Ch1 Project Management.docx

Project management: Chapter 1: Introduction Project Management Module 1 This module introduces the main concepts and philosophies of project management. These areas are then explored in greater depth, and additional ideas introduced, in the remaining modules. By the time you have finished this module, you should be familiar with: The concept of project management; How project management differs from traditional management and the different organization structures employed; The potential benefits and challenges of using a project management approach; The history and origins of project management. A project is a one-off process with a single definable end result or product. Some examples include building a house, introducing new human resources practices, and developing new IT systems. It is difficult to provide an example of a ‘typical’ project because project management techniques are now applied so widely that listing their possible applications would take a volume as large as this text! In addition, new uses are being found regularly. One reason for this growth in popularity is that project management is a very practical tool when used for change management purposes. The ever-increasing rate of change in the environments in which organizations operate requires them to transform themselves regularly if they are to survive and have the possibility of prosperity. Hence the continued growth in interest in project management. Much of project management is concerned with planning and controlling the three key variables associated with projects. These variables are time, cost, and quality. They are interrelated and a change in any single variable frequently has a significant impact on the others. Since project management is concerned with managing change, within the constraints of the three key variables of time, cost, and quality, organizational structures for managing projects can be expected to differ from traditional organizational structures which were developed to help managers manage in more stable environments. Organizational structures for managing projects are examined and contrasted with more traditional management organizational structures. Projects have a finite life cycle, i.e. definite starting and completion points, and it follows that any project team or organization structure set up to manage a project will have a finite life cycle. Project management is a truly unique international and multidisciplinary profession. This characteristic has led to the development of international generic standards and is managed by a new kind of professional who operates in a different way from traditional functional managers. After studying this module, you should be able to define those main differences and understand their advantages and disadvantages compared with traditional approaches. The module also gives a brief review of how project management evolved from more traditional management structures in response to changing industrial and economic conditions. A major influence has been the tendency for projects to become large and more complex. As a result, the penalties for failure, and the rewards for success have changed significantly. Learning Summary What is a project? Along with mass production, and batch production, a project is one type of standard production system. Projects are characterized by having one-off and unique objectives and characteristics. What is project management? Project management involves devising, managing and controlling the process required to achieve safe completion of a project on time, within cost, and to the required standards of quality. Traditional planning and control techniques consider time, cost, and quality planning and control, but project management seeks to consider and evaluate each one concurrently. Generally, as the industry has evolved, it has become more complex. This has resulted in more and more complex projects, which created a need for more effective ways to manage them. The project manager’s role has evolved to be able to view a project’s time, cost and quality variables within the context of the whole operating system. In most cases, the objective of the project team is to meet the success criteria for the project, and then to disband. Few other aspects of enterprises have such requirements. Project management operates largely within existing organizations. Projects operating within functional structures offer good flexibility in the use of people. Staff are primarily employed to perform a functional task, but are temporarily assigned to a project that requires their particular expertise. In addition, individual experts can be used effectively on a number of projects. If there is a broad base of expertise within a functional department, it can be employed on different projects with relative ease. The ‘within function’ structure also has the advantage that specialist knowledge can be easily shared within the function and utilized effectively by the project team. Continuity of expertise, procedures, and administration is maintained within the function, despite any personnel changes that might occur. The project manager heads the project organization and operates independently of the normal chain of command. The project manager is responsible for integrating people from different functional disciplines who are working on the project. The project manager negotiates directly with functional managers for support. Functional managers usually remain responsible for individual work tasks and personnel within the project, while the project manager is responsible for integrating and overseeing the start and completion of activities. The project focuses on delivering a particular product or service at a certain time and cost, and to a particular quality standard. In contrast, functional units must maintain an ongoing pool of resources to support heir organization’s goals. As a result, conflict may occur between functional and project interests. Decision making, accountability, outcomes and rewards are shared among members of the project team and the functional units. Though the project organization is temporary, the functional units from which it is formed may be permanent. When a project ends, the project organization is disbanded and people return to their functional units or are assigned to new projects. Projects can originate