Because learning changes everything.

Chapter One
Modern Project
Management

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No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
 Definition of Project

Project Defined
• A temporary endeavor undertaken to create a unique product, service,
or result

Major Characteristics of a Project

• Has an established objective
• Has a defined life span with a beginning and an end
• Involves several departments and professionals
• Involves doing something never been done before
• Has specific time, cost, and performance requirements

© McGraw-Hill Education 2
 LECTURE OUTLINE

Project Management –
Evolution,
Project Life Cycle,
applications,
characteristics,
Project Profiling, and relevance;
Scope of a Project: Statement of Work,
WBS (Work Breakdown Structure)
OBS (Organizational Breakdown Structure).

© McGraw-Hill Education 3
 Definition of Project Management

• Project Management is the process of planning, organizing,

executing, and monitoring a specific endeavor to achieve defined
goals within a given timeframe, budget, and scope. It involves
applying methodologies, skills, tools, and techniques to ensure the
project's success while managing risks, quality, and stakeholder
expectations.

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 Key Elements of Project Management

•Scope: Defining what needs to be achieved and the project's deliverables.

•Time: Creating a timeline to complete tasks and milestones.

•Cost: Budgeting resources to meet the project's objectives.

•Quality: Ensuring deliverables meet the required standards.

•Resources: Managing people, technology, and materials.

•Risk: Identifying and mitigating potential challenges.

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 Examples of Projects

1. Construction Project
Objective: Build a residential complex with 50 apartments within 18
months.
Activities:
• Design the building plan.
• Procure materials and hire contractors.
• Manage construction phases.
• Monitor progress and address delays.
Outcome: A completed and operational residential complex.

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 Examples of Projects

2. Software Development Project

Objective: Develop a mobile app for food delivery in six months.
Activities:
• Gather requirements from stakeholders.
• Design and develop the app.
• Test for bugs and optimize performance.
• Launch and market the app.
Outcome: A user-friendly food delivery app available on Android and
iOS.

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 Examples of Projects

3. Event Management Project

Objective: Organize a corporate annual meeting for 500 attendees.
Activities:
• Book the venue and arrange logistics.
• Prepare the agenda and invite speakers.
• Manage food, decorations, and tech setup.
• Execute the event and collect feedback.
Outcome: A successful corporate meeting with positive feedback.

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 Examples of Projects

4. Marketing Campaign
Objective: Launch a marketing campaign for a new product within three
months.
Activities:
• Develop a campaign strategy.
• Design promotional materials and advertisements.
• Execute digital and offline marketing initiatives.
• Measure campaign performance.
Outcome: Increased brand awareness and sales of the product.

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 Examples of Projects

5. Research and Development (R&D) Project

Objective: Create a prototype for a sustainable energy device in one
year.
Activities:
• Conduct market and technical feasibility studies.
• Design and develop the prototype.
• Test the prototype under various conditions.
• Document findings and present results.
Outcome: A functional prototype with potential for commercialization

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 Examples of Projects

4. Marketing Campaign
Objective: Launch a marketing campaign for a new product within three
months.
Activities:
• Develop a campaign strategy.
• Design promotional materials and advertisements.
• Execute digital and offline marketing initiatives.
• Measure campaign performance.
Outcome: Increased brand awareness and sales of the product.

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 Examples of Projects

5. Research and Development (R&D) Project

Objective: Create a prototype for a sustainable energy device in one
year.
Activities:
• Conduct market and technical feasibility studies.
• Design and develop the prototype.
• Test the prototype under various conditions.
• Document findings and present results.
Outcome: A functional prototype with potential for commercialization

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 Why Project Management Is Important?

• Ensures projects are completed on time and within budget.

• Aligns resources and efforts with organizational goals.
• Minimizes risks and addresses challenges effectively.
• Improves communication and collaboration among stakeholders.
• Delivers higher quality outcomes.

Project management is a vital discipline across industries, from IT and

healthcare to construction and marketing, ensuring goals are met
efficiently and effectively.

