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AP/ADMS 3353 Project Management

Course Introduction

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Abdullah Dasci, Ph.D.

• At York since August 2005

• Previously taught at McGill University,

University of Alberta, and UNC at Charlotte

• Research: Competitive location, dynamic

pricing, supply chain management,

production-distribution systems

• On with the course introduction…

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Project Management

A project is a one-time endeavor undertaken to create a unique product or service.

Project management is the discipline of organizing and managing resources to complete a project within defined scope, time, and cost constraints.

A project is a one-time endeavor undertaken to create a unique product or service.

Project management is the discipline of organizing and managing resources to complete a project within defined scope, time, and cost constraints.

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AK/ADMS 3353 Project Management

Course web page: http://www.yorku.ca/dasci/PM.htm

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AK/ADMS 3533 Project Management

Chapter 1: Modern Project Management

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Road Map

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What Is a Project?

• Project Defined– A complex, nonroutine, one-time effort limited by

time, budget, resources, and performance specifications designed to meet customer needs.

• Major Characteristics of a Project– Has an established objective.– Has a defined life span with a beginning and an end.– Typically requires across-the-organizational

participation.– Involves doing something never been done before.– Has specific time, cost, and performance

requirements.

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Comparison of Routine Work with Projects

TABLE 1.1

Routine, Repetitive Work

Taking class notes

Daily entering sales receipts into the accounting ledger

Responding to a purchasing request

Routine manufacture of an Apple iPod

Attaching tags on a manufactured product

Projects

Writing a term paper

Setting up a sales kiosk for a professional accounting meeting

Developing a supply-chain information system

Designing an iPod that is approximately 2 X 4 inches, interfaces with PC, and stores 10,000 songs

Wire-tag projects for GE and Wal-Mart

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Programs versus Projects

• Program Defined– A series of coordinated, related, multiple projects

that continue over an extended time and are intended to achieve a goal.

– A higher-level group of projects targeted at a common goal.

– Example:• Project: completion of a required course in project

management.• Program: completion of all courses required for a

business major.

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Project Life Cycle

FIGURE 1.1

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The Challenge of Project Management

• The Project Manager

– Manages temporary, non-repetitive activities and frequently acts independently of the formal organization.

• Marshals resources for the project• Provides direction, coordination, and integration to the

project team• Manages a diverse set of project stakeholders• Dependent upon others for technical answers• Is responsible for performance and success of the

project

– Must induce the right people at the right time to address the right issues and make the right decisions.

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The Importance of Project Management

• Factors Leading to the Increased Use of Project Management:– Compression of the product life cycle– Global competition– Knowledge explosion– Corporate downsizing/business-process-re-

engineering– Increased customer focus

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Growth in PMP Certification

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Integrated Project Management Systems

• Problems Resulting from the Use of Piecemeal Project Management Systems:

– Do not tie together the overall strategies of the firm.

– Fail to prioritize selection of projects by their importance of their contribution to the firm.

– Are not integrated throughout the project life cycle.

– Do not match project planning and controls with organizational culture to make appropriate adjustments in support of project endeavors.

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Integrated Management of Projects

FIGURE 1.2

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The Technical and Sociocultural Dimensionsof the Project Management Process

FIGURE 1.3

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Organization Strategy and Project Selection

Chapter 2

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Road Map

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Why Project Managers Need to Understand the Strategic Management Process

• Changes in the Organization’s Mission and Strategy– Project managers must respond to changes with

appropriate decisions about future projects and adjustments to current projects.

– Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission.

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The Strategic Management Process: An Overview

• Strategic Management– Provides the theme and focus of the future

direction for the firm.• Responding to changes in the external environment—

environmental scanning• Allocating scarce resources of the firm to improve its

competitive position—internal responses to new action programs

– Requires strong links among mission, goals, objectives, strategy, and implementation.

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Strategic Management Process (cont’d)

•Four of Activities of the Strategic Management Process

1. Review and define the organizational mission.

2. Set long-range goals and objectives.

3. Analyze and formulate strategies to reach objectives.

4. Implement strategies through projects.

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Project Portfolio Management Problems

• The Implementation Gap– The lack of understanding and consensus on

strategy among top management and middle-level (functional) managers who independently implement the strategy.

