OPMA 5364 Project Management Part 1 Projects and Project Goals.
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Transcript of OPMA 5364 Project Management Part 1 Projects and Project Goals.
OPMA 5364Project Management
Part 1
Projects and Project Goals
Part 1 - Projects & Project Goals 2
Topic Outline: Projects and Project Goals
• Why organize an activity or job as a project• Project goals and performance tradeoffs• Examples of projects and goals• Project life cycles• How are projects selected• Organizational structures and projects• Project selection exercise
Part 1 - Projects & Project Goals 3
What are Projects?
A temporary endeavor undertaken to create a unique product, service or result (PMI-PMBOK)
Specific, timely, usually multidisciplinary, and always conflict ridden (Mantel et al.)
Series of activities or tasks, specific objectives, defined start and end dates, funding limits, consumes resources, multifunctional (Kerzner)
Part 1 - Projects & Project Goals 4
Why Projects?
Why organize an activity or job as a project?• It allows you to better structure and organize the
tasks that need to be performed• Well developed approaches and tools are
available for managing projects• Easy-to-use software is available for scheduling
and budgeting projects• Experience has shown that the work/job can be
done faster, cheaper, and better when managed as a project
Part 1 - Projects & Project Goals 5
Project Performance Goals
• Outcomes/Quality (deliverables and quality)– exactly what needs to be accomplished at
what quality level• Time
– doing it quickly or on schedule• Cost
– doing it cheaply or on budget
Unfortunately, tradeoffs among these goals exist
Part 1 - Projects & Project Goals 6
Project Goal Tradeoffs
Outcomes/Quality
Cost
Time
All Goals Met
Budget limit
Due Date
Desired Outcome/Quality
Part 1 - Projects & Project Goals 7
Project Performance Goals
Which goal is more important: time, cost, or outcomes?
Who decides which goal is more important?
Why is it important for the Project Manager (PM) to know which goal is more important?
Part 1 - Projects & Project Goals 8
Examples of Projects and Goals
• What are examples of non-project activities?
• What are some examples of projects you’ve worked on?– What were the desired deliverables/outcomes?– What was the project time frame?– What was the biggest challenge during the project?– Which goals were more important?– Were all goals fully met?
Part 1 - Projects & Project Goals 9
Project Life Cycles
The pace of project progress throughout the project
There are many patterns that project life cycles can follow, but the following chart depicts a fairly common pattern:– slow start– quick momentum– slow finish
Part 1 - Projects & Project Goals 10
A Common Project Life Cycle
Time0
100
Slow start
Quick momentum
Slow finish
% P
roje
ct c
ompl
etio
n
Part 1 - Projects & Project Goals 11
A Common Project Life Cycle
• Slow Start– manager is selected– team is assembled– initial resources are allocated– work program is organized
• Quick Momentum– work progresses– momentum builds
• Slow Finish– many loose ends to tie up
Part 1 - Projects & Project Goals 12
A Different Project Life Cycle
Time0
100
% P
roje
ct c
ompl
etio
n
Part 1 - Projects & Project Goals 13
Resources & Project Life Cycle
Start
TimeFinish
Res
ourc
es
Concept Planning Execution Wrap-up
Required Resources
Part 1 - Projects & Project Goals 14
Implications of Project Life Cycles
• Project life cycle shape will affect the timing of resource and funding needs
• Understanding the general project life cycle may help the stakeholders better understand and accept the current status of the project
• Understanding the general project life cycle may also help the PM make better goal tradeoff decisions at particular times during the project
Part 1 - Projects & Project Goals 15
Selecting Projects
Who decides which projects will be undertaken by an organization?
What are some examples of criteria that might be used in selecting projects?
Why should the PM be made aware of why a project was selected?
Part 1 - Projects & Project Goals 16
Some Nonnumeric Selection Methods
• Sacred Cow (president’s pet project)– Do you want to keep your job?– Examples
• Operating/Competitive Necessity– You must do this project to stay in business– Examples
• Comparative Benefits– Examine +/- of each potential project– Examples
Part 1 - Projects & Project Goals 17
Factor Scoring Method
Example: 3 projects; 4 factors; 1-5 scale (5=best)
Factor ProjectA ProjectB ProjectC
Cost 2 4 3
Risk 4 3 1
Suitable 4 2 5
Skills 2 2 5
Total Score: 12 11 14
Part 1 - Projects & Project Goals 18
Weighted Factor Scoring Method
Example: 3 projects; 4 factors; 1-5 scale (5=best)
Factor Wt. ProjectA ProjectB ProjectC
Cost .4 2 4 3
Risk .3 4 3 1
Suitable .1 4 2 5
Skills .2 2 2 5
Wtd. Score: 2.8 3.1 3.0
Part 1 - Projects & Project Goals 19
Some Numeric Selection Methods
Common Financial Assessment Methods– Payback Period
• Simple to use and easy to understand• Ignores returns beyond payback period and
time value of money
– Discounted Cash Flow (NPV)• Considers time value of money and all returns• Favors short-term projects• Ignores all non-monetary factors except risk
Part 1 - Projects & Project Goals 20
Payback Period Example
Expected project costs are $700,000
Expected returns are $200,000 per year
Payback period = 700,000 ÷ 200,000 = 3.5 years
Revenues would cover investment costs in 3.5 yrs.