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 Project Life Cycle

© McGraw-Hill Education FIGURE 1.1 14

 PROJECT LIFE CYCLE EXAMPLE

1. Initiation Stage
Purpose: Define the project, establish its feasibility, and secure approval to proceed.
Key Activities:
• Identify the project’s purpose, goals, and stakeholders.
• Conduct a feasibility study.
• Develop a business case.
• Create a project charter or initial plan.
Deliverables: Project charter, stakeholder analysis, initial scope statement.
Case Example: A company decides to launch a new e-commerce website. During the
initiation stage:
The team defines the objective: creating a platform for customers to purchase products
online.
A feasibility study confirms the demand for online shopping among their customer base.
The project charter outlines timelines, resources, and expected outcomes

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 2. Planning Stage

Purpose: Create a detailed roadmap for the project to ensure its successful completion.
Key Activities:
• Develop a project management plan (including scope, schedule, budget, and
quality).
• Create a Work Breakdown Structure (WBS).
• Identify risks and develop mitigation strategies.
• Allocate resources and set milestones.
Deliverables: Project plan, risk management plan, communication plan, resource
allocation.
Case Example: For the e-commerce website, the planning stage includes:
Creating a WBS with tasks like designing the website, integrating payment systems, and
adding inventory.
Defining milestones such as completing the design phase within two months.
Identifying risks, such as delays in payment gateway integration, and creating a
contingency plan

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 3. Execution Stage

Purpose: Implement the plan and complete the work to deliver the project's
objectives.
Key Activities:
• Coordinate resources and team members.
• Develop deliverables as per the project plan.
• Manage communications among stakeholders.
• Monitor progress and address issues.
Deliverables: Completed deliverables or intermediate results, status updates.
Case Example: During execution, the development team creates the e-commerce
website. Tasks include:
Designing the user interface (UI) and user experience (UX).
Coding the backend and frontend.
Adding inventory data and setting up secure payment systems.
Regular updates are shared with stakeholders
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 4. Monitoring and Controlling Stage

Purpose: Track progress to ensure the project stays on schedule, within

budget, and meets quality standards.
Key Activities:
• Compare actual performance with the project plan.
• Identify and address deviations.
• Update stakeholders with progress reports.
• Implement change requests as needed.
Deliverables: Status reports, performance metrics, updated project plans.
Case Example: For the e-commerce project:
The project manager monitors the website's development and ensures
milestones are met.
Delays in integrating the payment gateway are identified, and additional
resources are allocated to resolve the issue

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 5. Closure Stage

Purpose: Formally close the project after achieving its objectives.

Key Activities:
• Verify deliverables are complete and meet quality standards.
• Conduct a project review or lessons-learned session.
• Handover deliverables to the operations team or client.
• Release project resources.
Deliverables: Final report, deliverable handover, lessons-learned documentation.
Case Example: The e-commerce website is successfully launched. During
closure:
The website is tested and handed over to the operations team.
A final report highlights the project’s success and areas for improvement.
Lessons learned, such as the need for earlier testing of integrations, are
documented for future projects.

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 Characteristics of the Project Life Cycle

•Sequential Progression: Each phase builds on the previous one.

•Defined Deliverables: Clear outputs are required at the end of each phase.

•Stakeholder Engagement: Stakeholders are involved at key points for approvals.

•Flexibility: Tailored to suit different industries and project types (e.g., Agile, Waterfall).

•Risk and Cost Distribution: Risks and costs are highest at the start and diminish
as the project progresses.

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 Applications of the Project Life Cycle

•Software Development: Using Agile or Waterfall methodologies for product

•creation.

•Construction Projects: Managing resources and timelines in building projects.

•Event Management: Planning, executing, and reviewing large-scale events.

•Product Development: Researching, prototyping, and launching new products.

•Research Projects: Managing academic or industrial research initiatives.

