9781119165354

PROJECT MANAGEMENT

THE #1 GUIDE FOR STUDENTS AND PROFESSIONALS, NOW UPDATED FOR THE LATEST TRENDS AND EMERGING ISSUES

Project Management, or the “Project Management bible” as it’s widely known, provides practical guidance on all aspects of project management. It features a streamlined approach to PM functions—in full alignment with the concepts and standards outlined in PMI’s latest A Guide to the Project Management Body of Knowledge, (PMBOK^® Guide)—without stinting on detailed coverage of the tools and methods used at all stages of a project.

This 12th Edition has been updated to reflect recent changes to the PMBOK^® Guide—Sixth Edition, and features in-depth coverage of emerging topics, including global stakeholder management, causes of failure, agile project management, project governance failure, customer approval milestones, classifying project metrics, and more. Also, supplementary materials are available for students, professionals, and instructors.

Understand organizational structures and project management functions
Learn how to control costs, manage risk, and analyze trade-offs
Examine different methods used for planning, scheduling, QA, and more
Work effectively with customers and stakeholders from around the globe

As projects increase in scope and complexity, managing them across time zones, language barriers, and technology platforms requires a systematic approach that accounts for every detail. All the more reason to keep Project Management, 12^th Edition within arm’s reach throughout all stages of the projects you manage.

HAROLD KERZNER, PHD, is Senior Executive Director for Project Management at the International Institute for Learning, Inc. (IIL), a global learning solutions company offering professional training and consulting services worldwide. Dr. Kerzner's profound effect on the project management industry inspired IIL to establish, in coordination with the Project Management Institute (PMI), the Kerzner International Project Manager of the Year Award, which is presented to a distinguished PMP^® credential holder or global equivalent each year.

