OM480

Project Strategies:

Goal Setting

(With Material from the Text Authors)

Overview

• Project Definition

• Goal Statements

• Resource Requirements

• Managing Requirement Conflict

• Managerial Commitment

Strategic Management Process

Review/revisemission

New goalsand objectives

Portfolio ofstrategic choices

Strategyformulation

Strategyimplementation

Projects

Externalenvironment--opportunitiesand threats

Internalenvironment--strengths andweaknesses

1

2

3

4

Strategic Management ProcessIncludes Four Activities1. Review and define the organizational mission.2. Set long-range goals and objectives.3. Analyze and formulate strategies to reach objectives.4. Implement strategies through projects.

Strategy, Objectives and Project Linkages

Organization

Mission

Objectives

Project

Design3 advanced,solid waste

plants

Engineeringfirm

Designdepartment

Objective:“Diversify”

Strategy:“R & D”

Objective:“Waste plants”

Strategy:“Design specialpurpose plants”

Objective:“Design solidwaste plant”

Project

Pull-typeluggage with

hidden,retractable

wheels

Luggagefirm

R & Ddepartment

Objective:“Increase sales 40%”

Strategy:“Specialize”

Strategy:“Pull-typeluggage”

Objective:“R & D”

Objective:“Pull-typeluggage”

Cause-and-Effect Worksheet Example

Some projectsnot planned

Duplicate prioritysystems exist

Criteria are notcommonly known

No feedback

Lack of projectmanagement skills

Unknown project impacton other priorities

Planning

Overcommittedresources

Unknownresources

We don’t budgetfor resources

Vague communicationsof resources required

Projects arenot achievingtheir desiredimpact

Systems

Little consistency

Priority setting criteria are notconsistently applied to all projects

Different prioritysystems exist

Criteria are notcommonly known

Someone elsealways approvesprojects

Manyapprovals

Prioritiesconflict withapprovalcriteria

Priorityselectionreasons notdocumented

Project priorities can bereceived from all over withno central clearing house

Name dropping

People set own priorities

Special interest hasmajor impact on priority

No feedback system

New projects impact onexisting projects

Culture

Organization powerinfluences projects

Name droppingfor impact

Changeable commitments

Priorities set without regard to origin

Acceptable to miss dates

Priorities set without companyplan relationships

Priorities set outsidechain of command

Short-term vs.long-term thinking

Communication

Aversion to risk

Resistance to change

No personal political risk

Functional area turf protection

No feedbacksystem

New projectimpact unknown

Poor prioritycommunications

Perceived lack ofdirection fromtop management

Project criteria notcommonly known

Vague communicationof resource requirements

Project Definition

• Project Goal– Envisioned future state of solving a known

problem• Specifications

• Time

• Cost

– Integration of people, time, money, activities, and skills

Goal Statements

• Statement of the desired future state involving:• End Users

– Questions about utility

• Upper Management– Question relationship to corporate strategy

• Engineering Functions– Questions on design/development of solution

• Business Functions– Payback period, cost objectives, financial measures

Strategy, Objectives, and Project Linkages

Project Goal Life Cycle

Develop“Prototype”

“Customer”IDs Need

DevelopFunctional

Specs

Verify Specs w/“Customer

“Ballpark”ResourceEstimates

FunctionalSpecs to

Design Specs

Design Specsto Engineer-

ing Specs

StakeholderFeedback

Produce“Field”

Prod/Svc

FEEDBACK LOOPS

FEEDBACK LOOPS

FE

ED

BA

CK

LO

OP

S

FE

ED

BA

CK

LO

OP

S

Strategic Management Process

2-1

Financial Selection Criteria

• Payback Model– Time to recover project investment

• Investment $/Annual Net Savings = PB

– Widely used– Emphasis on Cash Flow

• Net Present Value (NPV)– Desired rate of return

• (Est. Annual Cash Flow/Project Cost) X 100 = RoR

– Compare “RoR” of project(s) to “target”

