Project
Management
MBA
Unit
Notes
by
module
Edinburgh Business School / Heriot Watt University
Personal Notes by: Alan Langridge
Time
Cost
Quality
Project Management
MODULE 1 – INTRODUCTION 8
1.1.2 PROJECTS AND OTHER PRODUCTION SYSTEMS 8
1.1.2.1 PROJECTS VERSUS PROGRAMMES 8
1.1.3 CHARACTERISTICS OF PROJECTS 8
1.2 WHAT IS PROJECT MANAGEMENT? 9
1.2.3.1 INTERNAL PROJECT MANAGEMENT (NON‐EXECUTIVE PROJECT MANAGEMENT) 9
1.2.3.2 EXTERNAL PROJECT MANAGEMENT 11
1.3.3 INTERNATIONAL CO‐OPERATION AND STANDARDS 12
1.3.5 GENERIC BENCHMARKS 12
1.3.7 PROJECT LIFE CYCLE 12
MODULE 2 – INDIVIDUAL AND TEAM ISSUES 13
2.2.2.2 THE CONCEPT OF THE PROJECT MANAGER 13
2.2.2.3 THE CENTRAL POSITION OF THE PROJECT MANAGER 13
2.2.2.4 THE ROLE OF THE PROJECT MANAGER 13
2.2.2.5 SELECTING THE PROJECT MANAGER 14
2.2.3.2 PROJECT PLANNING 14
2.2.3.3 AUTHORISING 15
2.2.3.4 TEAM ORGANISING 16
CLASSICAL THEORY 16
EMIPIRCAL THEORY 16
BEHAVIOURAL THEORY 16
DECISION THEORY 16
SYSTEMS MANAGEMENT THEORY 16
2.2.3.5 CONTROLLING 17
2.2.3.6 DIRECTING 17
2.2.3.7 TEAM BUILDING 17
2.2.3.8 LEADERSHIP 18
2.2.3.9 LIFE‐CYCLE LEADERSHIP 19
2.3.2 PROJECT TEAMS WITHIN FUNCTIONAL ORGANISATION 19
2.3.3 TEAM MULTI‐DISCIPLINARY AND HETEROGENEITY ISSUES 19
2.4.2 TEAM STAFFING 19
2.4.4 PROJECT TEAM OPERATION 20
2.5.2 PROJECT LIFE CYCLES 21
2.5.3 PROJECT CHANGE CONTROL AND MANAGEMENT 21
2.5.4 PROJECT TEAM EVOLUTION 21
2.5.5 GROUPTHINK 22
2.6 PROJECT TEAM MOTIVATION 22
2.6.2 MCGREGOR AND MASLOW 22
2.6.3.2 EXPECTANCY THEORY 23
2.7.2 PROJECT COMMUNICATION 24
2.7.3 FORMAL AND INFORMAL COMMUNICATION 24
2.7.4 INTERNAL AND EXTERNAL COMMUNICATIONS 24
2.8.2 ORIGINS AND SYMPTOMS OF TEAM MEMBER STRESS 24
SYMPTOMS 24
2.8.3.1 INDIVIDUAL STRESS MANAGEMENT 25
2.8.3.2 PROJECT‐TEAM STRESS MANAGEMENT 25
2.9.3 CONFLICT CHARACTERISTICS 25
2.9.5 CONFLICT MANAGEMENT 25
MODULE 2 LEARNING SUMMARY 26
MODULE 3 – PROJECT RISK MANAGEMENT 28
3.2.2 THE CONCEPT OF RISK 28
3.2.3.1 PATTERN RECOGNITION AND ATTENTION 28
3.2.3.2 BOUNDED RATIONALITY 28
3.2.3.3 RISK FORECASTING AND PREDICTION MOMENTUM 28
3.2.3.4 INTUITION AND BIAS 29
3.3.2 RISK ASSESSMENT AND CONTROL 29
3.3.2.1 ELEMENTS OF RISK ASSESSMENT 30
3.3.2.2 ELEMENTS OF RISK CONTROL 30
3.3.3 PROJECT AND STRATEGIC RISK 30
3.4.1 GENERIC RISK HEADINGS 31
3.4.2 MARKET RISK AND STATIC RISK 31
3.4.3.1 EXTERNAL RISK 31
3.4.3.2 INTERNAL RISK 32
3.5 RISK CONDITIONS AND DECISION MAKING 32
3.5.1 CONDITIONS OF CERTAINTY 32
3.5.2 DECISION MAKING UNDER CONDITIONS OF RISK 32
3.5.3 DECISION MAKING UNDER CONDITIONS OF UNCERTAINTY 33
3.5.3.1 HURWICZ CRITERION (MAXIMAX CRITERION) 33
3.5.3.2 WALD CRITERION (MAXIMIN CRITERION) 33
3.5.3.3 SAVAGE CRITERION (MINIMAX CRITERION) 33
3.5.3.4 LAPLACE CRITERION 33
3.5.4 THE NEED FOR A RISK MANAGEMENT STRATEGY 34
3.6 THE CONCEPT OF RISK MANAGEMENT 34
