IT Project Management /: Information Systems

Project Management Revised 6e

Kathy Schwalbe

Information Technology

Information Technology

Although project management has been an established fi eld for many years, managing information technology requires ideas and

information that go beyond standard project management. Now in its revised sixth edition,

Information Technology Project Management weaves together theory and practice to present an understandable, integrated view of the many

concepts skills, tools, and techniques involved in project management.

This text provides up-to-date information on how good project management and eff ective use of software can help you successfully manage information technology projects. Appendix A contains a detailed guide for using Microsoft® Project 2010, which is the most widely used project management software tool today. This comprehensive appendix teaches you the fundamentals of Project 2010 in the context of project scope, time, cost, human resources, and communications management. Exercises at the end of the appendix will help you test your skills!

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Project Management

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I N F O R M A T I O N T E C H N O L O G Y P R O J E C T M A N A G E M E N T

I N F O R M A T I O N T E C H N O L O G Y P R O J E C T M A N A G E M E N T

REVISED Sixth Edition

Kathy Schwalbe, Ph.D., PMP Augsburg College

Australia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States

Information Technology Project Management, REVISED Sixth Edition

Kathy Schwalbe

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1 2 3 4 5 6 7 1 4 1 3 1 2 1 1 1 0

For Dan, Anne, Bobby, and Scott

Chapter 1 Introduction to Project Management 1

Chapter 2 The Project Management and Information Technology Context 43

Chapter 3 The Project Management Process Groups: A Case Study 77

Chapter 4 Project Integration Management 129

Chapter 5 Project Scope Management 177

Chapter 6 Project Time Management 211

Chapter 7 Project Cost Management 253

Chapter 8 Project Quality Management 291

Chapter 9 Project Human Resource Management 337

Chapter 10 Project Communications Management 381

Chapter 11 Project Risk Management 421

Chapter 12 Project Procurement Management 461

Appendix A Guide to Using Microsoft Project 2010 A.1

Appendix B Advice for the Project Management Professional (PMP) Exam and Related Certifications B.1

Appendix C Additional Running Cases and Simulation Software C.1

Glossary G.1

Index I.1

BRIEF CONTENTS

Preface xvii

Chapter 1 Introduction to Project Management 1 Introduction 2 What Is a Project? 4

Examples of Information Technology Projects 4 Project Attributes 6 The Triple Constraint 8

What Is Project Management? 10 Project Stakeholders 10 Project Management Knowledge Areas 12 Project Management Tools and Techniques 12 Project Success 14

Program and Project Portfolio Management 17 Programs 17 Project Portfolio Management 18

The Role of the Project Manager 21 Project Manager Job Description 21 Suggested Skills for Project Managers 22 Importance of People and Leadership Skills 24 Careers for Information Technology Project Managers 25

The Project Management Profession 27 History of Project Management 27 The Project Management Institute 29 Project Management Certification 30 Ethics in Project Management 31 Project Management Software 32

Chapter Summary 35 Quick Quiz 35 Discussion Questions 37 Exercises 38 Companion Web Site 39 Key Terms 39 End Notes 40

Chapter 2 The Project Management and Information Technology Context 43 A Systems View of Project Management 44

What Is a Systems Approach? 45 The Three-Sphere Model for Systems Management 45

TABLE OF CONTENTS

Understanding Organizations 47 The Four Frames of Organizations 47 Organizational Structures 48 Organizational Culture 51

Stakeholder Management 52 The Importance of Top Management Commitment 54 The Need for Organizational Commitment to Information Technology 55 The Need for Organizational Standards 56

Project Phases and the Project Life Cycle 57 Product Life Cycles 59 The Importance of Project Phases and Management Reviews 61

The Context of Information Technology Projects 63 The Nature of Information Technology Projects 63 Characteristics of Information Technology Project Team Members 64 Diverse Technologies 64

Recent Trends Affecting Information Technology Project Management 65 Globalization 65 Outsourcing 66 Virtual Teams 67

Chapter Summary 70 Quick Quiz 71 Discussion Questions 72 Exercises 73 Companion Web Site 74 Key Terms 74 End Notes 75

Chapter 3 The Project Management Process Groups: A Case Study 77 Project Management Process Groups 78 Mapping the Process Groups to the Knowledge Areas 83 Developing an Information Technology Project Management Methodology 85 Case Study: JWD Consulting s Project Management Intranet Site Project 86

Project Pre-Initiation and Initiation 87 Project Planning 96 Project Execution 106 Project Monitoring and Controlling 111 Project Closing 114

Chapter Summary 123 Quick Quiz 123 Discussion Questions 125 Exercises 125 Companion Web Site 126 Key Terms 127 End Notes 127

viii Table of Contents

Chapter 4 Project Integration Management 129 What Is Project Integration Management? 130 Strategic Planning and Project Selection 133

Strategic Planning 133 Identifying Potential Projects 135 Aligning Information Technology with Business Strategy 136 Methods for Selecting Projects 138

Developing a Project Charter 147 Developing a Project Management Plan 151

Project Management Plan Contents 151 Using Guidelines to Create Project Management Plans 154

Directing and Managing Project Execution 156 Coordinating Planning and Execution 156 Providing Strong Leadership and a Supportive Culture 157 Capitalizing on Product, Business, and Application Area Knowledge 157 Project Execution Tools and Techniques 158

Monitoring and Controlling Project Work 159 Performing Integrated Change Control 161

Change Control on Information Technology Projects 162 Change Control System 162

Closing Projects or Phases 164 Using Software to Help in Project Integration Management 165 Chapter Summary 167 Quick Quiz 168 Discussion Questions 169 Exercises 170 Running Case 171 Tasks 172 Companion Web Site 173 Key Terms 173 End Notes 174

Chapter 5 Project Scope Management 177 What Is Project Scope Management? 178 Collecting Requirements 179

What Are Requirements? 179 How Do You Collect Requirements? 181 How Do You Document Requirements? 182

Defining Scope 183 Creating the Work Breakdown Structure 186

Approaches to Developing Work Breakdown Structures 191 The WBS Dictionary and Scope Baseline 194 Advice for Creating a WBS and WBS Dictionary 196

Verifying Scope 196 Controlling Scope 198

Suggestions for Improving User Input 200

Table of Contents ix

Suggestions for Reducing Incomplete and Changing Requirements 200 Using Software to Help in Project Scope Management 202 Chapter Summary 204 Quick Quiz 204 Discussion Questions 206 Exercises 206 Running Case 207 Tasks 208 Companion Web Site 208 Key Terms 209 End Notes 210

Chapter 6 Project Time Management 211 The Importance of Project Schedules 212 Defining Activities 214 Sequencing Activities 217

Dependencies 217 Network Diagrams 218

Estimating Activity Resources 221 Estimating Activity Durations 222 Developing the Schedule 223

Gantt Charts 224 Critical Path Method 228 Critical Chain Scheduling 233 Program Assessment and Review Technique (PERT) 236

Controlling the Schedule 237 Reality Checks on Scheduling and the Need for Discipline 238

Using Software to Help in Project Time Management 240 Words of Caution on Using Project Management Software 240

Chapter Summary 243 Quick Quiz 244 Discussion Questions 245 Exercises 246 Running Case 249 Tasks 249 Key Terms 250 End Notes 252

Chapter 7 Project Cost Management 253 The Importance of Project Cost Management 254

What Is Cost? 255 What Is Project Cost Management? 256

Basic Principles of Cost Management 257 Estimating Costs 261

Types of Cost Estimates 261 Cost Estimation Tools and Techniques 263

x Table of Contents

Typical Problems with Information Technology Cost Estimates 264 Sample Cost Estimate 265

Determining the Budget 270 Controlling Costs 272

Earned Value Management 273 Project Portfolio Management 278

Using Project Management Software to Help in Project Cost Management 279 Chapter Summary 282 Quick Quiz 282 Discussion Questions 284 Exercises 285 Running Case 286 Tasks 286 Companion Web Site 287 Key Terms 288 End Notes 289

Chapter 8 Project Quality Management 291 The Importance of Project Quality Management 292 What Is Project Quality Management? 294 Planning Quality 296 Performing Quality Assurance 298 Performing Quality Control 299 Tools and Techniques for Quality Control 300

Statistical Sampling 306 Six Sigma 307 Testing 313

Modern Quality Management 315 Deming and his 14 Points for Management 315 Juran and the Importance of Top Management Commitment to Quality 316 Crosby and Striving for Zero Defects 316 Ishikawa s Guide to Quality Control 317 Taguchi and Robust Design Methods 317 Feigenbaum and Workers Responsibility for Quality 318 Malcolm Baldrige National Quality Award 318 ISO Standards 318

Improving Information Technology Project Quality 319 Leadership 319 The Cost of Quality 320 Organizational Influences, Workplace Factors, and Quality 321 Expectations and Cultural Differences in Quality 322 Maturity Models 323

Using Software to Help in Project Quality Management 326 Chapter Summary 327 Quick Quiz 328 Discussion Questions 329

Table of Contents xi

xii Table of Contents

Exercises 330 Running Case 331 Tasks 331 Companion Web Site 332 Key Terms 332 End Notes 334

Chapter 9 Project Human Resource Management 337 The Importance of Human Resource Management 338

The Global IT Workforce 338 Implications for the Future of IT Human Resource Management 340

What Is Project Human Resource Management? 342 Keys to Managing People 344

Motivation Theories 344 Thamhain and Wilemon s Influence and Power 348 Covey and Improving Effectiveness 350

Developing the Human Resource Plan 352 Project Organizational Charts 352 Responsibility Assignment Matrices 354 Staffing Management Plans and Resource Histograms 356

Acquiring the Project Team 357 Resource Assignment 358 Resource Loading 359 Resource Leveling 361

Developing the Project Team 362 Training 363 Team-Building Activities 364 Reward and Recognition Systems 368

Managing the Project Team 368 Tools and Techniques for Managing Project Teams 368 General Advice on Managing Teams 369

Using Software to Help in Human Resource Management 370 Chapter Summary 372 Quick Quiz 373 Discussion Questions 375 Exercises 375 Running Case 376 Companion Web Site 377 Key Terms 377 End Notes 378

Chapter 10 Project Communications Management 381 The Importance of Project Communications Management 382 Identifying Stakeholders 385 Planning Communications 386

Distributing Information 388 Using Technology to Enhance Information Distribution 389 Formal and Informal Methods for Distributing Information 390 Distributing Important Information in an Effective and Timely Manner 391 Selecting the Appropriate Communications Medium 392 Understanding Group and Individual Communication Needs 394 Setting the Stage for Communicating Bad News 394 Determining the Number of Communications Channels 395

Managing Stakeholders 396 Reporting Performance 398 Suggestions for Improving Project Communications 399

Using Communication Skills to Manage Conflict 399 Developing Better Communication Skills 400 Running Effective Meetings 402 Using E-Mail, Instant Messaging, and Collaborative Tools Effectively 403 Using Templates for Project Communications 406

Using Software to Help in Project Communications 410 Chapter Summary 414 Quick Quiz 414 Discussion Questions 416 Exercises 417 Running Case 418 Companion Web Site 418 Key Terms 418 End Notes 419

Chapter 11 Project Risk Management 421 The Importance of Project Risk Management 422 Planning Risk Management 428 Common Sources of Risk on Information Technology Projects 430 Identifying Risks 434

Suggestions for Identifying Risks 434 The Risk Register 436

Performing Qualitative Risk Analysis 438 Using Probability/Impact Matrixes to Calculate Risk Factors 438 Top Ten Risk Item Tracking 441

Performing Quantitative Risk Analysis 442 Decision Trees and Expected Monetary Value 442 Simulation 444 Sensitivity Analysis 446

Planning Risk Responses 447 Monitoring and Controlling Risks 450 Using Software to Help in Project Risk Management 450 Chapter Summary 452 Quick Quiz 453 Discussion Questions 455

Table of Contents xiii

xiv Table of Contents

Exercises 455 Running Case 456 Companion Web Site 457 Key Terms 457 End Notes 459

Chapter 12 Project Procurement Management 461 The Importance of Project Procurement Management 462 Planning Procurements 466

Tools and Techniques for Planning Procurements 468 Procurement Management Plan 473 Statement of Work 474 Procurement Documents 475 Source Selection Criteria 476

Conducting Procurements 477 Administering Procurements 479 Closing Procurements 481 Using Software to Help in Project Procurement Management 481 Chapter Summary 484 Quick Quiz 485 Discussion Questions 486 Exercises 487 Running Case 488 Companion Web Site 488 Key Terms 489 End Notes 490

Appendix A Guide to Using Microsoft Project 2010 A.1 Introduction A.2

New Features of Project 2010 A.3 Before You Begin A.4

Overview of Project 2010 A.5 Starting Project 2010 and Using the Help Feature A.5 Main Screen Elements A.7 Project 2010 Views A.11 Project 2010 Filters A.15

Project Scope Management A.17 Creating a New Project File A.17 Developing a Work Breakdown Structure A.20 Saving Project Files with or without a Baseline A.24

Project Time Management A.24 Manual and Automatic Scheduling A.24 Entering Task Durations A.25 Establishing Task Dependencies A.30 Changing Task Dependency Types and Adding Lead or Lag Time A.33

Gantt Charts A.36 Network Diagrams A.38 Critical Path Analysis A.40

Project Cost Management A.42 Fixed and Variable Cost Estimates A.43 Assigning Resources to Tasks A.45 Baseline Plan, Actual Costs, and Actual Times A.51 Earned Value Management A.57

Project Human Resource Management A.60 Resource Calendars A.60 Resource Histograms A.61 Resource Leveling A.63 Using the New Team Planner Feature A.65

Project Communications Management A.66 Common Reports and Views A.66 Using Templates and Inserting Hyperlinks and Comments A.68

Discussion Questions A.72 Exercises A.72 Exercise A-1: Homework Assignments A.72

HW1: Project 2010, Part 1 (100 points, 25 points for each item) A.72 HW2: Project 2010, Part 2 (100 points, 25 points for each item) A.73

Exercise A-2: Web Site Development A.73 Exercise A-3: Software Training Program A.75 Exercise A-4: Project Tracking Database A.76 Exercise A-5: Real Project Application A.79

Appendix B Advice for the Project Management Professional (PMP) Exam and Related Certifications B.1

Introduction to Project Management Certification Programs B.1 What Is PMP Certification? B.1

What Are the Requirements for Earning and Maintaining PMP Certification? B.3 What Is the Structure and Content of the PMP Exam? B.5 How Should You Prepare for the PMP Exam? B.6 Ten Tips for Taking the PMP Exam B.7 Sample PMP Exam Questions B.10

What Is Project+ Certification? B.13 What Are the Requirements for Earning and Maintaining

Project+ Certification? B.14 Additional Information on the Project+ Exam B.15 Sample Project+ Exam Questions B.16

What Other Exams or Certifications Related to Project Management Are Available? B.17 Discussion Questions B.19 Exercises B.19 Answers to Sample PMP Exam Questions B.20 Answers to Sample Project+ Exam Questions B.20 End Notes B.20

Table of Contents xv

xvi Table of Contents

Appendix C Additional Running Cases and Simulation Software C.1 Introduction C.1 Additional Case 1: Green Computing Research Project C.1

Part 1: Project Integration Management C.1 Part 2: Project Scope Management C.3 Part 3: Project Time Management C.4 Part 4: Project Cost Management C.6 Part 5: Project Quality Management C.7 Part 6: Project Human Resource Management C.7 Part 7: Project Communications Management C.8 Part 8: Project Risk Management C.9 Part 9: Project Procurement Management C.9

Additional Case 2: Project Management Videos Project C.10 Part 1: Initiating C.10 Part 2: Planning C.11 Part 3: Executing C.12 Part 4: Monitoring and Controlling C.12 Part 5: Closing C.13

Fissure Simulation Software C.13 Introduction C.13 Instructions C.14

Glossary G.1 Index I.1

The future of many organizations depends on their ability to harness the power of informa- tion technology, and good project managers continue to be in high demand. Colleges have responded to this need by establishing courses in project management and making them part of the information technology, management, engineering, and other curriculum. Cor- porations are investing in continuing education to help develop effective project managers and project teams. This text provides a much-needed framework for teaching courses in project management, especially those that emphasize managing information technology projects. The first five editions of this text were extremely well received by people in acade- mia and the workplace. The Sixth Edition builds on the strengths of the previous editions and adds new, important information and features.

It s impossible to read a newspaper, magazine, or Web page without hearing about the impact of information technology on our society. Information is traveling faster and being shared by more individuals than ever before. You can buy just about anything online, surf the Web on a mobile phone, or use a wireless Internet connection at your local coffee shop. Companies have linked their many systems together to help them fill orders on time and better serve their customers. Software companies are continually developing new products to help streamline our work and get better results. When technology works well, it is almost invisible. But did it ever occur to you to ask, Who makes these complex technologies and systems happen?

Because you re reading this text, you must have an interest in the behind-the-scenes aspects of technology. If I ve done my job well, as you read you ll begin to see the many innovations society is currently experiencing as the result of thousands of successful infor- mation technology projects. In this text, you ll read about IT projects around the world that went well, including Mittal Steel Poland s Implementation of SAP project that unified IT sys- tems to improve business and financial processes; Dell Earth and other green computing projects that save energy and millions of dollars; and Six Sigma projects such as the project to improve case load management at Baptist St. Anthony s Hospital in Amarillo, Texas; the systems infrastructure project at the Boots Company in the United Kingdom that is taking advantage of supplier competition to cut costs and improve services; Kuala Lumpur s state- of-the-art Integrated Transport Information System (ITIS) project; and many more. Of course, not all projects are successful. Factors such as time, money, and unrealistic expecta- tions, among many others, can sabotage a promising effort if it is not properly managed. In this text, you ll also learn from the mistakes made on many projects that were not success- ful. I have written this book in an effort to educate you, tomorrow s project managers, about what will help make a project succeed and what can make it fail. You ll also see how pro- jects are used in everyday media, such as television and film, and how companies use best practices in project management. Many readers tell me how much they enjoy reading these real-world examples in the What Went Right?, What Went Wrong?, Media Snapshot, and Best Practice features. As practitioners know, there is no one size fits all solution to

PREFACE

managing projects. By seeing how different organizations successfully implement project management, you can help your organization do the same.

Although project management has been an established field for many years, managing information technology projects requires ideas and information that go beyond standard project management. For example, many information technology projects fail because of a lack of user input, incomplete and changing requirements, and a lack of executive support. This book includes suggestions on dealing with these issues. New technologies can also aid in managing information technology projects, and examples of using software to Help in project management are included throughout the book.

Information Technology Project Management, REVISED Sixth Edition, is still the only textbook to apply all nine project management knowledge areas project integration, scope, time, cost, quality, human resource, communications, risk, and procurement management and all five process groups initiating, planning, executing, monitoring and controlling, and closing to information technology projects. This text builds on the PMBOK® Guide, Fourth Edition, an American National Standard, to provide a solid framework and context for managing information technology projects. It also includes an appendix, Guide to Using Microsoft Project 2010, which many readers find invaluable. A second appendix provides advice on earning and maintaining Project Management Professional (PMP) certification from the Project Management Institute (PMI) as well as information on other certification programs, such as CompTIA s Project certification. A third appendix provides new case studies and information on using simulation software to help readers apply their project management skills.

Information Technology Project Management, REVISED Sixth Edition, provides practi- cal lessons in project management for students and practitioners alike. By weaving together theory and practice, this text presents an understandable, integrated view of the many con- cepts, skills, tools, and techniques involved in information technology project management. The comprehensive design of the text provides a strong foundation for students and practitioners in project management.

New to the REVISED Sixth Edition Building on the success of the previous editions, Information Technology Project Manage- ment, REVISED Sixth Edition, introduces a uniquely effective combination of features. The main changes made to the REVISED Sixth Edition only involve Appendix A. We know that faculty cannot update texts every single year, so this revision only provides you the option of teaching your students with the latest edition of Microsoft Project, Project 2010. The Beta release has been out for several months, and the final product should be available in summer 2010.

Appendix A has been thoroughly updated based on Microsoft Project 2010. There are many updates in Project 2010. In addition to adopting the Ribbon interface, Project 2010 provides a manual scheduling option, a simple Timeline feature, and a Team Planner view to easily assign people to tasks and reduce overallocations.

The main changes between the Sixth Edition and the Fifth Edition include the following:

Several changes were made to synchronize the Sixth Edition with the PMBOK®

Guide, Fourth Edition, which PMI published in December 2008. Several

xviii Information Technology Project Management

processes have changed, a few have been deleted, and a few have been added. For example, project scope management now includes a process for collecting requirements, which produces requirements documentation, a requirements management plan, and a requirements traceability matrix as outputs. This text describes this and other new processes and provides more details and examples of their outputs. Appendix C, Additional Running Cases, provides two new cases and informa- tion about using Fissure s simulation software. One of the new cases focuses on green computing projects, and the other involves finding or creating video clips related to project management. There is also a running case at the end of each knowledge area chapter, and the old cases from the Fifth Edition text are available on the new companion (premium) Web site. Several additional exercises are also provided at the end of chapters. A new Jeopardy-like game is provided on the companion (premium) Web site to help students study important concepts from each chapter in a fun and engaging way. A new companion (premium) Web site for the Sixth Edition (www.cengage. com/mis/schwalbe) provides you with access to informative links from the end notes, lecture notes, interactive quizzes, templates, additional running cases, suggested readings, podcasts, the new Jeopardy-like game, and many other items to enhance your learning.

A C C E S S I N G T H E C O M P A N I O N ( P R E M I U M ) W E B S I T E

To access the companion (premium) Web site, open a Web browser and go to www.cengage. com/login. Locate your companion (premium) access card in the front of each new book purchase, and click Create My Account to begin the registration process. If you ve pur- chased a used book, please search for Information Technology Project Management, Sixth Edition at www.CengageBrain.com where you can purchase instant access.

Updated examples are provided throughout the text. You ll notice several new examples in the Sixth Edition that explain recent events in managing real infor- mation technology projects. Several of the What Went Right?, What Went Wrong?, Media Snapshot, and Best Practice examples have been updated to keep you up-to-date. Additional examples and results of new studies are also included throughout the text, with appropriate citations. User feedback is incorporated. Based on feedback from reviewers, students, instructors, practitioners, and translators (this book has been translated into Chinese, Japanese, Russian, and Czech), you ll see several additional changes to help clarify information.

Approach Many people have been practicing some form of project management with little or no formal study in this area. New books and articles are being written each year as we discover more about the field of project management, and project management software continues to

Preface xix

advance. Because the project management field and the technology industry change rapidly, you cannot assume that what worked even a few years ago is still the best approach today. This text provides up-to-date information on how good project management and effective use of software can help you manage projects, especially information technology projects. Five distinct features of this text include its relationship to the Project Management Body of Knowledge, its detailed guide for using Microsoft Project 2010, its value in preparing for Project Management Professional and other certification exams, its inclusion of running case studies and online templates, and its companion (premium) Web site. You can also purchase a special bundling of this text that includes simulation software by Fissure, or you can order the Fissure simulation separately.

Based on the PMBOK® Guide, Fourth Edition

The Project Management Institute (PMI) created the Guide to the Project Management Body of Knowledge (the PMBOK® Guide) as a framework and starting point for understanding project management. It includes an introduction to project management, brief descriptions of all nine project management knowledge areas, and a glossary of terms. The PMBOK®

Guide is, however, just that a guide. This text uses the PMBOK® Guide, Fourth Edition- like (December 2008) as a foundation, but goes beyond it by providing more details, highlighting additional topics, and providing a real-world context for project manage- ment. Information Technology Project Management, Sixth Edition, explains project man- agement specifically as it applies to managing information technology projects in the twenty-first century. It includes several unique features to bring you the excitement of this dynamic field (for more information on features, see the section entitled Pedagogical Features ).

Contains a Detailed Guide on How to Use Microsoft Project 2010

Software has advanced tremendously in recent years, and it is important for project man- agers and their teams to use software to help manage information technology projects. Each copy of Information Technology Project Management, REVISED Sixth Edition, includes a detailed guide in Appendix A on using the leading project management software on the market Microsoft Project 2010. Examples using Project and other software tools are integrated throughout the text, not as an afterthought. Appendix A, Guide to Using Microsoft Project 2010, teaches you in a systematic way to use this powerful software to help in project scope, time, cost, human resource, and communications management.

Resource for PMP and Other Certification Exams

Professional certification is an important factor in recognizing and ensuring quality in a pro- fession. PMI provides certification as a Project Management Professional (PMP), and this text is an excellent resource for studying for the certification exam. This text will also help you pass other certification exams, such as CompTIA s Project exam. Having experience working on projects does not mean you can easily pass the PMP or other certification exams.

I like to tell my students a story about taking a driver s license test after moving to Min- nesota. I had been driving very safely and without accidents for over 16 years, so I thought I could just walk in and take the test. I was impressed by the sophisticated computer system used to administer the test. The questions were displayed on a large touch-screen monitor,

xx Information Technology Project Management

often along with an image or video to illustrate different traffic signs or driving situations. I became concerned when I found I had no idea how to answer several questions, and I was perplexed when the test seemed to stop and a message displayed saying, Please see the person at the service counter. This was a polite way of saying I had failed the test! After controlling my embarrassment, I picked up one of the Minnesota driving test brochures, studied it for an hour or two that night, and successfully passed the test the next day.

The point of this story is that it is important to study information from the organization that creates the test and not be overconfident that your experience is enough. Because this text is based on PMI s PMBOK® Guide, Fourth Edition, it provides a valuable reference for studying for PMP certification. It is also an excellent reference for CompTIA s Project exam. I have earned both of those certifications and kept them in mind when writing this text.

Provides Exercises, Running Cases, Templates, Sample Documents, and Optional Simulation Software

Based on feedback from readers, the Sixth Edition continues to provide challenging exer- cises and running cases to help students apply concepts in each chapter. There are over 50 templates, examples of real project documents, and optional simulation software devel- oped by Fissure, a PMI Registered Education Provider, that you can use to actively practice your skills in managing a project. All of these features help the subject matter come alive and have more meaning.

Includes a Companion (Premium) Web site

A companion (premium) Web site provides you with a one-stop location to access informa- tive links and tools to enhance your learning. Similar to other companion (premium) Web sites provided by Course Technology, this site will be a valuable resource as you view lec- ture notes, templates, interactive quizzes, podcasts, student files for Project 2010, important articles, references, and more. You can also link to the author s site to see real class syllabi, samples of student projects, and other helpful links.

Organization and Content Information Technology Project Management, REVISED Sixth Edition, is organized into three main sections to provide a framework for project management, a detailed description of each project management knowledge area, and three appendices to provide practical information for applying project management. The first three chapters form the first section, which introduces the project management framework and sets the stage for the remaining chapters.

Chapters 4 through 12 form the second section of the text, which describes each of the project management knowledge areas project integration, scope, time, cost, quality, human resource, communications, risk, and procurement management in the context of information technology projects. An entire chapter is dedicated to each knowledge area. Each knowledge area chapter includes sections that map to their major processes as described in the PMBOK® Guide, Fourth Edition. For example, the chapter on project quali- ty management includes sections on planning quality, performing quality assurance, and performing quality control. Additional sections highlight other important concepts related to each knowledge area, such as Six Sigma, testing, maturity models, and using software to

Preface xxi

Help in project quality management. Each chapter also includes detailed examples of key project management tools and techniques as applied to information technology projects. For example, the chapter on project integration management includes samples of various proj- ect-selection documents, such as net present value analyses, ROI calculations, payback analyses, and weighted scoring models. The project scope management chapter includes a sample project charter, a project scope statement, and several work breakdown structures for information technology projects.

Appendices A through C form the third section of the text, which provides practical information to help you apply project management skills on real or practice projects. By fol- lowing the detailed, step-by-step guide in Appendix A, which includes more than 60 screen shots, you will learn how to use Project 2010. Appendix B summarizes what you need to know to earn PMP or other certifications related to project management. Appendix C pro- vides additional running cases and information on using simulation software to help you practice your new skills.

Pedagogical Features Several pedagogical features are included in this text to enhance presentation of the materi- als so that you can more easily understand the concepts and apply them. Throughout the text, emphasis is placed on applying concepts to current, real-world information technology project management.

Learning Objectives, Chapter Summaries, Discussion Questions, Exercises, Quick Quizzes, Running Cases, and Companion (Premium) Web site

Learning Objectives, Chapter Summaries, Quick Quizzes, Discussion Questions, Exercises, Running Cases, and the companion (premium) Web site are designed to function as inte- grated study tools. Learning Objectives reflect what you should be able to accomplish after completing each chapter. Chapter Summaries highlight key concepts you should master. The Discussion Questions help guide critical thinking about those key concepts. Quick Quizzes test knowledge of essential chapter concepts and include an answer key. Exercises provide opportunities to practice important techniques, as do the Running Cases. The companion (premium) Web site provides several study aids, such as podcasts, the new Jeopardy-like game, and interactive quizzes for each chapter, which are different from the Quick Quizzes in the text.

Opening Case and Case Wrap-Up

To set the stage, each chapter begins with an opening case related to the material presented in that chapter. These real-life case scenarios (most based on the author s experiences) spark student interest and introduce important concepts in a real-world context. As project management concepts and techniques are discussed, they are applied to the opening case and other similar scenarios. Each chapter then closes with a case wrap-up with some end- ing successfully and some, realistically, failing to further illustrate the real world of project management.

What Went Right? and What Went Wrong?

Failures, as much as successes, can be valuable learning experiences. Each chapter of the text includes one or more examples of real information technology projects that went right

xxii Information Technology Project Management

as well as examples of projects that went wrong. These examples further illustrate the importance of mastering key concepts in each chapter.

Media Snapshot

The world is full of projects. Several televisions shows, movies, newspapers, Web sites, and other media highlight project results, good and bad. Relating project management concepts to all types of projects highlighted in the media will help you understand and see the impor- tance of this growing field. Why not get people excited about studying project management by showing them how to recognize project management concepts in popular television shows, movies, or other media?

Best Practice

Every chapter includes an example of a best practice related to topics in that chapter. For example, Chapter 1 describes best practices written by Robert Butrick, author of The Project Workout, from the Ultimate Business Library s Best Practice book. He suggests that organi- zations ensure their projects are driven by their strategy and engage project stakeholders.

Key Terms

The fields of information technology and project management both include many unique terms that are vital to creating a workable language when the two fields are combined. Key terms are displayed in bold face and are defined the first time they appear. Definitions of key terms are provided in alphabetical order at the end of each chapter and in a glossary at the end of the text.

Application Software

Learning becomes much more dynamic with hands-on practice using the top project man- agement software tool in the industry, Microsoft Project 2010, as well as other tools, such as spreadsheet software and the Internet. Each chapter offers you many opportunities to get hands-on experience and build new software skills. This text is written from the point of view that reading about something only gets you so far to really understand project man- agement, you have to do it for yourself. In addition to the exercises and running cases found at the end of each chapter and in Appendix C, several challenging exercises are provided at the end of Appendix A, Guide to Using Microsoft Project 2010.

S U P P L E M E N T S

The following supplemental materials are available when this text is used in a classroom setting. All of the teaching tools available with this text are provided to the instructor on a single CD-ROM.

Electronic Instructor s Manual The Instructor s Manual that accompanies this textbook includes additional instructional material to Help in class prepara- tion, including suggestions for lecture topics and additional discussion questions. ExamView® This textbook is accompanied by ExamView, a powerful testing software package that allows instructors to create and administer printed,

Preface xxiii

computer (LAN-based), and Internet exams. ExamView includes hundreds of questions that correspond to the topics covered in this text, enabling students to generate detailed study guides that include page references for further review. The computer-based and Internet testing components allow students to take exams at their computers, and also save the instructor time by grading each exam automatically. PowerPoint Presentations This text comes with Microsoft PowerPoint slides for each chapter. These are included as a teaching aid for classroom presentation, to make available to students on the network for chapter review, or to be printed for classroom distribution. Instructors can add their own slides for additional topics they introduce to the class. Solution Files Solutions to end-of-chapter questions can be found on the Instructor Resource CD-ROM and may also be found on the Course Technology Web site at www.cengage.com/mis/schwalbe. The solutions are password- protected. Distance Learning Course Technology is proud to present online courses in WebCT and Blackboard, to provide the most complete and dynamic learning experience possible. When you add online content to one of your courses, you re adding a lot: self tests, links, glossaries, and, most of all, a gateway to the twenty-first century s most important information resource. We hope you will make the most of your course, both online and offline. For more information on how to bring distance learning to your course, contact your Course Technology sales representative.

A C K N O W L E D G M E N T S

I never would have taken on this project writing this book, the first, second, third, fourth, fifth, and sixth edition without the help of many people. I thank the staff at Course Tech- nology for their dedication and hard work in helping me produce this book and in doing such an excellent job of marketing it. Kate Mason (formerly Hennessy), Deb Kaufmann, Mat- thew Hutchinson, Patrick Franzen, and many more people did a great job in planning and executing all of the work involved in producing this book.

I thank my many colleagues and experts in the field who contributed information to this book. David Jones, Rachel Hollstadt, Cliff Sprague, Michael Branch, Barb Most, Jodi Curtis, Rita Mulcahy, Karen Boucher, Bill Munroe, Tess Galati, Joan Knutson, Neal Whitten, Brenda Taylor, Quentin Fleming, Jesse Freese, Nick Matteucci, Nick Erndt, Dragan Milosevic, Bob Borlink, Arvid Lee, Kathy Christenson, Peeter Kivestu, and many other people who provided excellent materials included in the Sixth Edition of this book. I really enjoy the network of project managers, authors, and consultants in this field who are very passionate about improving the theory and practice of project management.

