Because learning changes everything.

Chapter Four
Defining the Project

© 2021 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
 Where We Are Now

© McGraw-Hill Education 2
 Learning Objectives

04-01 Identify key elements of a project scope statement and understand

why a complete scope statement is critical to project success.
04-02 Describe the causes of scope creep and ways to manage it.
04-03 Understand why it is important to establish project priorities in terms
of cost, time, and performance.
04-04 Demonstrate the importance of a work breakdown structure (WBS)
to the management of projects and how it serves as a database for
planning and control.
04-05 Demonstrate how the organization breakdown structure (OBS)
establishes accountability to organization units.
04-06 Describe a process breakdown structure (PBS) and when to use it.
04-07 Create responsibility matrices for small projects.
04-08 Create a communication plan for a project.

© McGraw-Hill Education 3
 Chapter Outline

4.1 Step 1: Defining the Project Scope

4.2 Step 2: Establishing Project Priorities
4.3 Step 3: Creating the Work Breakdown Structure
4.4 Step 4: Integrating the WBS with the Organization
4.5 Step 5: Coding the WBS for the Information System
4.6 Process Breakdown Structure
4.7 Responsibility Matrices
4.8 Project Communication Plan

© McGraw-Hill Education 4
 Five General Steps for Collecting Project Information

Step 1: Defining the Project Scope

Step 2: Establishing Project Priorities
Step 3: Creating the Work Breakdown Structure
Step 4: Integrating the WBS with the Organization
Step 5: Coding the WBS for the Information System

© McGraw-Hill Education 5
 4.1 Step 1: Defining the Project Scope

Project Scope Defined

• Is a definition of the end result or mission of your project—a product or
service for your client/customer.
• Defines the results to be achieved in specific, tangible, and
measurable terms.
Purposes of the Project Scope Statement
• To clearly define the deliverable(s) for the end user
• To direct focus on the project purpose throughout the life of the project
for the customer and project participants
• To be published and used by the project owner and project
participants for planning and measuring project success

© McGraw-Hill Education 6
 Project Scope Checklist

1. Project objective
2. Product scope description
3. Justification
4. Deliverables
5. Milestones
6. Technical requirements
7. Limits and exclusions
8. Acceptance criteria

© McGraw-Hill Education 7
 Project Scope: Terms and Definitions

Scope Statements
• Is a short, one- to two-page summary of key elements of the scope,
followed by extended documentation of each element.
• Is also referred to as “statements of work (SOWs)”
Project Charter
• Is a documentation that authorizes the project manager to initiate and
lead the project.
• Often includes a brief scope description as well as such items as risk
limits, business case, spending limits, and even team composition.
Scope Creep
• Is the tendency for the project scope to expand over time—usually by
changing requirements, specifications, and priorities.

© McGraw-Hill Education 8
 Five of the Most Common Causes of Scope Creep

• Poor requirement analysis

• Not involving users early enough
• Underestimating project complexity
• Lack of change control
• Gold plating

© McGraw-Hill Education 9
 4.2 Step 2: Establishing Project Priorities

Three major criteria (trade-offs) that a project manager has to manage

are:
• Cost (budget)
• Time (schedule)
• Performance (scope)
A project manager can manage the project trade-offs by completing a
priority matrix for the project and identifying which criterion is:
• Constrain—original parameter is fixed.
• Enhance—a criterion should be optimized.
• Accept—a criterion is tolerable not to meet the original parameter.

© McGraw-Hill Education 10
 Project Management Trade-offs

© McGraw-Hill Education FIGURE 4.1 11

 Project Priority Matrix for the Development of a New Wireless Router

© McGraw-Hill Education FIGURE 4.2 12

 4.3 Step 3: Creating the Work Breakdown Structure

Work Breakdown Structure (WBS)

• Is a hierarchical outline of the project with different levels of detail.
• Identifies the products and work elements involved in a project.
• Defines the relationship of the final deliverable (the project) to its sub-
deliverables, and, in turn, their relationships to work packages.
• Serves as a framework for tracking cost and work performance.
• Is best suited for design and build projects that have tangible
outcomes rather than process-oriented projects.

© McGraw-Hill Education 13
 Hierarchical Breakdown of the WBS

* This breakdown groups work packages by type of work within a deliverable and
allows assignment of responsibility to an organizational unit. This extra step
facilitates a system for monitoring project progress (discussed in Chapter 13).
© McGraw-Hill Education FIGURE 4.3 14
 How WBS Helps the Project Manager

• Assures project managers that all products and work elements are identified, to
integrate the project with the current organization, and to establish a basis for
control.
• Facilitates the evaluation of cost, time, and technical performance at all levels in
the organization over the life of the project.
• Provides management with information appropriate to each organizational level.
• Helps project managers to plan, schedule, and budget the project.
• Helps in the development of the organization breakdown structure (OBS), which
assigns project responsibilities to organization units and individuals.
• Provides the opportunity to “roll up” (sum) the budget and actual costs of the
smaller work packages into larger work elements.
• Defines communication channels and assists in understanding and coordinating
many parts of the project.

