Project management the management process

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Third Edition

r ject
Mana ement
The Managerial Process



Third Edition

r ject
Management
The Managerial Process

Clifford F. Gray
Oregon State University

Erik W. Larson
Oregon State University

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Preface
Our motivation for writing this text wasto provide students with a holistic, integrative view of project
management. A holisitic view focuses on how projects contribute to the strategic goals of the organization. The linkages for integration include the process of selecting projects that best support the strategy
of a particular organization and that in turn can be supported by the technical and managerial processes
made available by the organization to bring projects to completion. The goals for prospective project
managers are to understand the role of a project in their organizations and to master the project management tools, techniques, and interpersonal skills necessary to orchestrate projects from start to finish.
The role of projects in organizations is receiving increasing attention. Projects are becoming the major tool for implementing and achieving the strategic goals of the organization. In the face of intense,
worldwide competition, many organizations have reorganized around a philosophy of innovation, renewal, and organizational learning to survive. This philosophy suggests an organization that is flexible
and project driven. Project management has developed to the point where it is a professional discipline
having its own body of knowledge and skills. Today it is nearly impossible to imagine anyone at any
level in the organization who would not benefit from some degree of expertise in the process of managing projects.

Audience
This text is written for a wide audience. It covers concepts and skills that are used by managers to propose,
plan, secure resources, budget, and lead project teams to successful completions of their projects. The text
should prove useful to students and prospective project managers in helping them understand why organizations have developed a formal project management process to gain a competitive advantage. Readers will
find the concepts and techniques discussed in enough detail to be immediately useful in new-project situations. Practicing project managers will find the text to be a valuable guide and reference when dealing
with typical problems that arise in the course of a project. Managers will also find-the text useful in understanding the role of projects in the missions of their organizations. Analysts will find the text useful in

helping to explain the data needed for project implementation as well as the operations ofinherited or purchased software. Members ofthe Project Management Institute will find the text is well structured to meet
the needs of those wishing to prepare for PMP (Project Management Professional) certification. The text
has in-depth coverage of the most critical topics found in PMI's Project Management Body ofKnowledge
(PIMBOK). People at all levels in the organization assigned to work on projects will find the text useful
not only in providing them with a rationale for the use ofproject management tools and techniques but also
because of the insights they will gain on how to enhance their contributions to project success.
Our emphasis is not only on how the management process works, but, more importantly, on why it
works. The concepts, principles, and techniques are universally applicable. That is, the text does not specialize by industry type or project scope. Instead, the text is written for the individual who will be required
to manage a variety of projects in a variety of different organizational settings. In the case of some small
projects, a few of the steps of the techniques can be omitted, but the conceptual framework applies to all
organizations in which projects are important to survival. The approach can be used in pure project
vii


viii Preface

organizations such as construction, research organizations, and engineering consultancy firms. At the same
time, this approach will benefit organizations that carry out many small projects while the daily effort of
delivering products or services continues.

Content
In this latest edition of the book, we have responded to feedback received from both students and teachers, which is deeply appreciated. As a result of the this feedback, the following changes have been made
to the Third Edition:
• Expanded discussions of change management, managing conflict, communication plans, request for
proposals (RFP), and project maturity models.
• Revised chapters on organizations (Chapter 3) and monitoring project performance (Chapter 13) to
make their terminology consistent with the Project Management Body of Knowledge (PMBOK).
• The discussion of earned value has been completely revised to make it easier for students to understand.
• New student exercises have been added to several chapters. Several computer exercises have been revised.
• Examples and screenshots from MS Project are now embedded in the text.

• The "Snapshot from Practice" boxes feature a number ofnew examples of project management in action as well as new research highlights that continue to promote practical application of project management.
Overall the text addresses the major questions and issues the authors have encountered over their 50
combined years of teaching project management and consulting with practicing project managers in domestic and foreign environments. The following questions represent the issues and problems practicing
project managers find consuming most of their effort: What is the strategic role of projects in contemporary organizations? How are projects prioritized? What organizational and managerial styles will improve chances of project success? How do project managers orchestrate the complex network of
relationships involving vendors, subcontractors, project team members, senior management, functional
managers, and customers that affect project success? What factors contribute to the development of a
high-performance project team? What project management system can be set up to gain some measure
of control? How do managers prepare for a new international project in a foreign culture? How does one
pursue a career in project management?
Project managers must deal with all these concerns to be effective. All of these issues and problems
represent linkages to an integrative project management view. The chapter content of the text has been
placed within an overall framework that integrates these topics in a holistic manner. Cases and snapshots
are included from the experiences of practicing managers. The future for project managers appears to be
promising. Careers will be determined by success in managing projects.
The l20-day trial version of Microsoft Project software is included on its own CD-ROM free with the
text.