Part 1 - Projects & Project Goals 21
Discounted Cash Flow
Net Present Value
where
I0 = initial cash investment
Ft = net cash inflow in period t
k = required rate of return or hurdle rate
n
1tt
t0
k1
FI)project(NPV
Part 1 - Projects & Project Goals 22
Discounted Cash Flow
Initial cost = $700,000; 4-year annual cash flow = $200,000; required rate of return = 15%
NPV = -700,000 + 200,000/(1.15)1
+ 200,000/(1.15)2 + 200,000/(1.15)3
+ 200,000/(1.15)4
NPV = -700,000 + 173,913 + 151,229 + 131,503 + 114,351NPV = $-129,004Should they do this project?
Part 1 - Projects & Project Goals 23
Mix of Projects
The mix of projects undertaken should support the firm’s corporate strategy.
• Derivative projects—small improvements• Platform projects—develop new line of
products using existing technology• Breakthrough projects—new generation of
products using new technology• R&D projects—develop new knowledge
Part 1 - Projects & Project Goals 24
Organizational Structures
Organizational structure describes the management reporting relationships in the org.
Organization charts show these relationships.
How do projects fit within an organization?• Traditional functional organization• Functional project organization• Pure project organization• Matrix project organization
Part 1 - Projects & Project Goals 25
Traditional Functional OrganizationCompany President
MarketingVice President
ManufacturingVice President
ProcurementVice President
CustomerService
Manager
EngineeringVice President
DomesticSales
Manager
InternationalSales
Manager
SystemsEngineering
Manager
ElectronicsEngineering
Manager
SoftwareEngineering
Manager
MechanicalEngineering
Manager
FabricationManager
AssemblyManager
TestingManager
ProductionSchedulingManager
PurchasingManager
Receiving &InspectionManager
TechnicalDocumentation
Manager
ShippingManager
Finance &AdministrationVice President
HumanResources
Vice President
Part 1 - Projects & Project Goals 26
Functional Project Organization
• Project organized and controlled within a functional unit or department
• Usually for smaller projects with a narrower focus
• What are the advantages of this structure?• What are the disadvantages?
Part 1 - Projects & Project Goals 27
Functional Project OrganizationCompany President
MarketingVice President
ManufacturingVice President
ProcurementVice President
CustomerService
Manager
EngineeringVice President
DomesticSales
Manager
InternationalSales
Manager
SystemsEngineering
Manager
ElectronicsEngineering
Manager
SoftwareEngineering
Manager
EngineeringProject A
FabricationManager
AssemblyManager
TestingManager
ShippingManager
PurchasingManager
Receiving &InspectionManager
EngineeringProject B
ManufacturingProject 1
Finance &AdministrationVice President
HumanResources
Vice President
Part 1 - Projects & Project Goals 28
Pure Project Organization
• Each project is organized as a separate division reporting to senior management
• Effective for large projects, not small. Why?• Each project owns its resources/personnel• Each project may not have much depth of
technical expertise, but it should have breadth
Part 1 - Projects & Project Goals 29
Pure Project Organization
CompanyPresident
Project AProject Manager
Project BProject Manager
MarketingVice President
HumanResources
Vice President
Finance &AdministrationVice President
LegalVice President
EngineeringManager
ManufacturingManager
ProcurementManager
Consultants
EngineeringManager
ManufacturingManager
ProcurementManager
Subcontractors
Part 1 - Projects & Project Goals 30
Matrix Project Organization
• Most common organizational structure• Has many advantages of functional project and
pure project structures• Project team members have two bosses• Team members may be assigned part-time to
project and may have less loyalty to the project
Part 1 - Projects & Project Goals 31
President
ProgramManager
Manufacturing Marketing Finance R & D Personnel
Project 1
Project 2
Project 3
3
1
0
1 1/2
4
1/2
1/2
1/4
3
4
1 1/2
1/2
1/2
1/4
1
Matrix Project Organization
Part 1 - Projects & Project Goals 32
Project Selection Exercise
Quality Fleet Ads case• Divide into small groups• Read case (5 min.)• Assignment: (25 min.)
– Discuss the advantages of each project– Discuss the cost and budget implications– Rank the projects from most important to least
– Which set of projects do you recommend?– What is your proposed budget?