Chapter 4 Defining the Project © McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Where We Are Now © McGraw-Hill Education. 4-‹#› Learning Objectives (1 of 2) Identify key elements of a project scope statement and understand why a complete scope statement is crucial to project success Understand why it is important to establish project priorities in terms of cost, time, and performance Demonstrate the importance of a work breakdown structure (WBS) to the management of projects and how it serves as a data base for planning and control 4-‹#› © McGraw-Hill Education. Learning Objectives (2 of 2) Demonstrate how the organization breakdown structure (OBS) establishes accountability to organizational units Describe a process breakdown structure (PBS) and when to use it Create responsibility matrices for small projects Create a communication plan for a project 4-‹#› © McGraw-Hill Education. Chapter Outline 4.1 Step 1: Defining the Project Scope 4.2 Step 2: Establishing Project Priorities 4.3 Step 3: Creating the Work Breakdown Structure 4.4 Step 4: Integrating the WBS with the Organization 4.5 Step 5: Coding the WBS for the Information System 4.6 Process Breakdown Structure 4.7 Responsibility Matrices 4.8 Project Communication Plan 4-‹#› © McGraw-Hill Education. 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 4-‹#› © McGraw-Hill Education. Step 1: Defining the Project Scope Project Scope A definition of the end result or mission of the project—a product or service for the client/customer Purposes of the Project 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 4-‹#› © McGraw-Hill Education. Project Scope Checklist Project objective Deliverables Milestones Technical requirements Limits and exclusions Reviews with customer 4-‹#› © McGraw-Hill Education. Project Scope: Terms and Definitions 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 4-‹#› © McGraw-Hill Education. Step 2: Establishing Project Priorities Causes of Project Trade-offs Shifts in the relative importance of criterions related to cost, time, and performance parameters Budget–Cost Schedule–Time Performance–Scope Managing the Priorities of Project Trade-offs Con ...

1. Chapter 4
Defining the Project
© McGraw-Hill Education. All rights reserved. Authorized only
for instructor use in the classroom. No reproduction or further
distribution permitted without the prior written consent of
McGraw-Hill Education.
Where We Are Now
© McGraw-Hill Education.
4-‹#›
Learning Objectives (1 of 2)
Identify key elements of a project scope statement and
understand why a complete scope statement is crucial to project
success
Understand why it is important to establish project priorities in
terms of cost, time, and performance
Demonstrate the importance of a work breakdown structure
(WBS) to the management of projects and how it serves as a
data base for planning and control
4-‹#›
© McGraw-Hill Education.
Learning Objectives (2 of 2)
Demonstrate how the organization breakdown structure (OBS)
establishes accountability to organizational units

2. Describe a process breakdown structure (PBS) and when to use
it
Create responsibility matrices for small projects
Create a communication plan for a project
4-‹#›
© McGraw-Hill Education.
Chapter Outline
4.1 Step 1: Defining the Project Scope
4.2 Step 2: Establishing Project Priorities
4.3 Step 3: Creating the Work Breakdown Structure
4.4 Step 4: Integrating the WBS with the Organization
4.5 Step 5: Coding the WBS for the Information
System
4.6 Process Breakdown Structure
4.7 Responsibility Matrices
4.8 Project Communication Plan
4-‹#›
© McGraw-Hill Education.
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
4-‹#›
© McGraw-Hill Education.
Step 1: Defining the Project Scope

3. Project Scope
A definition of the end result or mission of the project—a
product or service for the client/customer
Purposes of the Project 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
4-‹#›
© McGraw-Hill Education.
Project Scope Checklist
Project objective
Deliverables
Milestones
Technical requirements
Limits and exclusions
Reviews with customer
4-‹#›
© McGraw-Hill Education.
Project Scope: Terms and Definitions
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

4. 4-‹#›
© McGraw-Hill Education.
Step 2: Establishing Project Priorities
Causes of Project Trade-offs
Shifts in the relative importance of criterions related to cost,
time, and performance parameters
Budget–Cost
Schedule–Time
Performance–Scope
Managing the Priorities of Project Trade-offs
Constrain: original parameter is a fixed requirement.
Enhance: optimizing a criterion over others
Accept: reducing (or not meeting) a criterion requirement
4-‹#›
© McGraw-Hill Education.
FIGURE 4.1 Project Management Trade-offs
Quality
Scope
Time
Cost
4-‹#›
© McGraw-Hill Education.
FIGURE 4.2 Project Priority Matrix
© McGraw-Hill Education.

5. 4-‹#›
Step 3: Creating the Work Breakdown Structure
Work Breakdown Structure (WBS)
A 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 to work packages.
Best suited for design and build projects that have tangible
outcomes rather than process-oriented projects
4-‹#›
© McGraw-Hill Education.
FIGURE 4.3 Hierarchical Breakdown of the WBS (1 of
2)LevelHierarchical breakdownDescription1ProjectComplete
project2DeliverableMajor
deliverables3SubdeliverableSupporting deliverables4Lowest
subdeliverableLowest management responsibility level5Cost
account*Grouping of work packages for monitoring progress
and responsibility6Work packageIdentifiable work activities
© McGraw-Hill Education.
4-‹#›
FIGURE 4.3 Hierarchical Breakdown of the WBS (2 of 2)
*This breakdown groups work packages by type of work within
a deliverable and allows assignment of responsibility to an
organizational unit. This extra step facilitates a system for
monitoring project progress (discussed in Chapter 13).
4-‹#›

6. © McGraw-Hill Education.
How WBS Helps the Project Manager
WBS
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 assigns project responsibilities to
organizational units and individuals
Helps manage plan, schedule, and budget.
Defines communication channels and assists
in coordinating the various project elements.
4-‹#›
© McGraw-Hill Education.
FIGURE 4.4 Work Breakdown Structure
© McGraw-Hill Education.
4-‹#›
Work Packages
A work package is the lowest level of the WBS.
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).
Identifies a person responsible for units of work (who).