3.6.2 RISK IDENTIFICATION 35
3.6.4 RISK ANALYSIS 35
3.6.4.1 RISK MAP 36
3.6.6.2 RESPONSE OPTIONS 37
3.6.7 RISK CONTROL, POLICY AND REPORTING 37
3.7 RISK, CONTRACTS AND PROCUREMENT 37
MODULE 3 LEANING SUMMARY 38
MODULE 4 – PROJECT MANAGEMENT ORGANISATIONAL STRUCTURES AND STANDARDS 40
4.2.2.2 THE FUNCTIONAL STRUCTURE (INTERNAL TO AN EXISTING ORGANISATION) 41
4.2.2.3 PURE PROJECT STRUCTURE (INTERNAL TO AN EXISTING ORGANISATION) 41
4.2.2.4 MATRIX STRUCTURE (INTERNAL TO AN EXISTING ORGANISATION) 42
4.2.3 THE PROJECT EXTERNAL TO THE EXISTING ORGANISATION 42
4.2.3.2 EXTERNAL (EXECUTIVE) PROJECT MANAGEMENT STRUCTURE 42
4.2.4.1 BROAD CONSIDERATIONS (CRITERIA FOR SELECTING THE ORG STRUCTURE) 46
4.2.4.2 PROJECT OBJECTIVES AND CHOICE OF ORGANISATIONAL STRUCTURE 46
4.4 PROJECT MANAGEMENT STANDARDS 47
4.4.2.2 THE APM BOK PROFILE 47
4.4.3 BS6079 47
MODULE 4 LEARNING SUMMARY 48
MODULE 5 – PROJECT TIME PLANNING AND CONTROL 49
5.1 THE CONCEPT OF PROJECT TIME PLANNING AND CONTROL 49
5.2.1.2 SOURCES OF TIME PLANNING DATA 49
5.2.2 THE PLANNING PROCESS 50
5.2.2.2 THE STATEMENT/SCOPE OF WORK (SOW) 51
5.2.2.3 THE WORK BREAKDOWN STRUCTURE (WBS) 51
5.2.2.4 PROJECT LOGIC EVALUATION 52
5.2.2.6 THE DRAFT MASTER SCHEDULE (DMS) 53
GANTT CHARTS 53
NETWORK DIAGRAMS 54
CRITICAL PATH METHOD (CPM) 55
PROGRAM EVALUATION REVIEW TECHNIQUE (PERT) 58
5.3 PROJECT REPLANNING – CRASH ANALYSIS 62
5.4 TRADE‐OFF ANALYSIS 63
5.4.3 TRADE‐OFF CLASSIFICATION 64
5.5 RESOURCE SCHEDULING 64
5.5.4 RESOURCE LEVELLING (OR SMOOTHING) 65
5.6.6 COMMON COMMERCIAL PROJECT PLANNING AND CONTROL SOFTWARE 65
MODULE 5 LEARNING SUMMARY 66
MODULE 6 – PROJECT COST PLANNING AND CONTROL 67
6.2 PROJECT COST PLANNING AND CONTROL SYSTEMS 67
6.2.2.2 COST PLANNING AND CONTROL AS MANAGEMENT FUNCTIONS 67
6.2.2.3 GENERAL REQUIREMENTS OF A COST CONTROL SYSTEM 67
6.2.3 TYPES OF CONTROL SYSTEMS 68
6.2.4.2 COST AND ALLOWANCE CLASSIFICATION 71
6.2.5 LIFE CYCLE COSTS 72
6.2.5.3 THE PROCESS OF LIFE CYCLE COSTING (LCC) 73
6.3 THE PROJECT COST CONTROL SYSTEM (PCCS) 74
6.3.2 THE PCCS PLANNING CYCLE 74
6.3.2.4 COMPUTERISED DATABASE ESTIMATING SYSTEMS 76
6.3.2.5 THE PROJECT BUDGET PLAN 76
6.3.3 THE PCCS OPERATING CYCLE 77
EARNED VALUE ANALYSIS (EVA) 78
EVA: VARIANCE, ENVELOPES AND INTERPRETATION 81
THE CRITICAL RATIO 84
EVA EXAMPLE 86
PVAR : PROJECT VARIANCE AND ANALYSIS REPORTING 87
MODULE 6 LEARNING SUMMARY 88
MODULE 7 – PROJECT QUALITY MANAGEMENT 90
7.2 QUALITY MANAGEMENT AS A CONCEPT 90
7.2.2.5 PROACTIVE PLANNING 91
7.2.3 QUALITY STANDARDS 92
7.2.3.2 BRIEF GUIDE TO ISO9000 92
7.3 THE QUALITY GURUS 93
7.2.1 DEMING 93
7.3.2 JURAN 95
7.3.3 CROSBY 95
7.3.4 IMAI 97
7.4 THE QUALITY MANAGEMENT ‘SIX PACK’ 97
7.4.8 QUALITY CONTROL TOOLS 100
PARETO ANALYSIS 100
BRAINSTORMING TECHNIQUES 100
