaction 864 19.13 Summary 867 19.14 Studying Tips for the PMI® Project Management Certification Exam 868 20 QUALITY MANAGEMENT 873 20.0 Introduction 874 20.1 Definition of Quality 875 20.2 The Quality Movement 877 20.3 Comparison of the Quality Pioneers 880 20.4 The Taguchi Approach 881 xvi CONTENTS ftoc.qxd 1/19/09 2:27 PM Page xvi 20.5 The Malcolm Baldrige National Quality Award 884 20.6 ISO 9000 885 20.7 Quality Management Concepts 887 20.8 The Cost of Quality 890
  • 29. 20.9 The Seven Quality Control Tools 893 20.10 Process Capability (CP) 910 20.11 Acceptance Sampling 912 20.12 Implementing Six Sigma 912 20.13 Lean Six Sigma and DMAIC 914 20.14 Quality Leadership 915 20.15 Responsibility for Quality 916 20.16 Quality Circles 916 20.17 Just-in-Time Manufacturing (JIT) 917 20.18 Total Quality Management (TQM) 919 20.19 Studying Tips for the PMI® Project Management Certification Exam 923 21 MODERN DEVELOPMENTS PROJECT MANAGEMENT 927 21.0 Introduction 927 21.1 The Project Management Maturity Model (PMMM) 928 21.2 Developing Effective Procedural Documentation 932 21.3 Project Management Methodologies 936 21.4 Continuous Improvement 937 21.5 Capacity Planning 942 21.6 Competency Models 943 21.7 Managing Multiple Projects 945 21.8 End-of-Phase Review Meetings 947
  • 30. 22 THE BUSINESS OF SCOPE CHANGES 949 22.0 Introduction 949 22.1 Need for Business Knowledge 951 22.2 Timing of Scope Changes 952 22.3 Business Need for a Scope Change 953 22.4 Rationale for Not Approving a Scope Change 954 23 THE PROJECT OFFICE 955 23.0 Introduction 955 23.1 Present-Day Project Office 956 23.2 Implementation Risks 957 23.3 Types of Project Offices 958 23.4 Networking Project Management Offices 959 23.5 Project Management Information Systems 959 23.6 Dissemination of Information 961 23.7 Mentoring 962 Contents xvii ftoc.qxd 1/19/09 2:27 PM Page xvii
  • 31. 23.8 Development of Standards and Templates 963 23.9 Project Management Benchmarking 963 23.10 Business Case Development 964 23.11 Customized Training (Related to Project Management) 965 23.12 Managing Stakeholders 966 23.13 Continuous Improvement 967 23.14 Capacity Planning 967 23.15 Risks of Using a Project Office 968 24 MANAGING CRISIS PROJECTS 971 24.0 Introduction 971 24.1 Understanding Crisis Management 971 24.2 Ford versus Firetone 973 24.3 The Air France Concorde Crash 974 24.4 Intel and the Pentium Chip 975 24.5 The Russian Submarine Kursk 975 24.6 The Tylenol Poisonings 976 24.7 Nestlé’s Marketing of Infant Formula 979 24.8 The Space Shuttle Challenger Disaster 981 24.9 The Space Shuttle Columbia Disaster 982 24.10 Victims versus Villains 983 24.11 Life-Cycle Phases 984
  • 32. 24.12 Project Management Implications 985 25 THE RISE, FALL, AND RESURRECTION OF IRIDIUM: A PROJECT MANAGEMENT PERSPECTIVE 987 25.0 Introduction 987 25.1 Naming the Project “Iridium” 989 25.2 Obtaining Executive Support 990 25.3 Launching the Venture 990 25.4 The Iridium System 992 25.5 The Terrestial and Space-Based Network 992 25.6 Project Initiation: Developing the Business Case 993 25.7 The “Hidden” Business Case 995 25.8 Risk Management 995 25.9 The Collective Belief 997 25.10 The Exit Champion 997 25.11 Iridium’s Infancy Years 999 25.12 Debt Financing 1001 25.13 The M-Star Project 1002 25.14 A New CEO 1003 25.15 Satellite Launches 1003 xviii CONTENTS ftoc.qxd 1/19/09 2:27 PM Page xviii
  • 33. 25.16 An Initial Public Offering (IPO) 1004 25.17 Signing up Customers 1004 25.18 Iridium’s Rapid Ascent 1005 25.19 Iridium’s Rapid Descent 1007 25.20 The Iridium “Flu” 1012 25.21 Searching for a White Knight 1012 25.22 The Definition of Failure (October, 1999) 1012 25.23 The Satellite Deorbiting Plan 1013 25.24 Iridium Is Rescued for $25 Million 1014 25.25 Epilogue 1015 25.26 Shareholder Lawsuits 1015 25.27 The Bankruptcy Court Ruling 1016 25.28 Autopsy 1016 25.29 Financial Impact of the Bankruptcy 1018 25.30 What Really Went Wrong? 1018 25.31 Lessons Learned 1020 25.32 Conclusion 1023 Appendix A.