I also thank my students and colleagues at Augsburg College and the University of Min- nesota for providing feedback on the earlier editions of this book. I received many valuable comments from them on ways to improve the text and structure of my courses. I learn something new about project management and teaching all the time by interacting with students, faculty, and staff.

xxiv Information Technology Project Management

Preface xxv

I also thank faculty reviewers for providing excellent feedback for me in writing this edi- tion: Brian Ameling, Limestone College; Michel Avital, University of Amsterdam; Al Funda- burk, Bloomsburg University; Suleyman Guleyupoglu, University of Phoenix; Aurore Kamssu, Tennessee State University; Angela Lemons, North Carolina A&T State University; Alan L. Matthews, Travecca Nazarene University; Thyra Nelson, Macon State College; Samir Shah, Pennsylvania State University York; and Andrew Urbaczewski, University of Michi- gan-Dearborn. I also wish to thank the many reviewers of the earlier editions of this text. I also thank the many other instructors and readers who have contacted me directly with praise as well as suggestions for improving this text. I really appreciate the feedback and do my best to incorporate as much as I can.

Most of all, I am grateful to my family. Without their support, I never could have written this book. My wonderful husband, Dan, has always supported me in my career, and he helps me keep up-to-date with software development since he is a lead architect for ComSquared Systems, Inc. Our three children, Anne, Bobby, and Scott, actually think it s cool that their mom writes books and speaks at conferences. They also see me managing projects all the time. Anne, now 25, teases me for being the only quilter she knows who treats each quilt as a project. (Maybe that s why I get so many done!) Our children all understand the main rea- son why I write I have a passion for educating future leaders of the world, including them.

As always, I am eager to receive your feedback on this book. Please send comments to me at schwalbe@augsburg.edu.

Kathy Schwalbe, Ph.D., PMP Professor, Department of Business Administration Augsburg College

A B O U T T H E A U T H O R

Kathy Schwalbe is a Professor in the Department of Busi- ness Administration at Augsburg College in Minneapolis, where she teaches courses in project management, prob- lem solving for business, systems analysis and design, infor- mation systems projects, and electronic commerce. Kathy was also an adjunct faculty member at the University of Minnesota, where she taught a graduate-level course in project management in the engineering department. She also provides training and consulting services to several organizations and speaks at several conferences. Kathy worked for ten years in industry before entering academia in 1991. She was an Air Force officer, systems analyst, proj- ect manager, senior engineer, and information technology consultant. Kathy is an active member of PMI, having served as the Student Chapter Liaison for the Minnesota

chapter of PMI, VP of Education for the Minnesota chapter, Director of Communications and Editor of the Information Systems Specific Interest Group (ISSIG) Review, and member of PMI s test-writing team. Kathy earned her Ph.D. in Higher Education at the University of Minnesota, her MBA at Northeastern University s High Technology MBA program, and her B.S. in mathematics at the University of Notre Dame.

I N F O R M A T I O N T E C H N O L O G Y P R O J E C T M A N A G E M E N T

C H A P T E R 1 INTRODUCTION TO PROJECT MANAGEMENT

L E A R N I N G O B J E C T I V E S

After reading this chapter, you will be able to:

Understand the growing need for better project management, especially for information technology projects

Explain what a project is, provide examples of information technology pro- jects, list various attributes of projects, and describe the triple constraint of project management

Describe project management and discuss key elements of the project management framework, including project stakeholders, the project man- agement knowledge areas, common tools and techniques, and project success

Discuss the relationship between project, program, and portfolio manage- ment and the contributions they each make to enterprise success

Understand the role of the project manager by describing what project managers do, what skills they need, and what the career field is like for information technology project managers

Describe the project management profession, including its history, the role of professional organizations like the Project Management Institute (PMI), the importance of certification and ethics, and the advancement of project management software

O P E N I N G C A S E

Anne Roberts, the Director of the Project Management Office for a large retail chain, stood in front of 500 people in the large corporate auditorium to explain the company s new strat- egies. She was also broadcasting to thousands of other employees, suppliers, and stock- holders throughout the world using live video via the Internet. The company had come a long way in implementing new information systems to improve inventory control, sell pro- ducts using the Web, streamline the sales and distribution processes, and improve customer service. However, the stock price was down, the nation s economy was weak, and people were anxious to hear about the company s new strategies.

Anne began to address the audience, Good morning. As many of you know, our CEO promoted me to this position as Director of the Project Management Office two years ago. Since then, we have completed many projects, including the advanced data networks proj- ect. That project enabled us to provide persistent broadband between headquarters and our retail stores throughout the world, allowing us to make timely decisions and continue our growth strategy. Our customers love that they can return items to any store, and any sales clerk can look up past sales information. Local store managers can make timely decisions using up-to-date information. Of course, we ve had some project failures, too, and we need to continually assess our portfolio of projects to meet business needs. Two big IT initiatives this coming year include meeting new green IT regulations and providing enhanced online collaboration tools for our employees, suppliers, and customers. Our challenge is to work even smarter to decide what projects will most benefit the company, how we can continue to leverage the power of information technology to support our business, and how we can exploit our human capital to successfully plan and execute those projects. If we succeed, we ll continue to be a world-class corporation.

And if we fail? someone asked from the audience. Let s just say that failure is not an option, Anne replied.

I N T R O D U C T I O N

Many people and organizations today have a new or renewed interest in project manage- ment. Until the 1980s, project management primarily focused on providing schedule and resource data to top management in the military, computer, and construction industries. Today s project management involves much more, and people in every industry and every country manage projects. New technologies have become a significant factor in many busi- nesses. Computer hardware, software, networks, and the use of interdisciplinary and global work teams have radically changed the work environment. The following statistics demon- strate the significance of project management in today s society, especially for projects involving information technology (IT). Note that IT projects involve using hardware, soft- ware, and/or networks to create a product, service, or result.

Total global spending on technology goods, services, and staff was projected to reach $2.4 trillion in 2008, an 8 percent increase from 2007. IT purchases in the U.S. grew less than 3 percent, while the rest of the Americas expanded in local currencies at 6-percent rates. Asia Pacific and the oil-exporting areas of Eastern Europe, the Middle East, and Africa were the main engines of growth.1

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Chapter 1

In the U.S. the size of the IT workforce topped 4 million workers for the first time in 2008. Unemployment rates in many information technology occupa- tions were among the lowest in the labor force at only 2.3 percent. Demand for talent is high, and several organizations throughout the world cannot grow as desired due to difficulties in hiring and recruiting the people they need.2

In 2007 the total compensation for the average senior project manager in U.S. dollars was $104,776 per year in the United States, $111,412 in Australia, and $120,364 in the United Kingdom. The average total compensation of a pro- gram manager was $122,825 in the United States, $133,718 in Australia, and $165,489 in the United Kingdom. The average total compensation for a Project Management Office (PMO) Director was $134,422 in the United States, $125,197 in Australia, and $210,392 in the United Kingdom. This survey was based on self-reported data from more than 5,500 practitioners in 19 countries.3

The number of people earning their Project Management Professional (PMP) certification continues to increase each year. A research report showed that the U.S. spends $2.3 trillion on projects every year, an amount equal to 25 percent of the nation s gross domestic product. The world as a whole spends nearly $10 trillion of its $40.7 trillion gross prod- uct on projects of all kinds. More than 16 million people regard project man- agement as their profession.4

Today s companies, governments, and nonprofit organizations are recognizing that to be successful, they need to be conversant with and use modern project management tech- niques. Individuals are realizing that to remain competitive in the workplace, they must develop skills to become good project team members and project managers. They also real- ize that many of the concepts of project management will help them in their everyday lives as they work with people and technology on a day-to-day basis.

W H A T W E N T W R O N G ?

In 1995, the Standish Group published an often-quoted study entitled The CHAOS Report. This consulting firm surveyed 365 information technology executive managers in the United States who managed more than 8,380 information technology application pro- jects. As the title of the study suggests, the projects were in a state of chaos. U.S. companies spent more than $250 billion each year in the early 1990s on approximately 175,000 infor- mation technology application development projects. Examples of these projects included creating a new database for a state department of motor vehicles, developing a new system for car rental and hotel reservations, and implementing a client-server architecture for the banking industry. The study reported that the overall success rate of information technolo- gy projects was only 16.2 percent. The surveyors defined success as meeting project goals on time and on budget. The study also found that more than 31 percent of information technology projects were canceled before completion, costing U.S. companies and

continued

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Introduction to Project Management

government agencies more than $81 billion. The study authors were adamant about the need for better project management in the information technology industry. They explained, Software development projects are in chaos, and we can no longer imitate the three monkeys hear no failures, see no failures, speak no failures. 5

In a more recent study, PricewaterhouseCoopers surveyed 200 companies from 30 dif- ferent countries about their project management maturity and found that over half of all projects fail. They also found that only 2.5 percent of corporations consistently meet their targets for scope, time, and cost goals for all types of project.6

Although several researchers question the methodology of such studies, their popularity has prompted managers throughout the world to examine their practices in managing projects. Many organizations assert that using project management provides advantages, such as:

Better control of financial, physical, and human resources Improved customer relations Shorter development times Lower costs and improved productivity Higher quality and increased reliability Higher profit margins Better internal coordination Positive impact on meeting strategic goals Higher worker morale

This chapter introduces projects and project management, explains how projects fit into programs and portfolio management, discusses the role of the project manager, and provides important background information on this growing profession. Although project management applies to many different industries and types of projects, this text focuses on applying project management to information technology projects.

W H A T I S A P R O J E C T ?

To discuss project management, it is important to understand the concept of a project. A project is a temporary endeavor undertaken to create a unique product, service, or result. 7 Operations, on the other hand, is work done in organizations to sustain the busi- ness. Projects are different from operations in that they end when their objectives have been reached or the project has been terminated.

Examples of Information Technology Projects Projects can be large or small and involve one person or thousands of people. They can be done in one day or take years to complete. As described earlier, information technology projects involve using hardware, software, and/or networks to create a product, service, or result. Examples of information technology projects include the following:

A technician replaces ten laptops for a small department A small software development team adds a new feature to an internal software application for the finance department

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Chapter 1

A college campus upgrades its technology infrastructure to provide wireless Internet access across the whole campus A cross-functional taskforce in a company decides what Voice-over-Internet- Protocol (VoIP) system to purchase and how it will be implemented A company develops a new system to increase sales force productivity and cus- tomer relationship management A television network implements a system to allow viewers to vote for contest- ants and provide other feedback on programs The automobile industry develops a Web site to streamline procurement A government group develops a system to track child immunizations A large group of volunteers from organizations throughout the world develops standards for environmentally friendly or green IT

Gartner, Inc., a prestigious consulting firm, identified the top ten strategic technologies for 2008. A few of these technologies include the following:

Green IT: Simply defined, green IT or green computing involves developing and using computer resources in an efficient way to improve economic viabili- ty, social responsibility, and environmental impact. For example, government regulations now encourage organizations and IT departments to use low- emission building materials, recycle computing equipment, and use alternative energy and other green technologies. Unified communications: The majority of organizations are expected to migrate from PBX (private branch exchange) to IP (Internet protocol) telepho- ny in the next three years. Business process modeling: Enterprise and process architects, senior develo- pers, and business process analysts must work together to help organizations effectively use IT to improve processes. Business process modeling (BPM) suites are expected to fill a critical role as a compliment to service-oriented architecture (SOA). Virtualization 2.0: Virtualization hides the physical characteristics of comput- ing resources from their users, such as making a single server, operating sys- tem, application, or storage device appear to function as multiple virtual resources. Virtualization technologies can improve IT resource management and increase flexibility for adapting to changing requirements and workloads. Virtualization 2.0 adds automation technologies so that resource efficiency can improve dramatically. Social software: Most students and professionals today use online social net- working sites such as MySpace, Facebook, LinkedIn, and YouTube to collabo- rate with others. Organizations will increasingly use social software technologies to augment traditional collaboration.8

As you can see, a wide variety of projects use information technologies, and organiza- tions rely on them for their success.

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Introduction to Project Management

M E D I A S N A P S H O T

Nicholas Carr published his exposé IT Doesn t Matter in the May 2003 issue of Harvard Business Review, a topic he expanded on in the following year with his book Does IT Mat- ter? Information Technology and the Corrosion of Competitive Advantage.9 Both sparked heated debates on the value of information technology in today s society. Carr suggested that information technology has followed a pattern similar to earlier infrastructure technol- ogies like railroads and electric power. As availability increased and costs decreased, infor- mation technology has become a commodity; therefore, Carr argued, it can no longer provide companies with a competitive advantage. In 2006, Baseline magazine published the article, Where I.T. Matters: How 10 Technologies Transformed 10 Industries as a retort to Carr s ideas. Below are a few of the technologies and industries that have made IT an important part of their business strategy. (Visit www.nicholasgcarr.com to see more recent work by Carr, including a free 2008 eBook, IT in 2018: From Turing s Machine to the Computing Cloud.)

VoIP: VoIP has totally transformed the telecommunications industry and broad- band Internet access. Phone companies do not have a lock on dial tones any- more; you can make a phone call through a cable TV provider or over any Internet channel for less than the cost of ordinary phone service. These technol- ogies, along with regulatory changes, have forced major phone companies to be more competitive to keep and attract customers. VoIP is more efficient and less expensive than traditional phone networks. The ramp-up to VoIP is expected to happen quickly. Research firm IDC estimates that U.S. subscribers to residential VoIP services will grow from 3 million in 2005 to 27 million by the end of 2009. Global Positioning Systems (GPS) and Business Intelligence: Farming is the oldest known human activity, says Michael Swanson, an agricultural economist at Wells Fargo bank, the largest lender to U.S. farmers. You d think that after 10,000 years there d be nothing left to improve. Not true. How have GPS and Business Intelligence changed the farming industry? In 1950, American farmers planted 83 million acres of corn, which produced 38 bushels per acre. In 2004, farmers planted 81 million acres of corn, which produced 160 bushels. That means that 2.5 percent fewer acres produced more than four times as much corn. Swanson estimates that if farmers did not use the technology they do today, they would have had to plant 320 million acres of corn last year to meet demand: We d be planting parking lots and backyards, Swanson joked. Digital Supply Chain: The entertainment industry s distribution system has changed dramatically due to new information technologies. The great promise of digital technology is that consumers will be able to choose how they want to consume content, says Kevin Tsujihara, president of Warner Home Entertain- ment Group, a new department formed to handle the digital delivery of entertain- ment to consumers. Before Warner underwent a major digital transformation, they were only able to process one or two pictures at a time. Today, we have the capability of taking upward of 10 simultaneous motion picture projects and work- ing on them in this environment. The creation of these digital masters obviously is important in that we can make a transformation to whatever channel we need to get to the consumer. 10

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Chapter 1

Project Attributes As you can see, projects come in all shapes and sizes. The following attributes help to define a project further:

A project has a unique purpose. Every project should have a well-defined objective. For example, Anne Roberts, the Director of the Project Management Office in the opening case, might sponsor an information technology collabora- tion project to develop a list and initial analysis of potential information tech- nology projects that might improve operations for the company. The unique purpose of this project would be to create a collaborative report with ideas from people throughout the company. The results would provide the basis for further discussions and projects. As in this example, projects result in a unique product, service, or result. A project is temporary. A project has a definite beginning and a definite end. In the information technology collaboration project, Anne might form a team of people to work immediately on the project, and then expect a report and an executive presentation of the results in one month. A project is developed using progressive elaboration. Projects are often defined broadly when they begin, and as time passes, the specific details of the project become clearer. Therefore, projects should be developed in incre- ments. A project team should develop initial plans and then update them with more detail based on new information. For example, suppose a few people sub- mitted ideas for the information technology collaboration project, but they did not clearly address how the ideas would support the business strategy of improving operations. The project team might decide to prepare a question- naire for people to fill in as they submit their ideas to improve the quality of the inputs. A project requires resources, often from various areas. Resources include peo- ple, hardware, software, and other assets. Many projects cross departmental or other boundaries to achieve their unique purposes. For the information technology collaboration project, people from information technology, market- ing, sales, distribution, and other areas of the company would need to work together to develop ideas. The company might also hire outside consultants to provide input. Once the project team has selected key projects for imple- mentation, they will probably require additional resources. And to meet new project objectives, people from other companies product suppliers and con- sulting companies may be added. Resources, however, are limited and must be used effectively to meet project and other corporate goals. A project should have a primary customer or sponsor. Most projects have many interested parties or stakeholders, but someone must take the primary role of sponsorship. The project sponsor usually provides the direction and funding for the project. In this case, Anne Roberts would be the sponsor for the information technology collaboration project. Once further information tech- nology projects are selected, however, the sponsors for those projects would be senior managers in charge of the main parts of the company affected by the projects. For example, if the vice president of sales initiates a project to

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Introduction to Project Management

improve direct product sales using the Internet, he or she might be the project sponsor. A project involves uncertainty. Because every project is unique, it is some- times difficult to define its objectives clearly, estimate how long it will take to complete, or determine how much it will cost. External factors also cause uncertainty, such as a supplier going out of business or a project team member needing unplanned time off. This uncertainty is one of the main reasons pro- ject management is so challenging, especially on projects involving new technologies.

An effective project manager is crucial to a project s success. Project managers work with the project sponsors, the project team, and the other people involved in a project to meet project goals.

The Triple Constraint Every project is constrained in different ways by its scope, time, and cost goals. These lim- itations are sometimes referred to in project management as the triple constraint. To cre- ate a successful project, a project manager must consider scope, time, and cost and balance these three often-competing goals. He or she must consider the following:

Scope: What work will be done as part of the project? What unique product, service, or result does the customer or sponsor expect from the project? How will the scope be verified? Time: How long should it take to complete the project? What is the project s schedule? How will the team track actual schedule performance? Who can approve changes to the schedule? Cost: What should it cost to complete the project? What is the project s bud- get? How will costs be tracked? Who can authorize changes to the budget?

Figure 1-1 illustrates the three dimensions of the triple constraint. Each area scope, time, and cost has a target at the beginning of the project. For example, the information technology collaboration project might have an initial scope of producing a 40- to 50-page report and a one-hour presentation on about 30 potential information technology projects. The project manager might further define project scope to include providing a description of each potential project, an investigation of what other companies have implemented for similar projects, a rough time and cost estimate, and assessments of the risk and potential payoff as high, medium, or low. The initial time estimate for this project might be one month, and the cost estimate might be $45,000 $50,000. These expectations provide the targets for the scope, time, and cost dimensions of the project. Note that the scope and cost goals in this example include ranges the report can be between 40- to 50-pages long and the project can cost between $45,000 and $50,000. Because projects involve uncertainty and limited resources, projects rarely finish according to discrete scope, time, and cost goals originally planned. Instead of discrete target goals, it is often more realistic to set a range of goals such as spending between $45,000 and $50,000 and having the length of the report between 40 and 50 pages. These goals might mean hitting the target, but not the bull s eye.

Managing the triple constraint involves making trade-offs between scope, time, and cost goals for a project. For example, you might need to increase the budget for a project to meet

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Chapter 1

scope and time goals. Alternatively, you might have to reduce the scope of a project to meet time and cost goals. Experienced project managers know that you must decide which aspect of the triple constraint is most important. If time is most important, you must often change the initial scope and/or cost goals to meet the schedule. If scope goals are most important, you may need to adjust time and/or cost goals.

For example, to generate project ideas, suppose the project manager for the informa- tion technology collaboration project sent an e-mail survey to all employees, as planned. The initial time and cost estimate may have been one week and $5,000 to collect ideas based on this e-mail survey. Now, suppose the e-mail survey generated only a few good proj- ect ideas, and the scope goal was to collect at least 30 good ideas. Should the project team use a different method like focus groups or interviews to collect ideas? Even though it was not in the initial scope, time, or cost estimates, it would really help the project. Since good ideas are crucial to project success, it would make sense to inform the project sponsor that you want to make adjustments.

Although the triple constraint describes how the basic elements of a project scope, time, and cost interrelate, other elements can also play significant roles. Quality is often a key factor in projects, as is customer or sponsor satisfaction. Some people, in fact, refer to the quadruple constraint of project management, which includes quality as well as scope, time, and cost. Others believe that quality considerations, including customer

Successful project management means meeting all three goals (scope, time, and cost)—and satisfying the project’s sponsor! Target

FIGURE 1-1 The triple constraint of project management

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Introduction to Project Management

satisfaction, must be inherent in setting the scope, time, and cost goals of a project. A proj- ect team may meet scope, time, and cost goals but fail to meet quality standards or satisfy their sponsor, if they have not adequately addressed these concerns. For example, Anne Roberts may receive a 50-page report describing 30 potential information technology projects and hear a presentation on the findings of the report. The project team may have completed the work on time and within the cost constraint, but the quality may have been unacceptable. Anne s view of an executive presentation may be very different from the proj- ect team s view. The project manager should be communicating with the sponsor through- out the project to make sure the project meets his or her expectations.

How can you avoid the problems that occur when you meet scope, time, and cost goals, but lose sight of quality or customer satisfaction? The answer is good project management, which includes more than meeting the triple constraint.

W H A T I S P R O J E C T M A N A G E M E N T ?

Project management is the application of knowledge, skills, tools and techniques to proj- ect activities to meet project requirements. 11 Project managers must not only strive to meet specific scope, time, cost, and quality goals of projects, they must also facilitate the entire process to meet the needs and expectations of the people involved in or affected by project activities.

Figure 1-2 illustrates a framework to help you understand project management. Key elements of this framework include the project stakeholders, project management knowl- edge areas, project management tools and techniques, and the contribution of successful projects to the enterprise.

Project Stakeholders Stakeholders are the people involved in or affected by project activities and include the project sponsor, project team, support staff, customers, users, suppliers, and even

9 Knowledge areas Core functions

Project integration management

Tools and techniques

Stakeholders’ needs and

expectations

Facilitating functions

Project 1 Project 2 Project 3 Project 4

Project portfolio

Enterprise success

Time management

Cost management

Quality management

Scope management

Human resource

management

Communications

management Risk

management Procurement management

Project success

FIGURE 1-2 Project management framework

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Chapter 1

opponents of the project. These stakeholders often have very different needs and expecta- tions. For example, building a new house is a well-known example of a project. There are several stakeholders involved in a home construction project.

The project sponsors would be the potential new homeowners. They would be the people paying for the house and could be on a very tight budget, so they would expect the contractor to provide accurate estimates of the costs involved in building the house. They would also need a realistic idea of when they could move in and what type of home they could afford given their budget con- straints. The new homeowners would have to make important decisions to keep the costs of the house within their budget. Can they afford to finish the basement right away? If they can afford to finish the basement, will it affect the projected move-in date? In this example, the project sponsors are also the cus- tomers and users for the product, which is the house. The project manager in this example would normally be the general contractor responsible for building the house. He or she needs to work with all the project stakeholders to meet their needs and expectations. The project team for building the house would include several construction workers, electricians, carpenters, and so on. These stakeholders would need to know exactly what work they must do and when they need to do it. They would need to know if the required materials and equipment will be at the con- struction site or if they are expected to provide the materials and equipment. Their work would need to be coordinated since there are many interrelated factors involved. For example, the carpenter cannot put in kitchen cabinets until the walls are completed. Support staff might include the buyers employers, the general contractor s administrative Helpant, and other people who support other stakeholders. The buyers employers might expect their employees to still complete their work but allow some flexibility so they can visit the building site or take phone calls related to building the house. The contractor s administrative Helpant would support the project by coordinating meetings between the buyers, the contrac- tor, suppliers, and so on. Building a house requires many suppliers. The suppliers would provide the wood, windows, flooring materials, appliances, and so on. Suppliers would expect exact details on what items they need to provide, where and when to deliver those items, and so on. There may or may not be opponents of a project. In this example, there might be a neighbor who opposes the project because the workers are making so much noise that she cannot concentrate on her work at home, or the noise might wake her sleeping children. She might interrupt the workers to voice her complaints or even file a formal complaint. Or, the neighborhood might have association rules concerning new home design and construction. If the homeowners did not follow these rules, they might have to halt construction due to legal issues.

As you can see from this example, there are many different stakeholders on projects, and they often have different interests. Stakeholders needs and expectations are important in the beginning and throughout the life of a project. Successful project managers develop

11

Introduction to Project Management

good relationships with project stakeholders to understand and meet their needs and expectations.

Project Management Knowledge Areas Project management knowledge areas describe the key competencies that project man- agers must develop. The center of Figure 1-2 shows the nine knowledge areas of project management. The four core knowledge areas of project management include project scope, time, cost, and quality management. These are core knowledge areas because they lead to specific project objectives.

Project scope management involves defining and managing all the work required to complete the project successfully. Project time management includes estimating how long it will take to complete the work, developing an acceptable project schedule, and ensuring timely com- pletion of the project. Project cost management consists of preparing and managing the budget for the project. Project quality management ensures that the project will satisfy the stated or implied needs for which it was undertaken.

The four facilitating knowledge areas of project management are human resource, com- munications, risk, and procurement management. These are called facilitating knowledge areas because they are the processes through which the project objectives are achieved.

Project human resource management is concerned with making effective use of the people involved with the project. Project communications management involves generating, collecting, dissemi- nating, and storing project information. Project risk management includes identifying, analyzing, and responding to risks related to the project. Project procurement management involves acquiring or procuring goods and services for a project from outside the performing organization.

Project integration management, the ninth knowledge area, is an overarching function that affects and is affected by all of the other knowledge areas. Project managers must have knowledge and skills in all nine of these areas. This text includes an entire chapter on each of these knowledge areas because all of them are crucial to project success.

Project Management Tools and Techniques Thomas Carlyle, a famous historian and author, stated, Man is a tool-using animal. Without tools he is nothing, with tools he is all. As the world continues to become more complex, it is even more important for people to develop and use tools, especially for managing impor- tant projects. Project management tools and techniques Help project managers and their teams in carrying out work in all nine knowledge areas. For example, some popular time- management tools and techniques include Gantt charts, project network diagrams, and criti- cal path analysis. Table 1-1 lists some commonly used tools and techniques by knowledge area. You will learn more about these and other tools and techniques throughout this text.

12

Chapter 1

A 2006 survey of 753 project and program managers was conducted to rate several project management tools. Respondents were asked to rate tools on a scale of 1 5 (low to high) based on the extent of their use and the potential of the tools to help improve project success. Super tools were defined as those that had high use and high potential for

TABLE 1-1 Common project management tools and techniques by knowledge area

Knowledge area/category Tools and techniques

Integration management Project selection methods, project management methodologies, stakeholder analyses, project char- ters, project management plans, project manage- ment software, change requests, change control boards, project review meetings, lessons-learned reports

Scope management Scope statements, work breakdown structures, statements of work, requirements analyses, scope management plans, scope verification techniques, and scope change controls

Time management Gantt charts, project network diagrams, critical path analysis, crashing, fast tracking, schedule performance measurements

Cost management Net present value, return on investment, payback analysis, earned value management, project portfo- lio management, cost estimates, cost management plans, cost baselines

Quality management Quality metrics, checklists, quality control charts, Pareto diagrams, fishbone diagrams, maturity models, statistical methods

Human resource management Motivation techniques, empathic listening, respon- sibility assignment matrices, project organizational charts, resource histograms, team building exercises

Communications management

Communications management plans, kick-off meetings, conflict management, communications media selection, status and progress reports, virtu- al communications, templates, project Web sites

Risk management Risk management plans, risk registers, probability/ impact matrices, risk rankings

Procurement management Make-or-buy analyses, contracts, requests for pro- posals or quotes, source selections, supplier evalua- tion matrices

13

Introduction to Project Management

improving project success. These super tools included software for task scheduling (such as project management software), scope statements, requirement analyses, and lessons- learned reports. Tools that are already extensively used and have been found to improve project importance include progress reports, kick-off meetings, Gantt charts, and change requests. These super tools are bolded in Table 1-1.12 Of course, different tools can be more effective in different situations. It is crucial for project managers and their team members to determine which tools will be most useful for their particular projects.

W H A T W E N T R I G H T ?

Follow-up studies by the Standish Group (see the previously quoted CHAOS study in the What Went Wrong? passage) showed some improvement in the statistics for information technology projects in the past decade:

The number of successful IT projects has more than doubled, from 16 percent in 1994 to 35 percent in 2006. The number of failed projects decreased from 31 percent in 1994 to 19 percent in 2006. The United States spent more money on IT projects in 2006 than 1994 ($346 billion and $250 billion, respectively), but the amount of money wasted on chal- lenged projects (those that did not meet scope, time, or cost goals, but were completed) and failed projects was down to $53 billion in 2006 compared to $140 billion in 1994.13

The good news is that project managers are learning how to succeed more often; the bad news is that it is still very difficult to lead successful IT projects. The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself. 14

Despite its advantages, project management is not a silver bullet that guarantees suc- cess on all projects. Project management is a very broad, often complex discipline. What works on one project may not work on another, so it is essential for project managers to continue to develop their knowledge and skills in managing projects. It is also important to learn from the mistakes and successes of others.

Project Success How do you define the success or failure of a project? There are several ways to define proj- ect success. The list that follows outlines a few common criteria for measuring the success of a project using the example of upgrading 500 desktop computers within three months for $300,000:

1. The project met scope, time, and cost goals. If all 500 computers were upgraded and met other scope requirements, the work was completed in three months or less, and the cost was $300,000 or less, you could consider it a

14

Chapter 1

successful project based on this criterion. The Standish Group studies used this definition of success. Several people question this simple definition of proj- ect success and the methods used for collecting the data. (See the references by Glass on the companion Web site for this text to read more about this debate.)

2. The project satisfied the customer/sponsor. Even if the project met initial scope, time, and cost goals, the users of the computers or their managers (the main customers or sponsors in this example) might not be satisfied. Perhaps the project manager or team members never returned calls or were rude. Per- haps users had their daily work disrupted during the upgrades or had to work extra hours due to the upgrades. If the customers were not happy with impor- tant aspects of the project, it would be deemed a failure. Conversely, a project might not meet initial scope, time, and cost goals, but the customer could still be very satisfied. Perhaps the project team took longer and spent more money than planned, but they were very polite and helped the users and managers solve several work-related problems. Many organizations implement a custom- er satisfaction rating system for projects to measure project success instead of only tracking scope, time, and cost performance.

3. The results of the project met its main objective, such as making or saving a certain amount of money, providing a good return on investment, or simply making the sponsors happy. Even if the project cost more than estimated, took longer to complete, and the project team was hard to work with, if the users were happy with the upgraded computers it would be a successful project, based on this criterion. As another example, suppose the sponsor really approved the upgrade project to provide a good return on investment by speeding up work and therefore generating more profits. If those goals were met, the sponsor would deem the project a success, regardless of other factors involved.

Why do some IT projects succeed and others fail? Table 1-2 summarizes the results of the 2001 CHAOS study, describing, in order of importance, what factors contribute most to the success of information technology projects. The study lists executive support as the most important factor, overtaking user involvement, which was ranked first in earlier stud- ies. Also note that several other success factors can be strongly influenced by executives such as encouraging user involvement, providing clear business objectives, assigning an experienced project manager, using a standard software infrastructure, and following a for- mal methodology. Other success factors are related to good project scope and time manage- ment such as having a minimized scope, firm basic requirements, and reliable estimates. In fact, experienced project managers, who can often help influence all of these factors to improve the probability of project success, led 97 percent of successful projects.

It is interesting to compare success factors for information technology projects in the U.S. with those in other countries. A 2004 study summarizes the results of a survey of 247 information systems project practitioners in mainland China. One of the study s key findings is that relationship management is viewed as a top success factor for information systems in China, while it is not mentioned in U.S. studies. The study also suggested that having competent team members is less important in China than in the U.S. The Chinese, like the Americans, included top management support, user involvement, and a competent project manager as vital to project success.15

15

Introduction to Project Management

It is also important to look beyond individual project success rates and focus on how organizations as a whole can improve project performance. Research comparing companies that excel in project delivery the winners from those that do not found four significant best practices. The winners:

1. Use an integrated toolbox. Companies that consistently succeed in managing projects clearly define what needs to be done in a project, by whom, when, and how. They use an integrated toolbox, including project management tools, methods, and techniques. They carefully select tools, align them with project and business goals, link them to metrics, and provide them to project managers to deliver positive results.

2. Grow project leaders. The winners know that strong project managers referred to as project leaders are crucial to project success. They also know that a good project leader needs to be a business leader as well, with strong interpersonal and intrapersonal skills. Companies that excel in project man- agement often grow their project leaders internally, providing them with career opportunities, training, and mentoring.

3. Develop a streamlined project delivery process. Winning companies have examined every step in the project delivery process, analyzed fluctuations in workloads, searched for ways to reduce variation, and eliminated bottlenecks to create a repeatable delivery process. All projects go through clear stages and clearly define key milestones. All project leaders use a shared road map, focus- ing on key business aspects of their projects while integrating goals across all parts of the organization.

TABLE 1-2 What helps projects succeed?