Acknowledgments
We want first to acknowledge with special thanks and appreciation the contribution of Diane Parente,
Pennsylvania State University-Erie, who prepared the SimProject extended case in the appendix. This


Preface ix

case consists of a series of exercises tied to the chapters of this book that coordinate with and make use
of SimProject, a project management simulation developed by Diane and her colleague at Penn StateErie, Jeff Pinto. SimProject adds a hands-on, experiential dimension to this course.
In addition, we would like to thank Ed Blevins, DeVry University-Irving, for updating the Test
Bank; Charlie Cook, University of West Alabama, for creating PowerPoint slides; and Julie Mehra for
accuracy checking the text and Instructor's Resource Manual content.
Next, it is important to note that the text includes contributions from numerous students, colleagues,

friends, and managers gleaned from professional conversations. We want them to know we sincerely appreciate their counsel and suggestions. Almost every exercise, case, and example in the text is drawn
from a real-world project. Special thanks to managers who graciously shared their current project as
ideas for exercises, subjects for cases, and examples for the text. Shlomo Cohen, Pat Taylor, and John
Wold, whose work is printed, are gratefully acknowledged. Special gratitude is due Robert Breitbarth of
Interact Management, who shared invaluable insights on prioritizing projects. University students and
managers deserve special accolades for identifying problems with earlier drafts ofthe text and exercises.
We are indebted to the reviewers of the first and second edition who shared our commitment to elevating the instruction of project management. We thank all of them for their many thoughtful suggestions and for making our book better. Ofcourse we accept responsibility for the final version of the text.
We would also like to thank our colleagues in the College of Business at Oregon State University for
their support and help in completing this project. In particular, we recognize Mark Pagell, Jimmy Yang,
Prem Matheu, Jack Drexler, and Roger Graham for their helpful comments and suggestions. Special
thanks go to Lori Emmons, Sharon Carlson, Ann Leen, and Cheryl Hoflich who helped prepare the manuscript. We also wish to thank the many students who helped us at different stages of this project, most
notably Carrie Doran, Neil Young, Rebecca Keepers, Katie McAlexander, Katherine Knox, and Amanda
Bosworth. Mary Gray deserves special credit for editing and working under tight deadlines.
Finally, we want to extend our thanks to all the people at McGraw-HilllIrwin for their efforts and support. First, we'd like to thank Scott Isenberg for continuing to champion and provide editorial direction
and guidance through all three editions of the book, and Wanda Zeman, whose superb management of
the book's development has continued to add value to the book with each new edition of it. And we
would also like to thank Jim Labeots, Rose Hepburn, Jeremy Cheshareck, Adam Rooke, Cathy Tepper,
Elizabeth Mavetz, and Gina DeMartino for managing the final production, design, supplement, and media phases of the Third Edition.
Clifford E Gray
Erik W Larson



Note to Student
You will find the content of this text highly practical, relevant, and current. The concepts discussed are
relatively simple and intuitive. As you study each chapter we suggest you try to grasp not only how things
work, but why things work. You are encouraged to use the text as a handbook as you move through the
three levels of competency:

I know.

I cando.
I can adapt to new situations.
Project management is both people and technical oriented. Project management involves understanding the cause-effect relationships and interactions among the sociotechnical dimensions ofprojects.
Improved competency in these dimensions will greatly enhance your competitive edge as a project manager.
The field ofproject management is growing in importance and at an exponential rate. It is nearly impossible to imagine a future management career that does not include management of projects. Resumes
ofmanagers will soon be primarily a description of the individual's participation in projects and their respective contributions.
Good luck on your journey through the text and on your future projects.

xi


Brief Contents
Preface

vii

13. Progress and Performance
Measurement and Evaluation 411

1. Modem Project Management

3

55

14. Project Audit and Closure 461
15. International Projects 489
16. Project Management and the
Future 517

125

APPENDIX 1: Computer Project

2. Organization Strategy and Project
Selection 21

3.
4.
5.
6.
7.
8.
9.
10.