Preface xix

1 Overview 1

1.0 Introduction 1

1.1 Understanding Project Management 2

1.2 Defining Project Success 6

1.3 Trade-Offs and Competing Constraints 7

1.4 The Entry-Level Project Manager 9

1.5 The Talent Triangle 10

1.6 Technology-Based Projects 10

1.7 The Project Manager–Line Manager Interface 11

1.8 Defining the Project Manager’s Role 13

1.9 Defining the Functional Manager’s Role 15

1.10 Defining the Functional Employee’s Role 17

1.11 Defining the Executive’s Role 17

1.12 Working with Executives 17

1.13 Committee Sponsorship/Governance 19

1.14 The Project Manager as the Planning Agent 20

1.15 Project Champions 21

1.16 Project-Driven versus Non–Project-Driven Organizations 22

1.17 Marketing in the Project-Driven Organization 24

1.18 Classification of Projects 25

1.19 Location of the Project Manager 26

1.20 Differing Views of Project Management 27

1.21 Public-Sector Project Management 28

1.22 International Project Management 31

1.23 Concurrent Engineering: A Project Management Approach 32

1.24 Added Value 32

1.25 Studying Tips for the PMI^® Project Management Certification Exam 33

Problems 36

Case Study

Williams Machine Tool Company 37

2 Project Management Growth: Concepts and Definitions 39

2.0 Introduction 39

2.1 The Evolution of Project Management: 1945–2017 39

2.2 Resistance to Change 43

2.3 Systems, Programs, and Projects: A Definition 45

2.4 Product versus Project Management: A Definition 47

2.5 Maturity and Excellence: A Definition 49

2.6 Informal Project Management: A Definition 50

2.7 The Many Faces of Success 52

2.8 The Many Faces of Failure 54

2.9 Causes of Project Failure 57

2.10 Degrees of Success and Failure 59

2.11 The Stage-Gate Process 60

2.12 Project Life Cycles 61

2.13 Gate Review Meetings (Project Closure) 65

2.14 Engagement Project Management 66

2.15 Project Management Methodologies: A Definition 67

2.16 From Enterprise Project Management Methodologies to Frameworks 69

2.17 Methodologies Can Fail 70

2.18 Organizational Change Management and Corporate Cultures 71

2.19 Benefits Harvesting and Cultural Change 76

2.20 Agile and Adaptive Project Management Cultures 77

2.21 Project Management Intellectual Property 77

2.22 Systems Thinking 79

2.23 Studying Tips for the PMI^® Project Management Certification Exam 82

Problems 85

Case Study

Creating a Methodology 86

3 Organizational Structures 89

3.0 Introduction 89

3.1 Organizational Work Flow 90

3.2 Traditional (Classical) Organization 91

3.3 Pure Product (Projectized) Organization 93

3.4 Matrix Organizational Form 95

3.5 Modification of Matrix Structures 99

3.6 The Strong, Weak, or Balanced Matrix 101

3.7 Project Management Offices 101

3.8 Selecting the Organizational Form 103

3.9 Strategic Business Unit (SBU) Project Management 106

3.10 Transitional Management 107

3.11 Seven Fallacies that Delay Project Management Maturity 109

3.12 Studying Tips for the PMI^® Project Management Certification Exam 111

Problems 113

4 Organizing and Staffing the Project Office and Team 115

4.0 Introduction 115

4.1 The Staffing Environment 116

4.2 Selecting the Project Manager: an Executive Decision 117

4.3 Skill Requirements for Project and Program Managers 121

4.4 Special Cases in Project Manager Selection 125

4.5 Today’s Project Managers 126

4.6 Duties and Job Descriptions 127

4.7 The Organizational Staffing Process 128

4.8 The Project Office 131

4.9 The Functional Team 133

4.10 The Project Organizational Chart 133

4.11 Selecting the Project Management Implementation Team 136

4.12 Mistakes Made by Inexperienced Project Managers 139

4.13 Studying Tips for the PMI^® Project Management Certification Exam 140

Problems 142

5 Management Functions 145

5.0 Introduction 145

5.1 Controlling 146

5.2 Directing 146

5.3 Project Authority 148

5.4 Interpersonal Influences 152

5.5 Barriers to Project Team Development 154

5.6 Suggestions for Handling the Newly Formed Team 157

5.7 Team Building as an Ongoing Process 158

5.8 Leadership in a Project Environment 159

5.9 Value-Based Project Leadership 160

5.10 Transformational Project Management Leadership 163

5.11 Organizational Impact 163

5.12 Employee–Manager Problems 165

5.13 General Management Pitfalls 166

5.14 Time Management Pitfalls 167

5.15 Management Policies and Procedures 171

5.16 Human Behavior Education 171

5.17 Studying Tips for the PMI^® Project Management Certification Exam 174

Problems 177

Case Studies

The Trophy Project 178

McRoy Aerospace 180

The Poor Worker 182

The Prima Donna 182

The Reluctant Workers 184

Leadership Effectiveness (A) 185

Leadership Effectiveness (B) 189

Motivational Questionnaire 195

6 Communications Management 203

6.0 Introduction 203

6.1 Modeling the Communications Environment 203

6.2 The Project Manager as a Communicator 208

6.3 Project Review Meetings 212

6.4 Project Management Bottlenecks 212

6.5 Active Listening 213

6.6 Communication Traps 214

6.7 Project Problem Solving 215

6.8 Brainstorming 223

6.9 Predicting the Outcome of a Decision 224

6.10 Facilitation 226

6.11 Studying Tips for the PMI^® Project Management Certification Exam 228

Problems 230