at different places in the organization. Product development and related projects tend to originate from marketing, whereas technology applications originate in research and development, and so on. Project management sets into motion numerous other support functions, such as personnel evaluation, accounting, and information systems. Given the temporary nature of a project, an organization working on projects must be flexible so that it can alter structure and resources to meet sifting requirements of different projects. In a project system, the product is a one-off non-repetitive element. As a result of this, there is no learning curve and high levels of complex management planning and control are required. The concept of project management has evolved in order to plan, co-ordinate and control the many complex and often diverse activities involved in modern-day commercial projects. Project management is principally the general management of an organization within an organization. Good project management requires the effective application of all the general manager’s skills to achieve the project’s goals. Project management employs the whole range of functional management areas, and skills are often required in each of these areas in order to secure project success. Project teams are set up to undertake projects of every type. They may deal with single projects where all resources are dedicated to achieving the objective of that project, or they may be responsible for multiple projects where the resources have to be managed across projects. Projects can be external where they are carried out for a client outside the organization. These are normally defined by a binding contract and are usually a main revenue source for the organization. Project can be internal where they are generally set up to improve the operations of the organization and the client would be an internal client. Characteristics of Project Management Project management is unique in that it uses both international and specific industry benchmarks. Project management is also unique in that it represents an entirely new profession that gives professional advice in relation to the full life cycle of a project, from inception to completion. Project management assumes responsibility for optimizing time, cost, and quality performance for a project. Under the project management philosophy, it is not acceptable to consider any of these variables in isolation, because each of them has a bearing on the eventual performance of the others. Project management is concerned with ensuring that the project success criteria are met. However, project management recognizes that there s more than one success criterion. There is no point in completing on time and on cost if the quality of the finished product is lower than specified by the client. For each of the variables of time, cost, and quality, there should be a minimum acceptable condition. Project management is concerned with meeting or exceeding these minimum criteria in all cases. Project management often involves using fully trained project management professionals to run projects, rather than designers or others acting as managers. The modern concept of project management includes the evolution of the professional project manager. Potential Benefits and Challenges of Project Management Some of the obvious benefits of using a project management approach are that it makes more efficient use of company resources, it offers reduced disruption of routine operational activities, and it offers greater motivation potential for people working in projects. Project management also offers greater visibility of strategies and concepts within the organization as a whole, the promotion of healthy competition between organization projects, and full life cycle cost consideration as each stage. Project management can provide clearer communication on progress and input to strategic plans, improved control and security of classified and sensitive information, and improved teambuilding and team spirit. There are challenges to using project management as an approach. In order for a project management system to work, key staff are taken from functional units for a proportion of their time. If not properly controlled, this could damage the performance of the functional unit. Projects will inevitably compete, at least to some extent, for limited and finite organizational resources. Functional managers tend to be less visible and flexible than project mangers. Increased staff flexibility is also required. Staff have to be re-deployed when the project terminates. There may be problems with this if the functional staff have been working on the project to a large extent, and/or for a significant amount of time. The history of project management Modern project management has evolved from the basic principles established during the development of the Los Alamos project in the USA in 1944. The atomic bomb project was the first really complex, high-technology project operated by mankind, and the need for a new project management approach was identified. By the mid-50’s, the size and complexity of many projects had increased to such an extent that the well developed management of the first half of the 20th century were unable to cope. The US defense industry was finding it difficult to control the costs and time schedules of its large-scale weapons systems projects, and some very large cost and time overruns occurred. The solution was to further develop the Los Alamos principles into what we now call project management. The discipline was developed and led to the formation of the project management institute (PMI) in the USA, and the Association for Project Management (APM) in the UK in the 1960’s. Throughout the 1960’s, the additional methods emerged to help project managers; but the next real milestone was the development of cheap and reliable computers in the early 1980’s. The APM produced its Body of Knowledge in 1988, and assisted greatly in the preparation of BS6079 in 1996, and ISO 10006 in 1997. These reference works document British and European standards for project management practice and in many ways, mark the frontiers of the development of the discipline as a profession today. Project Management Today Project management is now used by numerous different disciplines, and has evolved into an integral management component