1. Executive support

2. User involvement

3. Experienced project manager

4. Clear business objectives

5. Minimized scope

6. Standard software infrastructure

7. Firm basic requirements

8. Formal methodology

9. Reliable estimates

10. Other criteria, such as small milestones, proper planning, competent staff, and ownership

The Standish Group, Extreme CHAOS, (2001).

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Chapter 1

4. Measure project health using metrics. Companies that excel in project deliv- ery use performance metrics to quantify progress. They focus on a handful of important measurements and apply them to all projects. Metrics often include customer satisfaction, return on investment, and percentage of schedule buffer consumed.16

Project managers play an important role in making projects, and therefore organiza- tions, successful. Project managers work with the project sponsors, the project team, and the other stakeholders involved in a project to meet project goals. They also work with the sponsor to define success for that particular project. Good project managers do not assume that their definition of success is the same as the sponsors . They take the time to under- stand their sponsors expectations and then track project performance based on important success criteria.

P R O G R A M A N D P R O J E C T P O R T F O L I O M A N A G E M E N T

As mentioned earlier, about one-quarter of the world s gross domestic product is spent on projects. Projects make up a significant portion of work in most business organizations or enterprises, and successfully managing those projects is crucial to enterprise success. Two important concepts that help projects meet enterprise goals are the use of programs and project portfolio management.

Programs A program is a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. 17 As you can imagine, it is often more economical to group projects together to help streamline management, staffing, pur- chasing, and other work. The following are examples of common programs in the IT field.

Infrastructure: An IT department often has a program for IT infrastructure projects. Under this program, there could be several projects, such as providing more wireless Internet access, upgrading hardware and software, and develop- ing and maintaining corporate standards for IT. Applications development: Under this program, there could be several pro- jects, such as updating an enterprise resource planning (ERP) system, purchas- ing a new off-the-shelf billing system, or developing a new capability for a customer relationship management system. User support: In addition to the many operational tasks related to user sup- port, many IT departments have several projects to support users. For exam- ple, there could be a project to provide a better e-mail system or one to develop technical training for users.

A program manager provides leadership and direction for the project managers head- ing the projects within a program. Program managers also coordinate the efforts of project teams, functional groups, suppliers, and operations staff supporting the projects to ensure that project products and processes are implemented to maximize benefits. Program man- agers are responsible for more than the delivery of project results; they are change agents

17

Introduction to Project Management

responsible for the success of products and processes produced by those projects. For example, the popular video game Rock Band lists the program manager and team first under the credits section for the game.

Program managers often have review meetings with all their project managers to share important information and coordinate important aspects of each project. Many program managers worked as project managers earlier in their careers, and they enjoy sharing their wisdom and expertise with their project managers. Effective program managers recognize that managing a program is much more complex than managing a single project. They recog- nize that technical and project management skills are not enough program managers must also possess strong business knowledge, leadership capabilities, and communication skills.

Project Portfolio Management In many organizations, project managers also support an emerging business strategy of project portfolio management (also called just portfolio management in this text), in which organizations group and manage projects and programs as a portfolio of investments that contribute to the entire enterprise s success. Portfolio managers help their organiza- tions make wise investment decisions by helping to select and analyze projects from a strate- gic perspective. Portfolio managers may or may not have previous experience as project or program managers. It is most important that they have strong financial and analytical skills and understand how projects and programs can contribute to meeting strategic goals.

Figure 1-3 illustrates the differences between project management and project portfolio management. Notice that the main distinction is a focus on meeting tactical or strategic goals. Tactical goals are generally more specific and short-term than strategic goals, which emphasize long-term goals for an organization. Individual projects often address tactical goals, whereas portfolio management addresses strategic goals. Project management addresses questions like Are we carrying out projects well? , Are projects on time and budget? , and Do project stakeholders know what they should be doing?

Portfolio management addresses questions like Are we working on the right pro- jects? , Are we investing in the right areas? , and Do we have the right resources to be competitive? Pacific Edge Software s product manager, Eric Burke, defines project port- folio management as the continuous process of selecting and managing the optimum set of project initiatives that deliver maximum business value. 18

Tactical goals Strategic goals

Project management • Are we carrying out projects well? • Are projects on time and on budget? • Do project stakeholders know what they should be doing?

Project portfolio management • Are we working on the right projects? • Are we investing in the right areas? • Do we have the right resources to be competitive?

FIGURE 1-3 Project management compared to project portfolio management

18

Chapter 1

Many organizations use a more disciplined approach to portfolio management by devel- oping guidelines and software tools to Help in project portfolio management. The Project Management Institute (described later in this chapter) first published the Organizational Project Management Maturity Model (OPM3) Knowledge Foundation in 2003,19 which describes the importance not only of managing individual projects or programs well, but the importance of following organizational project management to align projects, programs, and portfolios with strategic goals. OPM3 is a standard that organizations can use to measure their organizational project management maturity against a comprehensive set of best practices.

B E S T P R A C T I C E

A best practice is an optimal way recognized by industry to achieve a stated goal or objective. 20 Rosabeth Moss Kanter, a Professor at Harvard Business School and well- known author and consultant, says that visionary leaders know the best practice secret: Stretching to learn from the best of the best in any sector can make a big vision more likely to succeed. 21 Kanter also emphasizes the need to have measurable standards for best prac- tices. An organization can measure performance against its own past, against peers, and even better, against potential. Kanter suggests that organizations need to continue to reach for higher standards. She suggests the following exercise regime for business leaders who want to adapt best practices in an intelligent way to help their own organizations:

Reach high. Stretch. Raise standards and aspirations. Find the best of the best and then use it as inspiration for reaching full potential. Help everyone in your organization become a professional. Empower people to manage themselves through benchmarks and standards based on best practice exchange. Look everywhere. Go far afield. Think of the whole world as your laboratory for learning.

Robert Butrick, author of The Project Workout, wrote an article on best practices in project management for the Ultimate Business Library s Best Practice book. He suggests that organizations need to follow basic principles of project management, including these two mentioned earlier in this chapter:

Make sure your projects are driven by your strategy. Be able to demonstrate how each project you undertake fits your business strategy, and screen out unwanted projects as soon as possible. Engage your stakeholders. Ignoring stakeholders often leads to project failure. Be sure to engage stakeholders at all stages of a project, and encourage teamwork and commitment at all times.22

As you can imagine, project portfolio management is not an easy task. Figure 1-4 illus- trates one approach for project portfolio management where one large portfolio exists for the entire organization. This allows top management to view and manage all projects at an enterprise level. Sections of that portfolio are then broken down to improve the management of projects in each sector. For example, a company might have the main

19

Introduction to Project Management

portfolio categories as shown in the left part of Figure 1-4 marketing, materials, IT, and human resources (HR) and divide each of those categories further to address their unique concerns. The right part of this figure shows how the IT projects could be categorized in more detail to Help in their management. In this example, there are three basic IT project portfolio categories:

Venture: Projects in this category help transform the business. For example, the large retail chain described in the opening case might have an IT project to provide kiosks in stores and similar functionality on the Internet where cus- tomers and suppliers could quickly provide feedback on products or services. This project could help transform the business by developing closer partner- ships with customers and suppliers. Growth: Projects in this category would help the company grow in terms of revenues. For example, a company might have an IT project to provide infor- mation on their corporate Web site in a new language, such as Chinese or Japa- nese. This capability could help them grow their business in those countries. Core: Projects in this category must be accomplished to run the business. For example, an IT project to provide computers for new employees would fall under this category.

Note on the right part of Figure 1-4 that the Core category of IT projects is labeled as nondiscretionary costs. This means that the company has no choice in whether to fund these projects; they must fund them to stay in business. Projects that fall under the Venture or Growth category are discretionary costs because the company can use its own discretion or judgment in deciding whether or not to fund them. Notice the arrow in the center of Fig- ure 1-4 labeled Risks, Value/Timing. This arrow indicates that the risks, value, and timing of projects normally increase as you move from Core to Growth to Venture projects. How- ever, some core projects can also be high risk, have high value, and require good timing. As you can see, many factors are involved in portfolio management.

Overall project portfolio categories IT project portfolio categories

R is

ks

V al

ue /T

im in

g

Nondiscretionary costs

Discretionary costs

Venture: Transform

the business

Growth: Grow the business

Core: Run the business

Marketing

Materials IT

HR

FIGURE 1-4 Sample project portfolio approach

20

Chapter 1

Many organizations use specialized software to organize and analyze all types of project data into project portfolios. Enterprise or portfolio project management software inte- grates information from multiple projects to show the status of active, approved, and future projects across an entire organization. For example, Figure 1-5 provides a sample screen from portfolio management software provided by Planview. The charts and text in the upper half of the screen show the number and percentage of projects in this project portfo- lio that are on target and in trouble in terms of schedule and cost variance. The bottom half of the screen lists the names of individual projects, percent complete, schedule variance, cost variance, budget variance, and risk percentage. The last section in this chapter pro- vides more information on project management software.

T H E R O L E O F T H E P R O J E C T M A N A G E R

You have already read that project managers must work closely with the other stakeholders on a project, especially the sponsor and project team. They are also more effective if they are familiar with the nine project management knowledge areas and the various tools and techniques related to project management. Experienced project managers help projects succeed. But what do project managers do exactly? What skills do they really need to do a good job? The next section provides brief answers to these questions, and the rest of this book gives more insight into the role of the project manager. Even if you never become a project manager, you will probably be part of a project team, and it is important for team members to help their project managers.

Project Manager Job Description A project manager can have many different job descriptions, which can vary tremendously based on the organization and the project. For example, Monster.com includes thousands

FIGURE 1-5 Sample project portfolio management screen showing project health

21

Introduction to Project Management

of job listings for project managers. They even have a job category for project/program man- agers. Here are a few edited postings:

Project manager for a consulting firm: Plans, schedules, and controls activities to fulfill identified objectives applying technical, theoretical, and managerial skills to satisfy project requirements. Coordinates and integrates team and individual efforts and builds positive professional relationships with clients and associates. IT project manager for a financial services firm: Manages, prioritizes, devel- ops, and implements information technology solutions to meet business needs. Prepares and executes project plans using project management software fol- lowing a standard methodology. Establishes cross-functional end-user teams defining and implementing projects on time and within budget. Acts as a liai- son between third-party service providers and end-users to develop and imple- ment technology solutions. Participates in vendor contract development and budget management. Provides post implementation support. IT project manager for a nonprofit consulting firm: Responsibilities include business analysis, requirements gathering, project planning, budget estimating, development, testing, and implementation. Responsible for working with vari- ous resource providers to ensure development is completed in a timely, high- quality, and cost-effective manner.

The job description for a project manager can vary by industry and by organization, but there are similar tasks that most project managers perform regardless of these differ- ences. In fact, project management is a skill needed in every major information technology field, from database administrator to network specialist to technical writer.

Suggested Skills for Project Managers In an interview with two chief information officers (CIOs), John Oliver of True North Com- munications, Inc. and George Nassef of Hotjobs.com, both men agreed that the most impor- tant project management skills seem to depend on the uniqueness of the project and the people involved.23 Project managers need to have a wide variety of skills and be able to decide which particular skills are more important in different situations. As you can imag- ine, good project managers should have many skills. A Guide to the Project Management Body of Knowledge the PMBOK® Guide recommends that the project management team understand and use expertise in the following areas:

The Project Management Body of Knowledge Application area knowledge, standards, and regulations Project environment knowledge General management knowledge and skills Soft skills or human relations skills

This chapter introduced the nine project management knowledge areas, as well as some general tools and techniques project managers use. The following section focuses on the IT application area, including skills required in the project environment, general man- agement, and soft skills. Note that the PMBOK® Guide, Fourth Edition describes three dimensions of project management competency: project management knowledge and per- formance competency (knowing about project management and being able to apply that

22

Chapter 1

knowledge) as well as personal competency (attitudes and personality characteristics). Consult PMI s Web site at www.pmi.org for further information on skills for project man- agers and PMI s Career Framework for Practitioners.

The project environment differs from organization to organization and project to proj- ect, but some skills will help in almost all project environments. These skills include under- standing change, and understanding how organizations work within their social, political, and physical environments. Project managers must be comfortable leading and handling change, since most projects introduce changes in organizations and involve changes within the projects themselves. Project managers need to understand the organization in which they work and how that organization develops products and provides services. The skills and behavior needed to manage a project for a Fortune 100 company in the United States may differ greatly from those needed to manage a government project in Poland. Chapter 2, The Project Management and Information Technology Context, provides detailed information on these topics.

Project managers should also possess general management knowledge and skills. They should understand important topics related to financial management, accounting, procure- ment, sales, marketing, contracts, manufacturing, distribution, logistics, the supply chain, strategic planning, tactical planning, operations management, organizational structures and behavior, personnel administration, compensation, benefits, career paths, and health and safety practices. On some projects, it will be critical for the project manager to have a lot of experience in one or several of these general management areas. On other projects, the proj- ect manager can delegate detailed responsibility for some of these areas to a team member, support staff, or even a supplier. Even so, the project manager must be intelligent and experi- enced enough to know which of these areas are most important and who is qualified to do the work. He or she must also make and/or take responsibility for all key project decisions.

Achieving high performance on projects requires soft skills, otherwise called human relations skills. Some of these soft skills include effective communication, influencing the organization to get things done, leadership, motivation, negotiation, conflict management, and problem solving. Why do project managers need good soft skills? One reason is that to understand, navigate, and meet stakeholders needs and expectations, project managers need to lead, communicate, negotiate, solve problems, and influence the organization at large. They need to be able to listen actively to what others are saying, help develop new approaches for solving problems, and then persuade others to work toward achieving proj- ect goals. Project managers must lead their project teams by providing vision, delegating work, creating an energetic and positive environment, and setting an example of appropri- ate and effective behavior. Project managers must focus on teamwork skills to employ peo- ple effectively. They need to be able to motivate different types of people and develop esprit de corps within the project team and with other project stakeholders. Since most projects involve changes and trade-offs between competing goals, it is important for project managers to have strong coping skills as well. It helps project managers maintain their sani- ty and reduce their stress levels if they cope with criticism and constant change. Project managers must be flexible, creative, and sometimes patient in working toward project goals; they must also be persistent in making project needs known.

Lastly, project managers, especially those managing IT projects, must be able to make effective use of technology as it relates to the specific project. Making effective use of tech- nology often includes special product knowledge or experience with a particular industry.

23

Introduction to Project Management

Project managers must make many decisions and deal with people in a wide variety of disci- plines, so it helps tremendously to have a project manager who is confident in using the spe- cial tools or technologies that are the most effective in particular settings. Project managers do not normally have to be experts on any specific technology, but they have to know enough to build a strong team and ask the right questions to keep things on track. For example, project managers for large information technology projects do not have to be experts in the field of information technology, but they must have working knowledge of vari- ous technologies and understand how the project would enhance the business. Many com- panies have found that a good business manager can be a very good information technology project manager because they focus on meeting business needs and rely on key project members to handle the technical details.

All project managers should continue to develop their knowledge and experience in project management, general management, soft skills, and the industries they support. Non-IT business people are now very savvy with information technology, but few informa- tion technology professionals have spent the time developing their business savvy.24 IT proj- ect managers must be willing to develop more than their technical skills to be productive team members and successful project managers. Everyone, no matter how technical they are, should develop business and soft skills.

Importance of People and Leadership Skills In a recent study, project management experts from various industries were asked to identify the ten most important skills and competencies for effective project managers. Table 1-3 shows the results.

Respondents were also asked what skills and competencies were most important in vari- ous project situations:

Large projects: Leadership, relevant prior experience, planning, people skills, verbal communication, and team-building skills were most important. High uncertainty projects: Risk management, expectation management, lead- ership, people skills, and planning skills were most important. Very novel projects: Leadership, people skills, having vision and goals, self con- fidence, expectations management, and listening skills were most important.25

Notice that a few additional skills and competencies not cited in the top 10 list were mentioned when people thought about the context of a project. To be the most effective, project managers require a changing mix of skills and competencies depending on the project being delivered.

Also notice the general emphasis on people and leadership skills. As mentioned earlier, all project managers, especially those working on technical projects, need to demonstrate leadership and management skills. Leadership and management are terms often used inter- changeably, although there are differences. Generally, a leader focuses on long-term goals and big-picture objectives, while inspiring people to reach those goals. A manager often deals with the day-to-day details of meeting specific goals. Some people say that, Managers do things right, and leaders do the right things. Leaders determine the vision, and man- agers achieve the vision. You lead people and manage things.

24

Chapter 1

However, project managers often take on the role of both leader and manager. Good project managers know that people make or break projects, so they must set a good exam- ple to lead their team to success. They are aware of the greater needs of their stakeholders and organizations, so they are visionary in guiding their current projects and in suggesting future ones. As mentioned earlier, companies that excel in project management grow proj- ect leaders, emphasizing development of business and communication skills. Yet good project managers must also focus on getting the job done by paying attention to the details and daily operations of each task. Instead of thinking of leaders and managers as specific people, it is better to think of people as having leadership skills, such as being visionary and inspiring, and management skills, such as being organized and effective. Therefore, the best project managers have leadership and management characteristics; they are visionary yet focused on the bottom line. Above all else, good project managers focus on achieving posi- tive results!

Careers for Information Technology Project Managers A recent article suggests that, The most sought-after corporate IT workers in 2010 may be those with no deep-seated technical skills at all. The nuts-and-bolts programming and easy-to-document support jobs will have all gone to third-party providers in the U.S. or abroad. Instead, IT departments will be populated with versatilists those with a technolo- gy background who also know the business sector inside and out, can architect and carry out IT plans that will add business value, and can cultivate relationships both inside and outside the company. 26

A recent survey by CIO.com supports this career projection. IT executives listed the skills they predicted would be the most in demand in the next two to five years. Project/

TABLE 1-3 Ten most important skills and competencies for project managers

1. People skills

2. Leadership

3. Listening

4. Integrity, ethical behavior, consistent

5. Strong at building trust

6. Verbal communication

7. Strong at building teams

8. Conflict resolution, conflict management

9. Critical thinking, problem solving

10. Understands, balances priorities

Jennifer Krahn, Effective Project Leadership: A Combination of Project Manager Skills and Competencies in Context, PMI Research Conference Proceedings ( July 2006).

25

Introduction to Project Management

program management came in first place, followed by business process management, busi- ness analysis, and application development. Table 1-4 shows these results, as well as the percentage of respondents who listed the skill as most in demand. Even if you choose to stay in a technical role, you still need project management knowledge and skills to help your team and your organization succeed.

TABLE 1-4 Top information technology skills

Skill Percentage of Respondents

Project/program management 60%

Business process management 55%

Business analysis 53%

Application development 52%

Database management 49%

Security 42%

Enterprise architect 41%

Strategist/internal consultant 40%

Systems analyst 39%

Relationship management 39%

Web services 33%

Help desk/user support 32%

Networking 32%

Web site development 30%

QA/testing 28%

IT finance 28%

Vendor management/ procurement

27%

IT HR 21%

Other 3%

Carolyn Johnson, 2006 Midyear Staffing Updates, CIO Research Reports, October 2, 2006.

26

Chapter 1

T H E P R O J E C T M A N A G E M E N T P R O F E S S I O N

The profession of project management is growing at a very rapid pace. To understand this line of work, it is helpful to briefly review the history of project management, introduce you to the Project Management Institute (PMI) and some of its services (such as certification), and discuss the growth in project management software.

History of Project Management Although people have worked on projects for centuries, most agree that the modern concept of project management began with the Manhattan Project, which the U.S. military led to develop the atomic bomb in World War II. The Manhattan Project involved many people with different skills at several different locations. It also clearly separated the overall man- agement of the project s mission, schedule, and budget under General Leslie R. Groves and the technical management of the project under the lead scientist, Dr. Robert Oppenheimer. The Manhattan Project lasted about three years and cost almost $2 billion in 1946.

In developing the project, the military realized that scientists and other technical spe- cialists often did not have the desire or the necessary skills to manage large projects. For example, after being asked several times for each team member s responsibilities at the new Los Alamos laboratory in 1943, Dr. Oppenheimer tossed a piece of paper with an organiza- tion chart on it at his director and said, Here s your damn organization chart. 27 Project management was recognized as a distinct discipline requiring people with special skills and, more importantly, the desire to lead project teams.

In 1917, Henry Gantt developed the famous Gantt chart for scheduling work in facto- ries. A Gantt chart is a standard format for displaying project schedule information by list- ing project activities and their corresponding start and finish dates in a calendar format. Initially, managers drew Gantt charts by hand to show project tasks and schedule informa- tion, and this tool provided a standard format for planning and reviewing all the work on early military projects.

Today s project managers still use the Gantt chart as the primary tool to communicate project schedule information, but with the aid of computers, it is no longer necessary to draw the charts by hand and they can be more easily shared and disseminated to project stakeholders. Figure 1-6 displays a Gantt chart created with Microsoft Project, the most widely used project management software today. You will learn more about using Project 2007 in Appendix A.

During the Cold War years of the 1950s and 60s, the military continued to be key in refining several project management techniques. Members of the U.S. Navy Polaris missile/ submarine project first used network diagrams in 1958. These diagrams helped managers model the relationships among project tasks, which allowed them to create schedules that were more realistic. Figure 1-7 displays a network diagram created using Microsoft Project. Note that the diagram includes arrows that show which tasks are related and the sequence in which team members must perform the tasks. The concept of determining relationships among tasks is essential in helping to improve project scheduling. This concept allows you to find and monitor the critical path the longest path through a network diagram that determines the earliest completion of a project. You will learn more about Gantt charts, net- work diagrams, critical path analysis, and other time management concepts in Chapter 6, Project Time Management.

27

Introduction to Project Management

By the 1970s, the U.S. military and its civilian suppliers developed software to Help in managing large projects. Early project management software was very expensive to pur- chase and it ran exclusively on mainframe computers. For example, Artemis was an early project management software product that helped managers analyze complex schedules for designing aircraft. A full-time employee was often required to run the complicated software, and expensive pen plotters were used to draw network diagrams and Gantt charts.

As computer hardware became smaller and more affordable and software included graphical, easy-to-use interfaces, project management software became less expensive and more widely used. This made it possible and affordable for many industries worldwide

FIGURE 1-6 Sample Gantt chart created with Project 2007

B Start: 6/3/08 ID: 2 Finish: 6/4/08 Dur: 2 days Res:

C Start: 6/3/08 ID: 3 Finish: 6/5/08 Dur: 3 days Res:

D Start: 6/4/08 ID: 4 Finish: 6/7/08 Dur: 4 days Res:

E Start: 6/5/08 ID: 5 Finish: 6/11/08 Dur: 5 days Res:

F Start: 6/5/08 ID: 6 Finish: 6/10/08 Dur: 4 days Res:

G Start: 6/6/08 ID: 7 Finish: 6/13/08 Dur: 6 days Res:

H Start: 6/12/08 ID: 8 Finish: 6/19/08 Dur: 6 days Res:

I Start: 6/14/08 ID: 9 Finish: 6/17/08 Dur: 2 days Res:

J Start: 6/20/08 ID: 10 Finish: 6/24/08 Dur: 3 days Res:

A Start: 6/3/08 ID: 1 Finish: 6/3/08 Dur: 1 day Res:

FIGURE 1-7 Sample network diagram in Microsoft Project

28

Chapter 1

to use project management software on all types and sizes of projects. New software makes basic tools, such as Gantt charts and network diagrams, inexpensive, easy to create, and available for anyone to update. See the section in this chapter on project management software for more information.

In the 1990s, many companies began creating project management offices to help them handle the increasing number and complexity of projects. A Project Management Office (PMO) is an organizational group responsible for coordinating the project management function throughout an organization. There are different ways to structure a PMO, and they can have various roles and responsibilities. Below are possible goals of a PMO:

Collect, organize, and integrate project data for the entire organization. Develop and maintain templates for project documents. Develop or coordinate training in various project management topics. Develop and provide a formal career path for project managers. Provide project management consulting services. Provide a structure to house project managers while they are acting in those roles or are between projects.

By the end of the twentieth century, people in virtually every industry around the globe began to investigate and apply different aspects of project management to their projects. The sophistication and effectiveness with which project management tools are being applied and used today is influencing the way companies do business, use resources, and respond to market requirements with speed and accuracy. As mentioned earlier in this chapter, many organizations are now using enterprise or project portfolio management soft- ware to help manage portfolios of projects.

Many colleges, universities, and companies around the world now offer courses related to various aspects of project management. You can even earn bachelor s, master s, and doc- toral degrees in project management. PMI reported in 2008 that of the 280 institutions it has identified that offer degrees in project management, 103 are in mainland China. When Western companies come into China they are more likely to hire individuals who have PMP certification as an additional verification of their skills. In our salary survey, the salary dif- ference in IT, for example, was dramatic. A person with certification could make five to six times as much salary, so there is terrific incentive to get certified and work for these West- ern companies. 28

The problems in managing projects, the publicity about project management, and the belief that it really can make a difference continue to contribute to the growth of this field.

The Project Management Institute Although many professional societies suffer from declining membership, the Project Management Institute (PMI), an international professional society for project managers founded in 1969, has continued to attract and retain members, reporting 277,221 members worldwide by August 31, 2008. A large percentage of PMI members work in the information technology field and more than 13,000 pay additional dues to join the Information Systems Specific Interest Group. Because there are so many people working on projects in various industries, PMI has created specific interest groups (SIGs) that enable members to share ideas about project management in their particular application areas, such as information systems. PMI also has SIGs for aerospace/defense, financial services, healthcare, hospitality

29

Introduction to Project Management

management, manufacturing, new product development, retail, and urban development, to name a few. Note that there are also other project management professional societies. See the companion Web site for more information.

P M I S T U D E N T M E M B E R S H I P

As a student, you can join PMI for a reduced fee. Consult PMI s Web site (www.pmi.org) for more information. You can also network with other students studying project manage- ment by joining the Students of Project Management Specific Interest Group (SIG) at www.studentsofpm.org. Note that PMI is changing the SIGs into Virtual Communities, so you may see that term used.

Project Management Certification Professional certification is an important factor in recognizing and ensuring quality in a profession. PMI provides certification as a Project Management Professional (PMP) someone who has documented sufficient project experience and education, agreed to follow the PMI code of professional conduct, and demonstrated knowledge of the field of project management by passing a comprehensive examination. Appendix B provides more informa- tion on PMP certification as well as other certification programs, such as CompTIA s Project certification.

The number of people earning PMP certification continues to increase. In 1993, there were about 1,000 certified project management professionals. By December 31, 2008, there were 318,289 active PMPs.29 Figure 1-8 shows the rapid growth in the number of people earning project management professional certification from 1993 to 2008.

Several studies show that organizations supporting technical certification programs tend to operate in more complex information technology environments and are more

1,000 1,900 2,800 4,400 6,415 10,086

18,184 27,052

40,343

52,443 76,550

102,047

175,194

221,144

267,367

318,289

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

# PM

Ps

FIGURE 1-8 Growth in PMP Certification, 1993 2008

30

Chapter 1

efficient than companies that do not support certification. Likewise, organizations that sup- port PMP certification see the value of investing in programs to improve their employees knowledge in project management. Many employers today require specific certifications to ensure their workers have current skills, and job seekers find that they often have an advantage when they earn and maintain marketable certifications. A 2006 Certification Magazine survey of over 35,000 IT workers from 197 countries found that average salaries for workers in project management were among the highest for all IT specialties. IT workers with a PMP certification earned among the highest salaries for all IT workers who hold pro- fessional certifications.30

As information technology projects become more complex and global in nature, the need for people with demonstrated knowledge and skills in project management will contin- ue. Just as passing the CPA exam is a standard for accountants, passing the PMP exam is becoming a standard for project managers. Some companies require that all project man- agers be PMP certified. Project management certification is also enabling professionals in the field to share a common base of knowledge. For example, any person with PMP certifi- cation can list, describe, and use the nine project management knowledge areas. Sharing a common base of knowledge is important because it helps advance the theory and practice of project management. PMI also offers additional certifications, including new ones in scheduling, risk, and program management. See Appendix B of this text for detailed infor- mation on certification.

Ethics in Project Management Ethics, loosely defined, is a set of principles that guide our decision making based on per- sonal values of what is right and wrong. Making ethical decisions is an important part of our personal and professional lives because it generates trust and respect with other peo- ple. Project managers often face ethical dilemmas. For example, several projects involve different payment methods. If a project manager can make more money by doing a job poorly, should he or she do the job poorly? No! If a project manager is personally opposed to the development of nuclear weapons, should he or she refuse to manage a project that helps produce them? Yes! Ethics guide us in making these types of decisions.

PMI approved a new Code of Ethics and Professional Conduct effective January 1, 2007. This new code applies not only to PMPs, but to all PMI members and individuals who hold a PMI certification, apply for a PMI certification, or serve PMI in a volunteer capacity. It is vital for project management practitioners to conduct their work in an ethical manner. Even if you are not affiliated with PMI, these guidelines can help you conduct your work in an ethical manner, which helps the profession earn the confidence of the public, employ- ers, employees, and all project stakeholders. The PMI Code of Ethics and Professional Con- duct includes short chapters addressing vision and applicability, responsibility, respect, fairness, and honestly. A few excerpts from this document include the following:

As practitioners in the global project management community:

2.2.1 We make decisions and take actions based on the best interests of society, public safety, and the environment.

2.2.2 We accept only those assignment that are consistent with our background, expe- rience, skills, and qualifications.

2.2.3 We fulfill the commitments that we undertake we do what we say we will do.

31

Introduction to Project Management

3.2.1 We inform ourselves about the norms and customs of others and avoid engaging in behaviors they might consider disrespectful.

3.2.2 We listen to others points of view, seeking to understand them.

3.2.3 We approach directly those persons with whom we have a conflict or disagreement.

4.2.1 We demonstrate transparency in our decision-making process.

4.2.2 We constantly reexamine our impartiality and objectivity, taking corrective action as appropriate.

4.3.1 We proactively and fully disclose any real or potential conflicts of interest to appropriate stakeholders.

5.2.1 We earnestly seek to understand the truth.

5.2.2 We are truthful in our communications and in our conduct. 31

In addition, PMI added a new series of questions to the PMP certification exam in March 2002 to emphasize the importance of ethics and professional responsibility. See Appendix B for information on the PMP exam.

Project Management Software Unlike the cobbler neglecting to make shoes for his own children, the project management and software development communities have definitely responded to the need to provide more software to Help in managing projects. The Project Management Center, a Web site for people involved in project management, provides an alphabetical directory of more than 300 project management software solutions (www.infogoal.com/pmc). This site and others demonstrate the growth in available project management software products, especially Web- based tools. Deciding which project management software to use has become a project in itself. This section provides a summary of the basic types of project management software available and references for finding more information. In Appendix A, you will learn how to use Microsoft Project 2007, the most widely used project management software tool today.

M I C R O S O F T P R O J E C T 2 0 0 7

Appendix A includes a Guide to Using Microsoft Project 2007, which will help you develop hands-on skills using this most popular project management software tool. You can also access a trial version of VPMi Express a Web-based product from VCS (www.vcsonline. com) by following the information provided on the resources page in the front of this text or by going directly to the VCS Web site.

Many people still use basic productivity software such as Microsoft Word and Excel to perform many project management functions, including determining project scope, time, and cost, assigning resources, preparing project documentation, and so on. People often use productivity software instead of specialized project management software because they already have it and know how to use it. However, there are hundreds of project

32

Chapter 1

management software tools that provide specific functionality for managing projects. These project management software tools can be divided into three general categories based on functionality and price:

Low-end tools: These tools provide basic project management features and generally cost less than $200 per user. They are often recommended for small projects and single users. Most of these tools allow users to create Gantt charts, which cannot be done easily using current productivity software. Top Ten Reviews listed MinuteMan ($49.95) and Project Kickstart ($199.95) in their list of top 10 project management software tools for 2008.32 Basecamp (www.basecamphq.com) is another popular tool with low-end through high- end versions ranging in price from $24 to $149 per month. Several companies provide add-in features to Excel (see www.business-spreadsheets.com) to pro- vide basic project management functions using a familiar software product. Midrange tools: A step up from low-end tools, midrange tools are designed to handle larger projects, multiple users, and multiple projects. All of these tools can produce Gantt charts and network diagrams, and can Help in critical path analysis, resource allocation, project tracking, status reporting, and so on. Prices range from about $200 to $600 per user, and several tools require addi- tional server software for using workgroup features. Microsoft Project is still the most widely used project management software today in this category, and there is also an enterprise version, as described briefly below and in Appendix A. In the summer of 2008, Top Ten Reviews listed Microsoft Project as the number one choice ($599), along with Milestones ($249). A product called Copper also made the top ten list, with a price of $999 for up to 50 users. As noted earlier, this text includes a trial version of Project 2007 as well as one of VPMi Express, a totally Web-based tool. Note that students and educators can purchase software like Microsoft Project 2007 at reduced prices from sites like www.journeyed.com ($59.98 for Project 2007 Standard in October 2008), and anyone can download a trial version from Microsoft s Web site. Many other suppliers also provide trial versions of their products. High-end tools: Another category of project management software is high-end tools, sometimes referred to as enterprise project management software. These tools provide robust capabilities to handle very large projects, dispersed work- groups, and enterprise and portfolio management functions that summarize and combine individual project information to provide an enterprise view of all pro- jects. These products are generally licensed on a per-user basis, integrate with enterprise database management software, and are accessible via the Internet. In mid-2002, Microsoft introduced the first version of their Enterprise Project Management software, and in 2003, they introduced the Microsoft Enterprise Project Management solution, which was updated in 2007 to include Microsoft Office Project Server 2007 and Microsoft Office Project Portfolio Server 2007A. Several inexpensive, Web-based products that provide enterprise and portfolio management capabilities are also on the market. For example, VPMi Enterprise Online (www.vcsonline.com) is available for a low monthly fee per user (see the front cover of this text for free trial information). See the Project Management Center Web site (www.infogoal.com/pmc) or Top Ten Reviews

33

Introduction to Project Management

(http://project-management-software-review.toptenreviews.com) for links to many companies that provide project management software.

