Project management toolbox tools and techniques for the practicing project manager 2016

PROJECT
MANAGEMENT
TOOLBOX
Second Edition

Russ J. Martinelli
Dragan Z. Milosevic


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Copyright © 2016 by Russ J. Martinelli and Dragan Z. Milosevic
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CONTENTS
Preface

xv

Acknowledgments

PART I:

xvii

THE PM TOOLBOX

1 INTRODUCTION TO THE PM TOOLBOX

1

3

Enabling Business and Project Strategy 5
Project Management Methodologies and Processes 7
Constructing and Adapting a PM Toolbox 9
Secure Strategic Alignment 10
Customize the PM Toolbox 12
Continuously Improve the PM Toolbox 20

References 21

PART II:

PROJECT INITIATION TOOLS

2 PROJECT SELECTION

23
25

The Benefits Map 25
Enabling Benefits Management 26
Developing a Benefits Map 28
Using a Benefits Map 29
Variations 30
Benefits 31

Economic Methods 31
Payback Time 31
Net Present Value 31

Internal Rate of Return 33
Using Economic Methods 33
Benefits of Economic Methods 34

iii


iv

CONTENTS

Scoring Models 34
Developing a Scoring Model 34
Using a Scoring Model 39
Benefits 40

Voting Models 40
Developing a Voting Model 41
Using the Voting Model 42
Benefits 45

Pairwise Ranking 46
Developing a Pairwise Ranking Tool 47
Using the Pairwise Ranking Matrix 48
Benefits 49

The Alignment Matrix 49
Developing the Alignment Matrix 50
Variations 51
Benefits 52

References 52

3 PROJECT INITIATION
Checklist Questions for Project Initiation 55
Developing Checklist Questions for Project
Initiation 56
Using the Checklist Questions 57

The Goals Grid 57
Developing a Goals Grid 58
Using the Goals Grid 59
Benefits 60

Responsibility Matrix 60
Developing a Responsibility Matrix 61
Using the Responsibility Matrix 63
Benefits 64

Complexity Assessment 64
Developing the Complexity Assessment 65
Using the Complexity Assessment 67
Benefits 67

55


CONTENTS

v

The Project Business Case 68
Developing the Project Business Case 68
Using the Project Business Case 70
Benefits 71

The Project Charter 71
Developing a Project Charter 71
Using a Project Charter 76
Variations 77
Benefits 77

References 78

PART III:

PROJECT PLANNING TOOLS

4 PROJECT REQUIREMENTS
The Elicitation Plan 84
Developing an Elicitation Plan 86
Using the Elicitation Plan 89
Benefits 90

Requirements Specification 91
Specifying a Requirement Using Planguage 91
Using the Requirements Specificiation 93
Benefits 96

The Product Requirements Document 96

Developing a Product Requirements
Document 97
Using the PRD 101
Benefits 102

Requirements Ambiguity Checklist 102
Using the Requirements Ambiguity
Checklist 104
Benefits 106

Requirements Baseline 106
Establishing a Requirements Baseline 107
Establish a Requirements Change Board 107
Benefits 108

References 109

81
83


vi

CONTENTS

5 SCOPE PLANNING

111

Project SWOT Analysis 111

Performing a Project SWOT Analysis 112
Using a Project SWOT Analysis 116
Benefits 117

The Scope Statement 118
Developing a Scope Statement 118
Using a Scope Statement 124
Variations 124
Benefits 125

The Work Breakdown Structure 126
Constructing a Project WBS: A Top-Down
Approach 128
Establish the WBS Level of Detail 130
Constructing a Project WBS: A Bottom-Up
Approach 134
Using the WBS 135
Benefits 136

The Product Breakdown Structure 137
Constructing a Product Breakdown
Structure 137
Using the PBS 141
Benefits 141

References 142

6 SCHEDULE DEVELOPMENT
The Gantt Chart 146
Developing a Gantt Chart 146

Using the Gantt Chart 149
Benefits 149

The Milestone Chart 150
Developing a Milestone Chart 151
Using the Milestone Chart 153
Benefits 154