for a wide range of industries. Project managers are increasingly being accepted as fundamental contributors to the operational process. Project management today has evolved into an internationally important discipline. As a profession, it is growing rapidly in many countries. Version 2 A project is a one-off process with a single definable end-result or product. Project management is also a very useful tool for change management purposes. Much of project management is concerned with planning and controlling the 3 key variables: Time Cost Quality These variables are interrelated, and a change in one frequently has an impact on the others Projects often require a different organisational structure than traditional organisations, due to the emphasis on change and flexibility. Project management is truly an international and multidisciplinary profession, and generic standards have been developed. Project management has become a true profession in itself, and these managers operate in a different way than traditional managers. What is a project? At any moment in time organisations will be attempting to achieve a wide range of goals and objectives- for example the sale of goods and services, improving customer relationships, improving staff motivation, or developing new products. Each of these objectives can be managed and operated through a project production system. Projects and other production systems Production systems can be classified as: Mass production: production of large numbers of repetitive items at maximum efficiency Batch production: used when there is little possibility of continued demand for a product, and some modifications will be needed at intervals Project (non-repetitive) production: No previous learning curve. Non-repetitive items. Requires high levels of management planning and control. Even organisations that predominately use mass or batch production systems, utilise project systems to improve the organisations competitive position through changes in effectiveness or efficiency. Projects vs. programmes Programme: A set of identifiable projects aimed at achieving some goal or objective Most often of longer duration than a single project May not include a final date Characteristics of projects A project can be defined by its characteristics where the following apply: 1) It involves a single, definable purpose, product or result 2) It usually has defined constraints or targets 3) It uses skills and talents from multiple professions and organisations 4) It is unique 5) It is somewhat unfamiliar 6) It is a temporary activity 7) It is part of the process involved in reaching a goal 8) It is part of an interlinked process 9) It is generally of secondary importance to the organisation 10) It is relatively complex Relevant project manager skills: financial awareness marketing appreciation technical knowledge planning skills strategic awareness quality management Project management covers the whole range of functional management areas. The traditional organisation has been structured with a top-down hierarchy with vertical manager-subordinate relationships and departments along functional, geographic or product lines. Traditional organisations become highly specialised and effective at what they do, and are well suited for stable environments. They are fairly rigid and therefore less suitable to the unstable and dynamic environments that characterise project situations. Projects may be external, where they are carried out for a client outside the organisation. These are usually defined by a binding contract and are usually a main revenue source for the organisation Projects may also be internal, where they are generally set up to improve the operations of the organisation and the client would be an internal project sponsor. Projects are either undertaken to deliver hardware or software; tangible physical result or where the project result is a system or process. What is project management? Definition of project management The process of planning and executing a piece of work from inception to completion to achieve safe achievement of objectives on time, within cost limits and to specified standards of quality. The organising, planning, directing, co-ordinating and controlling of all project resources from inception to completion to achieve project objectives on time, within cost and to required quality standards. Project management is therefore about deciding the various success or failure criteria of a project and the organising and running the project as a single entity so that all success criteria are met. This process involves setting up and managing a project team that may consist of a number of different individuals with different specialisations. The project manager must weld this group of individuals into a team and then drive the team to perform successfully. The basic project management structures Internal project management The traditional organisational structure with highly departmentalised functions, has the disadvantage that individuals tend to become compartmentalised and work rigidly on functional tasks. In order to make more efficient use of resources, project teams can be set up to operate across these functional boundaries. In this structure, the project manager takes , or is allocated, individuals from their normal functional units and reallocates them to one or more projects. Each person therefore, now has both functional and project responsibilities. In addition, individual experts can be used across different projects effectively. The internal system also has the advantage that specialist knowledge easily can be built up and shared within the function. The main characteristics of the system are as follows: A single designated person, namely the project manager, is responsible for managing the project organisation The project manager acts (to some extent) independently and outside the normal functional authority structure The project manager has equal authority to the functional managers over shared resources The project manager acts as a single leader and brings together the efforts of the various project and functional resources in order to achieve the project objectives Projects generally require a range of different functional specialists to work together. The work is therefore often carried out by this range of different functional specialists working as a