SWOT ANALYSIS 101
7.4.8.2 ANALYSIS TOOLS 101
SCATTER DIAGRAMS 101
CONTROL CHARTS 102
7.4.8.3 IDENTIFICATION AND ANALYSIS TOOLS 102
CAUSE AND EFFECT ANALYSIS 102
7.5 TOTAL QUALITY MANAGEMENT (TQM) 103
7.5.4 TQM IMPLEMENTATION 103
KAIZEN 104
4S+1 (ALSO KNOWN AS 5S IN WESTERN CULTURE) 105
GENCHI GENBUTSU 106
POKA‐YOKE 106
7.5.5 ADVANTAGES AND DISADVANTAGES OF TQM SYSTEMS 106
7.6.2.2 CONFIGURATION IDENTIFICATION SPECIFICATION 108
7.6.2.3 CONFIGURATION CHANGE‐CONTROL SYSTEM 108
7.6.3 CONFIGURATION MANAGEMENT BASELINES 109
7.7 CONCURRENT ENGINEERING AND TIME‐BASED COMPETITION 110
7.7.3 PHASED AND FAST‐TRACK CONCURRENT ENGINEERING 110
7.7.4 ADVANTAGES AND DISADVANTAGES OF CONCURRENT ENGINEERING 111
MODULE 7 LEARNING SUMMARY 112
FORMULAE SHEET (FOR EXAMINATION PURPOSES) 114
Time
Cost
Quality
Module
1
–
Introduction
1. A project is a one‐off process with a single definable end‐result or product
2. Project Management focuses on control of 3 key variables related to planning and control: time, cost and quality
1.1.2
Projects
and
Other
Production
Systems
3. There are 3 broad types of production systems a. Mass production
i. Large numbers of repetitive items where there is minimal chance of change ii. Consumer demand is relatively constant for the end product
iii. Capital intensive iv. Highly mechanistic
v. Researched and developed to operate at maximum efficiency vi. Once setup little management intervention or control is needed b. Batch production
i. Modifications at set intervals are likely to be required
ii. Continual high demand for the end product may not always exist iii. Less mechanistic than Mass Production – organised around
functional/process groupings
iv. A medium level of management intervention or control is needed c. Project (non‐repetitive) production
i. One off, non‐repetitive items
ii. Complex management and control is needed iii. No previous learning curve on which to rely
1.1.2.1
Projects
Versus
Programmes
4. A programme is a set of identifiable projects aimed at achieving a set of goals/objectives
1.1.3
Characteristics
of
Projects
5. General project characteristics include (there can be exceptions): a. A single, definable purpose, product or result
b. Usually has defined constraints or targets (think cost, schedule/time, performance) c. Multi‐disciplined
d. Unique
e. Somewhat unfamiliar (never an exact repeat)
f. Defined time frame (considered a temporary activity) g. Part of the process involved in working to achieve a goal h. Usually interlinked with other projects within an organisation
i. Usually of secondary importance (there are exceptions such as R&D projects and companies established solely for the execution of a single project)
j. Relatively complex (in organisational terms)
1.2
What
is
Project
Management?