145


CONTENTS

vii

The Critical Path Method Diagram 154
Constructing a CPM Diagram 155
Using the CPM Diagram 160
Benefits 161
Variations 161

The Time-Scaled Arrow Diagram 162
Developing a TAD 162
Using a TAD 167
Benefits 168

The Critical Chain Schedule 168
Developing a Critical Chain Schedule 169
Using the Critical Chain Schedule 172
Benefits 173

The Hierarchical Schedule 173
Constructing a Hierarchical Schedule 174
Using a Hierarchical Schedule 176
Benefits 177

Line of Balance 177
Developing a Line-of-Balance Schedule 178
Using the LOB 180
Benefits 181

Choosing Your Scheduling Tools 181
References 183

7 COST PLANNING
The Cost-Planning Map 185
Developing a Cost-Planning Map 186
Using the Cost-Planning Map 191
Benefits 191

Analogous Estimate 191
Developing an Analogous Estimate 192
Using an Analogous Estimate 193
Benefits 193

185


viii

CONTENTS

Parametric Estimate 194
Developing Parametric Estimates 194
Using Parametric Estimates 198
Benefits 198

Bottom-up Estimate 199
Developing Bottom-Up Estimates 200
Using Bottom-Up Estimates 202
Benefits 202

The Cost Baseline 203
Developing a Cost Baseline 203
Using the Cost Baseline 207
Benefits 208

Choosing a Cost-Planning Tool 211
References 211

PART IV:

PROJECT IMPLEMENTATION TOOLS

8 SCOPE MANAGEMENT
Project Scope Control System 217
Establishing a Project Scope Control
System 217
Using the Project Scope Control System 220
Benefits 223

Project Change Request 223
Developing a Project Change Request 224
Using the Project Change Request 228
Benefits 229

The Project Change Log 229
Developing a Project Change Log 230
Using the Project Change Log 232
Benefits 233

The Scope Control Decision Checklist 233
Developing a Scope Control Decision
Checklist 233

213
215


CONTENTS

ix

Using the Scope Control Decision
Checklist 234
Benefits 235

References 235

9 SCHEDULE MANAGEMENT

The Burn Down Chart 239
Developing the Burn Down Chart 239
Using the Burn Down Chart 240
Benefits 242

The Slip Chart 243
Developing the Slip Chart 244
Using the Slip Chart 246
Benefits 246

The Buffer Chart 247
Developing the Buffer Chart 248
Using the Buffer Chart 249
Benefits 250

The Jogging Line 251
Constructing a Jogging Line 252
Using the Jogging Line 255
Variations 256
Benefits 256

The Milestone Prediction Chart 257
Constructing the Milestone Prediction
Chart 258
Using the Milestone Prediction Chart 260
Benefits 260

B-C-F Analysis 261
Performing the B-C-F Analysis 262
Using the B-C-F Analysis 264

Benefits 265

Schedule Crashing 265
Performing Schedule Crashing 265
Using Schedule Crashing 269
Benefits 269

237


x

CONTENTS

Choosing Your Schedule Management Tools 269
References 270

10 COST MANAGEMENT

273

Cost Management Plan 275
Developing the Cost Management Plan 275
Using the Cost Management Plan 276

The Budget Consumption Chart 276
Developing the Budget Consumption
Chart 277
Using the Budget Consumption Chart 278
Variations 279

Benefits 279

Earned Value Analysis 280
Performing Earned Value Analysis 281
Using Earned Value Analysis 292
Variations 293
Benefits 293

Milestone Analysis 294
Performing a Milestone Analysis 295
Using the Milestone Analysis 297
Benefits 297

Choosing Your Cost Management Tools 297
References 298

11 AGILE PROJECT EXECUTION
Contributed by
Peerasit Patanakul
James Henry
Jeffrey A. Leach

Scrum Basics 302
Product Backlog and Sprint Backlog 304
Information on the Backlogs 304
Populating Backlogs 304
Benefits 306

301

CONTENTS

xi

Release Planning 307
The Release-Planning Event 308
Initial Draft Release Plan 309
Final Release Plans 309
HIP Sprint 310
Release Planning versus Sprint Planning 310
Benefits 311