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 Profiling the Project Life Cycle

Profiling involves analyzing the characteristics, structure, and dynamics

of the PLC to tailor it to the needs of specific projects. This involves
assessing the following:
Characteristics:
•Complexity: Level of technical or managerial challenges.
•Simple: Small projects with minimal risks (e.g., routine maintenance).
•Complex: Multi-disciplinary efforts (e.g., building an airport).
•Methodology: The approach to executing the life cycle.
•Traditional (Waterfall): Sequential and rigid.
•Adaptive (Agile): Iterative and flexible.
•Stakeholder Involvement: Level of participation at various stages.
•High: Collaborative design projects.
•Low: Routine projects with minimal client input.
•Deliverables: Tangible outcomes expected at each stage.
•Initiation: Feasibility report.
•Closure: Final deliverables and lessons learned.

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 Examples of Profiling with PLC
•Complexity:
•Simple Projects: A retail store implementing a point-of-sale (POS) system.
•Complex Projects: Developing a smart city initiative involving IoT, energy grids,
and transportation systems.

•Methodology:
•Traditional (Waterfall): Used in construction, where sequential steps
(design → foundation → construction) are mandatory.
•Agile: Preferred in tech, such as iterative software development for mobile apps.

•Stakeholder Involvement:
•High: A pharmaceutical company developing a new drug, requiring regular
feedback from regulatory bodies and researchers.
•Low: Routine maintenance of IT infrastructure with limited stakeholder interaction.

•Deliverables:
•Initiation: A charter for a renewable energy project, outlining objectives and
funding sources.
•Closure: Final deliverables of a marketing campaign, including a performance
report and client feedback.
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 Why is the Project Life Cycle Important? (Relevance)

A. Benefits for Project Success:

Clear Goals: Ensures everyone understands what needs to be done.

• Example: A startup creating a fitness app clearly defines features like step
counting and calorie tracking.
Risk Management: Helps identify and solve problems early.
• Example: An airline company spots delays in aircraft procurement and adjusts
timelines.
Resource Optimization: Ensures time, money, and effort are used wisely.
• Example: A film production team schedules actors and shoots scenes efficiently
to avoid overruns.
Quality Assurance: Ensures the final output meets standards.
• Example: A toy company tests safety compliance for a new product line before
launching.

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 Why is the Project Life Cycle Important? (Relevance)

B. Benefits for Stakeholders:

Transparency: Keeps everyone updated on progress.
• Example: A construction firm regularly updates clients on project
milestones.
Accountability: Assigns responsibilities to team members.
• Example: A marketing agency assigns specific tasks like ad design
and campaign analytics.
Predictability: Reduces uncertainties and surprises.
• Example: A logistics company maps out clear timelines for delivering
goods.

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 Why is the Project Life Cycle Important? (Relevance)

C. Adaptability to Modern Practices:

Tailored Approaches: Adjusts based on project needs.

• Example: A tech startup may use Agile for a flexible approach, while a
government project may require strict documentation.
Scalability: Works for both small and large projects.
• Example: A local bakery upgrading its inventory system versus a
global chain implementing AI for supply chain management.
Integration with Trends: Fits with modern methods like Lean or
DevOps.
• Example: A software company integrates automated testing to
streamline product releases.

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 The Challenges of Project Management

The Project Manager

• Manages temporary, non-repetitive activities and frequently acts
independently of the formal organization.
• Marshals resources for the project.
• Is the direct link to the customer.
• Works with a diverse troupe of characters.
• Provides direction, coordination, and integration to the project team.
• 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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 1.2 Current Drivers of Project Management

Factors leading to the increased use of project management:

• Compression of the product life cycle: The smartphone industry
constantly updates models with new features every year. Managing such
frequent product launches requires rigorous project planning, execution, and
delivery.
• Knowledge explosion: In the pharmaceutical industry, developing a new
drug requires managing knowledge from fields like biochemistry, clinical
trials, and regulatory compliance. Project management ensures the
integration of this knowledge for successful outcomes.
• Triple bottom line (planet, people, profit)
• Increased customer focus
• Small projects represent big problems

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 1.2 Current Drivers of Project Management

Factors leading to the increased use of project management:

• Triple bottom line (planet, people, profit): A construction project
might prioritize using renewable materials (planet), employing local
workers (people), and maintaining cost efficiency (profit). Project
management ensures all these aspects are balanced.
• Increased customer focus: An e-commerce company launching a
new app focuses on customer feedback during the development
phase. Project management ensures features are tailored to customer
demands, enhancing user experience.
• Small projects represent big problems

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 1.2 Current Drivers of Project Management

Factors leading to the increased use of project management:

• Small projects represent big problems: A minor software update in
an IT system, if poorly managed, can cause system crashes,
disrupting operations for an entire company. Proper project
management prevents such issues.