There are also several free or open-source tools available. For example, Open Work- bench (www.openworkbench.org), dotProject (www.dotproject.net), and TaskJuggler (www.taskjuggler.org) are all free online project management tools. Remember, however, that these tools are developed, managed, and maintained by volunteers. They also often run on limited platforms and may not be well supported.

As mentioned earlier, there are many reasons to study project management, particular- ly as it relates to information technology projects. The number of information technology projects continues to grow, the complexity of these projects continues to increase, and the profession of project management continues to expand and mature. As more people study and work in this important field, the success rate of information technology projects should improve.

C A S E W R A P – U P

Anne Roberts worked with the VPs and the CEO to form teams to help identify potential IT projects that would support their business strategies. They formed a project team to implement a project portfolio management software tool across the organization. They formed another team to develop project-based reward systems for all employees. They also authorized funds for a project to educate all employees in project management, to help peo- ple earn PMP and related certifications, and to develop a mentoring program. Anne had successfully convinced everyone that effectively managing projects was crucial to their company s future.

34

Chapter 1

Chapter Summary

There is a new or renewed interest in project management today as the number of projects con- tinues to grow and their complexity continues to increase. The success rate of information tech- nology projects has more than doubled since 1995, but still only about a third are successful in meeting scope, time, and cost goals. Using a more disciplined approach to managing projects can help projects and organizations succeed.

A project is a temporary endeavor undertaken to create a unique product, service, or result. An information technology project involves the use of hardware, software, and/or networks. Pro- jects are unique, temporary, and developed incrementally; they require resources, have a spon- sor, and involve uncertainty. The triple constraint of project management refers to managing the scope, time, and cost dimensions of a project.

Project management is the application of knowledge, skills, tools, and techniques to project activities to meet project requirements. Stakeholders are the people involved in or affected by project activities. A framework for project management includes the project stakeholders, project management knowledge areas, and project management tools and techniques. The nine knowl- edge areas are project integration management, scope, time, cost, quality, human resource, communications, risk, and procurement management. There are many tools and techniques in each knowledge area. There are different ways to define project success, and project managers must understand the success criteria for their unique projects.

A program is a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. Project portfolio management involves organizing and managing projects and programs as a portfolio of investments that contribute to theentire enterprise s success. Portfolio management emphasizes meeting strategic goals while project management focuses on tactical goals. Studies show that executive support is crucial to project success, as are other factors like user involvement, an experienced project manager, and clear business objectives.

Project managers play a key role in helping projects and organizations succeed. They must perform various job duties, possess many skills, and continue to develop skills in project manage- ment, general management, and their application area, such as information technology. Soft skills, especially leadership, are particularly important for project managers.

The profession of project management continues to grow and mature. In the U.S., the military took the lead in project management and developed many tools such as Gantt charts and network diagrams, but today people use project management in virtually every industry around the globe. The Project Management Institute (PMI) is an international professional society that provides certification as a Project Management Professional (PMP) and upholds a code of ethics. Today, hundreds of project management software products are available to Help people in managing projects.

Quick Quiz

1. Approximately what percentage of the world s gross domestic product is spent on projects?

a. 10 percent

b. 25 percent

c. 50 percent

d. 75 percent

35

Introduction to Project Management

2. Which of the following is a not a potential advantage of using good project management?

a. Shorter development times

b. Higher worker morale

c. Lower cost of capital

d. Higher profit margins

3. A ______ is a temporary endeavor undertaken to create a unique product, service, or result.

a. program

b. process

c. project

d. portfolio

4. Which of the following is not an attribute of a project?

a. projects are unique

b. projects are developed using progressive elaboration

c. projects have a primary customer or sponsor

d. projects involve little uncertainty

5. Which of the following is not part of the triple constraint of project management?

a. meeting scope goals

b. meeting time goals

c. meeting communications goals

d. meeting cost goals

6. ______ is the application of knowledge, skills, tools and techniques to project activities to meet project requirements.

a. Project management

b. Program management

c. Project portfolio management

d. Requirements management

7. Project portfolio management addresses ______ goals of an organization, while project management addresses ______ goals.

a. strategic, tactical

b. tactical, strategic

c. internal, external

d. external, internal

36

Chapter 1

8. Several application development projects done for the same functional group might best be managed as part of a ______.

a. portfolio

b. program

c. investment

d. collaborative

9. Which of the following is not one of the top ten skills or competencies of an effective project manager?

a. people skills

b. leadership

c. integrity

d. technical skills

10. What is the certification program called that the Project Management Institute provides?

a. Certified Project Manager (CPM)

b. Project Management Professional (PMP)

c. Project Management Expert (PME)

d. Project Management Mentor (PMM)

Quick Quiz Answers

1. b; 2. c; 3. c; 4. d; 5. c; 6. a; 7. a; 8. b; 9. d; 10. b

Discussion Questions

1. Why is there a new or renewed interest in the field of project management?

2. What is a project, and what are its main attributes? How is a project different from what most people do in their day-to-day jobs? What is the triple constraint?

3. What is project management? Briefly describe the project management framework, providing examples of stakeholders, knowledge areas, tools and techniques, and project success factors.

4. What is a program? What is a project portfolio? Discuss the relationship between projects, programs, and portfolio management and the contributions they each make to enterprise success.

5. What is the role of the project manager? What are suggested skills for all project managers and for information technology project managers? Why is leadership so important for project managers? How is the job market for information technology project managers?

6. Briefly describe some key events in the history of project management. What role does the Project Management Institute and other professional societies play in helping the profession?

7. What functions can you perform with project management software? What are some popular names of low-end, midrange, and high-end project management tools?

37

Introduction to Project Management

Exercises

1. Visit the Standish Group s Web site at www.standishgroup.com. Read one of the CHAOS articles, and also read at least one report or article that questions the findings of the CHAOS studies. See the Suggested Readings by Robert L. Glass on the companion Web site for references. Write a two-page summary of the reports, key conclusions, and your opinion of them.

2. Find someone who works as a project manager or someone who works on projects, such as a worker in your school s IT department or the president of a social club. Prepare several interview questions to learn more about projects and project management, and then ask them your questions in person, through e-mail, or over the phone. Write a two-page summa- ry of your findings. Guidelines for your interview and sample questions are available on the companion Web site.

3. Search the Internet for the terms project management, project management careers, pro- ject portfolio management, and information technology project management. Write down the number of hits that you received for each of these phrases. Find at least three Web sites that provide interesting information on one of the topics. Write a two-page paper summarizing key information about these three Web sites as well as the Project Management Institute s Web site (www.pmi.org).

4. Find any example of a real project with a real project manager. Feel free to use projects in the media (the Olympics, television shows, movies, etc.) or a project from your work, if appli- cable. Write a two-page paper describing the project in terms of its scope, time, and cost goals. Discuss what went right and wrong on the project and the role of the project manager and sponsor. Also describe if the project was a success or not and why. Include at least one reference and cite it on the last page.

5. Skim through Appendix A on Microsoft Project 2007. Review information about Project 2007 from Microsoft s Web site (www.microsoft.com/project) and information about VPMi Express from www.vcsonline.com. Also, visit The Project Management Center (www.infogoal.com/pmc) and Top Ten Reviews (http://project-management-software- review.toptenreviews.com). Research two project management software tools besides Project 2007. Write a two-page paper answering the following questions:

a. What functions does project management software provide that you cannot do easily using other tools such as a spreadsheet or database?

b. How do the different tools you reviewed compare, based on cost of the tool, key fea- tures, and other relevant criteria?

c. How can organizations justify investing in enterprise or portfolio project management software?

6. Research information about PMP and related certifications. Skim through Appendix B for information and find at least two articles on this topic. What are benefits of certification in general? Do you think it is worthwhile for most project managers to get certified? Is it some- thing you would consider? Write a two-page paper summarizing your findings and opinions.

38

Chapter 1

Companion Web Site

Visit the companion Web site for this text at www.cengage.com/mis/schwalbe to access:

References cited in the text and additional suggested readings for each chapter

Template files

Lecture notes

Interactive quizzes

Podcasts

Links to general project management Web sites

And more

See the Preface of this text for additional information on accessing the companion Web site.

Key Terms

best practice — An optimal way recognized by industry to achieve a stated goal or objective critical path — The longest path through a network diagram that determines the earliest

completion of a project

enterprise project management software — Software that integrates information from multiple projects to show the status of active, approved, and future projects across an entire organization; also called portfolio project management software

ethics — A set of principles that guide our decision making based on personal values of what is right and wrong

Gantt chart — A standard format for displaying project schedule information by listing project activities and their corresponding start and finish dates in a calendar format

green IT or green computing — Developing and using computer resources in an efficient way to improve economic viability, social responsibility, and environmental impact

leader — A person who focuses on long-term goals and big-picture objectives, while inspiring people to reach those goals

manager — A person who deals with the day-to-day details of meeting specific goals portfolio project management software — Software that integrates information from multiple

projects to show the status of active, approved, and future projects across an entire organization; also called enterprise project management software

program — A group of projects managed in a coordinated way to obtain benefits and control not available from managing them individually

program manager — A person who provides leadership and direction for the project managers heading the projects within a program

project — A temporary endeavor undertaken to create a unique product, service, or result project management — The application of knowledge, skills, tools, and techniques to project

activities to meet project requirements Project Management Institute (PMI) — An international professional society for project

managers

project management knowledge areas — Project integration management, scope, time, cost, quality, human resource, communications, risk, and procurement management

39

Introduction to Project Management

Project Management Office (PMO) — An organizational group responsible for coordinating the project management functions throughout an organization

Project Management Professional (PMP) — Certification provided by PMI that requires documenting project experience and education, agreeing to follow the PMI code of ethics, and passing a comprehensive exam

project management tools and techniques — Methods available to Help project managers and their teams; some popular tools in the time management knowledge area include Gantt charts, network diagrams, and critical path analysis

project manager — The person responsible for working with the project sponsor, the project team, and the other people involved in a project to meet project goals

project portfolio management or portfolio management — When organizations group and manage projects as a portfolio of investments that contribute to the entire enterprise s success

project sponsor — The person who provides the direction and funding for a project stakeholders — People involved in or affected by project activities triple constraint — Balancing scope, time, and cost goals virtualization — Hiding the physical characteristics of computing resources from their users,

such as making a single server, operating system, application, or storage device appear to function as multiple virtual resources

End Notes

1 Andrew H. Bartels, Teleconference: Global IT 2008 Market Forecast, Forrester Research (February 11, 2008).

2 Eric Chabrow, Computer Jobs Hit Record High, CIO Insight (July 7, 2008). 3 Project Management Institute, Project Management Salary Survey, Fifth Edition, 2007. 4 Project Management Institute, PMI Today, October 2006 and June 2008. 5 Standish Group, The CHAOS Report (www.standishgroup.com) (1995). Another reference is

Jim Johnson, CHAOS: The Dollar Drain of IT Project Failures, Application Development Trends (January 1995).

6 PricewaterhouseCoopers, Boosting Business Performance through Programme and Project Management (June 2004).

7 Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK ® Guide), Fourth Edition (2008).

8 Gartner, Inc. Gartner Identifies the Top 10 Strategic Technologies for 2008, Gartner Symposium/ITxpo (October 9, 2007).

9 Nicholas G. Carr, Does IT Matter? (Harvard Business School Press, 2004). 10 Where I.T. Matters: How 10 Technologies Transformed 10 Industries, Baseline (October 2,

2006). 11 Project Management Institute, Inc., A Guide to the Project Management Body of Knowledge

(PMBOK ® Guide), Fourth Edition (2008).

40

Chapter 1

12 Claude Besner and Brian Hobbs, The Perceived Value and Potential Contribution of Project Management Practices to Project Success, PMI Research Conference Proceedings (July 2006).

13 Jim Johnson, CHAOS 2006 Research Project, CHAOS Activity News, 2:no. 1 (2007). 14 Standish Group, CHAOS 2001: A Recipe for Success (2001). 15 Chang Dong, K.B. Chuah, and Li Zhai, A Study of Critical Success Factor of Information

System Projects in China, Proceedings of PMI Research Conference (2004). 16 Dragan Milosevic and And Ozbay, Delivering Projects: What the Winners Do, Proceedings of

the Project Management Institute Annual Seminars & Symposium (November 2001). 17 Project Management Institute, A Guide to the Project Management Body of Knowledge

(PMBOK ® Guide), Fourth Edition (2008). 18 Eric Burke, Project Portfolio Management, PMI Houston Chapter Meeting (July 10, 2002). 19 Project Management Institute, Organizational Project Management Maturity Model (OPM3)

Knowledge Foundation (2003). 20 Ibid., p. 13. 21 Ultimate Business Library, Best Practice: Ideas and Insights from the World s Foremost

Business Thinkers (New York: Perseus 2003), p. 1. 22 Ibid., p. 8. 23 Mary Brandel, The Perfect Project Manager, ComputerWorld (August 6, 2001). 24 Lauren Thomsen-Moore, No soft skills for us, we re techies, ComputerWorld (December 16,

2002). 25 Jennifer Krahn, Effective Project Leadership: A Combination of Project Manager Skills and

Competencies in Context, PMI Research Conference Proceedings (July 2006). 26 Stacy Collett, Hot Skills: Cold Skills, ComputerWorld (July 17, 2006). 27 Regents of the University of California, Manhattan Project History, Here s Your Damned

Organization Chart, (1998 2001). 28 Venessa Wong, PMI On Specialization and Globalization, Projects@Work (June 23, 2008) 29 Project Management Institute, PMI Today, (February 2009). 30 Project Management Institute, PMI Community Post, (February 9, 2007). 31 Project Management Institute, PMI Today, (December 2006), p. 12 13. 32 Top Ten Reviews, 2006 Project Management Report, http://project-management-software-

review.toptenreviews.com, (accessed September 10, 2008).

41

Introduction to Project Management

C H A P T E R 2 THE PROJECT MANAGEMENT AND INFORMATION TECHNOLOGY CONTEXT

L E A R N I N G O B J E C T I V E S

After reading this chapter, you will be able to:

Describe the systems view of project management and how it applies to information technology projects

Understand organizations, including the four frames, organizational struc- tures, and organizational culture

Explain why stakeholder management and top management commitment are critical for a project s success

Understand the concept of a project phase and the project life cycle and distinguish between project development and product development

Discuss the unique attributes and diverse nature of information technology projects

Describe recent trends affecting IT project management, including globali- zation, outsourcing, and virtual teams

O P E N I N G C A S E

Tom Walters recently accepted a new position at his college as the Director of Information Technology. Tom had been a respected faculty member at the college for the past 15 years. The college a small, private institution in the Southwest offered a variety of programs in the liberal arts and professional areas. Enrollment included 1,500 full-time traditional students and about 1,000 working-adult students attending evening programs. Many instructors supplemented their courses with information on the Internet and course Web sites, but they did not offer any distance-learning programs. The college s niche was serving students in that region who liked the setting of a small liberal arts college.

Like other institutions of higher learning, the use of information technology at the college had grown tremendously in the past 10 years. There were a few classrooms on campus with computers for the instructors and students, and a few more with just instructor stations and projection systems. Tom knew that several colleges throughout the country required that all students lease laptops and that these colleges incorporated technology components into most courses. This idea fascinated him. He and two other members of the Information Technology department visited a local college that had required all students to lease laptops for the past three years, and they were very impressed with what they saw and heard. Tom and his staff developed plans to start requiring students to lease laptops at their college the next year.

Tom sent an e-mail to all faculty and staff in September, which briefly described this and other plans. He did not get much response, however, until the February faculty meeting when, as he described some of the details of his plan, the chairs of the History, English, Phi- losophy, and Economics departments all voiced their opposition to the idea. They eloquently stated that the college was not a technical training school, and they thought the idea was ludi- crous. Members of the Computer Science department voiced their concern that almost all of their students already had state-of-the art laptops and would not want to pay a mandatory fee to lease less-powerful ones. The director of the adult education program expressed her concern that many adult-education students would balk at an increase in fees. Tom was in shock to hear his colleagues responses, especially after he and his staff had spent a lot of time planning details of how to implement laptops at their campus. Now what should he do?

Many of the theories and concepts of project management are not difficult to under- stand. What is difficult is implementing them in various environments. Project managers must consider many different issues when managing projects. Just as each project is unique, so is its environment. This chapter discusses some of the components involved in understanding the project environment, such as using a systems approach, understanding organizations, managing stakeholders, matching product life cycles to the project environ- ment, understanding the context of information technology projects, and reviewing recent trends affecting IT project management.

A S Y S T E M S V I E W O F P R O J E C T M A N A G E M E N T

Even though projects are temporary and intended to provide a unique product or service, you cannot run projects in isolation. If project managers lead projects in isolation, it is unlikely that those projects will ever truly serve the needs of the organization. Therefore, projects must operate in a broad organizational environment, and project managers need

44

Chapter 2

to consider projects within the greater organizational context. To handle complex situa- tions effectively, project managers need to take a holistic view of a project and understand how it relates to the larger organization. Systems thinking describes this holistic view of carrying out projects within the context of the organization.

What Is a Systems Approach? The term systems approach emerged in the 1950s to describe a holistic and analytical approach to solving complex problems that includes using a systems philosophy, systems analysis, and systems management. A systems philosophy is an overall model for thinking about things as systems. Systems are sets of interacting components working within an envi- ronment to fulfill some purpose. For example, the human body is a system composed of many subsystems the nervous system, the skeletal system, the circulatory system, the digestive system, and so on. Systems analysis is a problem-solving approach that requires defining the scope of the system, dividing it into its components, and then identifying and evaluating its problems, opportunities, constraints, and needs. Once this is completed, the systems ana- lyst then examines alternative solutions for improving the current situation, identifies an optimum, or at least satisfactory, solution or action plan, and examines that plan against the entire system. Systems management addresses the business, technological, and organiza- tional issues associated with creating, maintaining, and making changes to a system.

Using a systems approach is critical to successful project management. Top manage- ment and project managers must follow a systems philosophy to understand how projects relate to the whole organization. They must use systems analysis to address needs with a problem-solving approach. They must use systems management to identify key business, technological, and organizational issues related to each project in order to identify and satisfy key stakeholders and do what is best for the entire organization.

In the opening case, when Tom Walters planned the laptop project, he did not use a sys- tems approach. Members of his IT department did all of the planning. Even though Tom sent an e-mail describing the laptop project to all faculty and staff, he did not address many of the organizational issues involved in such a complex project. Most faculty and staff are very busy at the beginning of fall term and many may not have read the entire message. Others may have been too busy to communicate their concerns to the Information Technology depart- ment. Tom was unaware of the effects the laptop project would have on other parts of the college. He did not clearly define the business, technological, and organizational issues asso- ciated with the project. Tom and the Information Technology department began work on the laptop project in isolation. If they had taken a systems approach, considering other dimen- sions of the project, and involving key stakeholders, they could have identified and addressed many of the issues raised at the February faculty meeting before the meeting.

The Three-Sphere Model for Systems Management Many business and information technology students understand the concepts of systems and performing a systems analysis. However, they often gloss over the topic of systems management. The simple idea of addressing the three spheres of systems management business, organization, and technology can have a huge impact on selecting and managing projects successfully.

Figure 2-1 provides a sample of some of the business, organizational, and technological issues that could be factors in the laptop project. In this case, technological issues, though

45

The Project Management and Information Technology Context

not simple by any means, are probably the least difficult to identify and resolve. However, projects must address issues in all three spheres of the systems management model. Although it is easier to focus on the immediate and sometimes narrow concerns of a partic- ular project, project managers and other staff must keep in mind the effects of any project on the interests and needs of the entire system or organization.

Many information technology professionals become captivated with the technology and day-to-day problem solving involved in working with information systems. They tend to become frustrated with many of the people problems or politics involved in most organiza- tions. In addition, many information technology professionals ignore important business issues such as, Does it make financial sense to pursue this new technology? or, Should the company develop this software in-house or purchase it off-the-shelf? Using a more holis- tic approach helps project managers integrate business and organizational issues into their planning. It also helps them look at projects as a series of interrelated phases. When you inte- grate business and organizational issues into project management planning and look at pro- jects as a series of interrelated phases, you do a better job of ensuring project success.

Business

Organization Technology

•What will the laptop project cost the college?

•What will it cost students?

•What will support costs be?

•What will the impact be on enrollments?

•Will the laptop project affect all students, just traditional students, or only certain majors?

•How will the project affect students who already have PCs or laptops?

•Who will train students, faculty, and staff?

•Who will administer and support training?

•Should the laptops use Macintosh, Windows, or both types of operating systems?

•What applications software will be loaded?

•What will the hardware specifications be?

•How will the hardware impact LAN and Internet access?

FIGURE 2-1 Three-sphere model for systems management

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Chapter 2

U N D E R S T A N D I N G O R G A N I Z A T I O N S

The systems approach requires that project managers always view their projects in the con- text of the larger organization. Organizational issues are often the most difficult part of working on and managing projects. For example, many people believe that most projects fail because of company politics. Project managers often do not spend enough time identify- ing all the stakeholders involved in projects, especially the people opposed to the projects. In fact, the latest edition of the PMBOK® Guide added a new initiating process under proj- ect communications management called identify stakeholders. (See Chapter 10 for more information.) Project managers also often do not spend enough time considering the politi- cal context of a project or the culture of the organization. To improve the success rate of information technology projects, it is important for project managers to develop a better understanding of people as well as organizations.

The Four Frames of Organizations Organizations can be viewed as having four different frames: structural, human resources, political, and symbolic:1

The structural frame deals with how the organization is structured (usually depicted in an organizational chart) and focuses on different groups roles and responsibilities in order to meet the goals and policies set by top management. This frame is very rational and focuses on coordination and control. For exam- ple, within the structural frame, a key information technology issue is whether a company should centralize the information technology personnel in one department or decentralize across several departments. You will learn more about organizational structures in the next section. The human resources (HR) frame focuses on producing harmony between the needs of the organization and the needs of the people. It recognizes that there are often mismatches between the needs of the organization and the needs of individuals and groups and works to resolve any potential problems. For example, many projects might be more efficient for the organization if per- sonnel worked 80 or more hours a week for several months. This work sched- ule would probably conflict with the personal lives of those people. Important issues in information technology related to the human resources frame are the shortage of skilled information technology workers within the organization and unrealistic schedules imposed on many projects. The political frame addresses organizational and personal politics. Politics in organizations take the form of competition among groups or individuals for power and leadership. The political frame assumes that organizations are coalitions com- posed of varied individuals and interest groups. Often, important decisions need to be made based on the allocation of scarce resources. Competition for scarce resources makes conflict a central issue in organizations, and power improves the ability to obtain scarce resources. Project managers must pay attention to politics and power if they are to be effective. It is important to know who opposes your projects as well as who supports them. Important issues in information technology related to the political frame are the power shifts from central functions to operat- ing units or from functional managers to project managers.

47

The Project Management and Information Technology Context

The symbolic frame focuses on symbols and meanings. What is most impor- tant about any event in an organization is not what actually happened, but what it means. Was it a good sign that the CEO came to a kickoff meeting for a project, or was it a threat? The symbolic frame also relates to the company s culture. How do people dress? How many hours do they work? How do they run meetings? Many information technology projects are international and include stakeholders from various cultures. Understanding those cultures is also a crucial part of the symbolic frame.

W H A T W E N T W R O N G ?

Several large organizations have installed or tried to install enterprise resource planning (ERP) systems to integrate business functions such as ordering, inventory, delivery, accounting, and human resource management. They understand the potential benefits of an ERP system and can analyze its various technical issues, but many companies do not realize how important the organizational issues are to ERP implementations.

For example, in early 2001, Sobey s, Canada s second largest grocery store chain with 1,400 stores, abandoned its two-year, $90 million investment in an ERP system. The sys- tem was developed by SAP, the largest enterprise software company and the third-largest software supplier. Unfortunately, the system did not work properly due to several organiza- tional challenges. People in different parts of the company had different terms for various items, and it was difficult to make the necessary decisions for the ERP system. Also, no one wanted to take the time required to get the new system to work because they had their dai- ly work to do. Every department has to work together to implement an ERP system, and it is often difficult to get departments to communicate their needs. As Dalhousie University Associate Professor Sunny Marche states, The problem of building an integrated system that can accommodate different people is a very serious challenge. You can t divorce tech- nology from the sociocultural issues. They have an equal role. Sobey s ERP system shut down for five days and employees were scrambling to stock potentially empty shelves in several stores for weeks. The system failure cost Sobey s more than $90 million and caused shareholders to take an 82-cent after-tax hit per share.2

Project managers must learn to work within all four organizational frames to function well in organizations. Chapter 9, Project Human Resource Management, and Chapter 10, Project Communications Management, further develop some of the organizational issues. The following sections on organizational structures, organizational culture, stakeholder management, and the need for top management commitment provide additional informa- tion related to the structural and political frames.

Organizational Structures Many discussions of organizations focus on organizational structure. Three general classifi- cations of organizational structures are functional, project, and matrix. Most companies today involve all three structures somewhere in the organization, but one is usually most common. Figure 2-2 portrays these three organizational structures. A functional organiza- tional structure is the hierarchy most people think of when picturing an organizational

48

Chapter 2

chart. Functional managers or vice presidents in specialties such as engineering, manufacturing, information technology, and human resources report to the chief executive officer (CEO). Their staffs have specialized skills in their respective disciplines. For exam- ple, most colleges and universities have very strong functional organizations. Only faculty in the business department teach business courses; faculty in the history department teach history; faculty in the art department teach art, and so on.

A project organizational structure also has a hierarchical structure, but instead of functional managers or vice presidents reporting to the CEO, program managers report to the CEO. Their staffs have a variety of skills needed to complete the projects within their programs. An organization that uses this structure earns their revenue primarily from per- forming projects for other groups under contract. For example, many defense, architectur- al, engineering, and consulting companies use a project organizational structure. These companies often hire people specifically to work on particular projects.

VP Engineering VP Manufacturing VP IT VP HR

CEO

Staff Staff Staff Staff

Functional

Program Manager A

CEO

Staff Staff Staff

Project

Program Managers

CEO

Staff Staff Staff

Matrix

VP Engineering VP HR

Staff

VP Manufacturing

Staff

VP IT

Project Manager A: 2 engineering 1/2 HR1 manufacturing 31/2 IT

Project Manager B: 5 engineering 1 HR3 manufacturing 10 IT

Project Manager C: 1 engineering 1/10 HR0 manufacturing 4 IT

Program Manager B Program Manager C

FIGURE 2-2 Functional, project, and matrix organizational structures

49

The Project Management and Information Technology Context

A matrix organizational structure represents the middle ground between functional and project structures. Personnel often report to both a functional manager and one or more project managers. For example, information technology personnel at many compa- nies often split their time between two or more projects, but they report to their manager in the information technology department. Project managers in matrix organizations have staff from various functional areas working on their projects, as shown in Figure 2-2. Matrix organizational structures can be strong, weak, or balanced, based on the amount of control exerted by the project managers.

Table 2-1 summarizes how organizational structures influence projects and project managers, based on information from several versions of the PMBOK® Guide. Project man- agers have the most authority in a pure project organizational structure and the least amount of authority in a pure functional organizational structure. It is important that proj- ect managers understand the current organizational structure under which they are work- ing. For example, if someone in a functional organization is asked to lead a project that requires strong support from several different functional areas, he or she should ask for top management sponsorship. This sponsor should solicit support from all relevant functional managers to ensure that they cooperate on the project and that qualified people are

TABLE 2-1 Organizational structure influences on projects

Project Characteristics

Organizational Structure Type

Functional Matrix Project

Weak Matrix Balanced Matrix

Strong Matrix

Project manager s authority

Little or none

Limited Low to Moderate

Moderate to High

High to almost total

Percent of organiza- tion s personnel assigned full-time to project work

Virtually none

0 25% 15 60% 50 95% 85 100%

Who controls the project budget

Functional manager

Functional manager

Mixed Project manager

Project manager

Project manager s role

Part-time Part-time Full-time Full-time Full-time

Common title for project manager s role

Project Coor- dinator/ Proj- ect Leader

Project Coor- dinator/ Proj- ect Leader

Project Manager/ Project Officer

Project Manager / Program Manager

Project Manager/ Program Manager

Project management administrative staff

Part-time Part-time Part-time Full-time Full-time

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Chapter 2

available to work as needed. The project manager might also ask for a separate budget to pay for project-related trips, meetings, and training or to provide financial incentives to the people supporting the project.

Even though project managers have the most authority in the project organizational structure, this type of organization is often inefficient for the company as a whole. Assigning staff full-time to the project often creates underutilization and/or misallocation of staff resources. For example, if a technical writer is assigned full-time to a project, but there is no work for him or her on a particular day, the organization is wasting money by paying that person a full-time wage. Project organizations may also miss economies of scale avail- able through the pooling of requests for materials with other projects.

Disadvantages such as these illustrate the benefit of using a systems approach to man- aging projects. For example, the project manager might suggest hiring an independent contractor to do the technical writing work instead of using a full-time employee. This approach would save the organization money while still meeting the needs of the project. When project managers use a systems approach, they are better able to make decisions that address the needs of the entire organization.

Organizational Culture Just as an organization s structure affects its ability to manage projects, so does an organiza- tion s culture. Organizational culture is a set of shared assumptions, values, and behaviors that characterize the functioning of an organization. It often includes elements of all four frames described previously. Organizational culture is very powerful, and many people believe the underlying causes of many companies problems are not in the organizational structure or staff; they are in the culture. It is also important to note that the same organi- zation can have different subcultures. The information technology department may have a different organizational culture than the finance department, for example. Some organiza- tional cultures make it easier to manage projects.

According to Stephen P. Robbins and Timothy Judge, authors of a popular textbook on organizational behavior, there are ten characteristics of organizational culture:

1. Member identity: The degree to which employees identify with the organiza- tion as a whole rather than with their type of job or profession. For example, a project manager or team member might feel more dedicated to his or her company or project team than to their job or profession, or they might not have any loyalty to a particular company or team. As you can guess, an organi- zational culture where employees identify more with the whole organization are more conducive to a good project culture.

2. Group emphasis: The degree to which work activities are organized around groups or teams, rather than individuals. An organizational culture that emphasizes group work is best for managing projects.

3. People focus: The degree to which management s decisions take into account the effect of outcomes on people within the organization. A project manager might assign tasks to certain people without considering their individual needs, or the project manager might know each person very well and focus on individ- ual needs when assigning work or making other decisions. Good project man- agers often balance the needs of individuals and the organization.

51

The Project Management and Information Technology Context

4. Unit integration: The degree to which units or departments within an organi- zation are encouraged to coordinate with each other. Most project managers strive for strong unit integration to deliver a successful product, service, or result. An organizational culture with strong unit integration makes the project manager s job easier.

5. Control: The degree to which rules, policies, and direct supervision are used to oversee and control employee behavior. Experienced project managers know it is often best to balance the degree of control to get good project results.

6. Risk tolerance: The degree to which employees are encouraged to be aggres- sive, innovative, and risk seeking. An organizational culture with a higher risk tolerance is often best for project management since projects often involve new technologies, ideas, and processes.

7. Reward criteria: The degree to which rewards, such as promotions and salary increases, are allocated according to employee performance rather than senior- ity, favoritism, or other nonperformance factors. Project managers and their teams often perform best when rewards are based mostly on performance.

8. Conflict tolerance: The degree to which employees are encouraged to air con- flicts and criticism openly. It is very important for all project stakeholders to have good communications, so it is best to work in an organization where people feel comfortable discussing conflict openly.

9. Means-ends orientation: The degree to which management focuses on out- comes rather than on techniques and processes used to achieve results. An orga- nization with a balanced approach in this area is often best for project work.

10. Open-systems focus: The degree to which the organization monitors and responds to changes in the external environment. As discussed earlier in this chapter, projects are part of a larger organizational environment, so it is best to have a strong open-systems focus.3

As you can see, there is a definite relationship between organizational culture and suc- cessful project management. Project work is most successful in an organizational culture where employees identify more with the organization, where work activities emphasize groups, and where there is strong unit integration, high risk tolerance, performance-based rewards, high conflict tolerance, an open-systems focus, and a balanced focus on people, control, and means orientation.

S T A K E H O L D E R M A N A G E M E N T

Recall from Chapter 1 that project stakeholders are the people involved in or affected by proj- ect activities. Stakeholders can be internal to the organization, external to the organization, directly involved in the project, or simply affected by the project. Internal project stake- holders generally include the project sponsor, project team, support staff, and internal custo- mers for the project. Other internal stakeholders include top management, other functional managers, and other project managers. Since organizations have limited resources, projects affect top management, other functional managers, and other project managers by using some of the organization s limited resources. Thus, while additional internal stakeholders may not be directly involved in the project, they are still stakeholders because the project

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Chapter 2

affects them in some way. External project stakeholders include the project s customers (if they are external to the organization), competitors, suppliers, and other external groups potentially involved in or affected by the project, such as government officials or concerned citizens. Since the purpose of project management is to meet project requirements and satis- fy stakeholders, it is critical that project managers take adequate time to identify, under- stand, and manage relationships with all project stakeholders. Using the four frames of organizations to think about project stakeholders can help you meet their expectations.