• Organization Politics– Project selection is based on the persuasiveness

and power of people advocating the projects.• Resource Conflicts and Multitasking

– The multiproject environment creates interdependency relationships of shared resources which results in the starting, stopping, and restarting projects.

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Benefits of Project Portfolio Management

• Builds discipline into project selection process.• Links project selection to strategic metrics.• Prioritizes project proposals across a common set

of criteria, rather than on politics or emotion.• Allocates resources to projects that align with

strategic direction.• Balances risk across all projects.• Justifies killing projects that do not support

organization strategy.• Improves communication and supports

agreement on project goals.

EXHIBIT 2.2

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Portfolio of Projects by Type

FIGURE 2.2

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A Portfolio Management System

• Selection Criteria– Financial: payback, net present value (NPV),

internal rate of return (IRR)– Non-financial: projects of strategic

importance to the firm.

• Multi-Weighted Scoring Models– Use several weighted selection criteria to

evaluate project proposals.

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Financial Models

• The Payback Model– Measures the time it will take to recover the

project investment.– Shorter paybacks are more desirable.– Emphasizes cash flows, a key factor in business.– Limitations of payback:

• Ignores the time value of money.• Assumes cash inflows for the investment period (and

not beyond).• Does not consider profitability.

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Financial Models (cont’d)

• The Net Present Value (NPV) Model

– Uses management’s minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows.

• Positive NPV: the project meets the minimum desired rate of return and is eligible for further consideration.

• Negative NPV: project is rejected.

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Net Present Value (NPV) and Internal Rate of Return (IRR): Example Comparing Two Projects

EXHIBIT 2.3

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Non-financial Criteria

• To capture larger market share• To make it difficult for competitors to enter the

market• To develop core technology that will be used in

next-generation products• To reduce dependency on unreliable suppliers• To prevent government intervention and regulation

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Checklist Selection Model

• Strategy alignment: What specific organization does this project align with?

• Driver: What business problem does the project solve?• Success metrics: How will we measure success?• Sponsorship: Who is the project sponsor?• Risk: What is the impact of not doing this project?• Risk: What is the project risk to our organization? • Benefits: What is the value of the project to this

organization?• Organization culture: Is our organization culture right

for this type of project? • Approach: Will we build or buy?• Training/resources: Will staff training be required?• Finance: What is estimated cost of the project?• Portfolio: How does the project interact with current

projects?

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Project Screening Matrix

FIGURE 2.3

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Applying a Selection Model

• Project Classification– Deciding how well a strategic or operations project

fits the organization’s strategy.

• Selecting a Model– Applying a weighted scoring model to bring

projects to closer with the organization’s strategic goals.

• Reduces the number of wasteful projects

• Helps identify proper goals for projects

• Helps everyone involved understand how and why a project is selected

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Project Proposals

• Sources and Solicitation of Project Proposals– Within the organization– Request for proposal (RFP) from external sources

(contractors and vendors)

• Ranking Proposals and Selection of Projects– Prioritizing requires discipline, accountability,

responsibility, constraints, reduced flexibility, and loss of power

• Managing the Portfolio– Senior management input– The priority team (project office) responsibilities

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Managing the Portfolio

• Senior Management Input– Provide guidance in selecting criteria that are

aligned with the organization’s goals– Decide how to balance available resources among

current projects

• The Priority Team Responsibilities– Publish the priority of every project– Ensure that the project selection process is open

and free of power politics– Reassess the organization’s goals and priorities– Evaluate the progress of current projects

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Project Portfolio Matrix

FIGURE 2.7

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Project Portfolio Matrix Dimensions

• Bread-and-Butter Projects– Involve evolutionary improvements to current products

and services.

• Pearls– Represent revolutionary commercial advances using

proven technical advances.

• Oysters– Involve technological breakthroughs with high

commercial payoffs.

• White Elephants– Projects that at one time showed promise but are no

longer viable.