7. Identifies monitoring points for measuring success (how well).
4-‹#›
© McGraw-Hill Education.
Step 4: Integrating the WBS with the Organization
Organizational Breakdown Structure (OBS)
Depicts how the firm is organized to discharge its work
responsibility for a project.
Provides a framework to summarize
organization unit work performance.
Identifies organization units responsible
for work packages.
Ties organizational units to cost control accounts.
4-‹#›
© McGraw-Hill Education.
FIGURE 4.5 Integration of WBS and OBS
© McGraw-Hill Education.
4-‹#›
Step 5: Coding the WBS for the Information System
WBS Coding System
Defines:
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

8. WBS Dictionary
Provides detailed information about each element in the WBS.
4-‹#›
© McGraw-Hill Education.
EXHIBIT 4.1 Coding the WBS
© McGraw-Hill Education.
4-‹#›
FIGURE 4.6 Process Breakdown Structure (PBS) for Software
Development Project
© McGraw-Hill Education.
4-‹#›
Responsibility Matrices
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 responsible for each
activity.
Clarifies critical interfaces between units
and individuals that need coordination.
Provide a means for all participants to view their
responsibilities and agree on their assignments.
Clarifies the extent or type of authority that
can be exercised by each participant.

9. 4-‹#›
© McGraw-Hill Education.
FIGURE 4.7 Responsibility Matrix for a Market Research
ProjectTaskProject team: RichardProject team: DanProject
team: DaveProject team: LindaProject team: ElizabethIdentify
target customersRSSDevelop draft questionnaireRSSPilot-test
questionnaireRSFinalize questionnaireRSSSPrint
questionnaireRPrepare mailing labelsRMail
questionnairesRReceive and monitor returned
questionnairesRSInput response dataRAnalyze
resultsRSSPrepare draft of reportSRSSPrepare final reportRS
R = Responsible
S = Supports/assists
© McGraw-Hill Education.
4-‹#›
FIGURE 4.8 Responsibility Matrix for the Conveyor Belt
Project (1 of 3)DeliverablesOrganization:
DesignOrganization: Development Organization:
DocumentationOrganization: AssemblyArchitectural
designs12Hardware specifications21Kernel
specifications13Utilities specifications21Hardware
design13Disk drivers312Memory management13Operating
system documentation221Prototypes541Integrated acceptance
test622
© McGraw-Hill Education.
4-‹#›
FIGURE 4.8 Responsibility Matrix for the Conveyor Belt
Project (2 of 3)DeliverablesOrganization: TestingOrganization:

10. PurchasingOrganization: Quality Assur.Organization:
ManufacturingArchitectural designs233Hardware
specifications23Kernel specifications3Utilities
specifications3Hardware design33Disk driversMemory
management3Operating system
documentation3Prototypes3334Integrated acceptance test155
© McGraw-Hill Education.
4-‹#›
FIGURE 4.8 Responsibility Matrix for the Conveyor Belt
Project (3 of 3)
Responsible
Support
Consult
Notification
Approval
4-‹#›
© McGraw-Hill Education.
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 communicated?
How will it be communicated?
4-‹#›

11. © McGraw-Hill Education.
Developing a Communication Plan
Stakeholder analysis
Information needs
Sources of information
Dissemination modes
Responsibility and timing
4-‹#›
© McGraw-Hill Education.
FIGURE 4.9 Stakeholder Communications
© McGraw-Hill Education.
4-‹#›
Information Needs
Project status reports
Deliverable issues
Changes in scope
Team status meetings
Gating decisions
Accepted request changes
Action items
Milestone reports
4-‹#›
© McGraw-Hill Education.
FIGURE 4.10 Shale Oil Research Project Communication
PlanWhat informationTarget AudienceWhen?Method of

12. CommunicationProviderMilestone reportSenior management and
project managerBimonthlyE-mail and hardcopyProject
officeProject status reports & agendasStaff and
customerWeeklyE-mail and hardcopyProject managerTeam
status reportsProject manager and project officeWeeklyE-
mailTeam recorderIssues reportStaff and customerWeeklyE-
mailTeam recorderEscalation reportsStaff and customerWhen
neededMeeting and hardcopyProject managerOutsourcing
performanceStaff and CustomerBimonthlyMeetingProject
managerAccepted change requestsProject office, senior mgmt.,
customer, staff, and project mgr.AnytimeE-mail and
hardcopyDesign departmentOversight gate decisionsSenior
management and project managerAs requiredE-mail meeting
reportOversight group or
project office
© McGraw-Hill Education.
4-‹#›
Key Terms
Cost account
Milestone
Organization breakdown structure (OBS)
Priority matrix
Process breakdown structure (PBS)
Project charter
Responsibility matrix
Scope creep
Scope statement
WBS dictionary
Work breakdown structure (WBS)
Work package
4-‹#›

13. © McGraw-Hill Education.
End of Presentation
© McGraw-Hill Education. All rights reserved. Authorized only
for instructor use in the classroom. No reproduction or further
distribution permitted without the prior written consent of
McGraw-Hill Education.
4-‹#›
1. In the last decade, has the role of finance become more
important or less important? Why? Is this good or bad?
2. Comment on the role of finance in the Healthcare industry.
What do you see as its role?