Organization: Structure and Culture
Defining the Project

99

Estimating Project Times and Costs
Developing a Project Plan
Managing Risk

153

207

Scheduling Resources

GLOSSARY 543
241

Reducing Project Duration 281
Leadership: Being an Effective Project
Manager 311

11. Managing Project Teams 343
12. Partnering: Managing Interorganizational
Relations 381

xii

Exercises 531

ACRONYMS

549

PROJECT MANAGEMENT
EQUATIONS 550
INDEX 551


Contents
Case: Film Prioritization

Preface vii
Chapter 1

Modern Project Management 3
What Is a Project? 4
The Importance of Project Management

Organization: Structure and Culture
7

ProjectManagement Today-An Integrative
Approach 11
Research Highlight: Works Wellwith Others

14

Summary 15
Text Overview 15
Key Terms 16
Review Questions 16
Exercises 16
References 17

55

Project Management Strucfures 55
Snapshot from Practice: Skunk Works at
Lockheed Martin 60
Snapshotfrom Practice: Projectitis: The Dark Side to
Project Teams 62

Choosing the Appropriate Project Management
Structure 69

Research Highlight: Relative Effectiveness of
Different Project Management Structures 70
Snapshot from Practice: The Project Management
Program Office 71

Organizational Culture

72

Snapshot from Practice: Software Development
Teams at Microsoft 75

17

Implications of Organizational Culture for
Organizing Projects 77

Chapter 2
Organization Strategy and Project
Selection 21
The Strategic Management Process: An
Overview 22
Snapshotfrom Practice: Move Beyond
Computers 23
Snapshotfrom Practice: The SAS Turnaround 27

The Need for an Effective Project Portfolio
Management System 28
A Portfolio Management System 31
Snapshotfrom Practice: A Derailed Vision 36

Applying a Selection Model
Summary 43
KeyTerms 43
Review Questions 43
Exercises 44
References 45

51

Chapter 3 .

Snapshot from Practice: Project Management at
Work 8
Snapshotfrom Practice: The Emergence of
e.Schwab 10

Case: A Day in the Life

48

Appendix 2.1
Request for Proposal (RFP)

36

Case: Hector Gaming Company 46

Snapshotfrom Practice: Matrix Problems
atDEC 79

Summary 80
Key Terms 81
Review Questions
Exercises 81
References 82

81

Case: Moss and McAdams Accounting Firm
Case: ORION Systems (A) 87
Case: ORlON Systems (B) 90

84

Appendix 3.1
How Culture Is Created and Communicated in
Organizations 91
Snapshotfrom Practice: Culture Change at H.P.:
From the H-P Wayto the Rules ofthe Garage 96

Chapter 4
Defining the Project 99
xiii


xiv Contents

Step 1: Defining the Project Scope

100

References

Snapshot from Practice: Big Bertha II versus USGAs
COR Requirements 102

Step 2: Establishing Project Priorities

103

Snapshot from Practice: Scope Statement

Snapshot from Practice: Year 2004 Olympic
Games-Athens, Greece 106
Snapshot from Practice: Creating a WBS 110

Chapter 5
Estimating Project Times and Costs

153

157

Using the Forward and Backward Pass
Information 167
Level of Detail for Activities 168
Practical Considerations 168
Extended Network Techniques to Come Closer to
Reality 172

Snapshot from Practice: Concurrent Engineering
175

Snapshotfrom Practice: HammockActivities

125

Factors Influencing the Quality of Estimates 125
Estimating Guidelines for Times, Costs, and
Resources 127
Macro versus Micro Estimating 129
Methods for Estimating Project Times and Costs
130
Snapshot from Practice: The Delphi Method 131
Snapshot from Practice: Estimate Accuracy 136
Snapshot from Practice: Level ofDetail-Rule of
Thumb 137

Level of Detail 137
Developing Budgets 138
Types of Costs 139
Refining Estimates and Contingency Funds

Chapter 6
Developing a Project Plan

Snapshot from Practice: The YellowSticky Approach
(for Constructing a Project Network) 161
Snapshot from Practice: The Critical Path 167

122

140

Snapshot from Practice: How Do YouEstimate the
Cost ofa Nuclear Power Plant? 141

143

148

Developing the Project Network 153
From Work Package to Network 154
Constructing a Project Network 155
Activity-on-Node (AON) Fundamentals
Network Computation Process 160