Consider again the laptop project from the opening case. Tom Walters seemed to focus on just a few internal project stakeholders. He viewed only part of the structural frame of the college. Since his department would do most of the work in administering the laptop project, he concentrated on those stakeholders. Tom did not even involve the main custo- mers for this project the students at the college. Even though Tom sent an e-mail to facul- ty and staff, he did not hold meetings with senior administration or faculty at the college. Tom s view of who the stakeholders were for the laptop project was very limited.

During the faculty meeting, it became evident that the laptop project had many stake- holders in addition to the Information Technology department and students. If Tom had expanded his view of the structural frame of his organization by reviewing an organizational chart for the entire college, he could have identified other key stakeholders. He would have been able to see that the laptop project would affect academic department heads and mem- bers of different administrative areas. If Tom had focused on the human resources frame, he would have been able to tap his knowledge of the college and identify individuals who would most support or oppose requiring laptops. By using the political frame, Tom could have considered the main interest groups that would be most affected by this project s out- come. Had he used the symbolic frame, Tom could have tried to address what moving to a laptop environment would really mean for the college. He then could have anticipated some of the opposition from people who were not in favor of increasing the use of technology on campus. He also could have solicited a strong endorsement from the college president or dean before talking at the faculty meeting.

Tom Walters, like many new project managers, learned the hard way that his technical and analytical skills were not enough to guarantee success in project management. To be more effective, he had to identify and address the needs of different stakeholders and understand how his project related to the entire organization.

M E D I A S N A P S H O T

The New York Times reported that the project to rebuild Ground Zero in New York City is having severe problems. Imagine all of the stakeholders involved in this huge, highly emotional project. A 34-page report (see the article reference for further information) describes the many challenges faced in the reconstruction of the former World Trade Cen- ter site nearly seven years after the terrorist attack of September 11, 2001. The report listed at least 15 fundamental unresolved issues, including the lack of final designs for the proposed World Trade Center Transportation Hub; the unfinished decontamination and

continued

53

The Project Management and Information Technology Context

dismantling of the former Deutsche Bank tower; and the resolution of a land-rights issue with the St. Nicholas Greek Orthodox Church.

Perhaps most pressingly, the report identified a need for a more efficient, centralized decision-making structure a steering committee with authority to make final decisions on matters which fundamentally drive schedule and cost. 4 The What Went Right? example later in this chapter describes the benefits of having an executive steering committee to help projects succeed, especially when there are many stakeholders and challenges involved.

The Importance of Top Management Commitment People in top management positions, of course, are key stakeholders in projects. A very important factor in helping project managers successfully lead projects is the level of com- mitment and support they receive from top management. Without top management com- mitment, many projects will fail. Some projects have a senior manager called a champion who acts as a key proponent for a project. The sponsor can serve as the champion, but often another manager can more successfully take on this role. As described earlier, projects are part of the larger organizational environment, and many factors that might affect a project are out of the project manager s control. Several studies cite executive support as one of the key factors associated with virtually all project success.

Top management commitment is crucial to project managers for the following reasons:

Project managers need adequate resources. The best way to kill a project is to withhold the required money, human resources, and visibility for the proj- ect. If project managers have top management commitment, they will also have adequate resources and not be distracted by events that do not affect their specific projects. Project managers often require approval for unique project needs in a timely manner. For example, on large information technology projects, top manage- ment must understand that unexpected problems may result from the nature of the products being produced and the specific skills of the people on the proj- ect team. For example, the team might need additional hardware and software halfway through the project for proper testing, or the project manager might need to offer special pay and benefits to attract and retain key project person- nel. With top management commitment, project managers can meet these specific needs in a timely manner. Project managers must have cooperation from people in other parts of the orga- nization. Since most information technology projects cut across functional areas, top management must help project managers deal with the political issues that often arise in these types of situations. If certain functional managers are not responding to project managers requests for necessary information, top management must step in to encourage functional managers to cooperate. Project managers often need someone to mentor and coach them on leadership issues. Many information technology project managers come from technical positions and are inexperienced as managers. Senior managers should take the time to pass on advice on how to be good leaders. They should encourage new

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Chapter 2

project managers to take classes to develop leadership skills and allocate the time and funds for them to do so.

Information technology project managers work best in an environment in which top management values information technology. Working in an organization that values good project management and sets standards for its use also helps project managers succeed.

B E S T P R A C T I C E

A major element of good practice concerns IT governance, which addresses the authority and control for key IT activities in organizations, including IT infrastructure, IT use, and project management. (The term project governance can also used to describe a uniform method of controlling all types of projects.) The IT Governance Institute (ITGI) was estab- lished in 1998 to advance international thinking and standards in directing and controlling an organization s use of technology. Effective IT governance helps ensure that IT supports business goals, maximizes investment in IT, and addresses IT-related risks and opportu- nities. A 2004 book by Peter Weill and Jeanne Ross called IT Governance: How Top Perfor- mers Manage IT Decision Rights for Superior Results5 includes research stating that firms with superior IT governance systems have 20 percent higher profits than firms with poor governance. (See the ITGI s Web site www.itgi.org for more information, including many case studies and best practices in this area.)

A lack of IT governance can be dangerous, as evidenced by three well-publicized IT project failures in Australia Sydney Water s customer relationship management system, the Royal Melbourne Institute of Technology s academic management system, and One.Tel s billing system. Researchers explained how these projects were catastrophic for their organizations, primarily due to a severe lack of IT governance, which the authors dubbed managerial IT unconsciousness, the title of their article.

All three projects suffered from poor IT governance. Senior management in all three organizations had not ensured that prudent checks and balances were in place to enable them to monitor either the progress of the projects or the alignment and impact of the new systems on their business. Proper governance, particularly with respect to financial matters, auditing, and contract management, was not evident. Also, project-level planning and control were notably absent or inadequate with the result that project status reports to management were unrealistic, inaccurate, and misleading. 6

The Need for Organizational Commitment to Information Technology Another factor affecting the success of information technology projects is the organization s commitment to information technology in general. It is very difficult for a large information technology project (or a small one, for that matter) to be successful if the organization itself does not value information technology. Many companies have realized that information technology is integral to their business and have created a vice president or equivalent-level position for the head of information technology, often called the Chief Information Officer (CIO). Some companies assign people from non-information technology areas to work on

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large projects full-time to increase involvement from end users of the systems. Some CEOs even take a strong leadership role in promoting the use of information technology in their organizations.

Gartner, Inc., a well-respected information technology consulting firm, provides awards to organizations for excellence in applying various technologies. For example, in 2006, Gartner announced the winners of its eighth annual Customer Relationship Management (CRM) Excellence Awards. BNSF Railway received the award in the Excellence in Enter- prise CRM category, and UnitedHealth Group received the award in the Excellence in Sales, Marketing or Customer Service category. (Electronic Arts, an independent producer of electronic games, won the award in 2007.) The 2006 award winners had the following to say:

Elizabeth Obermiller, director of ERM systems for BNSF Railway: Our success was driven by the ongoing executive commitment and passionate and talented teams, who were able to implement a planned and phased approach with advanced application of analytics to monitor, measure and drive success. John Reinke, a senior vice president of Uniprise, a UnitedHealth Group: We are excited to receive this award for our partnership with eLoyalty to imple- ment a new, cutting-edge call center technology application called Behavioral Analytics . This technology allows us to engage in deeper, more personally relevant phone conversations with each consumer who speaks with a customer care professional. Health care consumers often face complex and emotional issues, and this is a great example of how technology can help improve their experience. 7

The Need for Organizational Standards Another problem in most organizations is not having standards or guidelines to follow that could help in performing project management. These standards or guidelines might be as simple as providing standard forms or templates for common project documents, examples of good project management plans, or guidelines on how the project manager should pro- vide status information to top management. The content of a project management plan and how to provide status information might seem like common sense to senior managers, but many new information technology project managers have never created plans or given a non-technical status report. Top management must support the development of these stan- dards and guidelines and encourage or even enforce their use. For example, an organization might require all potential project information in a standard format to make project portfo- lio management decisions. If a project manager does not submit a potential project in the proper format, it could be rejected.

As described in Chapter 1, some organizations invest heavily in project management by creating a project management office or center of excellence, an organizational entity created to Help project managers in achieving project goals and maintaining project gover- nance. Rachel Hollstadt, founder and CEO of a project management consulting firm, sug- gests that organizations consider adding a new position, a Chief Project Officer (CPO). Some organizations develop career paths for project managers. Some require that all proj- ect managers have Project Management Professional (PMP) certification and that all

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employees have some type of project management training. The implementation of all of these standards demonstrates an organization s commitment to project management.

P R O J E C T P H A S E S A N D T H E P R O J E C T L I F E C Y C L E

Since projects operate as part of a system and involve uncertainty, it is good practice to divide projects into several phases. A project life cycle is a collection of project phases. Some organizations specify a set of life cycles for use on all of their projects, while others follow common industry practices based on the types of projects involved. In general, proj- ect life cycles define what work will be performed in each phase, what deliverables will be produced and when, who is involved in each phase, and how management will control and approve work produced in each phase. A deliverable is a product or service, such as a tech- nical report, a training session, a piece of hardware, or a segment of software code, pro- duced or provided as part of a project. (See Chapter 5, Project Scope Management, for detailed information on deliverables.)

In early phases of a project life cycle, resource needs are usually lowest and the level of uncertainty is highest. Project stakeholders have the greatest opportunity to influence the final characteristics of the project s products, services, or results during the early phases of a project life cycle. It is much more expensive to make major changes to a project during latter phases. During the middle phases of a project life cycle, the certainty of com- pleting a project improves as a project continues, more information is known about the project requirements and objectives, and more resources are usually needed than during the initial or final phase. The final phase of a project focuses on ensuring that project requirements were met and that the project sponsor approves completion of the project.

Project phases vary by project or industry, but some general phases in traditional proj- ect management are often called the concept, development, implementation, and close-out phases. The PMBOK Guide®, Fourth Edition calls these phases starting the project, organiz- ing and preparing, carrying out the project work, and finishing the project. These phases should not be confused with the project management process groups of initiating, planning, executing, monitoring and controlling, and closing, as described in Chapter 3. The first two traditional project phases (concept and development) focus on planning and are often referred to as project feasibility. The last two phases (implementation and close-out) focus on delivering the actual work and are often referred to as project acquisition. A project should successfully complete each phase before moving on to the next. This project life cycle approach provides better management control and appropriate links to the ongoing operations of the organization.

Figure 2-3 provides a summary framework for the general phases of the traditional proj- ect life cycle. In the concept phase of a project, managers usually develop some type of busi- ness case, which describes the need for the project and basic underlying concepts. A preliminary or rough cost estimate is developed in this first phase, and an overview of the work involved is created. A work breakdown structure (WBS) outlines project work by decomposing the work activities into different levels of tasks. The WBS is a deliverable- oriented document that defines the total scope of the project. (You will learn more about the work breakdown structure in Chapter 5, Project Scope Management.) For example, if Tom

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Walters (from the opening case) had followed the project life cycle instead of moving full- steam ahead with the laptop project, he could have created a committee of faculty and staff to study the concept of increasing the use of technology on campus. This committee might have developed a business case and plan that included an initial, smaller project to investi- gate alternative ways of increasing the use of technology. They might have estimated that it would take six months and $20,000 to conduct a detailed technology study. The WBS at this phase of the study might have three levels and partition the work to include a competitive analysis of what five similar campuses were doing, a survey of local students, staff, and faculty, and a rough assessment of how using more technology would affect costs and enroll- ments. At the end of the concept phase, the committee would be able to deliver a report and presentation on its findings. The report and presentation would be an example of a deliverable.

After the concept phase is completed, the next project phase development begins. In the development phase, the project team creates more detailed project management plans, a more accurate cost estimate, and a more thorough WBS. In the example under dis- cussion, suppose the concept phase report suggested that requiring students to have laptops was one means of increasing the use of technology on campus. The project team could then further expand this idea in the development phase. They would have to decide if students would purchase or lease the laptops, what type of hardware and software the laptops would require, how much to charge students, how to handle training and maintenance, how to integrate the use of the new technology with current courses, and so on. If, however, the concept phase report showed that the laptop idea was not a good idea for the college, then the project team would no longer consider increasing the use of technology by requiring laptops in the development phase and would cancel the project before development. This phased approach minimizes the time and money spent developing inappropriate projects. A project idea must pass the concept phase before evolving into the development phase.

The third phase of the traditional project life cycle is implementation. In this phase, the project team creates a definitive or very accurate cost estimate, delivers the required work, and provides performance reports to stakeholders. Suppose Tom Walters college took the

Project Feasibility Project Acquisition

Business case

Preliminary cost estimate

2-level WBS

Project management plan

Budgetary cost estimate

3+-level WBS

Last work package

Definitive cost estimate

Performance reports

Completed work

Lessons learned

Customer acceptance

Concept Development Implementation Close-out

Sample deliverables for each phase

FIGURE 2-3 Phases of the traditional project life cycle

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idea of requiring students to have laptops through the development phase. During the implementation phase, the project team would need to obtain the required hardware and software, install the necessary network equipment, deliver the laptops to the students, cre- ate a process for collecting fees, provide training to students, faculty, and staff, and so on. Other people on campus would also be involved in the implementation phase. Faculty would need to consider how best to take advantage of the new technology. The recruiting staff would have to update their materials to reflect this new feature of the college. Security would need to address new problems that might result from having students carry around expensive equipment. The project team usually spends the bulk of their efforts and money during the implementation phase of projects.

The last phase of the traditional project life cycle is close-out. In the close-out phase, all of the work is completed, and there should be some sort of customer acceptance of the entire project. The project team should document its experiences on the project in a les- sons-learned report. If the laptop idea made it all the way through the implementation phase and all students received laptops, the project team would then complete the project by closing out any related activities. Team members might administer a survey to students, faculty, and staff in order to gather opinions on how the project fared. They would ensure that any contracts with suppliers were completed and appropriate payments made. They would transition future work related to the laptop project to other parts of the organization. The project team could also share its lessons-learned report with other college campuses that are considering implementing a similar program.

Many projects, however, do not follow this traditional project life cycle. They still have general phases with some similar characteristics as the traditional project life cycle, but they are much more flexible. For example, there may be just three phases, the initial, inter- mediate, and final phase. Or there may be multiple intermediate phases. There might be a separate project just to complete a feasibility study. Regardless of the project life cycle s specific phases, it is good practice to think of projects as having phases that connect the beginning and the end of the project, so that people can measure progress toward achieving project goals during each phase.

Just as a project has a life cycle, so does a product. Information technology projects help produce products and services such as new software, hardware, networks, research reports, and training on new systems. Understanding the product life cycle is just as important to good project management as understanding the phases of the traditional project life cycle.

Product Life Cycles Recall from Chapter 1 that a project is defined as a temporary endeavor undertaken to cre- ate a unique product, service, or result, and a program is defined as a group of projects managed in a coordinated way. A program often refers to the creation of a product, like an automobile or a new operating system. Therefore, developing a product often involves many projects.

All products follow some type of life cycle cars, buildings, even amusement parks. The Walt Disney Company, for example, follows a rigorous process to design, build, and test new products. They assign project managers to oversee the development of all new products, such as rides, parks, and cruise lines. Likewise, major automotive companies follow product life cycles to produce new cars, trucks, and other products. Most information technology

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professionals are familiar with the concept of a product life cycle, especially for developing software.

Software development projects are one subset of information technology projects. Many information technology projects involve researching, analyzing, and then purchasing and installing new hardware and software with little or no actual software development required. However, some projects involve minor software modifications to enhance existing software or to integrate one application with another. Other projects involve a major amount of software development. Many argue that developing software requires project managers to modify traditional project management methods, depending on a particular product s life cycle.

A systems development life cycle (SDLC) is a framework for describing the phases involved in developing information systems. Some popular models of an SDLC include the waterfall model, the spiral model, the incremental build model, the prototyping model, and the Rapid Application Development (RAD) model. These life cycle models are examples of a predictive life cycle, meaning that the scope of the project can be clearly articulated and the schedule and cost can be accurately predicted. The project team spends a large portion of the project effort attempting to clarify the requirements of the entire system and then producing a design. Users are often unable to see any tangible results in terms of working software for an extended period. Below are brief descriptions of several predictive SDLC models.8

The waterfall life cycle model has well-defined, linear stages of systems analy- sis, design, construction, testing, and support. This life cycle model assumes that requirements will remain stable after they are defined. The spiral life cycle model was developed based on experience with various refinements of the waterfall model as applied to large government software pro- jects. It recognizes the fact that most software is developed using an iterative or spiral approach rather than a linear approach. The incremental build life cycle model provides for progressive development of operational software, with each release providing added capabilities. The prototyping life cycle model is used for developing software prototypes to clarify user requirements for operational software. It requires heavy user involvement, and developers use a model to generate functional requirements and physical design specifications simultaneously. Developers can throw away or keep prototypes, depending on the project. The RAD life cycle model uses an approach in which developers work with an evolving prototype. This life cycle model also requires heavy user involvement and helps produce systems quickly without sacrificing quality. Developers use RAD tools such as CASE (computer-aided software engineering), JRP (joint requirements planning), and JAD (joint application design) to facilitate rapid prototyping and code generation.

In contrast to the predictive life cycle models, the Adaptive Software Development (ASD) life cycle model assumes that software development follows an adaptive approach because the requirements cannot be clearly expressed early in the life cycle. An adaptive approach is also used to provide more freedom than the prescriptive approaches. It allows the development to proceed by creating components that provide the functionality speci- fied by the business group as these needs are discovered in a more free-form approach.

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Important attributes of this approach are that the projects are mission driven and compo- nent based, using time-based cycles to meet target dates. Requirements are developed using an iterative approach, and development is risk driven and change tolerant to address and incorporate rather than mitigate risks. More recently, the term agile software develop- ment has become popular to describe new approaches that focus on close collaboration between programming teams and business experts. (See the companion Web site for the Suggested Readings related to agile and other software development methodologies.)

These life cycle models are all examples of SDLCs. Many Web sites and introductory management information systems texts describe each of them in detail. The type of soft- ware and complexity of the information system in development determines which life cycle model to use. It is important to understand the product life cycle to meet the needs of the project environment.

Most large information technology products are developed as a series of projects. For example, the systems planning phase for a new information system can include a project to hire an outside consulting firm to help identify and evaluate potential strategies for devel- oping a particular business application, such as a new order processing system or general ledger system. It can also include a project to develop, administer, and evaluate a survey of users to get their opinions on the current information systems used for performing that business function in the organization. The systems analysis phase might include a project to create process models for certain business functions in the organization. It can also include a project to create data models of existing databases in the company related to the business function and application. The implementation phase might include a project to hire contract programmers to code a part of the system. The close-out phase might include a project to develop and run several training sessions for users of the new application. All of these examples show that large information technology projects are usually composed of several smaller projects. It is often good practice to view large projects as a series of smal- ler, more manageable ones, especially when there is a lot of uncertainty involved. Success- fully completing one small project at a time will help the project team succeed in completing the larger project.

Because some aspects of project management need to occur during each phase of the product life cycle, it is critical for information technology professionals to understand and practice good project management throughout the product life cycle.

The Importance of Project Phases and Management Reviews Due to the complexity and importance of many information technology projects and their resulting products, it is important to take time to review the status of a project at each phase. A project should successfully pass through each of the main project or product phases before continuing to the next. Since the organization usually commits more money as a project continues, a management review should occur after each phase to evaluate progress, potential success, and continued compatibility with organizational goals. These management reviews, called phase exits or kill points, are very important for keeping pro- jects on track and determining if they should be continued, redirected, or terminated. Recall that projects are just one part of the entire system of an organization. Changes in other parts of the organization might affect a project s status, and a project s status might likewise affect what is happening in other parts of the organization. By breaking projects

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into phases, top management can make sure that the projects are still compatible with the needs of the rest of the organization.

Let s take another look at the opening case. Suppose Tom Walters college did a study on increasing the use of technology that was sponsored by the college president. At the end of the concept phase, the project team could have presented information to the faculty, president, and other staff members that described different options for increasing the use of technology, an analysis of what competing colleges were doing, and results of a survey of local stakeholders opinions on the subject. This presentation at the end of the concept phase represents one form of a management review. Suppose the study reported that 90 percent of students, faculty, and staff surveyed strongly opposed the idea of requiring all students to have laptops and that many adult students said they would attend other colleges if they were required to pay for the additional technology. The college would probably decide not to pursue this idea any further. Had Tom taken a phased approach, he and his staff would not have wasted the time and money it took to develop detailed plans.

In addition to formal management reviews, it is important to have top management involvement throughout the life cycle of most projects. It is unwise to wait for the end of project or product phases to have management inputs. Many projects are reviewed by man- agement on a regular basis, such as weekly or even daily, to make sure they are progressing well. Everyone wants to be successful in accomplishing goals at work, and having manage- ment involvement ensures that they are on track in accomplishing both project and organi- zational goals.

W H A T W E N T R I G H T ?

Having specific deliverables and kill points at the end of project or product phases helps managers make better decisions about whether to proceed, redefine, or kill a project. Improvement in information technology project success rates reported by the Standish Group has been due, in part, to an increased ability to know when to cancel failing projects. Standish Group Chairman Jim Johnson made the following observation: The real improve- ment that I saw was in our ability to in the words of Thomas Edison know when to stop beating a dead horse . . .. Edison s key to success was that he failed fairly often; but as he said, he could recognize a dead horse before it started to smell . . .. In information technolo- gy we ride dead horses failing projects a long time before we give up. But what we are seeing now is that we are able to get off them; able to reduce cost overrun and time over- run. That s where the major impact came on the success rate. 9

Another example of the power of management oversight comes from Huntington Banc- shares, Inc. This company, like many others, had an executive steering committee, a group of senior executives from various parts of the organization who regularly reviewed important corporate projects and issues. This Ohio-based, $26 billion bank holding compa- ny completed a year-long Web site redesign effort using XML technology to give its online customers access to real-time account information as well as other banking services. The CIO, Joe Gottron, said there were four or five very intense moments when the whole project was almost stopped due to its complexity. An executive steering committee met

continued

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weekly to review the project s progress and discuss work planned for the following week. Gottron said the meetings ensured that if we were missing a beat on the project, no matter which company [was responsible], we were on top of it and adding additional resources to make up for it. 10

Managers in the motorcycle industry now understand the importance of overseeing their IT projects. Harley-Davidson Motor Company used to focus only on producing and selling high-quality motorcycles. In 2003, however, management realized that it had to improve its IT operations and control to stay in business and adhere to new government laws such as the accounting reporting regulations of Sarbanes-Oxley. Harley-Davidson had no standardized processes for user access, change management, or backup and recovery at that time. Although complying with Sarbanes-Oxley was going to be a challenge, the company took strong action, utilized COBIT (Control Objectives for Information and relat- ed Technology) and passed Sarbanes-Oxley year one compliance . . .. One of the major ben- efits of using COBIT as its overall internal control and compliance model was getting everyone especially non-technical motorcycle experts revved up about control activities and why controls are important.11

T H E C O N T E X T O F I N F O R M A T I O N T E C H N O L O G Y P R O J E C T S

As described earlier, software development projects can follow several different product life cycles based on the project context. There are several other issues related to managing information technology projects. This section highlights some of the issues unique to the information technology industry that affect project management, including the nature of projects, the characteristics of project team members, and the diverse nature of technolo- gies involved.

The Nature of Information Technology Projects Unlike projects in many other industries, projects labeled as information technology pro- jects can be very diverse. Some involve a small number of people installing off-the-shelf hardware and associated software. Others involve hundreds of people analyzing several organizations business processes and then developing new software in a collaborative effort with users to meet business needs. Even for small hardware-oriented projects, there is a wide diversity in the types of hardware that could be involved personal computers, main- frame computers, network equipment, kiosks, or small mobile devices, to name a few. The network equipment might be wireless, phone-based, cable-based, or require a satellite connection. The nature of software development projects is even more diverse than hard- ware-oriented projects. A software development project might include developing a simple, standalone Microsoft Excel or Access application or a sophisticated, global e-commerce system using state-of-the-art programming languages.

Information technology projects also support every possible industry and business function. Managing an information technology project for a film company s animation department would require different knowledge and skills of the project manager and team members than a project to improve a federal tax collection system or install a communica- tion infrastructure in a third-world country. Because of the diversity of information

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technology projects and the newness of the field, it is important to develop and follow best practices in managing these varied projects. That way, information technology project man- agers will have a common starting point and method to follow with every project.

Characteristics of Information Technology Project Team Members Because of the nature of information technology projects, the people involved come from very diverse backgrounds and possess different skill sets. Most trade schools, colleges, and universities did not start offering degrees in computer technology, computer science, man- agement information systems, or other information technology areas until the 1970s. Therefore, many people in the field do not have a common educational background. Many companies purposely hire graduates with degrees in other fields such as business, mathe- matics, or the liberal arts to provide different perspectives on information technology pro- jects. Even with these different educational backgrounds, there are some common job titles for people working on most information technology projects such as business analyst, programmer, network specialist, database analyst, quality assurance expert, technical writ- er, security specialist, hardware engineer, software engineer, and system architect. Within the category of programmer, there are several other job titles used to describe the specific technologies the programmer uses, such as Java programmer, XML programmer, C/C++ programmer, and so on.

Some information technology projects require the skills of people in just a few of these job functions, but many require inputs from many or all of them. Occasionally, information technology professionals move around between these job functions, but more often people become technical experts in one area or they decide to move into a management position. It is also rare for technical specialists or project managers to remain with the same company for a long time, and in fact, many information technology projects include a large number of contract workers. Working with this army of free agents, as Rob Thomsett, author and consultant for the Cutter Consortium, calls them, creates special challenges. (See the com- panion Web site for an article on this topic by Thomsett and other suggested readings.)

Diverse Technologies Many of the job titles for IT professionals reflect the different technologies required to hold that position. Unfortunately, hardware specialists might not understand the language of database analysts, and vice versa. Security specialists may have a hard time communicating with business analysts. It is also unfortunate that people within the same information tech- nology job function often do not understand each other because each uses different tech- nology. For example, someone with the title of programmer can often use several different programming languages. A COBOL programmer, however, cannot be of much help on a Java project. These highly specialized positions also make it difficult for project managers to form and lead project teams.

Another problem with diverse technologies is that many of them change rapidly. A project team might be close to finishing a project when it discovers a new technology that can greatly enhance the project and better meet long-term business needs. New technolo- gies have also shortened the time frame many businesses have to develop, produce, and distribute new products and services. This fast-paced environment requires equally fast- paced processes to manage and produce information technology projects and products.

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R E C E N T T R E N D S A F F E C T I N G I N F O R M A T I O N T E C H N O L O G Y P R O J E C T M A N A G E M E N T

Additional challenges and opportunities face IT project managers and their teams in the form of the recent trends of increased globalization, outsourcing, and virtual teams. Each of these trends and suggestions for addressing them are provided in this section.

Globalization In his popular book, The World Is Flat, Thomas L. Friedman describes the effects of globali- zation, which has created a flat world where everyone is connected and the playing field is level for many more participants.12 Lower trade and political barriers and the digi- tal revolution have made it possible to interact almost instantaneously with billions of other people across the planet, and for individuals and small companies to compete with large corporations. Friedman also discusses the increase in uploading, where people share information through blogging, podcasts, and open-source software.

Information technology is a key enabler of globalization, and globalization has signifi- cantly affected the field of IT. Even though major IT companies such as Microsoft and IBM started in the United States, much of their business is global indeed, companies and indi- viduals throughout the world contribute to the growth of information technologies and work and collaborate on various IT projects. As mentioned in Chapter 1, the total global spending on technology goods, services, and staff was projected to reach $2.4 trillion in 2008, and the main engines of growth were Asia Pacific and the oil-exporting areas of Eastern Europe, the Middle East, and Africa.

It is important for project managers to address several issues when working on global projects. Several key issues include the following:

Communications: Since people will be working in different time zones, speak different languages, have different cultural backgrounds, celebrate different holidays, etc., it is important to address how people will communicate in an efficient and timely manner. A communications management plan (like the one described in Chapter 10, Project Communications Management) is vital. Trust: Trust is an important issue for all teams, especially when they are global teams. It is important to start building trust immediately by recognizing and respecting others differences and the value they add to the project. Common work practices: It is important to align work processes to come up with an agreed-upon modus operandi with which everyone is comfortable. Project managers must allow time for the team to develop these common work practices. Using special tools, as described in the next section, can facilitate this process. Tools: Information technology plays a vital role in globalization, especially in enhancing communications and work practices. For example, Timothy Porter, a project manager for Hundsun Technologies, a Chinese domestic software compa- ny building a global services business, describes several tools they use as follows:

XPlanner is used for project planning and project monitoring. This tool is suitable for agile software development and is Web-based for ease of dis- tributed geographic access.

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TRAC is an enhanced issue-tracking system for software development pro- jects. TRAC includes features such as defect management, source code control, project roadmap management, and an integrated wiki a collabo- rative, Web-based feedback system for project documentation that is very easy for stakeholders to review. CruiseControl is a framework for a continuous build process. It includes plug-ins for e-mail notification, source control tools, and so on. A Web interface is provided to view the details of the current and previous builds. WebEx, a Web-based conferencing tool, is used to record each develop- ment cycle s demo, which is stored on our wikis. These demos provide sta- keholders visibility into our progress and can also be used as training materials for new staff members or the test team. E-mail, telephone, SKYPE (software that allows users to make telephone calls over the Internet), and instant messaging (IM) are used for routine daily communication among team members.13

After researching over 600 global organizations, KPMG International summarized several suggestions for managing global project teams:

Employ greater project discipline for global projects, otherwise weaknesses within the traditional project disciplines may be amplified by the geographical differences. Think global, but act local to align and integrate stakeholders at all project levels. Consider collaboration over standardization to help balance the goals and proj- ect approach. Keep project momentum going for projects, which will typically have a long duration. Consider the use of newer, perhaps more innovative, tools and technology.14

Outsourcing As described in detail in Chapter 12, Project Procurement Management, outsourcing is when an organization acquires goods and/or sources from an outside source. The term offshoring is sometimes used to describe outsourcing from another country. Offshoring is a natural outgrowth of globalization. IT projects continue to rely more and more on out- sourcing, both within and outside of their country boundaries.

Organizations remain competitive by using outsourcing to their advantage. For exam- ple, many organizations have found ways to reduce costs by outsourcing. Their next chal- lenge is to make strategic IT investments with outsourcing by improving their enterprise architecture to ensure that IT infrastructure and business processes are integrated and standardized. (See the Suggested Readings on the companion Web site for this chapter by Ross and Beath and KPMG International. Chapter 12, Project Procurement Management, also features more information.)

Because of the increased use of outsourcing for IT projects, project managers should become more familiar with negotiating contracts and many other issues, including working on and managing virtual teams.

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Virtual Teams Increased globalization and outsourcing have increased the need for virtual teams. A virtual team is a group of individuals who work across time and space using communication tech- nologies. Team members might all work for the same company in the same country, or they might include employees as well as independent consultants, suppliers, or even volunteers providing their expertise from around the globe.

The main advantages of virtual teams include:

Increasing competiveness and responsiveness by having a team of workers available 24/7. Lowering costs because many virtual workers do not require office space or support beyond their home offices. Providing more expertise and flexibility by having team members from across the globe working any time of day or night. Increasing the work/life balance for team members by eliminating fixed office hours and the need to travel to work.

Disadvantages of virtual teams include:

Isolating team members who may not adjust well to working in a virtual environment. Increasing the potential for communications problems since team members cannot use body language or other communications to understand each other and build relationships and trust. Reducing the ability for team members to network and transfer information informally. Increasing the dependence on technology to accomplish work.

Like any team, a virtual team should focus on achieving a common goal. Research on virtual teams reveals a growing list of factors that influence their success

including:

Team processes: It is important to define how the virtual team will operate. For examples, teams must agree on how and when work will be done, what technologies will be used, how decisions will be made, and other important process issues. Leadership style: The project manager s leadership style affects all teams, especially virtual ones. Trust and relationships: Many virtual teams fail because of a lack of trust. It is difficult to build relationships and trust from a distance. Some project man- agers like to have a face-to-face meeting so team members can get to know each other and build trust. If that is not possible, phone or video conferences can help. Team member selection and role preferences: Dr. Meredith Belbin defined a team role as a tendency to behave, contribute and interrelate with others in a particular way. 15 It is important to select team members carefully and to form a team where all roles are covered. Each virtual team member must also understand his or her role(s) on the team. (Visit www.belbin.com for more information on this topic.)

