PROJECT MANAGEMENT

The Managerial Process

Erik W. Larson
Clifford F. Gray

INTRODUCTION

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All Rights Reserved
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Textbook

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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.
–Requires across-the-organizational participation.
–Involves doing something never been done before.
–Has specific time, cost, and performance
requirements.

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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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 Comparison of Routine Work with Projects
Routine, Repetitive Work Projects
Taking class notes Writing a term paper
Daily entering sales receipts into Setting up a sales kiosk for a
the accounting ledger professional accounting meeting
Responding to a supply-chain Developing a supply-chain
request information system
Practicing scales on the piano Writing a new piano piece
Routine manufacture of an Apple Designing an iPod that is
iPod approximately 2 X 4 inches,
interfaces with PC, and
stores 10,000 songs
Attaching tags on a manufactured Wire-tag projects for GE and
product Wal-Mart

TABLE 1.1

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Project Life Cycle

FIGURE 1.1

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An Overview of Project Management 5e.

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PROJECT MANAGEMENT
The Managerial Process
Erik W. Larson
Clifford F. Gray

CHAPTER FOUR
Defining the Project

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All Rights Reserved
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Where We Are Now

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 Learning Objectives
1.To recognize the importance of a complete
scope statement acceptable to your customer as
a condition for project success
2.To layout guidelines for creating a WBS for a
project
3.To demonstrate the importance of WBS to the
management of projects and how it serves as a
database for planning and control
4.To apply a WBS to a case or suggested project

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 Defining the Project

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

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 Step 1: Defining the Project Scope
• Project Scope
–A definition of the end result or mission of the
project—a product or service for the client/customer—
in specific, tangible, and measurable terms.
• Purpose of the Scope Statement
–To clearly define the deliverable(s) for the end user.
–To focus the project on successful completion
of its goals.
–To be used by the project owner and participants
as a planning tool and for measuring project success.

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 Project Scope Checklist

1. Project objective
2. Deliverables
3. Milestones
4. Technical requirements
5. Limits and exclusions
6. Reviews with customer

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 Project Scope: Terms and Definitions
• Scope Statements
–Also called statements of work (SOW)
• Project Charter
–Can contain an expanded version of scope statement
–A document authorizing the project manager to initiate
and lead the project.
• Scope Creep
–The tendency for the project scope to expand over
time due to changing requirements, specifications,
and priorities.

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 Project Scope
Example

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 Step 2: Establishing Project Priorities
• Causes of Project Trade-offs
–Shifts in the relative importance of criterions related
to cost, time, and performance parameters
• Budget–Cost
• Schedule–Time
• Performance–Scope

• Managing the Priorities of Project Trade-offs

–Constrain: a parameter is a fixed requirement.
–Enhance: optimizing a criterion over others.
–Accept: reducing (or not meeting) a criterion
requirement.

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Project Management Trade-offs

FIGURE 4.1

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Project Priority Matrix

FIGURE 4.2

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 Step 3: Creating the Work
Breakdown Structure

• Work Breakdown Structure (WBS)

–An hierarchical outline (map) that identifies the
products and work elements involved in a project.
–Defines the relationship of the final deliverable
(the project) to its subdeliverables, and in turn,
their relationships to work packages.
–Best suited for design and build projects that have
tangible outcomes rather than process-oriented
projects.

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 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).

FIGURE 4.3

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 How WBS Helps the Project Manager
• WBS
–Facilitates evaluation of cost, time, and technical
performance of the organization on a project.
–Provides management with information appropriate
to each organizational level.
–Helps in the development of the organization
breakdown structure (OBS). which assigns project
responsibilities to organizational units and individuals
–Helps manage plan, schedule, and budget.
–Defines communication channels and assists
in coordinating the various project elements.

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Work Breakdown Structure

FIGURE 4.4

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 Work Breakdown
Structure Example

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 Work Packages
• A work package is the lowest level of the WBS.
– It is output-oriented in that it:
1. Defines work (what).
2. Identifies time to complete a work package (how long).
3. Identifies a time-phased budget to complete
a work package (cost).
4. Identifies resources needed to complete
a work package (how much).
5. Identifies a person responsible for units of work (who).
6. Identifies monitoring points (milestones)
for measuring success.

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 Step 4: Integrating the WBS
with the Organization

• Organizational Breakdown Structure (OBS)

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

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Integration of
WBS and OBS

FIGURE 4.5
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Integration of
WBS and OBS

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 Step 5: Coding the WBS for
the Information System

• WBS Coding System

–Defines:
• Levels and elements of the WBS
• Organization elements
• Work packages
• Budget and cost information
–Allows reports to be consolidated at
any level in the organization structure

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WBS Coding

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 Coding the WBS
Example
Example

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 Responsibility
Matrices

In many cases, the size and scope of the project do

not warrant an elaborate WBS or OBS. One tool that
is widely used by project managers and task force
leaders of small projects is the responsibility matrix
(RM).
RMs are useful not only for organizing and assigning
responsibilities for small projects but also for
subprojects of large, more complex projects

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 Responsibility Matrices
• Responsibility Matrix (RM)
–Also called a linear responsibility chart.
–Summarizes the tasks to be accomplished and
who is responsible for what on the project.
• Lists project activities and participants.

• Clarifies critical interfaces between units

and individuals that need coordination.
• Provide an means for all participants to view their
responsibilities and agree on their assignments.
• Clarifies the extent or type of authority that
can be exercised by each participant.

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Responsibility Matrix for a Market Research Project

FIGURE 4.6

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Responsibility Matrix for the Conveyor Belt Project

FIGURE 4.7

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 Project Communication Plan

• 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?

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 Information Needs

• Project status reports

• Deliverable issues
• Changes in scope
• Team status meetings
• Gating decisions
• Accepted request changes
• Action items
• Milestone reports

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 Developing a Communication Plan

1. Stakeholder analysis
2. Information needs
3. Sources of information
4. Dissemination modes
5. Responsibility and timing

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Shale Oil Research Project Communication Plan

FIGURE 4.8
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 Key Terms

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

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