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 1.4 Project Management Today: A Socio-Technical Approach

The Technical Dimension (The “Science”)

• Consists of the formal, disciplined, purely logical parts of the process.
• Includes planning, scheduling, and controlling projects.

The Sociocultural Dimension (The “Art”)

• Involves the contradictory and paradoxical world of implementation.
• Centers on creating a temporary social system within a larger
organizational environment that combines the talents of a divergent
set of professionals working to complete the project.

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 A Socio-Technical Approach to Project Management

© McGraw-Hill Education FIGURE 1.4 32

 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

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 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
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 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

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 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.

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 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

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 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.

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 Project Management Trade-offs

© McGraw-Hill Education FIGURE 4.1 39

 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.

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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).
© McGraw-Hill Education FIGURE 4.3 41
 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 43

 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 47

 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.

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 Coding the WBS

© McGraw-Hill Education EXHIBIT 4.1 49

 Case Study: Opening a New Restaurant

1. Defining the Project Scope

Scenario: A group of investors and restaurateurs plans to open a new restaurant in a
popular area. The goal is to create a modern dining experience offering fresh, locally-
sourced food. The team needs to define the scope of the project, ensuring it meets
business goals while staying within budget.
Process: The project scope is defined to ensure clarity on what the restaurant will
deliver:
Objectives: To design and open a restaurant offering high-quality food with a
comfortable, stylish atmosphere. It should cater to families and working professionals.
Deliverables:
• Renovated space for the restaurant with seating for 100 guests.
• A fully equipped kitchen with modern cooking tools.
• A branded menu with seasonal dishes.
• An operational website for reservations.
• Licenses and permits to operate.
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 Case Study: Opening a New Restaurant

Exclusions: The scope excludes catering services or delivery (these can

be added after the initial opening).
Constraints: The restaurant must open within four months and should not
exceed a $300,000 budget.
Assumptions: The space is already leased, and the design team will have
access to the location in two weeks.
Outcome: The team has a clear understanding of what needs to be
accomplished, including essential deliverables and exclusions.

© McGraw-Hill Education 51
 Case Study: Opening a New Restaurant

2. Establishing Project Priorities

Scenario: The team faces several constraints, including a limited budget, time
pressure, and the desire for high-quality food and service. They need to prioritize
certain aspects of the project to ensure its success.
Process: Stakeholders agree on the following priorities:
Priority 1 - Time: The restaurant must open in four months to capture the
upcoming tourist season.
Priority 2 - Quality: The restaurant should offer a top-notch customer
experience, which includes great food, good service, and a welcoming ambiance.
Priority 3 - Budget: The total cost should not exceed $300,000, so careful
management of resources is critical.
Priority 4 - Scope: While a full liquor license is desired, the team agrees to forgo
it initially to focus on food and ambiance, leaving alcohol offerings to be
introduced later.
Outcome: The team decides to prioritize time, quality, and budget, allowing for a
successful launch that meets the most pressing needs while deferring some
elements (like alcohol) for future growth.
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 Case Study: Opening a New Restaurant

3. Creating the Work Breakdown Structure (WBS)

Scenario: With the scope and priorities defined, the project manager
needs to break down the work into smaller, manageable tasks. The WBS is
essential to keep track of every aspect of the restaurant's launch.
Process: The WBS is broken down into main phases and sub-tasks:
Phase 1: Project Planning
• Task 1.1: Define project goals and key performance indicators (KPIs).
• Task 1.2: Finalize restaurant concept and branding.
Phase 2: Design & Renovation
• Task 2.1: Hire architect and interior designer.
• Task 2.2: Create restaurant layout and seating arrangement.
• Task 2.3: Renovate the interior (flooring, lighting, furniture).
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 Case Study: Opening a New Restaurant