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Task-technology fit: IT is more likely to have a positive impact on individual performance if the capabilities of the technologies match the tasks that the user must perform. Cultural differences: It is important to address cultural differences, including the dimensions of directness, hierarchy, consensus, and individualism. These dimensions will affect many aspects of the team such as communications and decision making. Computer-mediated communication: It is crucial to provide reliable and appropriate computer-mediated communication to virtual team members, including e-mail, instant messaging, text messaging, chat rooms, and so on. Team life cycles: Just as projects and products have life cycles, so do teams. Project managers must address the team life cycle especially in assigning team members and determining deliverable schedules. Incentives: Virtual teams may require different types of incentives in order to accomplish quality work on time. They do not have the benefit of physical con- tact with their project managers or other team members, so it important to provide frequent positive incentives like a thank you via e-mail or phone, or even a bonus on occasion. Negative incentives, such as payment withholding or fines, can also be effective if virtual team members are not being productive. Conflict management: Even though they may never physically meet, virtual teams will still have conflict. It is important to address conflict management, as described in more detail in Chapter 10, Project Communications Management.

Several studies have been done to try to determine factors that are positively correlated to the effectiveness of virtual teams. Research suggests that team processes, trust/relation- ships, leadership style, and team member selection provide the strongest relationships to team performance and team member satisfaction.16 See the companion Web site for sug- gested readings on virtual teams and other topics discussed in this chapter.

As you can see, working as an information technology project manager or team mem- ber is an exciting and challenging job. It s important to focus on successfully completing projects that will have a positive impact on the organization as a whole.

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C A S E W R A P – U P

After several people voiced concerns about the laptop idea at the faculty meeting, the presi- dent of the college directed that a committee be formed to formally review the concept of requiring students to have laptops in the near future. Because the college was dealing with several other important enrollment-related issues, the president named the vice president of enrollment to head the committee. Other people soon volunteered or were assigned to the committee, including Tom Walters as head of Information Technology, the director of the adult education program, the chair of the Computer Science department, and the chair of the History department. The president also insisted that the committee include at least two members of the student body. The president knew everyone was busy, and he questioned whether the laptop idea was a high-priority issue for the college. He directed the committee to present a proposal at the next month s faculty meeting, either to recommend the creation of a formal project team (of which these committee members would commit to be a part) to fully investigate requiring laptops, or to recommend terminating the concept. At the next faculty meeting, few people were surprised to hear the recommendation to terminate the concept. Tom Walters learned that he had to pay much more attention to the needs of the entire college before proceeding with detailed information technology plans.

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Chapter Summary

Projects operate in an environment broader than the project itself. Project managers need to take a systems approach when working on projects; they need to consider projects within the greater organizational context.

Organizations have four different frames: structural, human resources, political, and symbolic. Project managers need to understand all of these aspects of organizations to be successful. The structural frame focuses on different groups roles and responsibilities to meet the goals and poli- cies set by top management. The human resources frame focuses on producing harmony between the needs of the organization and the needs of people. The political frame addresses organizational and personal politics. The symbolic frame focuses on symbols and meanings.

The structure of an organization has strong implications for project managers, especially in terms of the amount of authority the project manager has. The three basic organizational struc- tures include functional, matrix, and project. Project managers have the most authority in a pure project organization, an intermediate amount of authority in a matrix organization, and the least amount of authority in a pure functional organization.

Organizational culture also affects project management. A culture where employees have a strong identity with the organization, where work activities emphasize groups, where there is strong unit integration, high risk tolerance, performance-based rewards, high conflict tolerance, an open-systems focus, and a balance on the dimensions of people focus, control, and means- orientation is more conducive to project work.

Project stakeholders are individuals and organizations who are actively involved in the project or whose interests may be positively or negatively affected because of project execution or suc- cessful project completion. Project managers must identify and understand the different needs of all stakeholders on their projects.

Top management commitment is crucial for project success. Since projects often affect many areas in an organization, top management must Help project managers if they are to do a good job of project integration. Organizational commitment to information technology is also important to the success of information technology projects. Development standards and guidelines Help most organizations in managing projects.

A project life cycle is a collection of project phases. Traditional project phases include con- cept, development, implementation, and close-out phases. Projects often produce products, which follow product life cycles. Examples of product life cycles for software development include the waterfall, spiral, incremental build, prototyping, RAD, and the adaptive software development models. Project managers must understand the specific life cycle of the products they are produc- ing as well as the general project life cycle model.

A project should successfully pass through each of the project phases in order to continue to the next phase. A management review should occur at the end of each project phase, and more frequent management inputs are often needed. These management reviews and inputs are impor- tant for keeping projects on track and determining if projects should be continued, redirected, or terminated.

Project managers need to consider several factors due to the unique context of information technology projects. The diverse nature of these projects and the wide range of business areas and technologies involved make information technology projects especially challenging to man- age. Leading project team members with a wide variety of specialized skills and understanding rapidly changing technologies are also important considerations.

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Several recent trends have affected information technology project management. Increased globalization, outsourcing, and virtual teams have changed the way many IT projects are staffed and managed. Project managers must stay abreast of these and other trends and discover ways to use them to their advantage.

Quick Quiz

1. Which of the following is not part of the three-sphere model for systems management?

a. business

b. information

c. technology

d. organization

2. Which of the four frames of organizations addresses how meetings are run, employee dress codes, and expected work hours?

a. structural

b. human resources

c. political

d. symbolic

3. Personnel in a ______ organizational structure often report to two or more bosses.

a. functional

b. project

c. matrix

d. hybrid

4. Project work is most successful in an organizational culture where all of the following charac- teristics are high except ______.

a. member identity

b. group emphasis

c. risk tolerance

d. control

5. A ______ is a product or service, such as a technical report, a training session, or hardware, produced or provided as part of a project.

a. deliverable

b. product

c. work package

d. tangible goal

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The Project Management and Information Technology Context

6. Which of the following is not a phase of the traditional project life cycle?

a. systems analysis

b. concept

c. development

d. implementation

7. What is the term used to describe a framework of the phases involved in developing informa- tion systems?

a. systems development life cycle

b. rapid application development

c. predictive life cycle

d. extreme programming

8. Another name for a phase exit is a _____ point.

a. review

b. stage

c. meeting

d. kill

9. The nature of information technology projects is different from projects in many other indus- tries because they are very ______.

a. expensive

b. technical

c. diverse

d. challenging

10. What term is used to describe when an organization acquires goods and/or sources from an outside source in another country?

a. globalization

b. offshoring

c. exporting

d. global sourcing

Quick Quiz Answers

1. b; 2. d; 3. c; 4. d; 5. a; 6. a; 7. a; 8. d; 9. c; 10. b

Discussion Questions

1. What does it mean to take a systems view of a project? How does taking a systems view of a project apply to project management?

2. Explain the four frames of organizations. How can they help project managers understand the organizational context for their projects?

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3. Briefly explain the differences between functional, matrix, and project organizations. Describe how each structure affects the management of the project.

4. Describe how organizational culture is related to project management. What type of culture promotes a strong project environment?

5. Discuss the importance of top management commitment and the development of standards for successful project management. Provide examples to illustrate the importance of these items based on your experience on any type of project.

6. What are the phases in a traditional project life cycle? How does a project life cycle differ from a product life cycle? Why does a project manager need to understand both?

7. What makes information technology projects different from other types of projects? How should project managers adjust to these differences?

8. Define globalization, outsourcing, and virtual teams and describe how these trends are changing IT project management.

Exercises

1. Summarize the three-sphere model of systems management in your own words. Then use your own experience or interview someone who recently completed an information technolo- gy project and list several business, technology, and organizational issues addressed during the project. Which issues were most important to the project and why? Summarize your answers in a two-page paper.

2. Apply the four frames of organizations to an information technology project with which you are familiar. If you cannot think of a good information technology project, use your personal experience in deciding where to attend college to apply this framework. Write a two-page paper describing key issues related to the structural, human resources, political, and symbol- ic frames. Which frame seemed to be the most important and why? For example, did you decide where to attend college primarily because of the curriculum and structure of the pro- gram? Did you follow your friends? Did your parents have a lot of influence in your decision? Did you like the culture of the campus?

3. Search the Internet for two interesting articles about software development life cycles, includ- ing agile software development. Also review the Web site www.agilealliance.org. What do these sources say about project management? Write a two-page summary of your findings, citing your references.

Note: For this exercise and others, remember that you can find references cited in this text, suggested readings, and links to general project management Web sites on the companion Web site.

4. Search the Internet and scan information technology industry magazines or Web sites to find an example of an information technology project that had problems due to organizational issues. Write a two-page paper summarizing who the key stakeholders were for the project and how they influenced the outcome.

5. Write a two-page summary of an article about the importance of top management support for successful information technology projects and your opinion on this topic.

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The Project Management and Information Technology Context

6. Research the trend of using virtual teams. Review the information on team role theory from www.belbin.com and other related sources. Write a two-page summary of your findings, cit- ing at least three references. Also include your personal experience and/or opinion on the topic. For example, what role(s) would you prefer to play on a team? Do you like working on virtual teams? If you have not yet worked on one, how do you think it would be different from working on a face-to-face team?

Companion Web Site

Visit the companion Web site for this text at www.cengage.com/mis/schwalbe to access:

References cited in the text and additional suggested readings for each chapter

Template files

Lecture notes

Interactive quizzes

Podcasts

Links to general project management Web sites

And more

See the Preface of this text for additional information on accessing the companion Web site.

Key Terms

adaptive software development (ASD) — A software development approach used when requirements cannot be clearly expressed early in the life cycle

agile software development — A method for software development that uses new approaches, focusing on close collaboration between programming teams and business experts

champion — A senior manager who acts as a key proponent for a project deliverable — A product or service, such as a technical report, a training session, a piece of

hardware, or a segment of software code, produced or provided as part of a project executive steering committee — A group of senior executives from various parts of the

organization who regularly review important corporate projects and issues

functional organizational structure — An organizational structure that groups people by functional areas such as information technology, manufacturing, engineering, and human resources

human resources frame — Focuses on producing harmony between the needs of the organization and the needs of people

IT governance — Addresses the authority and control for key IT activities in organizations, including IT infrastructure, IT use, and project management

kill point — Management review that should occur after each project phase to determine if projects should be continued, redirected, or terminated; also called a phase exit

matrix organizational structure — An organizational structure in which employees are assigned to both functional and project managers

offshoring — Outsourcing from another country organizational culture — A set of shared assumptions, values, and behaviors that characterize

the functioning of an organization

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outsourcing — When an organization acquires goods and/or sources from an outside source phase exit — Management review that should occur after each project phase to determine if

projects should be continued, redirected, or terminated; also called a kill point

political frame — Addresses organizational and personal politics politics — Competition between groups or individuals for power and leadership predictive life cycle — A software development approach used when the scope of the project

can be clearly articulated and the schedule and cost can be accurately predicted project acquisition — The last two phases in a project (implementation and close-out) that

focus on delivering the actual work project feasibility — The first two phases in a project (concept and development) that focus on

planning

project life cycle — A collection of project phases, such as concept, development, implementation, and close-out

project organizational structure — An organizational structure that groups people by major projects, such as specific aircraft programs

structural frame — Deals with how the organization is structured (usually depicted in an organizational chart) and focuses on different groups roles and responsibilities to meet the goals and policies set by top management

symbolic frame — Focuses on the symbols, meanings, and culture of an organization systems — Sets of interacting components working within an environment to fulfill some

purpose

systems analysis — A problem-solving approach that requires defining the scope of the system to be studied, and then dividing it into its component parts for identifying and evaluating its problems, opportunities, constraints, and needs

systems approach — A holistic and analytical approach to solving complex problems that includes using a systems philosophy, systems analysis, and systems management

systems development life cycle (SDLC) — A framework for describing the phases involved in developing and maintaining information systems

systems management — Addressing the business, technological, and organizational issues associated with creating, maintaining, and making changes to a system

systems philosophy — An overall model for thinking about things as systems systems thinking — Taking a holistic view of an organization to effectively handle complex

situations virtual team — A group of individuals who work across time and space using communication

technologies

End Notes

1 Lee G. Bolman and Terrence E. Deal, Reframing Organizations (San Francisco: Jossey-Bass, 1991).

2 Eva Hoare, Software hardships, Herald (Halifax: Nova Scotia) (February 4, 2001). 3 Stephen P. Robbins and Timothy A. Judge, Organizational Behavior, 13th Edition (Prentice

Hall, 2008). 4 Charles V. Bagli, Higher Costs and Delays Expected at Ground Zero, New York Times (June

30, 2008).

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The Project Management and Information Technology Context

5 Peter Weill and Jeanne Ross, IT Governance: How Top Performers Manage IT Decision Rights for Superior Results (Harvard Business School Press, 2004).

6 David Avison, Shirely Gregor, and David Wilson, Managerial IT Unconsciousness, Communications of the ACM 49, no. 7 (July 2006), p. 92.

7 Gartner Inc., BNSF and UnitedHealth Group Win 2006 Gartner CRM Excellence Awards, press release (September 25, 2006).

8 Douglas H. Desaulniers and Robert J. Anderson, Matching Software Development Life Cycles to the Project Environment, Proceedings of the Project Management Institute Annual Seminars & Symposium, (November 1 10, 2001).

9 Jeannette Cabanis, A Major Import: The Standish Group s Jim Johnson on Project Management and IT Project Success, PM Network (PMI), (September 1998), p. 7.

10 Lucas Mearian, Bank Hones Project Management Skills with Redesign, ComputerWorld (April 29, 2002).

11 IT Governance Institute, COBIT and IT Governance Case Study: Harley-Davidson, www.itgi.org (September 2006).

12 Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-First Century (Farrar, Straus, and Giroux, 2005).

13 Timothy Porter, Tools for Facilitating Project Communication in an Onshore-Offshore Engagement Model, PMI-ISSIG.org (June 30, 2008).

14 KPMG International, Managing Global Projects: Observations from the front-line, www.kpmg.com (2007).

15 Belbin® Team Role Theory, Belbin.com (accessed July 1, 2008). 16 Jeremy S. Lurey and Mahesh S. Raisinghani, An Empirical Study of Best Practices in Virtual

Teams, Information & Management 38, no. 8 (2001).

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Chapter 2

C H A P T E R 3 THE PROJECT MANAGEMENT PROCESS GROUPS: A CASE STUDY

L E A R N I N G O B J E C T I V E S

After reading this chapter, you will be able to:

Describe the five project management process groups, the typical level of activity for each, and the interactions among them

Understand how the project management process groups relate to the project management knowledge areas

Discuss how organizations develop information technology project man- agement methodologies to meet their needs

Review a case study of an organization applying the project management process groups to manage an information technology project, describe outputs of each process group, and understand the contribution that effec- tive initiating, planning, executing, monitoring and controlling, and closing make to project success

O P E N I N G C A S E

Erica Bell was in charge of the Project Management Office (PMO) for her consulting firm. The firm, JWD for Job Well Done Consulting, had grown to include more than 200 full-time consultants and even more part-time consultants. JWD Consulting provides a variety of consulting services to Help organizations in selecting and managing infor- mation technology projects. The firm focuses on finding and managing high-payoff pro- jects and developing strong metrics to measure project performance and benefits to the organization after the project is implemented. The firm s emphasis on metrics and working collaboratively with its customers gives it an edge over many competitors.

Joe Fleming, the CEO, wanted his company to continue to grow and become a world- class consulting organization. Since the core of the business was helping other organiza- tions with project management, he felt it was crucial for JWD Consulting to have an exem- plary process for managing its own projects. He asked Erica to work with her team and other consultants in the firm to develop several intranet site applications that would allow them to share their project management knowledge. He also thought it would make sense to make some of the information available to the firm s clients. For example, the firm could provide project management templates, tools, articles, links to other sites, and an Ask the Expert feature to help build relationships with current and future clients. Since JWD Con- sulting emphasizes the importance of high-payoff projects, Joe also wanted to see a business case for this project before proceeding.

Recall from Chapter 1 that project management consists of nine knowledge areas: integra- tion, scope, time, cost, quality, human resources, communications, risk, and procurement. Another important concept to understand is that projects involve five project management process groups: initiating, planning, executing, monitoring and controlling, and closing. Tai- loring these process groups to meet individual project needs increases the chance of suc- cess in managing projects. This chapter describes each project management process group in detail through a simulated case study based on JWD Consulting. It also includes samples of typical project documents applied to this case. You can download templates for these and other project documents from the companion Web site for this text. Although you will learn more about each knowledge area in Chapters 4 though 12, it is important first to learn how they fit into the big picture of managing a project. Understanding how the knowledge areas and project management process groups function together will lend con- text to the remaining chapters.

P R O J E C T M A N A G E M E N T P R O C E S S G R O U P S

Project management is an integrative endeavor; decisions and actions taken in one knowl- edge area at a certain time usually affect other knowledge areas. Managing these interactions often requires making trade-offs among the project s scope, time, and cost the triple con- straint of project management described in Chapter 1. A project manager may also need to make trade-offs between other knowledge areas, such as between risk and human resources. Consequently, you can view project management as a number of related processes.

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A process is a series of actions directed toward a particular result. Project management process groups progress from initiating activities to planning activities, executing activities, monitoring and controlling activities, and closing activities. Initiating processes include defining and authorizing a project or project phase. Initiating processes take place during each phase of a project. Therefore, you cannot equate process groups with project phases. Recall that there can be different project phases, but all projects will include all five process groups. For example, project managers and teams should reexamine the business need for the project during every phase of the project life cycle to determine if the project is worth continuing. Initiating processes are also required to end a project. Someone must initiate activities to ensure that the project team completes all the work, documents lessons learned, assigns project resources, and that the customer accepts the work. Planning processes include devising and maintaining a workable scheme to ensure that the project addresses the organization s needs. There are sev- eral plans for projects, such as the scope management plan, schedule man- agement plan, cost management plan, procurement management plan, and so on, defining each knowledge area as it relates to the project at that point in time. For example, a project team must develop a plan to define the work that needs to be done for the project, to schedule activities related to that work, to estimate costs for performing the work, to decide what resources to procure to accomplish the work, and so on. To account for changing con- ditions on the project and in the organization, project teams often revise plans during each phase of the project life cycle. The project management plan, described in Chapter 4, coordinates and encompasses information from all other plans. Executing processes include coordinating people and other resources to car- ry out the various plans and produce the products, services, or results of the project or phase. Examples of executing processes include acquiring and devel- oping the project team, performing quality assurance, distributing information, managing stakeholder expectations, and conducting procurements. Monitoring and controlling processes include regularly measuring and monitoring progress to ensure that the project team meets the project objec- tives. The project manager and staff monitor and measure progress against the plans and take corrective action when necessary. A common monitoring and controlling process is reporting performance, where project stakeholders can identify any necessary changes that may be required to keep the project on track. Closing processes include formalizing acceptance of the project or project phase and ending it efficiently. Administrative activities are often involved in this process group, such as archiving project files, closing out contracts, docu- menting lessons learned, and receiving formal acceptance of the delivered work as part of the phase or project.

The process groups are not mutually exclusive. For example, project managers must perform monitoring and controlling processes throughout the project s life span. The

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The Project Management Process Groups: A Case Study

level of activity and length of each process group varies for every project. Normally, exe- cuting tasks requires the most resources and time, followed by planning tasks. Initiating and closing tasks are usually the shortest (at the beginning and end of a project or phase, respectively), and they require the least amount of resources and time. However, every project is unique, so there can be exceptions. You can apply the pro- cess groups for each major phase of a project, or you can apply the process groups to an entire project, as the JWD Consulting case study does in this chapter.

Many people ask for guidelines on how much time to spend in each process group. In his book, Alpha Project Managers: What the Top 2% Know That Everyone Else Does Not, Andy Crowe collected data from 860 project managers in various companies and industries in the United States. He found that the best the alpha project managers spent more time on every process group than their coun-

terparts except for executing, as shown in Figure 3-1. This breakdown suggests that the most time should be spent on executing, followed by planning. Spending a fair amount of time on planning should lead to less time spent on execution. Notice that the alpha project managers spent almost twice as much time on planning (21 per- cent versus 11 percent) as other project managers.1

W H A T W E N T W R O N G ?

Many readers of CIO Magazine commented on its cover story about problems with informa- tion systems at the U.S. Internal Revenue Service (IRS). The article described serious pro- blems the IRS has had in managing information technology projects. Philip A. Pell, PMP,

continued

2 Closing

Other Project Managers Alpha Project Managers

Monitoring and Controlling

Executing

Planning

Initiating

3

4 5

82 69

11 21

1 2

FIGURE 3-1 Percentage of time spent on each process group

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believes that having a good project manager and following a good project management pro- cess would help the IRS and many organizations tremendously. Mr. Pell provided the follow- ing feedback:

Pure and simple, good, methodology-centric, predictable, and repeatable project management is the SINGLE greatest factor in the success (or in this case failure) of any project. When a key stakeholder says, I didn t know how bad things were, it is a direct indictment of the project manager s communications manage- ment plan. When a critical deliverable like the middleware infrastructure that makes the whole thing work is left without assigned resources and progress tracking, the project manager has failed in his duty to the stakeholders. When key stakeholders (people and organizations that will be affected by the project, not just people who are directly working on the project) are not informed and their feedback incorporated into the project plan, disaster is sure to ensue. The project manager is ultimately responsible for the success or failure of the project.2

The IRS continues to have problems managing IT projects. A 2008 U.S. Government Accountability Office (GAO) report stated that IRS had fixed just 29 of 98 information secu- rity weaknesses identified the previous year. The report stated that the IRS has persistent information security weaknesses that place [it] at risk of disruption, fraud or inappropriate disclosure of sensitive information. 3

Each of the five project management process groups is characterized by the comple- tion of certain tasks. During initiating processes for a new project, the organization recognizes that a new project exists, and completes a project charter as part of this recog- nition (see Chapter 4 for more information on project charters). Tables are provided later in this chapter with detailed lists of possible outputs for each process group by knowl- edge area. For example, Tables 3-3 through 3-7 list potential outputs for the initiating and planning process groups. Samples of some outputs are provided for each process group in a case study of JWD Consulting s Project Management Intranet Site project. Project man- agers and their teams must decide which outputs are required for their particular projects.

Outputs of the planning process group include completing the project scope statement, the work breakdown structure, the project schedule, and many other items. Planning processes are especially important for information technology projects. Everyone who has ever worked on a large information technology project that involves new technology knows the saying, A dollar spent up front in planning is worth one hundred dollars spent after the system is implemented. Planning is crucial in information technology projects because once a project team implements a new system, it takes a considerable amount of effort to change the system. Research suggests that companies working to implement best practices should spend at least 20 percent of project time in initiating and planning.4 This percentage is backed up by evidence from Alpha Proj- ect Managers, as described earlier.

The executing process group takes the actions necessary to complete the work described in the planning activities. The main outcome of this process group is

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The Project Management Process Groups: A Case Study

delivering the actual work of the project. For example, if an information technology project involves providing new hardware, software, and training, the executing process- es would include leading the project team and other stakeholders to purchase the hard- ware, develop and test the software, and deliver and participate in the training. The executing process group should overlap the other process groups and generally requires the most resources.

Monitoring and controlling processes measure progress toward the project objectives, monitor deviation from the plan, and take corrective action to match prog- ress with the plan. Performance reports are common outputs of monitoring and con- trolling. The project manager should be monitoring progress closely to ensure that deliverables are being completed and objectives are being met. The project manager must work closely with the project team and other stakeholders and take appropriate actions to keep the project running smoothly. The ideal outcome of the monitoring and controlling process group is to complete a project successfully by delivering the agreed-upon project scope within time, cost, and quality constraints. If changes to project objectives or plans are required, monitoring and controlling processes ensure that these changes are made efficiently and effectively to meet stakeholder needs and expectations. Monitoring and controlling processes overlap all of the other project management process groups because changes can occur at any time.

During the closing processes, the project team works to gain acceptance of the end pro- ducts, services, or results and bring the phase or project to an orderly end. Key outcomes of this process group are formal acceptance of the work and creation of closing documents, such as a final project report and lessons-learned report.

M E D I A S N A P S H O T

Just as information technology projects need to follow the project management process groups, so do other projects, such as the production of a movie. Processes involved in making movies might include screenwriting (initiating), producing (planning), acting and directing (executing), editing (monitoring and controlling), and releasing the movie to thea- ters (closing). Many people enjoy watching the extra features on a DVD that describe how these processes lead to the creation of a movie. For example, the DVD for Lord of the Rings: The Two Towers Extended Edition includes detailed descriptions of how the script was created, how huge structures were built, how special effects were made, and how tal- ented professionals overcame numerous obstacles to complete the project. This acted not as promotional filler but as a serious and meticulously detailed examination of the entire filmmaking process. 5 New Line Cinema made history by shooting all three Lord of the Rings films consecutively during one massive production. It took three years of preparation to build the sets, find the locations, write the scripts, and cast the actors. Director Peter Jackson said that the amount of early planning they did made it easier than he imagined to produce the films. Project managers in any field know how important it is to have good plans and to follow a good process.

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M A P P I N G T H E P R O C E S S G R O U P S T O T H E K N O W L E D G E A R E A S

You can map the main activities of each project management process group into the nine project management knowledge areas. Table 3-1 provides a big-picture view of the relation- ships among the 42 project management activities, the process groups in which they are typi- cally completed, and the knowledge areas into which they fit. The activities listed in the table are the main processes for each knowledge area listed in the PMBOK® Guide, Fourth Edition. This text also includes additional activities not listed in the PMBOK® Guide, such as creating a business case and team contract, which can also Help in managing projects.

Several organizations use PMI s PMBOK® Guide information as a foundation for develop- ing their own project management methodologies, as described in the next section. Notice in Table 3-1 that many of the project management processes occur as part of the planning process group. Since each project is unique, project teams are always trying to do something that has not been done before. To succeed at unique and new activities, project teams must do a fair amount of planning. Recall, however, that the most time and money is normally spent on executing. It is good practice for organizations to determine how project manage- ment will work best in their own organizations.

TABLE 3-1 Project management process groups and knowledge area mapping

Project Management Process GroupsKnowledge Area

Initiating Planning Executing Monitoring and Controlling

Closing

Project Integration Management

Develop project charter

Develop project management plan

Direct and manage project execution

Monitor and control project work, Perform integrated change control

Close project or phase

Project Scope Management

Collect requirements, Define scope, Create WBS

Verify scope, Control scope

Project Time Management

Define activities, Sequence activities,

Control schedule

(continued)

The Project Management Process Groups: A Case Study

83

TABLE 3-1 Project management process groups and knowledge area mapping (continued)

Project Management Process GroupsKnowledge Area

Initiating Planning Executing Monitoring and Controlling

Closing

Estimate activity resources, Estimate activity durations, Develop schedule

Project Cost Management

Estimate costs, Determine budget

Control costs

Project Quality Management

Plan quality Perform quality assurance

Perform quality control

Project Human Resource Management

Develop human resource plan

Acquire project team, Develop project team, Manage project team

Project Communi- cations Management

Identify stake- holders

Plan communi- cations

Distribute information, Manage stakeholders expectations

Report performance

Project Risk Management

Plan risk man- agement, Identi- fy risks, Perform qualitative risk analysis, Perform quantitative risk analysis, Plan risk responses

Monitor and control risks

Project Procurement Management

Plan procurements

Conduct procurements

Administer procurements

Close procurements

Source: PMBOK® Guide, Fourth Edition, 2008.

Project Time Management (continued)

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D E V E L O P I N G A N I N F O R M A T I O N T E C H N O L O G Y P R O J E C T M A N A G E M E N T M E T H O D O L O G Y

Some organizations spend a great deal of time and money on training efforts for general project management skills, but after the training, project managers may still not know how to tailor their project management skills to the organization s particular needs. Because of this problem, some organizations develop their own internal information technology project management methodologies. The PMBOK® Guide is a standard that describes best prac- tices for what should be done to manage a project. A methodology describes how things should be done, and different organizations often have different ways of doing things.

In addition to using the PMBOK® Guide as a basis for project management methodology, many organizations use others, such as the following:

PRojects IN Controlled Environments (PRINCE2): Originally developed for information technology projects, PRINCE2 was released in 1996 as a generic project management methodology by the U.K. Office of Government Commerce (OCG). It is the de facto standard in the United Kingdom and is used in over 50 countries. (See www.prince2.com for more information.) PRINCE2 defines 45 separate subprocesses and organizes these into eight process groups as follows:

1. Starting Up a Project 2. Planning 3. Initiating a Project 4. Directing a Project 5. Controlling a Stage 6. Managing Product Delivery 7. Managing Stage Boundaries 8. Closing a Project

Agile methodologies: As described in Chapter 2, agile software development is a form of adaptive software development. All agile methodologies include an iterative workflow and incremental delivery of software in short iterations. Several popular agile methodologies include extreme programming, scrum, feature driven development, lean software development, Agile Unified Process (AUP), Crystal, and Dynamic Systems Development Method (DSDM). (See Web sites like www.agilealliance.org and the Suggested Readings on the companion Web site for this text for more information.) Rational Unified Process (RUP) framework: RUP is an iterative software development process that focuses on team productivity and delivers software best practices to all team members. According to RUP expert Bill Cottrell, RUP embodies industry-standard management and technical methods and techni- ques to provide a software engineering process particularly suited to creating and maintaining component-based software system solutions. 6 Cottrell explains that you can tailor RUP to include the PMBOK process groups, since several customers asked for that capability. There are several other project man- agement methodologies specifically for software development projects such as Joint Application Development (JAD) and Rapid Application Development

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The Project Management Process Groups: A Case Study

(RAD). (See Web sites such as www.ibm.com/software/awdtools/rup for more information.) Six Sigma methodologies: Many organizations have projects underway that use Six Sigma methodologies. The work of many project quality experts con- tributed to the development of today s Six Sigma principles. Two main methodolo- gies are used on Six Sigma projects: DMAIC (Define, Measure, Analyze, Improve, and Control) is used to improve an existing business process, and DMADV (Define, Measure, Analyze, Design, and Verify) is used to create new product or process designs to achieve predictable, defect-free performance. (See Chapter 8, Project Quality Management, for more information on Six Sigma.)

Many organizations tailor a standard or methodology to meet their unique needs. For exam- ple, if organizations use the PMBOK® Guide as the basis for their project management method- ology, they still have to do a fair amount of work to adapt it to their work environment. See the suggested reading on the companion Web site by William Munroe for an example of how Blue Cross Blue Shield of Michigan developed its IT project management methodology.

W H A T W E N T R I G H T ?

AgênciaClick, an interactive advertising and online communications company based in São Paulo, Brazil, made PMI s list of outstanding organizations in project management in 2007. Since 2002, the company saw revenues jump 132 percent, primarily due to their five-year emphasis on practicing good project management across the entire company. AgênciaClick launched a PMO in 2002 and used the PMBOK® Guide as the basis for developing their methodology and project management training program. The company also developed a custom project tracking system to help calculate physical work progress each day and alert managers of any schedule or cost issues. PMO Director Fabiano D Agostinho said, We real- ized the only way to manage multiple dynamic projects and deliver great products is to focus on project management . . . By monitoring and controlling projects and programs more efficiently, senior managers can focus on issues within the portfolio that need more attention. 7

The following section describes an example of applying the project management process groups to a project at JWD Consulting. It uses some of the ideas from the PMBOK®

Guide, Fourth Edition, some ideas from other methodologies, and some new ideas to meet unique project needs.

C A S E S T U D Y : J W D C O N S U L T I N G ’ S P R O J E C T M A N A G E M E N T I N T R A N E T S I T E P R O J E C T

The following fictitious case provides an example of the elements involved in managing a project from start to finish. This example also uses Microsoft Project to demonstrate how project management software can Help in several aspects of managing a project. Several

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templates illustrate how project teams prepare various project management documents. Files for these and other templates are available on the companion Web site for this text. Details on creating many of the documents shown are provided in later chapters, so do not worry if you do not understand everything right now. You might want to read this section again to enhance your learning.

Project Pre-Initiation and Initiation In project management, initiating includes recognizing and starting a new project. An orga- nization should put considerable thought into project selection to ensure that it initiates the right kinds of projects for the right reasons. It is better to have a moderate or even small amount of success on an important project than huge success on one that is unim- portant. The selection of projects for initiation, therefore, is crucial, as is the selection of project managers. Ideally, the project manager would be involved in initiating a project, but often the project manager is selected after many initiation decisions have already been made. You will learn more about project selection in Chapter 4, Project Integration Man- agement. Organizations must also understand and plan for the ongoing support that is often required after implementing a new system or other product or service resulting from a project.

It is important to remember that strategic planning should serve as the foundation for deciding which projects to pursue. The organization s strategic plan expresses the vision, mission, goals, objectives, and strategies of the organization. It also provides the basis for information technology project planning. Information technology is usually a support function in an organization, so it is critical that the people initiating information technology projects understand how those projects relate to current and future needs of the organization. For example, JWD Consulting s main business is providing consulting services to other organizations, not developing its own intranet site applications. Infor- mation systems, therefore, must support the firm s business goals, such as providing con- sulting services more effectively and efficiently.

An organization may initiate information technology projects for several reasons, but the most important reason is to support business objectives. Providing a good return on investment at a reasonable level of risk is also important, especially in tough economic times. As mentioned in the opening case, JWD Consulting wants to follow an exemplary pro- cess for managing its projects since its core business is helping other organizations manage projects. Developing an intranet to share its project management knowledge could help JWD Consulting reduce internal costs by working more effectively, and by allowing existing and potential customers to access some of the firm s information. JWD Consulting could also increase revenues by bringing in more business. Therefore, they will use these metrics reducing internal costs and increasing revenues to measure their own performance on this project.