6. Generally accepted as:
a. Achieving time, cost and quality targets, within the context of overall strategic and
tactical client requirements, by using project resources...and concerned with....the life cycle of the project...planning and controlling the project from inception to completion
7. Typical project management Time‐Cost‐Quality continuum
1.2.3.1
Internal
Project
Management
(non
executive
project
management)
8. Project team within an existing organisational structure 9. Typical functional structure/arrangement
Time Cost
Disadvantage: people tend to become compartmentalised and work rigidly on functional tasks
10. Typical project team operating across functional boundaries
Advantage: Good flexibility in the use of people
11. Main characteristics of internal project management systems(across functional boundaries) are:
a. A single person (project manager) is response of managing the project organisation b. Within reason the PM acts outside normal functional authority structures
c. PM has equal authority over shared project resources when compared to functional managers
d. PM acts as a single leader and co‐ordinates project resources to achieve project objectives
e. Work is generally conducted by a range of functional specialists working as a multi‐ disciplinary group
f. PM integrates the multi‐disciplined group into the multi‐disciplined project g. PM negotiates with functional managers for allocation of project resources h. The PM ensures focus on delivering the project outcomes/objectives in relation to
cost, quality and time; Functional managers stay focussed on achieving an organisations primary objectives
i. This creates the potential for conflict that over shared resource allocation that needs to be managed
i. Project individuals may be subject to two lines of authority – the PM and the Functional Manager. These may sometimes be competing.
k. Project structure is temporary and after achieving the project objectives the resources return to their functional roles
l. Projects can originate at any level or within any functional area
m. Project structures require support of the standard support functions (HR, IT, Finance etc) and usually do not operate as fully self‐contained sections
1.2.3.2
External
Project
Management
12. External PM is engaged along with external consultants to create the (external) project team and deliver the project according to the ‘success criteria’ as defined by the client
13. The main characteristics of an external proj mgmt structure are: a. External PM acts as an agent on behalf of the client
b. Highly flexible in that external consultants can be hired as required based on a function of the workload demand
c. Instructions and communications have to pass an internal‐external boundary. This can act as an impediment and barrier to effective communication
d. Buy‐in can be lower (team allegiance)than internal proj mgmt structures as the primary goal/driver of external project members is unlikely to coincide with the client organisation
e. External PM has direct control over (external) project resources f. Functional structure has no relevance
g. Risk transfer and contractual control requirements are enhanced/increased in external structures
h. There is little, if any, in‐built knowledge and once the external consultants finish their is potentially a high loss of built‐up project knowledge
14. A typical external project management structure arrangement:
1.3.3
International
Co
operation
and
Standards
15. Unique in that the codes of practice and body of knowledge are international
16. International professional body is the IPMA – International Project Management Association a. UK: Assoc’n for Project Management (APM)
b. USA: Project Management Institute (PMI)
1.3.5
Generic
Benchmarks
17. BS6079 – Bristish Standard for project management practice
18. ISO10006 – European Standard for Project Management of the design process 19. PRINCE2 – An attempt to produce standardised proj mgmt practice within controlled
environment industries and UK Govt
1.3.7
Project
Life
Cycle
20. Typical lice cycle phases include: a. Inception
b. Feasibility c. Prototype
d. Full design and development
e. Tendering and contractual arrangements f. Manufacturing
g. Commissioning h. Operation i. Decommissioning j. Removal and recycling 21.