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 Work Breakdown Structure

© McGraw-Hill Education FIGURE 4.4 16

 A Work Package

• Is the lowest level of the WBS.

• Is a short-duration task that has a definite start and stop point,
consumes resources, and represents cost.
• Should not exceed 10 workdays or one reporting period.
• Should be as independent of other work packages of the project as
possible.
• Is the basic unit used for planning, scheduling, and controlling the
project.

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 Each Work Package in the WBS

• Defines work (what).

• Identifies time to complete a work package (how long).
• Identifies a time-phased budget to complete a work package (cost).
• Identifies resources needed to complete a work package (how much).
• Identifies a single person responsible for units of work (who).
• Identifies monitoring points for measuring progress (how well).

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 4.4 Step 4: Integrating the WBS with the Organization

Organization Breakdown Structure (OBS)

• Depicts how the firm has organized to discharge work responsibility.
• Provides a framework to summarize organization unit work
performance.
• Identifies the organization units responsible for work packages.
• Ties the organizational unit to cost control accounts.

The intersection of work packages and the organization unit creates a

project cost point or cost account that integrates work and responsibility.

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 Integration of WBS and OBS

© McGraw-Hill Education FIGURE 4.5 20

 4.5 Step 5: Coding the WBS for the Information System

WBS Coding System

• Defines
• Levels and elements in the WBS
• Organization elements
• Work packages
• Budget and cost information
• Allows reports to be consolidated at any level in the structure.
WBS Dictionary
• Provides detailed information about each element in the WBS.

© McGraw-Hill Education 21
 Coding the WBS

© McGraw-Hill Education EXHIBIT 4.1 22

 4.6 Process Breakdown Structure

Process Breakdown Structure (PBS)

• Is used for process-oriented projects.
• Is often referred to as the “waterfall method” in the software industry.
Process-oriented project
• Is a project that the final outcome is a product of a series of steps and
phases.
• Is a project that evolves over time with each phase affecting the next
phase.
• Is a project that is driven by performance requirements, not by
plans/blueprints.

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 PBS for Software Development Project

© McGraw-Hill Education FIGURE 4.6 24

 4.7 Responsibility Matrices

Responsibility Matrix (RM)

• Is also called a linear responsibility chart.
• Summarizes the tasks to be accomplished and who is responsible for
what on the project.
• Lists all the project activities and the participants responsible for each
activity.
• Clarifies interfaces between units and individuals that require
coordination.
• Provides a mean for all participants in a project to view their
responsibilities and agree on their assignments.
• Clarifies the extent or type of authority exercised by each participant.

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 Responsibility Matrix for a Market Research Project

© McGraw-Hill Education FIGURE 4.7 26

 Responsibility Matrix for the Conveyor Belt Project

© McGraw-Hill Education FIGURE 4.8 27

 4.8 Project Communication Plan

Project communication plans address the following questions:

• What information needs to be collected and when?
• Who will receive the information?
• What methods will be used to gather and store information?
• What are the limits, if any, on who has access to certain kinds of
information?
• When will the information be communicated?
• How will it be communicated?

© McGraw-Hill Education 28
 Steps for Developing a Communication Plan

1. Stakeholder analysis—identify the target groups.

2. Information needs—project status reports, deliverable issues,
changes in scope, team status meetings, gating decisions, accepted
request changes, action items, milestone reports, etc.
3. Sources of information—where does the information reside?
4. Dissemination modes—hardcopy, e-mail, teleconferencing,
SharePoint, and a variety of database sharing programs.
5. Responsibility and timing—determine who will send out the formation
and when.

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 Stakeholder Communications

© McGraw-Hill Education FIGURE 4.9 30

 Shale Oil Research Project Communication Plan

© McGraw-Hill Education FIGURE 4.10 31

 Key Terms

Acceptance criteria Product scope description

Cost account Project charter
Gold plating Responsibility matrix
Milestone Scope creep
Organization breakdown structure (OBS) Scope statement
Priority matrix WBS dictionary
Process breakdown structure (PBS) Work breakdown structure (WBS)
Work package

© McGraw-Hill Education 32
Because learning changes everything. ®

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© 2021 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.