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Chapter 8

Managing Projects

© David O’Sullivan

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Reflections What is creativity? List and explain five graphic-based tools

that can be used for generating ideas. Where do ideas come from? Explain the mind mapping tool. How are failure modes scored in the failure

mode effects analysistechnique? Detail a simple form for capturing critical

data for an idea. Explain the importance of lead users in

generating new ideas.

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Activities

[Discussion of selected student ‘Activities’ from previous chapter]

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Learning Targets Outline the key stages of a project life cycle Understand the types of investments necessary for

projects Explain the importance of risk management in

projects Construct a simple cost–benefit analysis for a project Understand a number of tools for managing projects Understand the six stages of the buyer experience

life cycle Detail a simple form for capturing critical data for a

project

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Projects and Portfolios Project Management

Managing an individual project Managing project resources Achieving project goals

Portfolio Management Managing a group of projects Managing organisational resources Achieving organisational goals

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Semantics Projects Initiatives Actions Tasks

Portfolios Programs Initiatives

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Projects A unique, nonpermanent, goal-centered

activity with a predefined life cycle, constrained by cost and resource availability

Sample projects related to innovation: Installing a new piece of production equipment Developing a new technology or science Restructuring a department Installing a new computer system Developing a preventive maintenance program Building a new plant Developing a new product or service

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Project Characteristics Goal Centered Resources Life Cycle Unique Budgets Responsibilities

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Project Planning A project can represent a large

investment of time, money, and resources

Planning a project effectively can: Maximize contribution to goals Fundamental to the financial

considerations Crucial to scheduling of resources and

the control of progress and costs

Structured Approach

Schedule CostScope of work

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Project Planning Elements Workpackages Tasks Deliverables Gates and milestones Resources

Work Breakdown Structure

WBSO

BS

WP

CBS

Scope of work Schedule Cost estimate

Costaccount

WP

WP

WP

WP

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Sample Work package

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Sample Deliverables

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Project Scheduling

A schedule is the conversion of a project action plan into an operating timetable

Scheduling of people, equipment, information and their interrelationship

Fundamental basis for Understanding project complexity Monitoring and controlling project activity

and budget Tool for the management of projects.

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Worker-Month Allocation

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Gantt Charts

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Project Control

Once operational, control of the project is necessary to: Measure progress Identify deviations Take corrective action (when needed)

Continuous cycles of planning, implementation, and reviewing take place throughout the project lifecycle

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Risks Identification

Which risks are likely to affect the project Quantification

Probability and consequences of risks Mitigation

Methods for the reduction and control of risks Control

Documenting the lessons learned

The Three Dimensions of Risk

Prestudy

Type ofrisk

CommissioningExecutionClose

outPlanning

Level ofdetail

Time

Contextual risk

Project phases

Strategic risk

Operational risk

Communication Risk

Conversation Attribution

Norwegian: How long will it take to finish this report?

Norwegian: I asked him to participate.Venezuelan: His behaviour makes no sense. He is the boss. Why doesn’t he tell me?

Venezuelan: I do not know. How long should it take?

Norwegian: He refuses to take responsibility.Venezuelan: I asked him for an order.

Norwegian: You are in the best position to analyse time requirements

Norwegian: I press him to take responsibility for his own actions.

Venezuelan: What nonsense! I better give him an answer.

Venezuelan: 10 days.

Norwegian: He lacks the ability to estimate time; 10 days is totally inadequate

Conversation Example

Social Risk

Power Individualism Masculinity Uncertainty Avoidance

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Power DistanceSMALL POWER DISTANCE LARGE POWER DISTANCE

Inequalities should be minimized Inequalities expected and desired

Parents treat children as equals Parents teach children obedience

Organizational hierarchies viewed as inequality of roles, established for convenience

Organizational hierarchies reflect existential inequality between higher-ups and lower-downs

Decentralization is popular Centralization is popular

Narrow salary range between top and bottom of organizations

Wide salary range between top and bottom of organizations

The ideal boss is a resourceful democrat The ideal boss is a benevolent autocrat

Privileges and status symbols are frowned upon (or under communicated)

