Project management involves planning, directing, and controlling resources to complete projects on time and within budget. There are three main types of project organization structures: pure project, functional project, and matrix project. A matrix project blends aspects of pure and functional projects by utilizing resources from different functional areas while allowing the project manager to decide tasks and timing. Key project management techniques include work breakdown structures to plan tasks hierarchically, network models to identify critical paths, and Gantt charts to schedule activities visually over time.

1. Project Management

2. Definitions
• A Project is a series of related jobs usually directed
toward some major output and requiring a
significant period of time to perform
• Project Management are the management activities
of planning, directing, and controlling resources
(people, equipment, material) to meet the technical,
cost, and time constraints of a project
• Organization: Pure project, Functional Project, Matrix
Project

3. Pure Project
• Self-contained team works full time on the project
• Advantages:
– PM has full authority over the project
– Team members report to one boss
– Lines of communication are short
– Fast decision making
– Team pride, motivation and commitment are high
• Disadvantages:
– Duplication of resources
– Organizational goals and policies are ignored
– Organization falls behind in its knowledge of new technologies due to
weakened functional divisions

4. Functional Project
• The project is housed within a functional division
• Advantages:
– Team members can work on several projects
– Technical expertise is maintained within the functional area
– Functional area is a home after the project is completed
– Critical mass of specialized functional area experts creates synergistic
solutions to a project’s technical problems
• Disadvantages:
– Aspects of project that are not directly related to the functional area
get short changed
– Motivation of team members is often weak
– Needs of the client are secondary and are responded to slowly

5. Functional Organization
President
Research and
Development
Engineering Manufacturing
Project
A
Project
B
Project
C
Project
D
Project
E
Project
F
Project
G
Project
H
Project
I

6. Matrix Project
• Blends properties of pure and functional project
structures
• Each project utilizes people from different functional
areas
• PM decides what tasks and when they will be
performed
• Functional managers control which people and
technologies are used
• Can be weak, balanced or strong

7. Matrix Organization
President
Research and
Development
Engineering Manufacturing Marketing
Manager
Project A
Manager
Project B
Manager
Project C
3-7

8. Matrix Project Pros/Cons
• Advantages:
– Communication between functional divisions is enhanced
– PM is held responsible for successful completion of project
– Duplication of resources is minimized
– Team members have a functional home to return to after project
completion
– Policies of parent organization are followed
• Disadvantages:
– There are two bosses for team members
– Doomed to failure unless PM has strong negotiation skills
– Sub-optimization may occur due to hoarding of resources for project

9. Project Selection – No Numeric
• Sacred cow – project suggested by a senior and powerful
official
• Operating necessity – project is required for the organization
to continue operating
• Competitive necessity – project is required to enable the
company to maintain its competitive position
• Product line extension – project to develop and distribute
new products
• Comparative benefits model – portfolio of projects that best
fits the organization’s aims is constructed

10. Profit/Profitability Models
• Payback period – Initial fixed investment in the project divided
by the estimated annual net cash inflows from the project
• Average Rate of Return – Ratio of average annual profit to the
initial or average investment in the project
• Discounted cash Flow (Net present value) – determines the
net present of all cash flows by discounting them.
• Profitability index – also known as benefit-cost ratio is the
NPV of all future expected cash flows divided by the initial
cash investment

11. Scoring Models
• Unweighted scoring models – a set of relevant
factors are selected by management and
scored for each project.
• Weighted scoring models – Numeric weights
reflecting the relative importance of each
individual factor are added

12. Work Breakdown Structure
• Project starts out as a statement of work
• The project is then broken down to tasks
• Tasks may be further subdivided into more
meaningful pieces known as sub-tasks
• The sub-tasks are further subdivided into work
packages
• WBS defines the hierarchy of project tasks, sub-tasks
and work packages

13. WBS Diagram
Program
Project 1 Project 2
Task 1.1
Subtask 1.1.1
Work Package 1.1.1.1
Level
1
2
3
4
Task 1.2
Subtask 1.1.2
Work Package 1.1.1.2

14. Network-Planning Models
• A project is made up of a sequence of activities that
form a network representing a project
• The path taking longest time through this network of
activities is called the “critical path”
• The critical path provides a wide range of scheduling
information useful in managing a project
• Critical Path Method (CPM) helps to identify the
critical path(s) in the project networks

15. Gantt Chart
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Time
Vertical Axis: Always
Activities or Jobs
Horizontal Axis: Always Time
Horizontal bars used to denote length
of time for each activity or job.