Project Management

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.