The Daily Scrum Meeting 311
Organizing a Daily Scrum Meeting 312
Benefits 312

Sprint Task Board 313
Using the Sprint Task Board 313
Benefits 314

The Sprint Burn Down Chart 315
Developing a Sprint Burn Down Chart 315
Using a Sprint Burn Down Chart 316
Benefits 317

The Sprint Retrospective Meeting 317
Organizing a Sprint Retrospective
Meeting 318
Using a Sprint Retrospective Meeting 318

Benefits 320

Concluding Remarks 320
References 321

PART V:

PROJECT REPORTING AND
CLOSURE TOOLS

12 PERFORMANCE REPORTING
Project Reporting Checklist 325
Developing the Project Reporting
Checklist 326
Using the Project Reporting Checklist 326
Benefits 326

323
325


xii

CONTENTS

The Project Strike Zone 328
Developing the Project Strike Zone 328
Using the Project Strike Zone 330
Benefits 332

The Project Dashboard 332
Designing a Project Dashboard 334
Using the Project Dashboard 335
Benefits 336

The Summary Status Report 337
Developing a Summary Status Report 337
Using the Summary Status Report 342
Benefits 343

The Project Indicator 343
Developing the Project Indicator 345
Using the Project Indicator 346
Variations 346
Benefits 348

Choosing Your Reporting Tools 349
References 349

13 PROJECT CLOSURE
Contributed by Tim Rahschulte, PhD

Understanding Project Closure 351
Project Closing Activities 353

Project Closure Plan and Checklist 356
Developing the Plan and Checklist 358
Using the Closure Plan and Checklist 362
Benefits 362

The Project Closure Report 363
Developing the Project Closure Report 363
Using the Project Closure Report 365
Benefits 365

Postmortem Review 366
Conducting the Postmortem Review 366
Using the Postmortem Review 369

351


CONTENTS

xiii

Variations 371
Benefits 372

Concluding Remarks 373
References 373

PART VI:

RISK AND STAKEHOLDER MANAGEMENT
TOOLS

14 MANAGING PROJECT RISK
Risk Management Plan 378
Developing a Risk Management Plan 378

Using the Risk Management Plan 385
Benefits 386

The Risk Identification Checklist 387
Developing a Risk Identification Checklist 387
Using a Risk Identification Checklist 389
Benefits 389

The Risk Register 390
Creating a Risk Register 390
Using the Risk Register 393
Benefits 394

The Risk Assessment Matrix 394
Developing a Risk Assessment Matrix 395
Using the Risk Assessment Matrix 397
Variations 398
Benefits 398

Monte Carlo Analysis 399
Performing a Monte Carlo Analysis 400
Using the Monte Carlo Analysis 408
Benefits 409

The Decision Tree 409
Analyzing the Decision Tree 410
Using Decision Trees 413
Benefits 414

375

377


xiv

CONTENTS

The Risk Dashboard 414
Developing the Risk Dashboard 414
Using the Risk Dashboard 418
Benefits 418

Choosing Your Risk Management Tools 420
References 420

15 INFLUENCING PROJECT STAKEHOLDERS

423

The Stakeholder Management Plan 423
Developing a Stakeholder Management
Plan 424
Using the Stakeholder Management Plan 427
Benefits 427

The Stakeholder Map 428
Developing a Stakeholder Map 428
Using the Stakeholder Map 431
Benefits 431

The Stakeholder Analysis Table 431
Developing a Stakeholder Analysis Table 433
Using the Stakeholder Analysis Table 434
Benefits 435

The Stakeholder Evaluation Matrix 436
Developing a Stakeholder Evaluation
Matrix 438
Using the Stakeholder Evaluation Matrix 439
Variations 441
Benefits 443

The Stakeholder Strategy Matrix 444
Developing a Stakeholder Strategy Matrix 444
Using the Stakeholder Strategy Matrix 446
Benefits 447

Choosing Your Stakeholder Management Tools 447
References 449
Final Thoughts on The PM Toolbox 449
Index