Step 4: Integrating the WBS with the
Organization 111
Step 5: Coding the WB} for the Information
System 113
Project Rollup 114
Process Breakdown Structure 116
Responsibility Matrices 117
Summary 120
K.eyTerms 120
Review Questions 120
Exercises 120
I References
121

Creating a Database for Estimating
Summary 144
Key Terms 144
Review Questions 144
Exercises 145

146

Appendix 5.1
Learning Curves for Estimating

104

Step 3: Creating the Work Breakdown Structure
105

Case: Manchester United Soccer Club

146

Case: Sharp Printing, AG

Summary 179
Key Terms 179
Review Questions
Exercises 180

178

180

Case: Nightingale Project-A 189
Case: Nightingale Project-B 191
Case: Pilots Stadium Case 192

Appendix 6.1
Activity-on-Arrow Method 194

Chapter 7
Managing Risk 207
Risk Management Process 207
Step 1: Risk Identification 209
Step 2: Risk Assessment 211
Snapshotfrom Practice: Semiquantitative Risk
Approach 214

Step 3: Risk Response Development

215

Snapshotfrom Practice: From Dome to Dust 216
Snapshotfrom Practice: WAPor JAVJ4? 217

Contingency Planning

218

Snapshot from Practice: Risk Management at the
Top ofthe World 220

Contents

Contingency Funding and Time Buffers
Step 4: Risk Response Control 225
Change Control Management 226
Summary 229
Key Terms 229
Review Questions 229
Exercises 229
References 230

223

Project Cost-Duration Graph 287
Constructing a Project Cost-Duration
Graph 289
Practical Considerations 293
Snapshotfrom Practice: I'll Bet You. ..

239

241

Snapshotfrom Practice: Assessing Resource
Allocation 257

260

260

Case: Power Troin, Ltd.

Case: Whitbread World Sailboat Race 304
Case: The "Now" Wedding 307
Case: The Now Wedding, Part B 308

Chapter 10
Leadership: Being an Effective Project
Manager 311

Influence as Exchange 316
Social Network Building 319
322

Research Highlight: Improving the Performance of
New-Product Teams 323
Snapshotfrom Practice: Leading at the Edge 325

Ethics and Project Management

262

327

Snapshotfrom Practice: The Collapse ofArthur
Andersen 328
Building Trust: The Key to Exercising Influence

270

Appendix 8.1
The Critical-Chain Approach

304

303

Snapshotfrom Practice: Managing Expectations

Snapshotfrom Practice: Multiple Project Resource
Scheduling 261
Summary 262

Key Terms 262
Review Questions
Exercises 263
References 269

References

Snapshotfrom Practice: The Project Manager as
Conductor 315

259

Snapshot from Practice: Managing Geeks

Multiproject Resource Schedules

295

296

Managing versus Leading a Project 311
Managing Project Stakeholders 312

258

Snapshotfrom Practice: US. Forest Service
Resource Shortage 259

Assigning Project Work

What if Cost, Not Time, Is the Issue?
Summary 298
Key Terms 298
Review Questions 298
Exercises 299

Case: International Capital, Inc.-Part B

The Problem 241
'Iypes of Project Constraints 242
Classification of a Scheduling Problem 244
Resource Allocation Methods 245
Computer Demonstration of Resource-Constrained
Scheduling 251

SplittinglMultitasking 25'7Benefits of Scheduling Resources

283

Snapshotfrom Practice: Outsourcing in Bio-Tech
Picks Up Speed 284
Snapshot from Practice: The Fastest House in the
World 286

Appendix 7.1
PERT and PERT Simulation 235

Chapter 8
Scheduling Resources

282

Options for Accelerating Project Completion

Case: Alaska Fly-Fishing Expedition 231
Case: Silver Fiddle Construction 232
Case: Javacom LAN Project 234

Case: International Capital, Inc.-PartA

Northridge Earthquake

xv

328

Qualities of an Effective Project Manager

272

Chapter 9
Reducing Project Duration 281
Rationale for Reducing Project Duration
Snapshotfrom Practice: Responding to the

330

Research Highlight: Managing Product Development
Tensions 331

281

Summary 333
Key Terms 334
Review Questions

334


xvi Contents

Why Project Partnering Efforts Fail

Exercises 334
References 336
Case: Western Oceanography Institute

337

Chapter 11
Managing Project Teams 342
The Five-Stage Team Development Model

344

Research Highlight: The Punctuated Equilibrium
Model ofGroup Development 346

Situational Factors Affecting Team
Development 347
Building High-Performance Project Teams