Project Screening Process

Projectproposal

idea

Datacollection

and backup

Self evaluationof projectby criteria

Priority teamevaluates proposal

and reviews portfoliofor risk balance

Assign priorityAssign resources

Assign project managerEvaluate progress

Needstrategic fit

ROI/paybackrisk

Abandon

Return formore

information

Periodicreassessmentof priorities

Reject

Hold forresources

Pursue

Accept

Project Screening Process

Portfolio of Projects By Type

Project Screening Matrix

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2.0 3.0 2.0 2.5 1.0 1.0 3.0

Project 1 1 8 2 6 0 6 5 66

Project 2 3 3 2 0 0 5 1 27

Project 3 9 5 2 0 2 2 5 56

Project 4 3 0 10 0 0 6 0 32

Project 5 1 10 5 10 0 8 9 102

Project 6 6 5 0 2 0 2 7 55

…

Project n 5 5 7 0 10 10 8 83

CriteriaWeight

“Selling” Commitment

• Accept “Multiple Realities”– Varying Impressions and Perceptions

• Develop Broadly Specific Goal(s)– Enhances “Buy-in”– Consensus over Compromise

• “Customer” trumps other Stakeholders– Completely satisfy needs, profitably!

Resource Planning

• Establish realistic expectations– People: #s, skills, authority– Money: buy the “needs” first– Time: plan backward, execute forward

• Budget factors– Capital: physical plant and machinery– Expense: payroll, travel, consumables– Contingency: 10-15% for “Murphy”

Conflicting Project Goals

• Market Conditions– Windows of opportunity change

• Compatibility– Conflicts between activities, goals, competing

interests

• “Politics”– Senior leader support (or lack thereof)

• Resource Availability– Project prioritization/reallocation

Managing Conflict

• Influence– “Sell”; “WIFM” around goal

• Proaction– Invite criticism– Adjust and communicate

• Conflict Negotiation– Separate people from issue– Maintain balance– Communicate

Project Priority System

Long-range plan

1. Rank objectives2. Weight objectives3. Impact definitions and weights

Project proposalsfor

major projects

Priority teamPrioritize major

projects

4. Project priority5. Risk analysis

Annually Ongoing

Allocating resources

Assign projectmanagers

Functional managersidentify

available resources

Feedback status-ongoing projects Major project priority

and status report

Monthly

Rank ObjectivesImprove external customerservice

5 4 6 15

10% decrease in productioncosts

7 6 4 17

All activities meet currentlegal, safety, andenvironmental standards

MUST

Create $5 million in neewsales

8 4 6 18

Provide immediate responseto field problems

10 10 10 30

Develop/document policies,systems, procedures

7 10 6 23

Analyze objective independently in three dimensions

1. Seriousness - What is the current impact of the resultsof the objective on the organization?

0 10Small impact Large impact

2. Urgency - Time factor. What will be the relative consequencesof not taking action over the next 12 months?0 10

Can defer Must take action

3. Future seriousness - What is the chance of the objectives seriousness changing over time?

0 10Decrease orremain same

Dramaticallyincrease

Major Project Proposal

Project Title ______________________________________________________

Responsible Manager ________________Project Manager _______________

� _______ General Support Quality Legal New product _______ _____________ Cost reduction Replacement Capacity _______ _____________ ___________ __________ __________YES NO The project will take more than 500 labor hours?YES NO The project is a one-time effort? (will not occur on a regular basis)YES NO The project proposal was reviewed by the product manager?

Problem definitionDescribe the problem/opportunity.

Goal definitionDescribe the project goal.

Objective definitionPerformance: Quantify the savings/benefits you expect from the project.

Cost: Labor hours, materials, methods, equipment?

Schedule: Overall duration in months

Date _______ Number _______

Risk AnalysisWhat are the three major risks for this project?

1.

2.

3.

Risk1 above

Risk2 above

What is the probabilityof the above risks

occurring?

0 to 1.0none high

Risk3 above

Risk1 above

Risk2 above

What is the impact onproject success if these

risks do occur?

0 to 1.0none high

Risk3 above

Resources available? ____________ Yes _______________ No

Current project status

Start date ____________ Estimated finish date __________________

Status: Active On-hold

Update:

Priority team action: Accepted Returned

Discovery--project not defined Duplicate to: ____________

Operational--proposal not a project Project #

Need more information--to prioritize project Completed project

Project Portfolio Matrix