Case Studies

Communication Failures 231

The Team Meeting 234

7 Conflicts 237

7.0 Introduction 237

7.1 The Conflict Environment 238

7.2 Types of Conflicts 239

7.3 Conflict Resolution 240

7.4 The Management of Conflicts 241

7.5 Conflict Resolution Modes 242

7.6 Understanding Superior, Subordinate, and Functional Conflicts 244

7.7 Studying Tips for the PMI^® Project Management Certification Exam 246

Problems 248

Case Studies

Facilities Scheduling at Mayer Manufacturing 248

Telestar International 250

Handling Conflict in Project Management 251

8 Special Topics 257

8.0 Introduction 257

8.1 Performance Measurement 257

8.2 Financial Compensation and Rewards 262

8.3 Effective Project Management in the Small Business Organization 270

8.4 Mega Projects 271

8.5 Morality, Ethics, and the Corporate Culture 273

8.6 Professional Responsibilities 275

8.7 Internal and External Partnerships 278

8.8 Training and Education 279

8.9 Integrated Product/Project Teams 281

8.10 Virtual Project Teams 283

8.11 Managing Innovation Projects 284

8.12 Agile Project Management 287

8.13 Studying Tips for the PMI^® Project Management Certification Exam 289

Problems 295

Case Study

Is It Fraud? 295

9 The Variables for Success 299

9.0 Introduction 299

9.1 Predicting Project Success 299

9.2 Project Management Effectiveness 302

9.3 Expectations 303

9.4 Lessons Learned 305

9.5 Understanding Best Practices 306

9.6 Studying Tips for the PMI^® Project Management Certification Exam 312

Problems 313

Case Study

Radiance International 313

10 Working with Executives 317

10.0 Introduction 317

10.1 The Project Sponsor 317

10.2 Handling Disagreements with the Sponsor 327

10.3 The Collective Belief 327

10.4 The Exit Champion 328

10.5 The In-House Representatives 329

10.6 Stakeholder Relations Management 329

10.7 Project Portfolio Management 335

10.8 Politics 337

10.9 Studying Tips for the PMI^® Project Management Certification Exam 338

Problems 339

Case Studies

The Prioritization of Projects 340

The Irresponsible Sponsors 341

Selling Executives on Project Management 342

11 Planning 345

11.0 Introduction 345

11.1 Business Case 346

11.2 Validating the Assumptions 348

11.3 Validating the Objectives 351

11.4 General Planning 352

11.5 Life-Cycle Phases 355

11.6 Life-Cycle Milestones 356

11.7 Kickoff Meetings 358

11.8 Understanding Participants’ Roles 360

11.9 Establishing Project Objectives 360

11.10 The Statement of Work 361

11.11 Project Specifications 363

11.12 Data Item Milestone Schedules 364

11.13 Work Breakdown Structure 365

11.14 Wbs Decomposition Problems 370

11.15 Work Breakdown Structure Dictionary 372

11.16 Project Selection 373

11.17 The Role of the Executive in Planning 377

11.18 Management Cost and Control System 378

11.19 Work Planning Authorization 379

11.20 Why Do Plans Fail? 380

11.21 Stopping Projects 381

11.22 Handling Project Phaseouts and Transfers 381

11.23 Detailed Schedules and Charts 383

11.24 Master Production Scheduling 385

11.25 Project Plan 386

11.26 The Project Charter 391

11.27 Project Baselines 392

11.28 Verification and Validation 395

11.29 Management Control 396

11.30 Configuration Management 397

11.31 Enterprise Project Management Methodologies 398

11.32 Project Audits 399

11.33 Studying Tips for the PMI^® Project Management Certification Exam 400

Problems 404

12 Network Scheduling Techniques 409

12.0 Introduction 409

12.1 Network Fundamentals 411

12.2 Graphical Evaluation and Review Technique (GERT) 416

12.3 Dependencies 417

12.4 Slack Time 417

12.5 Network Replanning 423

12.6 Estimating Activity Time 428

12.7 Estimating Total Project Time 429

12.8 Total PERT /CPM Planning 430

12.9 Crash Times 431

12.10 PERT /CPM Problem Areas 436

12.11 Alternative PERT /CPM Models 436

12.12 Precedence Networks 437

12.13 Lag 440

12.14 Scheduling Problems 441

12.15 The Myths of Schedule Compression 441

12.16 Project Management Software 442

12.17 Studying Tips for the PMI^® Project Management Certification Exam 445

Problems 448

Case Study

The Invisible Sponsor 451

13 Pricing and Estimating 453

13.0 Introduction 453

13.1 Global Pricing Strategies 453

13.2 Types of Estimates 455

13.3 Pricing Process 458

13.4 Organizational Input Requirements 460

13.5 Labor Distributions 462

13.6 Overhead Rates 463

13.7 Materials/Support Costs 465

13.8 Pricing Out the Work 466

13.9 Smoothing Out Department Man-Hours 469

13.10 The Pricing Review Procedure 471

13.11 Systems Pricing 472

13.12 Developing the Supporting/Backup Costs 474

13.13 The Low-Bidder Dilemma 474

13.14 Special Problems 477

13.15 Estimating Pitfalls 478

13.16 Estimating High-Risk Projects 479

13.17 Project Risks 480

13.18 The Disaster of Applying the 10 Percent Solution to Project Estimates 483

13.19 Life-Cycle Costing (LCC) 484

13.20 Logistics Support 486

13.21 Economic Project Selection Criteria: Capital Budgeting 488

13.22 Payback Period 488

13.23 The Time Value of Money and Discounted Cash Flow (DCF) 489

13.24 Net Present Value (NPV) 490

13.25 Internal Rate of Return (IRR) 490

13.26 Comparing IRR, NPV, and Payback 491

13.27 Risk Analysis 492