347

Snapshotfrom Practice: Managing Martians 351
Snapshotfrom Practice: Mattei s Project Platypus
353
Snapshotfrom Practice: "Rat Fax" Galvanizes
ELITE Team at Newspaper 355
Snapshotfrom Practice: A Good Man in
aStorm 357
Snapshotfrom Practice: Managing Low-Priority
Projects 362

Managing Virtual Project Teams 367
Snapshotfrom Practice: Managing Virtual Global

Teams 368

Project Team Pitfalls

369

The Art of Negotiating 393
A Note on Managing Customer Relations

397

Research Highlight: IT Project Managers Doubling
as Client Account Executives 399

Summary 400
Key Terms 400
Review Questions
Exercises 401
References 401

401

Case: Partnering-The Accounting Software
Installation Project 402
Case: Goldrush Electronics Negotiation Exercise
403

Appendix 12.1
Contract Management 405
Snapshotfrom Practice: Can Partnering Workin the

Public Sector? 407

Chapter 13
Progress and Performance Measurement
and Evaluation 411

Snapshotfrom Practice: Nominal Group
Technique 371

Summary 371
Key Terms 372
Review Questions
Exercises 372
References 373

389

Snapshotfrom Practice: Incentive System for a
Partnering Project 390
Snapshotfrom Practice: Competing against the
Giants 391
Snapshotfrom Practice: U.S. Department of
Defense s ValueEngineering Awards 392

Structure of a Project Monitoring Information
System 411
The Project Control Process 413
Monitoring Time Performance 414
The Need for An Integrated Information System
416

372

Case: Kerzner Office Equipment 374
Case: Franklin Equipment, Ltd. 377

Snapshotfrom Practice: Status Reports at Microsoft

Chapter 12
Partnering: Managing
Interorganizational Relations

417

381

Introduction to Project Partnering 382
Preproject Activities-Setting the Stage for
Successful Partnering 384
Snapshotfrom Practice: "Partnering" a Flu Shot for
Projects 386

Project Implementation-Sustaining Collaborative
Relationships 388
Project Completion-Celebrating Success 389

Developing a Status Report: A Hypothetical
Example 423
Indexes to Monitor Progress 429
Forecasting Final Project Cost 432

Other Control Issues 434
Snapshotfrom Practice: Trojan Decommissioning
Project 434
Snapshotfrom Practice: A Pseudo-Earned Value
Percent Complete Approach 438

Summary 439
Key Terms 439


Contents xvii

Review Questions
Exercises 439
References 449

Cross-Cultural Considerations: A Closer
Look 496

439

Research Highlight: Cross-Cultural Orientations

498

Case: Scanner Project 449

Appendix 13.1
The Application of Additional Earned-Value
Rules 451

Appendix 13.2
Obtaining Project Information from
MS Project 456

Chapter 14
Project Audit and Closure 461
Project Audits 461
The Project Audit Process 462
Project Audits: The Bigger Picture

466

Snapshot from Practice: Operation Eagle Claw

467
Snapshot from Practice: Acer Attacks Costly
Delays 470

Project Closure

471

Snapshot from Practice: Project Cancelled 473
Research Highlight: Chaos: Software Projects 475
Research Highlight: Measures ofTeam
Performance 478

Team, Team Member..and Project Manager
Evaluations 478
Snapshotfrom Practice: The 36()"'degree

Feedback 481

Summary 482
Key Terms 483
Review Questions
Exercises 483
References 484
Appendix 14.1

Research Highlight: Hofstede Framework 499
Snapshotfrom Practice: Project Management
X-Files 500
Snapshotfrom Practice: Dealing with Customs 506

Selection and Training for International
Projects 509
Summary 511
Key Terms 511
Review Questions 511
Exercises 512
References 512
Case: AMEX, Hungary

513

Chapter 16
Project Management and the
Future 517
Current and Future Trends in Project
Management 517

Snapshot from Practice: The Human Genome
Project 521
Snapshot from Practice: The International Space
Station Project (ISS) 522

Unresolved Issues

523

Snapshot from Practice: Harvesting Project
Leaders 525

Project Management Career Issues
Summary 528
Conclusions 529
Key Terms 529
Exercises 529
References 529