451


PREFACE

M

uch has changed since the publication of the first edition of this book, as the

field of project management (PM) is continually evolving. Part of that evolution
has involved a new approach for selecting project management tools from an
ad-hoc “choose as you use” approach to a more systematic approach of creating a PM
Toolbox that can be applied to many project situations. From this perspective, we feel
fortunate to have been part of the recent project management evolution.
We also feel fortunate to have had the opportunity to work firsthand with many
project managers and project office directors as they set about the task of creating their
initial PM Toolboxes based on the teachings of this text. Our personal understanding of
how project management is evolving and how it affects the needs for PM tools has been
greatly enhanced. This new understanding became the basis for the changes introduced
in this second edition.
The most significant changes in this edition are in four areas. First, we have focused
the content of the book on the fundamental project management practice areas to
create more depth in content. Next, we have maintained the traditional view of project
management tools but have also provided a contemporary set of tools that reflect the
changes in PM practices. Then, to strengthen an area that has created some of the most
positive reader feedback, we have enhanced the various tips, tricks, and examples found
throughout the book. Finally, we worked to create a stronger message concerning the
importance of creating a PM Toolbox that enables stronger alignment between business strategy and project execution, between strategic goals and project deliverables,
and between the work of senior leaders and project managers.
This book has established itself as both educational lecture material and an industry
practice reference, which we hope to maintain with this second edition. Our heartfelt
thanks to the existing and future readers of this book; we hope you find it both enjoyable
and useful to read.
Of course, we would like to hear from you directly and get your feedback at
www.programmanagement-academy.com. Supplemental materials and templates can
be found on our web site as well.

xv

ACKNOWLEDGMENTS

W

e would like to thank the many people who have helped in making this book
a reality.
To our contributing authors, whose subject matter expertise is appreciated:
Debra Lavell, Jim Waddell, Tim Rahschulte, Peerasit Patanakul, James Henrey, and Jeffrey
Leach.
To the team at John Wiley & Sons, who continue to provide outstanding support and
guidance. In particular, we want to thank our executive editor, Margaret Cummins, and
our assistant editor, Amanda Shettleton. Your continued partnership and collaboration
is greatly valued.
To our many colleagues and coworkers who have contributed to the concepts presented in this work in many ways.
To our families who provide the support and encouragement necessary to complete
the writing process.
We are truly blessed to be associated with such a wonderful and supportive community of people!

xvii



PART

I

The PM
Toolbox

1

INTRODUCTION
TO THE PM TOOLBOX
onventional wisdom holds that project management (PM) tools are enabling
devices that assist a project manager in reaching an objective or, more specifically, a project deliverable or outcome. While this traditional role of PM tools is
more than meaningful, we believe that there is greater opportunity to provide value to
an organization and its project managers. In particular, each PM tool can be part of a set
of tools that makes up a project manager’s PM Toolbox.
The PM Toolbox, then, serves a higher purpose: (1) to increase efficiency of the
project players, (2) to provide the right information to support problem-solving and
decision-making processes, and (3) to help establish and maintain alignment among
business strategy, project strategy, and project execution outcomes.
Project management tools support the practices, methods, and various processes
used to effectively manage a project.1 They are enabling devices for the primary players
on a project: the project manager, the specialists who make up the project team, the
executive leadership team, and the governance body.
PM tools include procedures, techniques, and job aids by which a project deliverable
is produced or project information is created. Similarly, A Guide to the Project Management Body of Knowledge and other sources use the phrase “tools and techniques” in place
of what we define as PM tools.2
PM tools may be either qualitative or quantative in nature. To illustrate, consider
two examples: the team charter and Monte Carlo analysis. They differ in the type of
information they process. The team charter provides a systematic procedure to process
qualitative information about authorizing a team to implement a project. Monte Carlo
analysis is a risk-planning tool that uses an algorithm to quantify risks. The heart of both
the qualitative and quantitative groups of tools—and all PM tools belong to one of these
groups—is in their systematic procedure.