13.28 Capital Rationing 492

13.29 Project Financing 494

13.30 Studying Tips for the PMI^® Project Management Certification Exam 496

Problems 498

Case Study

The Estimating Problem 499

14 Cos t Control 501

14.0 Introduction 501

14.1 Understanding Control 503

14.2 The Operating Cycle 506

14.3 Cost Account Codes 506

14.4 Budgets 511

14.5 The Earned Value Measurement System (EVMS) 512

14.6 Variance and Earned Value 513

14.7 The Cost Baseline 529

14.8 Justifying the Costs 531

14.9 The Cost Overrun Dilemma 532

14.10 Recording Material Costs Using Earned Value Measurement 534

14.11 Material Variances: Price and Usage 535

14.12 Summary Variances 536

14.13 Status Reporting 537

14.14 Cost Control Problems 537

14.15 Studying Tips for the PMI^® Project Management Certification Exam 539

Problems 542

Case Studies

The Bathtub Period 544

Franklin Electronics 545

15 Metrics 549

15.0 Introduction 549

15.1 Project Management Information Systems 549

15.2 Enterprise Resource Planning 550

15.3 Project Metrics 550

15.4 Key Performance Indicators (KPIS) 555

15.5 Value-Based Metrics 561

15.6 Dashboards and Scorecards 566

15.7 Business Intelligence 569

15.8 Studying Tips for the PMI^® Project Management Certification Exam 570

Problems 573

16 Trade-off Analysis in a Project Environment 575

16.0 Introduction 575

16.1 Methodology for Trade-Off Analysis 578

16.2 Contracts: Their Influence on Projects 593

16.3 Industry Trade-Off Preferences 594

16.4 Project Manager’s Control of Trade-Offs 597

16.5 Studying Tips for the PMI^® Project Management Certification Exam 597

Problems 598

17 Risk Management 599

17.0 Introduction 599

17.1 Definition of Risk 601

17.2 Tolerance for Risk 603

17.3 Definition of Risk Management 604

17.4 Certainty, Risk, and Uncertainty 604

17.5 Risk Management Process 610

17.6 Plan Risk Management 611

17.7 Risk Identification 612

17.8 Risk Analysis 613

17.9 Qualitative Risk Analysis 615

17.10 Quantitative Risk Analysis 616

17.11 Plan Risk Response 619

17.12 Monitor and Control Risks 621

17.13 Some Implementation Considerations 622

17.14 The Use of Lessons Learned 623

17.15 Dependencies between Risks 624

17.16 The Impact of Risk Handling Measures 628

17.17 Risk and Concurrent Engineering 631

17.18 Studying Tips for the PMI^® Project Management Certification Exam 633

Problems 637

Case Studies

Teloxy Engineering (A) 640

Teloxy Engineering (B) 640

The Risk Management Department 641

18 Learning Curves 643

18.0 Introduction 643

18.1 General Theory 643

18.2 The Learning Curve Concept 644

18.3 Graphic Representation 646

18.4 Key Words Associated with Learning Curves 647

18.5 The Cumulative Average Curve 648

18.6 Sources of Experience 649

18.7 Developing Slope Measures 653

18.8 Unit Costs and Use of Midpoints 654

18.9 Selection of Learning Curves 654

18.10 Follow-On Orders 655

18.11 Manufacturing Breaks 656

18.12 Learning Curve Limitations 656

18.13 Competitive Weapon 657

18.14 Studying Tips for the PMI^® Project Management Certification Exam 658

Problems 659

19 Contract Management 661

19.0 Introduction 661

19.1 Procurement 662

19.2 Plan Procurements 664

19.3 Conducting the Procurements 667

19.4 Conduct Procurements: Request Seller Responses 668

19.5 Conduct Procurements: Select Sellers 669

19.6 Types of Contracts 673

19.7 Incentive Contracts 678

19.8 Contract Type versus Risk 680

19.9 Contract Administration 680

19.10 Contract Closure 683

19.11 Using a Checklist 684

19.12 Proposal-Contractual Interaction 684

19.13 Studying Tips for the PMI^® Project Management Certification Exam 686

Problems 691

Case Studies

To Bid or Not to Bid 692

The Management Reserve 693

20 Quality Management 697

20.0 Introduction 697

20.1 Definition of Quality 698

20.2 The Quality Movement 699

20.2 Quality Management Concepts 703

20.3 The Cost of Quality 707

20.4 The Seven Quality Control Tools 709

20.5 Acceptance Sampling 721

20.6 Implementing Six Sigma 722

20.7 Quality Leadership 723

20.8 Responsibility for Quality 724

20.9 Quality Circles 725

20.10 Total Quality Management (TQM) 725

20.11 Studying Tips for the PMI^® Project Management Certification Exam 728

Problems 731

21 Mod ern Developments in Project Management 733

21.0 Introduction 733

21.1 The Project Management Maturity Model (PMMM) 733

21.2 Developing Effective Procedural Documentation 737

21.3 Project Management Methodologies 741

21.4 Continuous Improvement 742

21.5 Capacity Planning 743

21.6 Competency Models 745

21.7 Managing Multiple Projects 747

21.8 The Business of Scope Changes 748

21.9 End-of-Phase Review Meetings 752

Case Study

Honicker Corporation 753

Kemko Manufacturing 755

Appendix A: Solution to Leadership Exercise 759

Appendix B: Solutions to the Project Management Conflict Exercise 765

Appendix C: Dorale Products Case Studies 771

Appendix D: Solutions to the Dorale Products Case Studies 783

Appendix E: Alignment of the PMBOK^® Guide to the Text 789

Index 795

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Project Management

Project Management

1119165350

Summary

Author Biography

Table of Contents

Supplemental Materials