483

525

Project Closeout Checklist 484
Case: Maximum Megahertz Project

486

Chapter 15
International Projects 489

Environmental Factors

490

Snapshot from Practice: The Filming ofApocalypse
Now 493

Project Site Selection

495

Appendix 1: Computer Project
Exercises 531
Glossary 543
Acronyms 549
Project Management Equations 550
Index 551


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CHAPTER

ONE

Modern Project
Management

The whole discipline and art ofproject management is going to be the essence ofmanagement
training, operational excellence, and value added.
Tom Peters, author, consultant
This is a good time to be reading a book about project management. Business leaders and experts have
proclaimed that project management is the wave of the future. Project management provides people with
a powerful set of tools that improves their ability to plan, implement, and manage activities to accomplish specific organizational objectives. But project management is more than just a set of tools; it is a
results-oriented management style that places a premium on building collaborative relationships among
a diverse cast of characters. Exciting opportunities await people skilled in project management.
The project approach has long been the style of doing business in the construction industry, u.s. Department of Defense contracts, and Hollywood as well as at big consulting firms. Now project management is spreading to all avenues of work. Today,project teams carry out everything from port expansions
to hospital restructuring to upgrading information systems. The "Big Three" automakers credit their
ability to recapture a significant share of the auto market to the use of project management teams, which
quickly develop new cars that incorporate the latest automotive technology. The impact of project management is most profound in the area of information technology, where the new folk heroes are young
professionals whose Herculean efforts lead to the constant flow of new hardware and software products.
Project management is not limited to the private sector. Project management is also a vehicle for doing good deeds and solving social problems. Endeavors such as providing emergency aid to a region
devastated by a hurricane, devising a strategy for reducing crime and drug abuse within a city, or organizing a community effort to renovate a public playground would and do benefit from the application of
modem project management skills and techniques.
Perhaps the best indicator of the growth and interest in project management can be seen in the rapid
expansion of the Project Management Institute (PMI), a professional organization for project management specialists. Between 1993 and 1997, membership quadrupled to more than 24,000. Current membership is now over 139,000 with members in 125 countries. Since projects cover such a wide variety of
industries, PM! has created Specific Interest Groups (SIGs) so people in different industries can share
ideas about managing projects in their areas of interest, such as aerospace, automotive, construction, engineering, financial services, information technology, pharmaceuticals, and telecommunications.
3


4 Chapter 1 Modern Project Management

Project management is not restricted to specialists. Managing projects are often a vital part of everyone's job. For example, Brian Vannoni, formerly of General Electric Plastics states:
We have very few dedicated project managers. Our project managers might be process engineers, they might be
scientists, they might be process control technicians, maintenance mechanics, degreed and nondegreed people. A
short answer for GE Plastics is that anyone, any level, any function could be a project manager. *

Companies recognize that their entire organizational staffcan benefit from being trained in project management, not just project management wannabes.
The growth of project management can also be seen in the classroom. Ten years ago major universities offered one or two classes in project management,primarily for engineers. Today, many universities
offer multiple sections of project management classes, with the core group of engineers being supplemented by business students majoring in marketing, management information systems (MIS), and finance, as well as students from other disciplines such as oceanography, health sciences, computer
sciences, and liberal arts. These students are finding that their exposure to project management is providing them with distinct advantages when it comes time to look for jobs. More and more employers are
looking for graduates with project management skills. The logical starting point for developing these
skills is understanding the uniqueness of a project and of project managers.

What Is a Project?
What do the following headlines have in common?
Next generation of high definition TVs enter the market.
Star Trek movie nears completion.
FARM AID concert raises millions for family farmers.
New football stadium breaks ground.
Portable fuel cells to replace conventional batteries.
All these events resulted from the management of projects. A project can be defined as follows:
A project is a complex, nonroutine, one-time effort limited by time, budget, resources, and performance specifications designed to meet customer needs .

a

. Like most organizational effort, the major goal of project is to satisfy a customer's need. Beyond this
fundamental similarity, the characteristics of a project help differentiate it from other endeavors of the
organization. The major characteristics of a project are as follows:
I.
2.
3.
4.
5.

An established objective.
A defined life span with a beginning and an end.

Usually, the involvement of several departments and professionals.
Typically, doing something that has never been done before.
Specific time, cost, and performance requirements.