Pre-Initiation Tasks

It is good practice to lay the groundwork for a project before it officially starts. Senior managers often perform several tasks, sometimes called pre-initiation tasks, including the following:

Determine the scope, time, and cost constraints for the project Identify the project sponsor

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Select the project manager Develop a business case for a project Meet with the project manager to review the process and expectations for managing the project Determine if the project should be divided into two or more smaller projects

As described in the opening case, the CEO of JWD Consulting, Joe Fleming, defined the high-level scope of the project, and he wanted to sponsor it himself since it was his idea and it was of strategic importance to the business. He wanted Erica Bell, the PMO Director, to manage the project after proving there was a strong business case for it. If there was a strong business case for pursuing the project, then Joe and Erica would meet to review the process and expectations for managing the project. If there was not a strong business case, the project would not continue. As for the necessity of the last pre-initiation task, many people know from experience that it is easier to successfully complete a small project than a large one, especially for IT projects. It often makes sense to break large projects down into two or more smaller ones to help increase the odds of success. In this case, however, Joe and Erica decided that the work could be done in one project that would last about six months. To justify investing in this project, Erica drafted a business case for the project, getting input and feedback from Joe, from one of her senior staff members in the PMO, and from a member of the Finance department. She also used a corporate template and sample business cases from past projects as a guide. Table 3-2 pro- vides the business case. (Note that this example and others are abbreviated examples. See the companion Web site for additional examples of project documents and to download a business case template and other templates.) Notice that the following information is included in this business case:

Introduction/background Business objective Current situation and problem/opportunity statement Critical assumptions and constraints Analysis of options and recommendation Preliminary project requirements Budget estimate and financial analysis Schedule estimate Potential risks Exhibits

Since this project is relatively small and is for an internal sponsor, the business case is not as long as many other business cases. Erica reviewed the business case with Joe, and he agreed that the project was definitely worth pursuing. He was quite pleased to see that payback was estimated within a year, and the return on investment was projected to be 112 percent. He told Erica to proceed with the formal initiation tasks for this project, as described in the next section.

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TABLE 3-2 JWD Consulting s business case

1.0 Introduction/Background

JWD Consulting s core business goal is to provide world-class project management con- sulting services to various organizations. The CEO, Joe Fleming, believes the firm can streamline operations and increase business by providing information related to project management on its intranet site, making some information and services accessible to current and potential clients.

2.0 Business Objective

JWD Consulting s strategic goals include continuing growth and profitability. The Project Management Intranet Site Project will support these goals by increasing visibility of the firm s expertise to current and potential clients by allowing client and public access to some sections of the intranet. It will also improve profitability by reducing internal costs by providing standard tools, techniques, templates, and project management knowledge to all internal consultants. Since JWD Consulting focuses on identifying profitable pro- jects and measuring their value after completion, this project must meet those criteria.

3.0 Current Situation and Problem/Opportunity Statement

JWD Consulting has a corporate Web site as well as an intranet. The firm currently uses the Web site for marketing information. The primary use of the intranet is for human resource information, such as where consultants enter their hours on various projects, change and view their benefits information, access an online directory and Web-based e-mail system, and so on. The firm also uses an enterprise-wide project management system to track all project information, focusing on the status of deliverables and meeting scope, time, and cost goals. There is an opportunity to provide a new section on the intranet dedicated to sharing consultants project management knowledge across the organization. JWD Consulting only hires experienced consultants and gives them freedom to manage projects as they see fit. However, as the business grows and projects become more complex, even experienced project managers are looking for suggestions on how to work more effectively.

4.0 Critical Assumption and Constraints

The proposed intranet site must be a valuable asset for JWD Consulting. Current consultants and clients must actively support the project, and it must pay for itself within one year by reducing internal operating costs and generating new business. The Project Management Office manager must lead the effort, and the project team must include participants from several parts of the company, as well as current client organizations. The new system must run on existing hardware and software, and it should require minimal technical support. It must be easily accessible by consultants and clients and be secure from unauthorized users.

5.0 Analysis of Options and Recommendation

There are three options for addressing this opportunity:

1. Do nothing. The business is doing well, and we can continue to operate without this new project.

2. Purchase access to specialized software to support this new capability with little in-house development.

(continued)

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TABLE 3-2 JWD Consulting s business case (continued)

3. Design and implement the new intranet capabilities in-house using mostly existing hard- ware and software.

Based on discussions with stakeholders, we believe that option 3 is the best option.

6.0 Preliminary Project Requirements

The main features of the project management intranet site include the following:

1. Access to several project management templates and tools. Users must be able to search for templates and tools, read instructions on using these templates and tools, and see examples of how to apply them to real projects. Users must also be able to submit new templates and tools, which should be first screened or edited by the Project Management Office.

2. Access to relevant project management articles. Many consultants and clients feel as though there is an information overload when they research project management informa- tion. They often waste time they should be spending with their clients. The new intranet should include access to several important articles on various project management topics, which are searchable by topic, and allow users to request the Project Management Office staff to find additional articles to meet their needs.

3. Links to other, up-to-date Web sites, with brief descriptions of the main features of the external site.

4. An Ask the Expert feature to help build relationships with current and future clients and share knowledge with internal consultants.

5. Appropriate security to make the entire intranet site accessible to internal consultants and certain sections accessible to others.

6. The ability to charge money for access to some information. Some of the information and features of the intranet site should prompt external users to pay for the information or ser- vice. Payment options should include a credit card option or similar online payment trans- actions. After the system verifies payment, the user should be able to access or download the desired information.

7. Other features suggested by users, if they add value to the business.

7.0 Budget Estimate and Financial Analysis

A preliminary estimate of costs for the entire project is $140,000. This estimate is based on the project manager working about 20 hours per week for six months and other internal staff working a total of about 60 hours per week for six months. The customer representatives would not be paid for their Helpance. A staff project manager would earn $50 per hour. The hourly rate for the other project team members would be $70 per hour, since some hours normally billed to clients may be needed for this project. The initial cost estimate also includes $10,000 for purchasing software and services from suppliers. After the project is completed, maintenance costs of $40,000 are included for each year, primarily to update the information and coordinate the Ask the Expert feature and online articles.

Projected benefits are based on a reduction in hours consultants spend researching project management information, appropriate tools and templates, and so on. Projected benefits are also based on a small increase in profits due to new business generated by this project. If each of more than 400 consultants saved just 40 hours each year (less than one hour per week) and could bill that time to other projects that generate a conservative estimate of $10 per hour in profits, then the projected benefit would be $160,000 per year. If the new intranet increased business by just 1 percent, using past profit information,

90

increased profits due to new business would be at least $40,000 each year. Total projected benefits, therefore, are about $200,000 per year.

Exhibit A summarizes the projected costs and benefits and shows the estimated net present value (NPV), return on investment (ROI), and year in which payback occurs. It also lists assumptions made in performing this preliminary financial analysis. All of the financial estimates areveryencouraging.Theestimatedpayback iswithinoneyear, as requestedbythe sponsor.The NPV is $272,800, and the discounted ROI based on a three-year system life is excellent at 112 percent.

8.0 Schedule Estimate

The sponsor would like to see the project completed within six months, but there is some flexibility in the schedule. We also assume that the new system will have a useful life of at least three years.

9.0 Potential Risks

There are several risks involved with this project. The foremost risk is a lack of interest in the new system by our internal consultants and external clients. User inputs are cru- cial for populating information into this system and realizing the potential benefits from using the system. There are some technical risks in choosing the type of software used to search the system, check security, process payments, and so on, but the features of this system all use proven technologies. The main business risk is investing the time and money into this project and not realizing the projected benefits.

10.0 Exhibits

Exhibit A: Financial Analysis for Project Management Intranet Site Project

TABLE 3-2 JWD Consulting s business case (continued)

Discount rate 8% Assume the project is done in about 6 months

0 1 2 3 Total Costs 140,000 40,000 40,000 40,000 Discount factor 1 0.93 0.86 0.79 Discounted costs 140,000 37,037 34,294 31,753 243,084

Benefits 200,000 200,000 200,000 Discount factor 0.93 0.86 0.79 Discounted benefits 186,185 171,468 158,766 515,419

Discounted benefits – costs (140,000) 148,148 137,174 127,013 Cumulative benefits – costs (140,000) 8,148 145,322 272,336 NPV

Payback in Year 1 Discounted life cycle ROI————> 112%

Assumptions Costs # hours PM (500 hours, $50/hour) 25,000 Staff (1500 hours, $70/hour) 105,000 Outsourced software and services 10,000 Total project costs (all applied in year 0)

Benefits # consultants 400 Hours saved 40 $/hour profit 10 Benefits from saving time 160,000 Benefits from 1% increase in profits 40,000 Total annual projected benefits 200,000

Year

140,000

0

0 1

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Initiating

To officially initiate the Project Management Intranet Site project, Erica knew that main tasks were to identify all of the project stakeholders and to develop the project charter. Table 3-3 shows these processes and their outputs, based on the PMBOK® Guide Fourth Edition. The main outputs are a project charter, stakeholder register, and stakeholder management strate- gy. Another output that Erica found very useful for initiating projects was a formal project kick-off meeting. Descriptions of how these outputs were created and sample documents relat- ed to each of them are provided for this particular project. Recall that every project and every organization is unique, so not all project charters, stakeholder registers, etc. will look the same. You will see examples of several of these documents in later chapters.

Identifying Project Stakeholders Erica met with Joe Fleming, the project s sponsor, to help identify key stakeholders for this project. Recall from Chapter 1 that stakeholders are people involved in or affected by proj- ect activities and include the project sponsor, project team, support staff, customers, users, suppliers, and even opponents to the project. Joe, the project sponsor, knew it would be important to assemble a strong project team, and he was very confident in Erica s ability to lead that team. They decided that key team members should include one of their full- time consultants with an outstanding record, Michael Chen, one part-time consultant, Jessie Faue, who was new to the company and supported the Project Management Office, and two members of the Information Technology (IT) department who supported the current intra- net, Kevin Dodge and Cindy Dawson. They also knew that client inputs would be important for this project, so Joe agreed to call the CEOs of two of the firm s largest clients to see if they would be willing to provide representatives to work on this project at their own expense. All of the internal staff Joe and Erica recommended agreed to work on the project, and the two client representatives would be Kim Phuong and Page Miller. Since many other people would be affected by this project as future users of the new intranet, they also identified other key stakeholders including their directors of IT, Human Resources (HR), and Public Relations (PR), as well as Erica s administrative Helpant.

After Joe and Erica made the preliminary contacts, Erica documented the stakeholders roles, names, organizations, and contact information in a stakeholder register, a document that includes details related to the identified project stakeholders. Table 3-4 provides an example of part of the initial stakeholder register. Since this document would be public, Erica was careful not to include information that might be sensitive, such as how strongly the stakeholder supported the project, potential influence on the project, requirements and

TABLE 3-3 Project initiation knowledge areas, processes, and outputs

Knowledge Area Initiating Process Outputs

Project Integration Management

Develop project charter

Project charter

Project Communications Management

Identify stakeholders Stakeholder register Stakeholder management strategy

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expectations, etc. She would keep these issues in mind discretely and use them in developing the stakeholder management strategy.

A stakeholder management strategy is an approach to help increase the support of stake- holders throughout the project. It includes basic information such as stakeholder names, level of interest in the project, level of influence on the project, and potential management strategies for gaining support or reducing obstacles from that particular stakeholder. Since much of this information can be sensitive, it should be considered confidential. Some project managers do not even write down this information, but they do consider it since stakeholder management is a crucial part of their jobs. Table 3-5 provides an example of part of Erica s stakeholder man- agement strategy for the Project Management Intranet Site project. You will see other examples of documenting stakeholder information in later chapters.

TABLE 3-4 Stakeholder register

Name Position Internal/ External

Project Role

Contact Information

Joe Fleming

CEO Internal Sponsor joe_fleming@jwdconsulting.com

Erica Bell

PMO Director

Internal Project manager

erica_bell@jwdconsulting.com

Michael Chen

Team member

Internal Team member

michael_chen@jwdconsulting.com

Kim Phuong

Business analyst

External Advisor kim_phuong@client1.com

Louise Mills

PR Director

Internal Advisor louise_mills@jwdconsulting.com

TABLE 3-5 Stakeholder management strategy

Name Level of Interest

Level of Influence

Potential Management Strategies

Joe Fleming

High High Joe likes to stay on top of key projects and make money. Have a lot of short, face-to- face meetings and focus on achieving the financial benefits of the project.

Louise Mills

Low High Louise has a lot of things on her plate, and she does not seem excited about this project. She may be looking at other job opportunities. Show her how this project will help the company and her resume.

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Drafting the Project Charter Erica drafted a project charter and had the project team members review it before showing it to Joe. Joe made a few minor changes, which Erica incorporated. Table 3-6 shows the final proj- ect charter (see Chapter 4 for more information on project charters). Note the items included on the project charter and its short length. JWD Consulting believes that project charters should preferably be one or two pages long, and they may refer to other documents, such as a business case, as needed. Erica felt the most important parts of the project charter were the sig- natures of key stakeholders (not included for brevity) and their individual comments. It is hard to get stakeholders to agree on even a one-page project charter, so everyone has a chance to make their concerns known in the comments section. Note that Michael Chen, the senior con- sultant asked to work on the project, was concerned about working on this project when he felt that his other assignments with external clients might have a higher priority. He offered to have an Helpant help as needed. The information technology staff members mentioned their concerns about testing and security issues. Erica knew that she would have to consider these concerns when managing the project.

TABLE 3-6 Project charter

Project Title: Project Management Intranet Site Project Project Start Date: May 2 Projected Finish Date: November 4

Budget Information: The firm has allocated $140,000 for this project. The majority of costs for this project will be internal labor. An initial estimate provides a total of 80 hours per week.

Project Manager: Erica Bell, (310) 555-5896, erica_bell@jwdconsulting.com

Project Objectives: Develop a new capability accessible on JWD Consulting s intranet site to help internal consultants and external customers manage projects more effectively. The intranet site will include several templates and tools that users can download, exam- ples of completed templates and related project management documents used on real projects, important articles related to recent project management topics, an article retrieval service, links to other sites with useful information, and an Ask the Expert fea- ture, where users can post questions they have about their projects and receive advice from experts in the field. Some parts of the intranet site will be accessible free to the pub- lic, other parts will only be accessible to current customers and/or internal consultants, and other parts of the intranet site will be accessible for a fee.

Main Project Success Criteria: The project should pay for itself within one year of completion.

Approach:

Develop a survey to determine critical features of the new intranet site and solicit input from consultants and customers.

Review internal and external templates and examples of project management documents.

Research software to provide security, manage user inputs, and facilitate the article retrieval and Ask the Expert features.

Develop the intranet site using an iterative approach, soliciting a great deal of user feedback.

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Holding a Project Kick-off Meeting Experienced project managers like Erica know that it is crucial to get projects off to a great start. Holding a good kick-off meeting is an excellent way to do this. A kick-off meeting is a meeting held at the beginning of a project so that stakeholders can meet each other, review the goals of the project, and discuss future plans. The kick-off meeting is often held after the business case and project charter are completed, but it could be held sooner, as needed. Even if some or even all project stakeholders must meet virtually, it is still important to have a kick-off meeting.

Erica also knows that all project meetings with major stakeholders should include an agenda. Figure 3-2 shows the agenda that Erica provided for the Project Management Intranet Site project kick-off meeting. Notice the main topics in an agenda:

Meeting objective Agenda (lists in order the topics to be discussed)

Determine a way to measure the value of the intranet site in terms of reduced costs and new revenues, both during the project and one year after project completion.

ROLES AND RESPONSIBILITIES

Name Role Position Contact Information

Joe Fleming Sponsor JWD Consulting, CEO joe_fleming@jwdconsulting.com

Erica Bell Project Manager

JWD Consulting, manager

erica_bell@jwdconsulting.com

Michael Chen Team Member

JWD Consulting, senior consultant

michael_chen@jwdconsulting.com

Jessie Faue Team Member

JWD Consulting, consultant

jessie_faue@jwdconsulting.com

Kevin Dodge Team Member

JWD Consulting, IT department

kevin_dodge@jwdconsulting.com

Cindy Dawson

Team Member

JWD Consulting, IT department

cindy_dawson@jwdconsulting.com

Kim Phuong Advisor Client representative kim_phuong@client1.com

Page Miller Advisor Client representative page_miller@client2.com

Sign-Off: (Signatures of all the above stakeholders) Comments: (Handwritten or typed comments from above stakeholders, if applicable) “I will support this project as time allows, but I believe my client projects take priority. I will have one of my Helpants support the project as needed.” —Michael Chen We need to be extremely careful testing this new system, especially the security in giving access to parts of the intranet site to the public and clients. Kevin Dodge and Cindy Dawson

TABLE 3-6 Project charter (continued)

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The Project Management Process Groups: A Case Study

A section for documenting action items, who they are assigned to, and when each person will complete the action A section to document the date and time of the next meeting

It is good practice to focus on results of meetings, and having sections for documenting action items and deciding on the next meeting date and time on the agenda helps to do so. It is also good practice to document meeting minutes, focusing on key decisions and action items. Erica planned to send the meeting minutes to all meeting participants and other appropriate stakeholders within a day or two of the meeting.

Project Planning Planning is often the most difficult and unappreciated process in project management. Because planning is not always used to facilitate action, many people view planning nega- tively. The main purpose of project plans, however, is to guide project execution. To guide execution, plans must be realistic and useful, so a fair amount of time and effort must go into the planning process; people knowledgeable with the work need to plan the work.

[Date of Meeting]

Project Management Intranet Site Project

FIGURE 3-2 Kick-off meeting agenda

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Chapter 4, Project Integration Management, provides detailed information on preparing a project management plan, and Chapters 5 through 12 describe planning processes for each of the other knowledge areas.

Table 3-7 lists the project management knowledge areas, processes, and outputs of project planning according to the PMBOK® Guide, Fourth Edition. There are many potential outputs from the planning process group, and every knowledge area is included. Just a few planning documents from JWD Consulting s Project Management Intranet Site Project are provided in this chapter as examples, and later chapters include many more examples. Recall that the PMBOK® Guide is only a guide, so many organizations may have different planning outputs based on their particular needs, as is the case in this example. There are many templates related to planning as well, with several listed in the last section of this chapter.

TABLE 3-7 Planning processes and outputs

Knowledge Area Planning Process Outputs

Project Integration Management

Develop project management plan

Project management plan

Project Scope Management

Collect requirements Requirements documents Requirements management plan Requirements traceability matrix

Define scope Project scope statement Project document updates

Create WBS WBS WBS dictionary Scope baseline Project document updates

Project Time Management

Define activities Activity list Activity attributes Milestone list

Sequence activities Project schedule network diagrams Project document updates

Estimate activity resources

Activity resource requirements Resource breakdown structure Project document updates

Estimate activity durations

Activity duration estimates Project document updates

Develop schedule Project schedule Schedule baseline

(continued)

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The Project Management Process Groups: A Case Study

Schedule data Project document updates

Project Cost Management

Estimate costs Activity cost estimates Basis of estimates Project document updates

Determine budget Cost performance baseline Project funding requirements Project document updates

Project Quality Management

Plan quality Quality management plan Quality metrics Quality checklists Process improvement plan Project document updates

Project Human Resource Management

Develop human resource plan

Human resource plan

Project Communications Management

Plan communications Communications management plan Project document updates

Project Risk Management

Plan risk management Risk management plan

Identify risks Risk register

Perform qualitative risk analysis

Risk register updates

Perform quantitative risk analysis

Risk register updates

Plan risk responses Risk register updates Project management plan updates Risk related contract decisions Project document updates

Project Procurement Management

Plan procurements Procurement management plan Procurement statement of work Make-or-buy decisions Procurement documents Source selection criteria Change requests

TABLE 3-7 Planning processes and outputs (continued)

Knowledge Area Planning Process Outputs 98

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Since the Project Management Intranet Site project is relatively small, Erica believes some of the most important planning documents to focus on are the following:

A team contract (not listed in Table 3-7, which is based only on the PMBOK®

Guide) A project scope statement A work breakdown structure (WBS) A project schedule, in the form of a Gantt chart with all dependencies and resources entered A list of prioritized risks (part of a risk register)

All of these documents, as well as other project-related information, will be available to all team members on a project Web site. JWD Consulting has used project Web sites for several years, and has found that they really help facilitate communications and document project information. For larger projects, JWD Consulting also creates many of the other out- puts listed in Table 3-7. (You will learn more about these documents by knowledge area in the following chapters.)

Soon after the project team signed the project charter, Erica organized a team-building meeting for the Project Management Intranet Site Project. An important part of the meeting was helping the project team get to know each other. Erica had met and talked to each member separately, but this was the first time the project team would spend much time together. Jessie Faue worked in the Project Management Office with Erica, so they knew each other well, but Jessie was new to the company and did not know any of the other team mem- bers. Michael Chen was a senior consultant and often worked on the highest priority projects for external clients. He attended the meeting with his Helpant, Jill Anderson, who would also support the project when Michael was too busy. Everyone valued Michael s expertise, and he was extremely straightforward in dealing with people. He also knew both of the client repre- sentatives from past projects. Kevin Dodge was JWD Consulting s intranet guru who tended to focus on technical details. Cindy Dawson was also from the Information Technology depart- ment and had experience working as a business consultant and negotiating with outside sup- pliers. Kim Phuong and Page Miller, the two client representatives, were excited about the project, but they were wary of sharing sensitive information about their company.

Erica had everyone introduce him or herself, and then she facilitated an icebreaker activity so everyone would be more relaxed. She asked everyone to describe his or her dream vacation, assuming cost was no issue. This activity helped everyone get to know each other and show different aspects of their personalities. Erica knew that it was important to build a strong team and have everyone work well together.

Erica then explained the importance of the project, again reviewing the signed project charter. She explained that an important tool to help a project team work together was to have members develop a team contract that everyone felt comfortable signing. JWD Consulting believed in using team contracts for all projects to help promote teamwork and clarify team communications. She explained the main topics covered in a team contract and showed them a team contract template. She then had the team members form two smaller groups, with one consultant, one Information Technology department member, and one client representative in each group. These smaller groups made it easier for every- one to contribute ideas. Each group shared their ideas for what should go into the con- tract, and then they worked together to form one project team contract. Table 3-8 shows the resulting team contract, which took about 90 minutes to create. Erica could see that

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TABLE 3-8 Team contract

Code of Conduct: As a project team, we will:

Work proactively, anticipating potential problems and working to prevent them.

Keep other team members informed of information related to the project.

Focus on what is best for the entire project team.

Participation: We will:

Be honest and open during all project activities.

Encourage diversity in team work.

Provide the opportunity for equal participation.

Be open to new approaches and consider new ideas.

Have one discussion at a time.

Let the project manager know well in advance if a team member has to miss a meeting or may have trouble meeting a deadline for a given task.

Communication: We will:

Decide as a team on the best way to communicate. Since a few team members cannot meet often for face-to-face meetings, we will use e-mail, a project Web site, and other technology to Help in communicating.

Have the project manager facilitate all meetings and arrange for phone and vid- eo conferences, as needed.

Work together to create the project schedule and enter actuals into our enter- prise-wide project management system by 4 p.m. every Friday.

Present ideas clearly and concisely.

Keep discussions on track.

Problem Solving: We will:

Encourage everyone to participate in solving problems.

Only use constructive criticism and focus on solving problems, not blaming people.

Strive to build on each other s ideas.

Meeting Guidelines: We will:

Plan to have a face-to-face meeting the first and third Tuesday morning of every month.

Meet more frequently the first month.

Arrange for telephone or videoconferencing for participants as needed.

Hold other meetings as needed.

Record meeting minutes and send them out via e-mail within 24 hours of all project meetings, focusing on decisions made and action items from each meeting.

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there were different personalities on this team, but she felt they all could work together well.

Erica wanted to keep their meeting to its two-hour time limit. Their next task would be to clarify the scope of the project by developing a project scope statement and WBS. She knew it took time to develop these documents, but she wanted to get a feel for what every- one thought were the main deliverables for this project, their roles in producing those deli- verables, and what areas of the project scope needed clarification. She reminded everyone what their budget and schedule goals were so they would keep that in mind as they dis- cussed the scope of the project. She also asked each person to provide the number of hours he or she would be available to work on this project each month for the next six months. She then had each person write down his or her answers to the following questions:

1. List one item that is most unclear to you about the scope of this project. 2. What other questions do you have or issues do you foresee about the scope of

the project? 3. List what you believe to be the main deliverables for this project. 4. Which deliverables do you think you will help create or review?

Erica collected everyone s inputs. She explained that she would take this information and work with Jessie to develop the first draft of the scope statement that she would e-mail to everyone by the end of the week. She also suggested that they all meet again in one week to develop the scope statement further and to start creating the WBS for the project.

Erica and Jessie reviewed all the information and created the first draft of the scope statement. At their next team meeting, they discussed the scope statement and got a good start on the WBS. Table 3-9 shows a portion of the scope statement that Erica created after a few more e-mails and another team meeting. Note that the scope statement lists the prod- uct characteristics and requirements, summarizes the deliverables, and describes project success criteria in detail.

TABLE 3-9 Scope statement (draft version)

Project Title: Project Management Intranet Site Project Date: May 18 Prepared by: Erica Bell, Project Manager,

erica_bell@jwdconsulting.com

Project Summary and Justification: Joe Fleming, CEO of JWD Consulting, requested this project to Help the company in meeting its strategic goals. The new intranet site will increase visibility of the company s expertise to current and potential clients. It will also help reduce internal costs and improve profitability by providing standard tools, techniques, templates, and project management knowledge to all internal con- sultants. The budget for the project is $140,000. An additional $40,000 per year will be required for operational expenses after the project is completed. Estimated bene- fits are $200,000 each year. It is important to focus on the system paying for itself within one year of its completion.

Product Characteristics and Requirements:

1. Templates and tools: The intranet site will allow authorized users to download files they can use to create project management documents and to help them use project

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management tools. These files will be in Microsoft Word, Excel, Access, Project, or in HTML or PDF format, as appropriate.

2. User submissions: Users will be encouraged to e-mail files with sample templates and tools to the Webmaster. The Webmaster will forward the files to the appropriate per- son for review and then post the files to the intranet site, if desired.

3. Articles: Articles posted on the intranet site will have appropriate copyright permis- sion. The preferred format for articles will be PDF. The project manager may approve other formats.

4. Requests for articles: The intranet site will include a section for users to request someone from the Project Management Office (PMO) at JWD Consulting to research appropriate articles for them. The PMO manager must first approve the request and negotiate payments, if appropriate.

5. Links: All links to external sites will be tested on a weekly basis. Broken links will be fixed or removed within five working days of discovery.

6. The Ask the Expert feature must be user-friendly and capable of soliciting questions and immediately acknowledging that the question has been received in the proper format. The feature must also be capable of forwarding the question to the appropriate expert (as maintained in the system s expert data- base) and capable of providing the status of questions that are answered. The system must also allow for payment for advice, if appropriate.

7. Security: The intranet site must provide several levels of security. All internal employees will have access to the entire intranet site when they enter their security information to access the main, corporate intranet. Part of the intranet will be avail- able to the public from the corporate Web site. Other portions of the intranet will be available to current clients based on verification with the current client database. Other portions of the intranet will be available after negotiating a fee or entering a fixed payment using pre-authorized payment methods.

8. Search feature: The intranet site must include a search feature for users to search by topic, key words, etc.

9. The intranet site must be accessible using a standard Internet browser. Users must have appropriate application software to open several of the templates and tools.

10. The intranet site must be available 24 hours a day, 7 days a week, with one hour per week for system maintenance and other periodic maintenance, as appropriate.

Summary of Project Deliverables

Project management-related deliverables: Business case, charter, team contract, scope statement, WBS, schedule, cost baseline, progress reports, final project presentation, final project report, lessons-learned report, and any other documents required to manage the project.

Product-related deliverables:

1. Survey: Survey current consultants and clients to help determine desired content and features for the intranet site.

2. Files for templates: The intranet site will include templates for at least 20 documents when the system is first implemented, and it will have the capacity to store up to 100 documents. The project team will decide on the initial 20 templates based on survey results.

3. Examples of completed templates: The intranet site will include examples of projects that have used the templates available on the intranet site. For example, if there is a

TABLE 3-9 Scope statement (draft version) (continued)

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template for a business case, there will also be an example of a real business case that uses the template.

4. Instructions for using project management tools: The intranet site will include informa- tion on how to use several project management tools, including the following as a mini- mum: work breakdown structures, Gantt charts, network diagrams, cost estimates, and earned value management. Where appropriate, sample files will be provided in the application software appropriate for the tool. For example, Microsoft Project files will be available to show sample work breakdown structures, Gantt charts, network dia- grams, cost estimates, and applications of earned value management. Excel files will be available for sample cost estimates and earned value management charts.

5. Example applications of tools: The intranet site will include examples of real projects that have applied the tools listed in number 4 above.

6. Articles: The intranet site will include at least 10 useful articles about relevant topics in project management. The intranet site will have the capacity to store at least 1,000 articles in PDF format with an average length of 10 pages each.

7. Links: The intranet site will include links with brief descriptions for at least 20 useful sites. The links will be categorized into meaningful groups.

8. Expert database: In order to deliver an Ask the Expert feature, the system must include and access a database of approved experts and their contact information. Users will be able to search for experts by pre-defined topics.

9. User Requests feature: The intranet site will include an application to solicit and pro- cess requests from users.

10. Intranet site design: An initial design of the new intranet site will include a site map, suggested formats, appropriate graphics, etc. The final design will incorporate com- ments from users on the initial design.

11. Intranet site content: The intranet site will include content for the templates and tools section, articles section, article retrieval section, links section, Ask the Expert section, User Requests feature, security, and payment features.

12. Test plan: The test plan will document how the intranet site will be tested, who will do the testing, and how bugs will be reported.

13. Promotion: A plan for promoting the intranet site will describe various approaches for soliciting inputs during design. The promotion plan will also announce the availability of the new intranet site.

14. Project benefit measurement plan: A project benefit plan will measure the financial value of the intranet site.

Project Success Criteria: Our goal is to complete this project within six months for no more than $140,000. The project sponsor, Joe Fleming, has emphasized the importance of the project paying for itself within one year after the intranet site is complete. To meet this financial goal, the intranet site must have strong user inputs. We must also develop a method for capturing the benefits while the intranet site is being developed and tested, and after it is rolled out. If the project takes a little longer to complete or costs a little more than planned, the firm will still view it as a success if it has a good payback and helps promote the firm s image as an excellent consulting organization.

TABLE 3-9 Scope statement (draft version) (continued)

103

As the project team worked on the scope statement, they also developed the work breakdown structure (WBS) for the project. The WBS is a very important tool in project management because it provides the basis for deciding how to do the work. The WBS also provides a basis for creating the project schedule and performing earned value management for measuring and forecasting project performance. Erica and her team decided to use the project management process groups as the main categories for the WBS, as shown in Figure 3-3. They included completed work from the initiating process to provide a complete picture of the project s scope. The group also wanted to list several milestones on their schedule, such as the completion of key deliverables, so they prepared a separate list of milestones that they would include on the Gantt chart. You will learn more about creating a WBS in Chapter 5, Project Scope Management.

After preparing the WBS, the project team held another face-to-face meeting to develop the project schedule, following the steps outlined in section 2.5 of the WBS. Several of the proj- ect schedule tasks are dependent on one another. For example, the intranet site testing was dependent on the construction and completion of the content tasks. Everyone participated in the development of the schedule, especially the tasks on which each would be working. Some of the tasks were broken down further so the team members had a better understanding of what they had to do and when. They also kept their workloads and cost constraints in mind when developing the duration estimates. For example, Erica was scheduled to work 20 hours per week on this project, and the other project team members combined should not spend more than 60 hours per week on average for the project. As team members provided duration estimates, they also estimated how many work hours they would spend on each task.

After the meeting, Erica worked with Jessie to enter all of the information into Microsoft Project. Erica was using the intranet site project to train Jessie in applying several project management tools and templates. They entered all of the tasks, duration estimates, and dependencies to develop the Gantt chart. Erica decided to enter the resource and cost infor- mation after reviewing the schedule. Their initial inputs resulted in a completion date a few weeks later than planned. Erica and Jessie reviewed the critical path for the project, and Eri- ca had to shorten the duration estimates for a few critical tasks in order to meet their sched- ule goal of completing the project within six months. She talked to the team members working on those tasks, and they agreed that they could plan to work more hours each week on those tasks, if required, in order to complete them on time. Figure 3-4 shows the resulting Gantt chart created in Microsoft Project. Only the executing tasks are expanded to show the subtasks under that category. (You will learn how to use Project 2007 in Appendix A. Chapter 6, Project Time Management, explains Gantt charts and other time management tools.) The baseline schedule projects a completion date of November 1. The project charter had a planned completion date of November 4. Erica wanted to complete the project on time, and although three extra days was not much of a buffer, she felt the baseline schedule was very realistic. She would do her best to help everyone meet their deadlines.