Privileges and status symbols for managers are popular and expected

IndividualismINDIVIDUALISM COLLECTIVISM

Children learn to think in terms of “I” Children learn to think in terms of “we”

Speaking one’s mind Maintaining harmony

Employee-employer relationship a contract Employee-employer relation like family

Management is management of individuals Management is management of groups

Tasks prevail over relationships Relationships prevail over tasks

Masculinity

MASCULINTY FEMININITY

Sympathy for the strong Sympathy for the weak

Money and things are important People and relationships important

Live in order to work Work in order to live

Men should be assertive, ambitious and tough

Everybody is supposed to be modest

Stress on equity, competition and performance among colleagues

Stress on equality, solidarity and quality of life.

Uncertainty Avoidance

WEAK UNCERTAINTY AVOIDANCE STRONG UNCERTAINTY AVOIDANCE

Lenient rules for children on what is dirty and taboo

Tight rules for children on what is dirty and taboo

Uncertainty is a normal feature of lifeUncertainty is seen as a threat which must be fought

Low stress, high well-being High stress, anxiety

Aggression and emotion should not be shownAggression and emotions may be ventilated at proper occasions

Managers and teachers may say “I don’t know”

Managers and teachers are supposed to have all the answers

Comfortable feeling when “lazy”. Hard-working only when required

Emotional need to be busy; inner urge to work hard

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Quantitative Techniques Payback Return on investment (ROI) Net present value (NPV)

Disadvantage with all quantitative techniques in project assessment is that the figures used often are estimates at best and can be incorrect

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Payback Net annual cash flow (NACF)

revenues derived from investment (IC) should pay back investment over a certain payback period (n)

nIC

NACF

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Example Machine costs €85,000 and generates

revenues of €55,000 per year for 7 years. It costs €30,000 to operate machine. At the end of year 7 machine is scrapped.

NACF = 55,000-30,000=25,000IC = 85,000n = 85,000/25,000 = 3.4 years

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Payback

Capital Recurrent Costs Recurrent Revenues

Additional Revenues Cost Avoidance Cost Savings

Payback=(Capital-Costs)/Revenues

Estimate Classification

Type Accuracy Purpose

Proposal ± 50 % Appraisal viability to start feasibility study

Budget ± 20 % Appraisal viability to start systems design

Sanction ± 10 % Appraisal viability to approve project

Control ± 5 % Measure progress, assign resources

Tender ± 2 % Prepare tender

Earned Value ManagementVolume (MHs)

Time

BCWS

TBCWS: Budgeted Cost of Work Scheduled

Cost VarianceACWP

ACWP: Actual Cost of Work Performance

t

BCWP

BCWP: Budgeted Cost of Work Performed

Resourcevariance

Volumevariance

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Qualitative techniques Fit with organizational goals and objectives Fit with competitive necessity for

sustainability Fit with existing product or service range Fit with available resources Fit with existing competencies Fit with desired future competencies Fit relative to competitor direction Fit relative to risk quotient Fit with other innovation projects, ongoing

or planned

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Qualitative Techniques

Criteria Weight Score W.Score

Fit with mission 5 3 15

Impact on objectives 10 4 40

Impact on indicators 10 2 20

Fit with competencies 7 5 35

Fit with skills 5 5 25

Level of Risk 10 4 40

Total Score     175

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Project Innovation

Portfolio and Project Management

Portfolio Management

Project Management

TeamsIndividualsTeamsSkillsLearningReview

GoalsStatementsRequirementsStrategiesMeasures

ResultsStatus ScorecardTrends

InnovationsStimuliCreationsProblemsIdeas

ProjectsSpecificationRankingSchedulesDeployment

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Project Tools

Concurrent engineering Quality function deployment (QFD) Buyer utility mapping Rapid prototyping

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House of Quality

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Buyer Utility Map

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Summary Outline the key stages of a project life cycle Understand the types of investments necessary for

projects Explain the importance of risk management in

projects Construct a simple cost–benefit analysis for a project Understand a number of tools for managing projects Understand the six stages of the buyer experience

life cycle Detail a simple form for capturing critical data for a

project

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Activities

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