•Phase 3: Menu Creation

•Task 3.1: Hire a head chef and culinary team.
•Task 3.2: Develop menu items and recipes.
•Task 3.3: Test and finalize menu with pricing.
•Phase 4: Hiring and Training Staff
•Task 4.1: Hire servers, bartenders, and kitchen staff.
•Task 4.2: Train staff on menu, customer service, and health standards

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 Case Study: Opening a New Restaurant

•Phase 5: Marketing & Launch

•Task 5.1: Design website and create social media presence.
•Task 5.2: Plan marketing campaign (grand opening, local ads, etc.).
•Task 5.3: Organize the soft launch and opening night.
•Phase 6: Post-Launch
•Task 6.1: Collect customer feedback.
•Task 6.2: Monitor operational efficiency and adjust processes as needed.

Outcome: A clear WBS helps the team break the project into manageable
phases and specific tasks, ensuring that each aspect is accounted for, from design
to hiring and marketing.

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 Case Study: Opening a New Restaurant

4. Integrating the WBS with the Organization

Scenario: The restaurant involves several departments: construction, design,
human resources, marketing, and operations. The WBS must align with the
organization’s resources and workflows.
Process: The project manager integrates the WBS with each department’s
responsibilities:
Design & Renovation Team: Responsible for all tasks under Phase 2, including
layout, renovations, and purchasing furniture.
HR Team: In charge of recruiting and training the restaurant staff (Phase 4).
Marketing Team: Handles all marketing activities, including website
development and promotional campaigns (Phase 5).
Operations Team: Ensures that everything runs smoothly post-launch, including
customer feedback collection and operational adjustments (Phase 6).
Outcome: By aligning tasks with specific teams, each department knows its
responsibilities, and there’s a clear division of labor. The integration helps
prevent overlap and ensures that each team is focused on the right deliverables.
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 Case Study: Opening a New Restaurant

5. Coding the WBS for the Information System

Scenario: The project manager needs to track progress, resources, and budgets using
a project management system. The WBS is coded to facilitate efficient monitoring and
reporting.
Process: Each task in the WBS is assigned a unique code for easier tracking in the
project management system (e.g., Trello, Asana, or Microsoft Project):
1.0 - Project Planning
• 1.1 - Define project goals: Code 1.1.1
• 1.2 - Finalize branding: Code 1.1.2
2.0 - Design & Renovation
• 2.1 - Hire architect: Code 2.1.1
• 2.2 - Renovate interior: Code 2.2.1
3.0 - Menu Creation
• 3.1 - Hire chef: Code 3.1.1
• 3.2 - Develop menu: Code 3.2.1
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 Case Study: Opening a New Restaurant

4.0 - Hiring & Training

• 4.1 - Hire staff: Code 4.1.1
• 4.2 - Train staff: Code 4.2.1
5.0 - Marketing & Launch
• 5.1 - Design website: Code 5.1.1
• 5.2 - Plan opening campaign: Code 5.2.1
6.0 - Post-Launch
• 6.1 - Collect feedback: Code 6.1.1
• 6.2 - Adjust processes: Code 6.2.1

© McGraw-Hill Education 58
 Case Study: Opening a New Restaurant

The project manager enters these codes into the information system,
where they can track:
The completion status of each task.
Resources allocated (e.g., budgets, staff).
Progress reports and timelines.
Outcome: Using a coded WBS allows the team to quickly track and
manage each task’s progress, ensuring no task is overlooked. It provides a
streamlined way to manage budgets, timelines, and resource allocation.

© McGraw-Hill Education 59
 ASSIGNMENT

MAKE A 5 STEP PLAN FOR “launching a new e-commerce website”

Step 1: Define the Project Scope

Step 2: Establish Project Priorities
Step 3: Create the Work Breakdown Structure
Step 4: Integrate the WBS with the Organization
Step 5: Code the WBS for the Information System

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