Note that we don’t talk about software tools here. True, many PM tools that we discuss in this book exist in a software format. However, our focus is not on tool formats.
Rather, we concentrate on the substance of PM tools: the use of tools to manage projects
more effectively and efficiently.
The design of a PM Toolbox should mirror the approach an organization takes for
establishing standardized project management methodologies and processes. A highly

C

3


4

INTRODUCTION TO THE PM TOOLBOX

standardized set of methods and processes will in turn require an equally high level of
standardization of the PM Toolbox. Less standardization introduces more variability in
PM Toolbox design and use, and therefore more possibility for inconsistent results.
In practice, as organizations strive to grow and mature, project execution efficiency
and repeatability become increasingly important as the leaders of the organization look
for consistency in achieving business results. This means that project managers must be
armed with the right tools—those that support the business strategy, project strategy,
and project management methodologies and processes. It also means that the same
tools should be used across the gamut of projects with limited exceptions.
Standardization of a firm’s PM Toolbox does not happen overnight. Rather, it is
an evolutionary process. In a practical sense, PM Toolboxes will look quite ad hoc at
first. The tendency is to begin building the PM Toolbox with existing tools due to a
project manager’s familiarity with them. So the early-stage PM Toolbox has more to do
with familiarity of use than with standardization. As a firm begins to mature its project
management practices, standardization of methodologies and processes begins to

take hold. This is when the PM Toolbox also begins to become more standardized, as
well as more aligned with the project strategy and the business strategy of the firm.
Construction of a PM Toolbox should be systematically driven, meaning that PM
tools are a vital part of an organization’s overall project execution mechanism. However, project execution must first be aligned to company strategy to be most effective.
When this is the case, the PM Toolbox becomes strategically aligned as well, as illustrated
in Figure 1.1.
As illustrated by the downward arrow, business strategy drives the project strategy,
which in turn drives methods and processes, which influences the PM Toolbox design.
For this downward flow to work, the PM Toolbox supports the project management
methodology and processes implemented by an organization. The methodology and
process in turn helps to implement the project strategy, which supports and is aligned
to the business strategy of a company in its quest for growth (upward arrow).

Business
Strategy

en
riv
lly
D
ica
teg

PM ToolBox

Figure 1.1: Strategically Aligned PM Toolbox

nt

Project Management

Methodologies and Processes

me

ign

Al

St
ra

ic
teg

ra
St

Project
Strategy


ENABLING BUSINESS AND PROJECT STRATEGY

5

ENABLING BUSINESS AND PROJECT STRATEGY
Looking at how projects and the management of those projects support the business
strategy of an organization is critical to understanding the strategic importance of the
PM Toolbox. Since alignment between the PM Toolbox and business strategy is driven
from the top of the pyramid (Figure 1.1), we start from there.

Historically, the strategic management and project management functions and processes of a company have been defined and performed as independent entities, each
with its own purpose and set of activities.3 Companies have come to realize, however,
that the time, money, and human effort invested in refining and improving each of these
independent functions and processes have not brought them closer to turning their
ideas into positive business results. Increasingly, this fact is leading business leaders to
the realization that strategy and project execution can no longer remain independent
if they wish to repeatedly achieve their desired business benefits and business value.
Rather, they must be integrated so that the formation of strategy and the execution of
strategy are tightly aligned.
Use of the Porter model is a simple approach to demonstrate at a high level the alignment among business strategy, project strategy, and PM Toolbox design (Figure 1.2).4
The essence of business strategy lies in devising ways to create both short-term and
long-term growth and sustainability for an enterprise. To equip themselves with the
opportunity, companies rely on their organizational resources.5 Visualize, for example,
project management as an organizational resource. Useful for this visualization can be
the framework of generic strategies, shown in Figure 1.2.6

DIFFERENTATION
Low

High
Business Strategy:
Differentiation

High

Project Strategy:
Fast Cycle Time

Business Strategy:

Low

COST

Schedule Planning
Schedule Management
Risk Management

Business Strategy:

Business Strategy:

Low-Cost

Best - Cost

Project Strategy:

Project Strategy:

Cost Containment

Cost and Quality

Business Strategy:

Business Strategy:

Cost Planning
Cost Management

Cost Planning
Cost Management
Performance

Figure 1.2: Aligning Business Strategy, Project Strategy, and PM Toolbox