The majority of the costs for this project were internal labor, and the team kept their labor hour constraints in mind when developing task duration estimates. Erica and Jessie entered each project team member s name and labor rate in the resource sheet for their Microsoft Project file. The client representatives were not being paid for their time, so she left their labor rates at the default value of zero. Erica had also included $10,000 for procurement in the financial analysis she prepared for the business case, and she showed Jessie how to enter that amount as a fixed cost split equally between the Ask the Expert and User Requests features,

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1.0 Initiating

1.2 Prepare project charter 1.3 Hold project kick-off meeting

2.0 Planning 2.1 Hold team planning meeting 2.2 Prepare team contract 2.3 Prepare scope statement 2.4 Prepare WBS 2.5 Prepare schedule and cost baseline

2.5.1 Determine task resources 2.5.2 Determine task durations 2.5.3 Determine task dependencies 2.5.4 Create draft Gantt chart 2.5.5 Review and finalize Gantt chart

2.6 Identify, discuss, and prioritize risks 3.0 Executing

3.1 Survey 3.2 User inputs 3.3 Intranet site content

3.3.1 Templates and tools 3.3.2 Articles 3.3.3 Links 3.3.4 Ask the Expert 3.3.5 User requests feature

3.4 Intranet site design 3.5 Intranet site construction 3.6 Intranet site testing 3.7 Intranet site promotion 3.8 Intranet site roll-out 3.9 Project benefits measurement

4.0 Monitoring and Controlling 4.1 Progress reports

5.0 Closing 5.1 Prepare final project report 5.2 Prepare final project presentation 5.3 Lessons learned

1.1 Identify key stakeholders

FIGURE 3-3 JWD Consulting intranet project work breakdown structure (WBS)

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where she thought they would have to purchase some external software and/or services. Erica then helped Jessie assign resources to tasks, entering the projected number of hours everyone planned to work each week on each task. They then ran several cost reports and made a few minor adjustments to resource assignments to make their planned total cost meet their budget constraints. Their cost baseline was very close to their planned budget of $140,000.

The last deliverable her team needed to create within the planning process group was a list of prioritized risks. This information will be updated and expanded as the project progresses in a risk register, which also includes information on root causes of the risks, warning signs that potential risks might occur, and response strategies for the risks. (See Chapter 12, Project Risk Management, for more information on risk registers.) Erica reviewed the risks she had men- tioned in the business case as well as the comments team members made on the project charter and in their team meetings. She held a special meeting for everyone to brainstorm and discuss potential risks. They posted all of the risks they identified on a probability/impact matrix, and then they grouped some of the ideas. There was only one risk in the high probability and high impact category, and several with medium impact in one or both categories. They chose not to list the low probability and low impact risks. After some discussion, the team developed the list of prioritized risks shown in Table 3-10.

Project Execution Executing the project involves taking the actions necessary to ensure that activities in the proj- ect plan are completed. It also includes work required to introduce any new hardware, software, and procedures into normal operations. The products of the project are produced during project execution, and it usually takes the most resources to accomplish this process. Table 3-11 lists the knowledge areas, executing processes, and outputs of project execution listed in the PMBOK® Guide, Fourth Edition. Many project sponsors and customers focus on deliverables related to providing the products, services, or results desired from the project. It is also important to document change requests and prepare updates to planning documents as part of execution. Templates related to this process group are also listed later in this chapter.

FIGURE 3-4 JWD Consulting intranet site project baseline Gantt chart

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For this relatively small project, Erica would work closely with all the team members to make sure they were producing the desired work results. She also used her networking skills to get input from other people in the firm and from external sources at no additional cost to the project. She made sure that everyone who would use the resulting intranet appli- cation also understood what they were producing as part of the project and how it would help them in the future. She knew that providing strong leadership and using good commu- nication skills were crucial to good project execution. The firm did have a formal change request form, but primarily used it for external projects. The firm also had contract specia- lists and templates for several procurement documents that the project team would use for the portions of the project they planned to outsource.

As mentioned earlier, Erica knew that Joe, the CEO and project sponsor, liked to see progress on projects through milestone reports. He also wanted Erica to alert him to any potential issues or problems. Table 3-12 shows a sample of a milestone report for the Project Management Intranet Site Project that Erica reviewed with Joe in mid-June. Erica met with most of her project team members often, and she talked to Joe about once a week to review progress on completing milestones and to discuss any other project issues. Although Erica could have used project management software to create milestone reports, she used word pro- cessing software instead because this project was small and she could more easily manipulate the report format.

Human resource issues often occur during project execution, especially conflicts. At several of the team meetings, Erica could see that Michael seemed to be bored and often left the room to make phone calls to clients. She talked to Michael about the situation, and she discovered that Michael was supportive of the project, but he knew he could only spend a minimal amount of time on it. He was much more productive outside of meetings, so Erica agreed to have Michael attend a minimal amount of project team meetings. She could see

TABLE 3-10 List of prioritized risks

Ranking Potential Risk

1 Lack of inputs from internal consultants

2 Lack of inputs from client representatives

3 Security of new system

4 Outsourcing/purchasing for the article retrieval and Ask the Expert features

5 Outsourcing/purchasing for processing online payment transactions

6 Organizing the templates and examples in a useful fashion

7 Providing an efficient search feature

8 Getting good feedback from Michael Chen and other senior consultants

9 Effectively promoting the new system

10 Realizing the benefits of the new system within one year

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that Michael was contributing to the team by the feedback he provided and his leadership on the Ask the Expert feature for the intranet site. Erica adjusted her communication style to meet his specific needs.

Another problem occurred when Cindy was contacting potential suppliers for software to help with the Ask the Expert and User Requests features. Kevin wanted to write all of the software for the project himself, but Cindy knew it made better business sense to

TABLE 3-11 Executing processes and outputs

Knowledge Area Executing Process

Outputs

Project Integration Management

Direct and manage project execution

Deliverables Work performance information Change requests Project management plan updates Project document updates

Project Quality Management

Perform quality assurance

Organizational process asset updates Change requests Project management plan updates Project document updates

Project Human Resource Management

Acquire project team Develop project team Manage project team

Project staff assignments Resource calendars Project management plan updates Team performance assessment Enterprise environmental factor updates Enterprise environmental factors updates Organizational process assets updates Project management plan updates Change requests

Project Communications Management

Distribute information Manage stake- holders expectations

Organizational process assets updates Organizational process assets updates Change requests Project management plan updates Project document updates

Project Procurement Management

Conduct procurements

Selected sellers Procurement contract award Resource calendars Change requests Project management plan updates Project documents updates

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TABLE 3-12 Milestone Report as of June 17

Milestone Date Status Responsible Issues/ Comments

Initiating Stakeholders identified

May 2 Completed Erica and Joe

Project charter signed May 10 Completed Erica

Project kick-off meeting held

May 13 Completed Erica Went very well

Planning Team contract signed May 13 Completed Erica

Scope statement completed

May 27 Completed Erica

WBS completed May 31 Completed Erica

List of prioritized risks completed

June 3 Completed Erica Reviewed with sponsor and team

Schedule and cost baseline completed

June 13 Completed Erica

Executing Survey completed June 28 Erica Poor response so

far!

Intranet site design completed

July 26 Kevin

Project benefits measurement completed

August 9 Erica

User inputs collected August 9 Jessie

Articles completed August 23 Jessie

Templates and tools completed

September 6 Erica

Ask the Expert completed

September 6 Michael

User Requests feature completed

September 6 Cindy

Links completed September 13 Kevin

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purchase these new software capabilities from a reliable source. Cindy had to convince Kevin that it was worth buying some software from other sources.

Cindy also discovered that their estimate of $10,000 was only about half the amount they needed. She discussed the problem with Erica, explaining the need for some custom development no matter which supplier they chose. Erica agreed that they should go with an outside source, and she asked their sponsor to approve the additional funds. Joe agreed, but he stressed the importance of still having the system pay for itself within a year.

Erica also had to ask Joe for help when the project team received a low response rate to their survey and requests for user inputs. Joe sent out an e-mail to all of JWD Consulting s consultants describing the importance of the project. He also offered five extra vacation days to the person who provided the best examples of how they used tools and templates to man- age their projects. Erica then received informative input from the consultants. Having effec- tive communication skills and strong top management support are essential to good project execution.

Intranet site construction completed

October 4 Kevin

Intranet site testing completed

October 18 Cindy

Intranet site promotion completed

October 25 Erica

Intranet site roll-out completed

October 25 Kevin

Monitoring and Controlling Progress reports Every Friday All

Closing Final project presentation completed

October 27 Erica

Sponsor sign-off on project completed

October 27 Joe

Final project report completed

October 28 Erica

Lessons-learned reports submitted

November 1 All

TABLE 3-12 Milestone Report as of June 17 (continued)

Milestone Date Status Responsible Issues/ Comments110

Chapter 3

TABLE 3-13 Monitoring and controlling processes and outputs

Knowledge Area Monitoring and Controlling Process

Outputs

Project Integration Management

Monitor and control project work

Perform integrated change control

Change requests Project management plan updates Project document updates Change request status updates Project management plan updates Project document updates

Project Scope Management

Verify scope Accepted deliverables Change requests Project document updates

B E S T P R A C T I C E

One way to learn about best practices in project management is by studying recipients of PMI s Project of the Year award. The Quartier International de Montréal (QIM), Montreal s international district, was a 66-acre urban revitalization project in the heart of downtown Montreal. This $90 million, five-year project turned a once unpopular area into a thriving section of the city with a booming real estate market and has generated $770 million in related construction. Clement Demers, PMP, was the director general for the QIM project. He said the team took a unique project execution approach by dividing work into packages that allowed for smaller-scale testing of management techniques and contract awards. Benefiting from experience gained in each stage, managers could then adjust future work segments and management styles accordingly. 8

Other strategies that helped the team succeed included the following:

The team identified champions in each stakeholder group to help inspire others to achieve project goals. The team s communications plan included a Web site dedicated to public concerns. There were two-day reviews at the beginning of each project phase to discuss pro- blems and develop solutions to prevent conflict. Financial investors were asked for input to increase their stake in the project. The team recognized the cost value of hiring high-quality experts, such as archi- tects, engineers, lawyers, and urban planners. They paid all professionals a fixed price for their services and paid their fees quickly.

Project Monitoring and Controlling Monitoring and controlling is the process of measuring progress toward project objectives, monitoring deviation from the plan, and taking corrective action to match progress with the plan. Monitoring and controlling is done throughout the life of a project. It also involves eight of the nine project management knowledge areas. Table 3-13 lists the knowledge areas, monitoring and controlling processes, and outputs, according to the PMBOK® Guide, Fourth Edition. Templates related to this process group are listed later in this chapter.

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Control scope Work performance measurements Organizational process assets updates Change requests Project management plan updates Project document updates

Project Time Management

Control schedule Work performance measurements Organizational process assets updates Change requests Project management plan updates Project document updates

Project Cost Management

Control cost Work performance measurements Budget forecasts Organizational process assets updates Change requests Project management plan updates Project document updates

Project Quality Management

Perform quality control Quality control measurements Validated deliverables Organizational process assets updates Change requests Project management plan updates Project document updates

Project Communications Management

Report performance Performance reports Organizational process assets updates Change requests

Project Risk Management

Monitor and control risks Risk register updates Organizational process assets updates Change requests Project management plan updates Project document updates

Project Procurement Management

Administer procurements Procurement documentation Organizational process assets updates Change requests Project management plan updates

TABLE 3-13 Monitoring and controlling processes and outputs (continued)

Knowledge Area Monitoring and Controlling Process

Outputs 112

On the Project Management Intranet Site Project, there were several updates to the project management plan to reflect changes made to the project scope, schedule, and budget. Erica and other project team members took corrective action when necessary. For example, when they were not getting many responses to their survey, Erica asked Joe for help. When Cindy had trouble negotiating with a supplier, she got help from another senior consultant who had worked with that supplier in the past. Erica also had to request more funds for that part of the project.

Project team members submitted a brief progress report every Friday. They were origi- nally using a company template for progress reports, but Erica found that by modifying the old template, she received better information to help her team work more effectively. She wanted team members not only to report what they did but also to focus on what was going well or not going well and why. This extra information helped team members reflect on the project s progress and identify areas in need of improvement. Table 3-14 is an example of one of Cindy s progress reports.

TABLE 3-14 Sample weekly progress report

Project Name: Project Management Intranet Project Team Member Name: Cindy Dawson, cindy_dawson@jwdconsulting.com Date: August 5

Work completed this week: Worked with Kevin to start the intranet site construction Organized all the content files Started developing a file naming scheme for content files Continued work on Ask the Expert and User Requests features Met with preferred supplier Verified that their software would meet our needs Discovered the need for some customization

Work to complete next week: Continue work on intranet site construction Prepare draft contract for preferred supplier Develop new cost estimate for outsourced work

What s going well and why: The intranet site construction started well. The design was very clear and easy to follow. Kevin really knows what he s doing.

What s not going well and why: It is difficult to decide how to organize the templates and examples. Need more input from senior consultants and clients.

Suggestions/Issues: Hold a special meeting to decide how to organize the templates and examples on the intranet site. Get some sample contracts and help in negotiating with the preferred supplier.

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The Project Management Process Groups: A Case Study

In addition to progress reports, an important tool for monitoring and controlling the proj- ect was using project management software. Each team member submitted his or her actual hours worked on tasks each Friday afternoon by 4 p.m. via the firm s enterprise-wide project management software. They were using the enterprise version of Microsoft Project 2007, so they could easily update their task information via the Web. Erica worked with Jessie to ana- lyze the information, paying special attention to the critical path and earned value data. (See Chapter 6 on Project Time Management for more information on critical path analysis; Chapter 7 on Project Cost Management for a description of earned value management; and Appendix A for more information on using Project 2007 to help control projects.) Erica wanted to finish the project on time, even if it meant spending more money. Joe agreed with that approach, and approved the additional funding Erica projected they would need based on the earned value projections and the need to make up a little time on critical tasks.

Joe again emphasized the importance of the new system paying for itself within a year. Erica was confident that they could exceed the projected financial benefits, and she decided to begin capturing benefits as soon as the project team began testing the system. When she was not working on this project, Erica was managing JWD Consulting s Project Management Office (PMO), and she could already see how the intranet site would help her staff save time and make their consultants more productive. One of her staff members wanted to move into the consulting group, and she believed the PMO could continue to provide its current services with one less person due to this new system a benefit she had not considered before. Several of the firm s client contracts were based on performance and not hours billed, so she was excited to start measuring the value of the new intranet site to their consultants as well.

Project Closing The closing process involves gaining stakeholder and customer acceptance of the final pro- ducts and services and bringing the project, or project phase, to an orderly end. It includes verifying that all of the deliverables are complete, and it often includes a final project report and presentation. Even though many information technology projects are canceled before completion, it is still important to formally close any project and reflect on what can be learned to improve future projects. As philosopher George Santayana said, Those who can- not remember the past are condemned to repeat it.

It is also important to plan for and execute a smooth transition of the project into the normal operations of the company. Most projects produce results that are integrated into the existing organizational structure. For example, JWD Consulting s Project Management Intranet Site Project will require staff to support the intranet site after it is operational. Erica included support costs of $40,000 per year for the projected three-year life of the new system. She also created a transition plan as part of the final report to provide for a smooth transition of the system into the firm s operations. The plan included a list of issues that had to be resolved before the firm could put the new intranet site into production. For example,

Project changes: I think we can stay on schedule, but it looks like we ll need about $10,000 more for out- sourcing. That s doubling our budget in that area.

TABLE 3-14 Sample weekly progress report (continued)

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Michael Chen would not be available to work on the intranet site after the six-month project was complete, so they had to know who would support the Ask the Expert feature and plan some time for Michael to work with him or her.

Table 3-15 lists the knowledge areas, processes, and outputs of project closing based on the PMBOK® Guide, Fourth Edition. During the closing processes of any project, project team members must deliver the final product, service, or result of the project, and update organizational process assets, such as project files and a lessons-learned report. If the proj- ect team procured items during the project, they must formally complete or close out all contracts. Templates related to project closing are listed later in this chapter.

Erica and her team prepared a final report, final presentation, contract files, and lessons-learned report in closing the project. Erica reviewed the confidential, individual lessons-learned report from each team member and wrote one summary lessons-learned report to include in the final documentation, part of which is provided in Table 3-16. Notice the bulleted items in the fourth question, such as the importance of having a good kick-off meeting, working together to develop a team contract, using project management software, and communicating well with the project team and sponsor.

TABLE 3-15 Closing processes and output

Knowledge Area Closing Process Outputs

Project Integration Management

Close project or phase Final product, service, or result transition Organizational process assets updates

Project Procurement Management

Close procurements Closed procurements Organizational process assets updates

TABLE 3-16 Lessons-learned report (abbreviated)

Project Name: JWD Consulting Project Management Intranet Site Project

Project Sponsor: Joe Fleming

Project Manager: Erica Bell

Project Dates: May 2 November 4

Final Budget: $150,000

1. Did the project meet scope, time, and cost goals?

We did meet scope and time goals, but we had to request an additional $10,000, which the sponsor did approve.

(continued)

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2. What were the success criteria listed in the project scope statement?

Below is what we put in our project scope statement under project success criteria: Our goal is to complete this project within six months for no more than

$140,000. The project sponsor, Joe Fleming, has emphasized the impor- tance of the project paying for itself within one year after the intranet site is complete. To meet this financial goal, the intranet site must have strong user input. We must also develop a method for capturing the benefits while the intranet site is being developed and tested, and after it is rolled out. If the project takes a little longer to complete or costs a little more than planned, the firm will still view it as a success if it has a good payback and helps promote the firm s image as an excellent consulting organization.

3. Reflect on whether or not you met the project success criteria.

As stated above, the sponsor was not too concerned about going over bud- get as long as the system would have a good payback period and help pro- mote our firm s image. We have already documented some financial and image benefits of the new intranet site. For example, we have decided that we can staff the PMO with one less person, resulting in substantial cost savings. We have also received excellent feedback from several of our cli- ents about the new intranet site.

4. In terms of managing the project, what were the main lessons your team learned from this project?

The main lessons we learned include the following:

Having a good project sponsor was instrumental to project success. We ran into a couple of difficult situations, and Joe was very creative in helping us solve problems.

Teamwork was essential. It really helped to take time for everyone to get to know each other at the kick-off meeting. It was also helpful to develop and follow a team contract.

Good planning paid off in execution. We spent a fair amount of time developing a good project charter, scope statement, WBS, schedules, and so on. Everyone worked together to develop these planning documents, and there was strong buy-in.

Project management software was very helpful throughout the project.

5. Describe one example of what went right on this project.

6. Describe one example of what went wrong on this project.

7. What will you do differently on the next project based on your experience working on this project?

TABLE 3-16 Lessons-learned report (abbreviated) (continued)

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Erica also had Joe sign a client acceptance form, one of the sample templates on the new intranet site that the project team suggested all consultants use when closing their projects. (You can find this and other templates on the companion Web site for this text.)

Table 3-17 provides the table of contents for the final project report. The cover page included the project title, date, and team member names. Notice the inclusion of a

TABLE 3-17 Final project report table of contents

1. Project Objectives

2. Summary of Project Results

3. Original and Actual Start and End Dates

4. Original and Actual Budget

5. Project Assessment (Why did you do this project? What did you produce? Was the project a success? What went right and wrong on the project?)

6. Transition Plan

7. Annual Project Benefits Measurement Approach

Attachments:

A. Project Management Documentation

Business case

Project charter

Team contract

Scope statement

WBS and WBS dictionary

Baseline and actual Gantt chart

List of prioritized risks

Milestone reports

Progress reports

Contract files

Lessons-learned reports

Final presentation

Client acceptance form

B. Product-Related Documentation

Survey and results

Summary of user inputs

Intranet site content

Intranet site design documents

Test plans and reports

Intranet site promotion information

Intranet site roll-out information

Project benefits measurement information

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transition plan and a plan to analyze the benefits of the system each year in the final report. Also, notice that the final report includes attachments for all the project manage- ment and product-related documents. Erica knew how important it was to provide good final documentation on projects. The project team produced a hard copy of the final docu- mentation and an electronic copy to store on the new intranet site for other consultants to use as desired.

Erica also organized a project closure luncheon for the project team right after their final proj- ect presentation. She used the luncheon to share lessons learned and celebrate a job well done!

As you can see, there are many documents that project teams prepare throughout the life of a project. Many people use templates as a standard format for preparing those documents. Table 3-18 lists templates used in this text for preparing the documents

TABLE 3-18 Templates by process group

Template Name Process Group

Chapter(s) Where Used

Application Software

File Name

Business Case Pre- initiating

3 Word business_case.doc

Business Case Financial Analysis

Pre- initiating

3, 4 Excel business_case_ financials.xls

Stakeholder Register

Initiating 3, 10 Word stakeholder_register.doc

Stakeholder Management Strategy

Initiating 3, 10 Word stakeholder_strategy.doc

Kick-off Meeting Initiating 3 Word kick-off_meeting.doc

Payback Chart Initiating 4 Excel payback.xls

Weighted Decision Matrix

Initiating 4, 12 Excel wtd_decision_matrix.xls

Project Charter Initiating 3, 4, 5 Word charter.doc

Team Contract Planning 3 Word team_contract.doc

Requirements Traceability Matrix

Planning 5 Word reqs_matrix.xls

Scope Statement Planning 3, 4, 5 Word scope_ statement.doc

Statement of Work

Planning 12 Word statement_of_work.doc

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Request for Proposal

Planning 12 Word rfp_outline.doc

Software Project Management Plan

Planning 4 Word sw_project_mgt_plan.doc

Work Breakdown Structure

Planning 3, 5, 6 Word wbs.doc

Gantt Chart Planning, Executing

3, 5, 6 Project Gantt_chart.mpp

Network Diagram Planning, Executing

3, 6 Project network_ diagram.mpp

Project Cost Estimate

Planning 7 Excel cost_estimate.xls

Earned Value Data and Chart

Monitoring and Controlling

7 Excel earned_value.xls

Quality Assurance Plan

Executing 8 Word quality_assurance_ plan.doc

Pareto Chart Monitoring and Controlling

8 Excel pareto_chart.xls

Project Organizational Chart

Planning, Executing

9 PowerPoint project_org_chart.ppt

Responsibility Assignment Matrix

Planning, Executing

9 Excel ram.xls

Resource Histogram

Planning, Executing

9 Excel resource_histogram.xls

Communications Management Plan

Planning 10 Word comm_plan.doc

TABLE 3-18 Templates by process group (continued)

Template Name Process Group

Chapter(s) Where Used

Application Software

File Name

(continued)

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The Project Management Process Groups: A Case Study

Project Description (text)

Planning 10 Word project_desc_text.doc

Project Description (Gantt chart)

Planning 10 Project project_desc_Gantt.mpp

Milestone Report Executing 3, 6 Word milestone_report.doc

Change Request Form

Planning, Monitoring and Controlling

4 Word change_request.doc

Progress Report Monitoring and Controlling

3, 10 Word progress_report.doc

Expectations Management Matrix

Monitoring and Controlling

10 Word expectations.doc

Issue Log Monitoring and Controlling

10 Word issue_log.doc

Probability/ Impact Matrix

Planning, Executing, Monitoring and Controlling

11 PowerPoint prob_impact_matrix.ppt

List of Prioritized Risks

Planning, Executing, Monitoring and Controlling

3, 11 Word list_of_risks.doc

Risk Register Planning, Monitoring and Controlling

11 Excel risk_register.xls

TABLE 3-18 Templates by process group (continued)

Template Name Process Group

Chapter(s) Where Used

Application Software

File Name 120

Chapter 3

shown in this chapter and in later chapters. It lists the template name, chapter number, pro- cess group(s) where you normally use the template, application software used to create it, and the file name for the template. You can download all of these files in one compressed file from the companion Web site for this text or from the author s Web site at www.kathyschwalbe.com. Note that the templates were saved in Office 2003 and 2007 format to allow for easier compatibility. Feel free to modify the templates to meet your needs.

The project management process groups initiating, planning, executing, monitoring and controlling, and closing provide a useful framework for understanding project management. They apply to most projects (information technology and non-information technology) and, along with the project management knowledge areas, help project managers see the big picture of managing a project in their particular organization.

Top 10 Risk Item Tracking

Planning, Monitoring and Controlling

11 Excel top_10.xls

Breakeven/ Sensitivity Analysis

Planning 11 Excel breakeven.xls

Client Acceptance Form

Closing 3, 10 Word client_acceptance.doc

Lessons-Learned Report

Closing 3, 10 Word lessons_learned_ report.doc

Final Project Documentation

Closing 3, 10 Word final_documentation.doc

TABLE 3-18 Templates by process group (continued)

Template Name Process Group

Chapter(s) Where Used

Application Software

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The Project Management Process Groups: A Case Study

C A S E W R A P – U P

Erica Bell and her team finished the Project Management Intranet Site Project on November 4, as planned in their project charter. They did go over budget, however, but Joe had approved Erica s request for additional funds, primarily for purchasing external software and customization. Like any project, they had a few challenges, but they worked together as a team and used good project management to meet their sponsor s and users needs. They received positive initial feedback from internal consultants and some of their clients on the new intranet site. People were asking for templates, examples, and expert advice even before the system was ready. About a year after the project was completed, Erica worked with a member of the Finance department to review the benefits of the new system. The Project Management Office did lose one of its staff members, but it did not request a replacement since the new system helped reduce the PMO s workload. This saved the firm about $70,000 a year for the salary and benefits of that staff position. They also had data to show that the firm saved more than $180,000 on contracts with clients due to the new system, while they had projected just $160,000. The firm was breaking even with the Ask the Expert feature the first year, and Erica estimated that the system provided $30,000 in additional profits the first year by generating new business, not the $40,000 they had projected. However, savings from the PMO staff position salary and the extra savings on contracts more than made up for the $10,000 difference. Joe was proud of the project team and the system they produced to help make JWD Consulting a world-class organization.

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Chapter Summary

Project management involves a number of interlinked processes. The five project management process groups are initiating, planning, executing, monitoring and controlling, and closing. These processes occur at varying levels of intensity throughout each phase of a project, and specific out- comes are produced as a result of each process. Normally the executing processes require the most resources and time, followed by the planning processes.

Mapping the main activities of each project management process group into the nine project management knowledge areas provides a big picture of what activities are involved in project management.

Some organizations develop their own information technology project management methodol- ogies, often using the standards found in the PMBOK® Guide as a foundation. It is important to tailor project management methodologies to meet the organization s particular needs. Popular methodologies like PRINCE2, agile methodologies, RUP, and Six Sigma include project manage- ment processes.

The JWD Consulting case study demonstrates how one organization managed an information technology project from its initiation through its closure. The case study provides several samples of outputs produced for initiating (including pre-initiating), planning, executing, monitoring and con- trolling, and closing as follows:

Business case Stakeholder register Stakeholder management strategy Project charter Kick-off meeting agenda Team contract Work breakdown structure Gantt chart List of prioritized risks Milestone report Progress report Lessons-learned report Final project report

Later chapters in this text provide detailed information on creating these and other project man- agement documents and using several of the tools and techniques described in this case study.

Quick Quiz

1. A ______ is a series of actions directed toward a particular result.

a. goal

b. process

c. plan

d. project

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The Project Management Process Groups: A Case Study

2. ______ processes include coordinating people and other resources to carry out the project plans and produce the products, services, or results of the project or phase.

a. Initiating

b. Planning

c. Executing

d. Monitoring and controlling

e. Closing

3. Which process group normally requires the most resources and time?

a. Initiating

b. Planning

c. Executing

d. Monitoring and controlling

e. Closing

4. What methodology was developed in the U.K., defines 45 separate subprocesses, and orga- nizes these into eight process groups?

a. Six Sigma

b. RUP

c. PMBOK® Guide

d. PRINCE2

5. Which of the following outputs is often completed before initiating a project?

a. stakeholder register

b. business case

c. project charter

d. kick-off meeting

6. A work breakdown structure, project schedule, and cost estimates are outputs of the ______ process.

a. initiating

b. planning

c. executing

d. monitoring and controlling

e. closing

7. Initiating involves developing a project charter, which is part of the project ______ manage- ment knowledge area.

a. integration

b. scope

c. communications

d. risk

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8. ______ involves measuring progress toward project objectives and taking corrective actions.

a. Initiating

b. Planning

c. Executing

d. Monitoring and controlling

e. Closing

9. What type of report do project teams create to reflect on what went right and what went wrong with the project?

a. lessons-learned report

b. progress report

c. final project report

d. business case

10. Many people use ______ to have a standard format for preparing various project manage- ment documents.

a. methodologies

b. templates

c. project management software

d. standards

Quick Quiz Answers

1. b; 2. c; 3. c; 4. d; 5. b; 6. b; 7. a; 8. d; 9. a; 10. b

Discussion Questions

1. Briefly describe what happens in each of the five project management process groups (initi- ating, planning, executing, monitoring and controlling, and closing). What types of activities are done before initiating a project?

2. Approximately how much time do good project managers spend on each process group and why?

3. Why do organizations need to tailor project management concepts, such as those found in the PMBOK® Guide, to create their own methodologies?

4. What are some of the key outputs of each process group? 5. What are some of the typical challenges project teams face during each of the five process

groups?

Exercises

1. Study the WBS and Gantt charts provided in Figures 3-3 and 3-4. Enter the WBS into Project 2007, indenting tasks as shown to create the WBS hierarchy. Do not enter durations or dependencies. Print the resulting Gantt chart. See the scope management section of Appen- dix A for help using Project 2007.

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2. Read the article by William Munroe regarding BlueCross BlueShield of Michigan s informa- tion technology project management methodology (available on the companion Web site for this text under Chapter 3). Or, research another methodology, such as PRINCE2, an agile methodology, RUP, or Six Sigma, and how organizations use it, citing at least two refer- ences. Why do you think organizations spend time and money tailoring a methodology to their environment? Write a two-page summary of your findings and your opinion on the topic.

3. Read the ResNet Case Study (available from the companion Web site for this text under Chapter 3). This real case study about Northwest Airlines reservation system illustrates another application of the project management process groups. Write a three- page paper summarizing the main outputs produced during each project process group in this case. Also, include your opinion of whether or not Peeter Kivestu was an effective proj- ect manager. If you prefer, find another well-documented project and summarize it instead.

4. JWD Consulting wrote a business case before officially initiating the Project Management Intranet Site project. Review the contents of this document (Table 3-2) and find two articles describing the need to justify investing in IT projects. In addition, describe whether you think most projects should include a business case before the project spon- sors officially approve the project. Write a two-page paper summarizing your findings and opinions.

5. Read an article about a recipient of PMI s Project of the Year award. Past winners include Fluor Corporation s Fernald Closure Project, Kaiser-Hill s Rocky Flats Nuclear Plant Closing, the Quartier International de Montréal district revitalization project, Saudi Aramco Haradh Gas Plant, and the Winter Olympics Salt Lake Organizing Committee. Write a one-page paper summarizing the project, focusing on how the project manager and team used good project management practices.

6. Download the template files used in this text from the companion Web site or from www. kathyschwalbe.com. Review several of them, and look at examples of how they are used in this text. Also search the Internet for other template files. Summarize what you think about using templates and how you think they can help project managers and their teams in a two-page paper. Also discuss potential problems with using templates.

Companion Web Site

Visit the companion Web site for this text at www.cengage.com/mis/schwalbe to access:

References cited in the text and additional suggested readings for each chapter

Template files

Lecture notes

Interactive quizzes

Podcasts

Links to general project management Web sites

And more

See the Preface of this text for more information on accessing the companion Web site.

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Key Terms

closing processes — formalizing acceptance of the project or project phase and ending it efficiently

executing processes — coordinating people and other resources to carry out the project plans and produce the products, services, or results of the project or project phase

initiating processes — defining and authorizing a project or project phase kick-off meeting — a meeting held at the beginning of a project so that stakeholders can meet

each other, review the goals of the project, and discuss future plans

methodology — describes how things should be done monitoring and controlling processes — regularly measuring and monitoring progress to

ensure that the project team meets the project objectives

planning processes — devising and maintaining a workable scheme to ensure that the project addresses the organization’s needs

process — a series of actions directed toward a particular result project management process groups — the progression of project activities from initiation to

planning, executing, monitoring and controlling, and closing

PRojects IN Controlled Environments (PRINCE2) — a project management methodology developed in the U.K. that defines 45 separate sub-processes and organizes these into eight process groups

Rational Unified Process (RUP) — an iterative software development process that focuses on team productivity and delivers software best practices to all team members

Six Sigma methodologies — DMAIC (Define, Measure, Analyze, Improve, and Control) is used to improve an existing business process and DMADV (Define, Measure, Analyze, Design, and Verify) is used to create new product or process designs

stakeholder register — a document that includes details related to the identified project stakeholders

standard — describes best practices for what should be done

End Notes

1 Andy Crowe, Alpha Project Managers: What the Top 2% Know That Everyone Else Does Not, Velociteach Press, Atlanta, GA, (2006).

2 Phillip A. Pell, Comments posted at Elaine Varron, No Easy IT Fix for IRS [formerly For the IRS, There s No EZ Fix ], CIO.com (April 1, 2004).

3 Grant Gross, Report: IRS information security still poor, InfoWorld (January 8, 2008). 4 PCI Group, PM Best Practices Report, (October 2001). 5 Brian Jacks, Lord of the Rings: The Two Towers Extended Edition (New Line), Underground

Online (UGO.com) (accessed August 4, 2004). 6 Bill Cottrell, Standards, compliance, and Rational Unified Process, Part I: Integrating RUP and

the PMBOK, IBM Developerworks (May 10, 2004). 7 Sarah Fister Gale, Outstanding Organizations 2007, PM Network, (October 2007), p. 5. 8 Libby Elis, Urban Inspiration, PM Network, (January 2006), p. 30.

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