multidisciplinary group under the leadership of the project manager The project manager is responsible for integrating this group into a multidisciplinary project team The project manager has to negotiate with different functional managers for the use of shared functional-project resources. Functional resources often remain under the direct control of the functional manager The project focuses on delivering the project objectives in relation to time, cost and quality. The functional managers have to concentrate on maintaining an ongoing pool of functional resources to support the primary goals of the organisation. As a result there is potential conflict between project managers and functional managers over shared resources. This applies especially to which people, and for how long; these are released from functional duties to project membership. A project may be subject to two lines of authority. A project individual may report directly to both the project manager and the functional manager. Decision-making, accountability, rewards and potential benefits are shared among the members of the project teams and the functional units. The project structure is temporary and lasts only until the project is completed. The functional units are generally permanent. Project team members generally return to their respective functional units once the project is completed. Projects can originate from within any level in the organisation Project structures generally require the assistance of standard support functions such as human resources, finance and IT. They do not generally operate as self contained sections In project organisations, the virtue of informal communication lines are recognised and formalised through the creation of a horizontal hierarchy to augment the vertical hierarchy. This hybrid organisation enables people in different functional areas to be formed into highly integrated project teams. External project management External project management is where an external project manager is appointed on a consultancy basis and acts as an external agent on behalf of the client. The external project manager appoints other external consultants and forms an external project team. The main characteristics of an external project structure are as follows: The External project manager acts as an agent on behalf of the client. The consultancy contract is a form of agency agreement. The external system is more flexible than the internal system. External consultants can be hired as required as a function of workload demand. Instructions and communications between the external consultants and the client have to cross the organisational boundary. This boundary acts as an interface and represents a barrier to effective communication Team allegiance tends to be lower in external structures. The objectives of the external consultants do not correspond to the objectives of the client and the external consultants owe no allegiance to the client organisation The external project manager has direct control over the project team. For this reason, external arrangements are sometimes referred to as external project management In an external structure, the functional structure of the organisation has no direct relevance to or impact on the project Because of the greater proportion of external organisations, there is a greater requirement for risk transfer and contractual control in an external project management structure There is no built-in knowledge of the firm. This can sometimes be a disadvantage. Characteristics of project management Multiple objectives Project management is concerned with several objectives at once. The objectives generally fall under the headings of time, cost and quality. Project success criteria are usually set by the client or executives of the parent organisation at the outset. The relative importance of each of the success criteria will determine the required levels of performance for each variable over the course of the project. For each of the variables there should be a minimum acceptable condition. During any project, there will be changes on one or more variables, and trade-offs will need to be made between them. If the quality criterion is increased, either the time and/or the cost will change. International co-operation and standards As a profession, project management is unique in that its codes of practice and body of knowledge are based on international rather than national practice. The international professional body is the International Project Management Association (IPMA). This body administers an international approach to project management and co-ordinates the activities of specific international professional associations, such as the Association of Project Management (APM) in the UK, and Project Management Institute (USA). IPMA ensures that the codes of practice and bodies of knowledge of the various national project management associations adhere to one standard as closely as possible, allowing only for essential cultural and economic differences. Multi-Industry/Multidisciplinary Practitioners The concepts and practices of project management are not specific to any one industry. The 3 largest membership groups within the APM are IT, Process Engineering and then construction. Generic benchmarks British standard, BS6079, is the current British standard for project management practice. It is generic and applicable across all industries ISO10006, is the European code of practice for project management of the design process. There are also a number of industry specific standards; PRINCE2 is an attempt at producing standardised project management practice within controlled environment industries and UK government. Large companies have also combined to develop industry specific responses to generic standards. On other occasions, very large companies have developed company-specific responses Specific provisions The modern concept of project management includes the professional project manager, who is educated and trained in project management and who has relevant industrial experience in project management rather than in design or in some other specialisation. Project life cycle The project manager is responsible for giving clients advice that covers the whole life cycle of a project; 1) Inception -the client decides to develop a project -the client assembles a basic proposal for the work that is required 2) Feasibility -the project team seeks to establish the validity of the proposal from all relevant perspectives. These perspectives can be financial, time-dependent, technological, and in some cases, political. This phase may include extensive market research. The end result of the feasibility stage is a statement of the viability of the proposal in relation to the variables that have been evaluated. 