First, projects have a defined objective-whether it is constructing a 12-story apartment complex by
January 1 or releasing version 2.0 of a specific software package as quickly as possible. This singular
* Harold Kerzner. Applied Project Management (New York: John Wiley & Sons.lOOOI. p, 221.


Chapter 1 Modem Project Management 5

purpose is often lacking in daily organizational life in which workers perform repetitive operations each
day.
Second, because there is a specified objective, projects have a defined endpoint, which is contrary to
the ongoing duties and responsibilities oftraditional jobs. In many cases, individuals move from one project to the next as opposed to staying in one job. After helping to construct a desalination installation
along the Gulf ofMexico, an engineer may next be assigned to construct an oil refinery plant in Malaysia.
Third, unlike much organizational work that is segmented according to functional specialty, projects typically require the combined efforts of a variety of specialists. Instead of working in separate offices under
separate managers, project participants, whether they be engineers, financial analysts, marketing professionals, or quality control specialists, work closely together under the guidance of a project manager to
complete a project
The fourth characteristic of a project is that it is nonroutine and has some unique elements. This is not
an either/or issue but a matter of degree. Obviously, accomplishing something that has never been done before, such as building a hybrid (electric/gas) automobile or landing two mechanical rovers on Mars, requires solving previously unsolved problems and breakthrough technology. On the other hand, even basic
construction projects that involve established sets of routines and procedures require some degree of customization that makes them unique.
Finally, specific time, cost, and performance requirements bind projects. Projects are evaluated according to accomplishment, cost, and time spent These triple constraints impose a higher degree of accountability than you typically find in most jobs. These three also highlight one ofthe primary functions ofproject
management, which is balancing the trade-offs between time, cost, and performance while ultimately satisfying the customer.

What a Project Is Not Projects should not be confused with everyday work. A project is not routine,
repetitive work! Ordinary daily work typically requires doing the same or similar work over and over,
while a project is done only once; a new product or service exists when the project is completed. Examine the list in Table 1.1 that compares routine, repetitive work and projects. Recognizing the difference
is important because too often resources can be used up on daily operations which may not contribute to
longer range organization strategies that require innovative new products.

The terms program and project are often used interchangeably in practice, which sometimes causes
confusion. Programs and projects are similar in the sense that they both are directed toward goals and require plans and resources to reach their goals. Both use similar tools, methods, and policies. The differences lie primarily in scope and time horizon. A program is a series of coordinated, related, multiple
projects that continue aver extended time intended to achieve a goal. A program is a higher level group of
projects targeted at a common goal. The classic example is the U.S. space program to place a space station on the moon to serve as a springboard to other space explorations.
TABLE 1.1
Comparison of
Routine Work
with Projects


6

Chapter1 Modem Project Management

The Project Life Cycle
Another way of illustrating the unique nature of project work is in terms of the project life cycle. Some
project managers find it useful to use the project life cycle as the cornerstone for managing projects. The
life cycle recognizes that projects have a limited life span and that there are predictable changes in level
of effort and focus over the life of the project. There are a number of different life-cycle models in project management literature. Many are unique to a specific industry or type of project. For example, a
new software development project may consist of five phases: definition, design, code, integration/test,
and maintenance. A generic cycle is depicted in Figure 1.1.
The project life cycle typically passes sequentially through four stages: defining, planning, executing,
and delivering. The starting point begins the moment the project is given the go-ahead. Project effort
starts slowly, builds to a peak, and then declines to delivery of the project to the customer.
I. Defining stage: Specifications of the project are defined; project objectives are established; teams
are formed; major responsibilities are assigned.
2. Planning stage: The level ofeffort increases, and plans are developed to determine what the project
will entail, when it will be scheduled, whom it will benefit, what quality level should be maintained,
and what the budget will be.
3. Executing stage: A major portion of the project work takes place-both physical and mental. The

physical product is produced (a bridge, a report, a software program). Time, cost, and specification
measures are used for control. Is the project on schedule, on budget, and meeting specifications?
What are the forecasts of each of these measures? What revisions/changes are necessary?
4. DeUvering stage: Includes the two activities: delivering the project product to the customer and redeploying project resources. Delivery ofthe project might include customer training and transferring
documents. Redeployment usually involves releasing project equipment/materials to other projects
and finding new assignments for team members.

FIGURE 1.1
Project Life
Cycle