3) Prototype -In some industries a prototype is developed for testing and evaluation before production starts up. 4) Full design development -Once a prototype has been tested and all feedback has been put back into the design system, full production design can commence. In most cases this involves developing detailed product information (full production drawings), together with full specification that defines the required standards of manufacture and assembly for each component. 5) Tendering and contractual arrangements -Some organisations manufacture all aspects in-house. More commonly, manufacturers have their own production facilities but buy a lot of manufactured components from external suppliers. External works are usually secured through some kind of competitive tender. A tender is a price given by a contractor in return for doing a piece of work that is clearly detailed and described. 6) Manufacturing -The product is assembled through the manufacturing process. 7) Commissioning - This phase involves all aspect of switching the system on. 8) Operation - In this phase the system is actively used for the purpose it was originally intended 9) Decommissioning - Decommissioning is the process by which a system is turned off 10) Removal and recycling - In the future more and more products and systems will be designed for ease and completeness of recycling Potential benefits and challenges of project management Potential benefits: Increased concentration on a specific objective More efficient use of company resources Increased accountability Potential for healthy competition between functional and project units Reduced disruption of functional operations Enhanced visibility of strategy implementation Consideration of life-cycle costs Increased product development and release speed Improved formal and informal communications Control of simultaneous multiple objectives Improved security of project related information Improved team spirit and cohesion Improved innovation through the use of multidisciplinary decision-making Opportunities to develop in-house interdisciplinary and multidisciplinary teams, individual and management skills. Potential challenges to project management: Key staff may be taken from functional units. This may have a corresponding detrimental effect on functional performance Project and functional managers may attempt to compete for resources and this may be detrimental for the company as a whole Project team members may find themselves receiving conflicting orders from their functional and project managers Powerful functional managers may use their authority to deprive project managers of necessary resources In order to ensure parity of authority between functional and project managers, a need arises for an additional level of authority. The project sponsor ensures that the functional and project manager have equal authority over project team resources and that no destructive competition occurs Functional managers may be less flexible than project managers and may feel pressured as a result of project demands Staff needs to develop a different attitude. They have to develop a more flexible approach and become used to working in a multifunctional environment. Project staff who have been working on a project for a long time may have problems re-adjusting to functional working The history of project management No one individual or industry is responsible for the concept of project management. Often it is attributed to the early space programmes of the 60’s, but its origins go back much further. Elements of project management probably first came to light in the great construction works of history Guilds and leagues of medieval times with the creation of establishment of rules and standards of practice, qualifications and membership. The industrial revolution changed the requirements of industry. What we call “traditional” management practices evolved during the industrial revolution and beyond. They were found to work well for standard products of mass or batch production, but were less efficient in managing the production of non-standard products. In the early 1900’s, the Gantt chart was introduced, and in the 50’s the first network diagrams for industrial processes were introduced. Project management in its current form emanated from the atomic bomb development programme in the 40’s. To address the ever-increasing complexity of controlling cost and time schedules of the US defence industry, two new network based systems were developed; in 1957, the DuPont Corporation developed the critical path method, and in 1958 the US Navy launched the program evaluation and review technique (PERT) About ten years later, both techniques were combined into a method called graphical evaluation and review technique (GERT) By the mid-60’s, computer technology increased the capability of storing information in regard to such systems In the 70’s the “earned value” concept was developed. The APM produced its body of knowledge in 1988, and assisted in the preparation of BS6079 in 1996, and ISO10006 in 1997. In the 1980’s the price of computers started falling, and became available for more project managers. Project Management today Today, project management has evolved into an integral management component for a wide range of industries. Increasingly, large organisations are developing their own project management development sections. This has been accompanied by a large growth in the number of professional project management consultancies. Project management techniques allow for previously unheard of opportunities for evaluation and comparison. The use of a Strategic Project Plan (SPP), allows accurate and standard recording and reporting of all aspects of a projects development. This practice of standardisation includes design, execution, implementation and use. SPP’s are increasingly being used as an assessment technique to assist in deciding which project management consultancy to employ.