Module
2
–
Individual
and
Team
Issues
2.2.2.2
The
Concept
of
the
Project
Manager
1. Project Managers have the authority to make decisions about project priorities, schedules, budgets, objective and policies, but often do not have the official authority to give direct orders to the people who must carry out the work as a result of these decisions
2. For influence, Project Managers must rely on: a. Competency
b. Professionalism c. Reputation d. Skill
e. Interpersonal Skills f. Alliances
2.2.2.3
The
Central
Position
of
the
Project
Manager
3. Focus within the overview – helps ensure resources and people are obtained and utilised in an integrated manner
4. The Project Manager occupies a central position relation to communications 5. The Project Manager requires
a. Intellect to devise project strategy
b. Diligence to ensure actions are taken / strategy is executed
2.2.2.4
The
Role
of
the
Project
Manager
6. Primary requirements of the Project Manager’s role include: a. Planning the project activities, schedules and budgets b. Organising and selecting the project team
c. Interfacing with the client and other interested/concerned parties d. Negotiating with the client and suppliers
e. Management of project resources f. Monitoring and controlling project status g. Identifying issues/problems
h. Resolving/solving issues/problems i. Resolving conflicts
7. The role calls for skilled and competent generalists 8. Project Scope ‐ the limits of the project
9. Project Creep – variations to the project scope
10. Some ‘soft skills’ a Project Manager should possess include: a. Flexibility and adaptability
b. Ability to multi‐task c. Persuasive
d. Initiative / self‐starter e. Well organised
g. Diplomatic
h. Good time manager
i. Be prepared to generalise rather than (always) specialise j. Ability to identify and resolve problems/issues
11. Some ’harder skills’ required by a Project Manager include: a. Establishing a team
b. Team dynamics
c. Ability to develop complex time and cost plans; and achieve them d. Understanding of contracts, procurement, purchasing and HR e. Technical understanding of the project
f. Translate business strategy to project objectives
2.2.2.5
Selecting
the
Project
Manager
12. Internal projects usually select PM’s from the ranks of functional managers or staff 13. Use of internal staff reduces/eliminates the learning curve to understand the organisation
and means previously established relationships and reputations within the organisation can be utilised in executing the project
14. It is advisable to NEVER have the same the person continue as a functional manager and the PM of a major project. Aside from each role being quite demanding, there may exist conflict between the two roles and thus objectives for both roles could not be simultaneously fulfilled
15. Increasingly, external consultants are used as PM’s in internal projects
16. Use of external consultants can greatly increase the learning curve of the PM to understand the organisation and also means relationship and reputations need to be established. Furthermore, the external PM may have a disparity of interest and allegiance because they do not ‘belong’ to the parent organisation
17. Specialist Project Managers can be advantageous. However, this lends itself to a concern in relation to technical competence of the PM. It is easy to lose respect of the project team if the project manager either does not understand the technology or makes technical errors
2.2.3.2
Project
Planning
18. Planning is often the first project activity 19. Technical planning is required for
a. Project Planning and Control b. Cost Planning and Control c. Quality Management
20. Authority relationships also need to established (who can authorise what)
21. Usual method for defining authority linkages is via a Task Responsibility Matrix (TRM)
22. TRM’s typically show a. Key milestones
b. Individual important activities c. General responsibilities d. Specific responsibilities e. Dates
Responsibilities would include a. Approval
b. Preparation c. Checking
d. Making and input e. Authorising
23. A project TRM typically has two axes. One axis is a list of activities and/or outputs. On the other axis is a list of the various individuals or groups involved in the delivery of the activities/outputs
2.2.3.3
Authorising
24. Authority is NOT the same as power
a. Authority is a type of ability to control and direct that is delegated from higher levels b. Power is given to an individual by subordinates (often because of their ability to
control or make long term decisions impacting the subordinate)
25. Authority is a key PM characteristic. (Power often resides with the Functional Manager) 26. Project sponsorship from a senior organisational level is key in help to resolve conflicts or
issues that a Project Manager cannot overcome (often in relation to a Functional Manager in the case of a major project; or someone at a comparable authority level in a minor project)
2.2.3.4
Team
Organising
27. The PM needs to understand the organisation’s politics and how this is expressed in the present organisation structures and team management approaches
Classical Theory
28. Under the classical or traditional view, management is the process that is executed in order to meet some form of organisational objective or group of organisational goals
29. In classical theory, the people involved in the process are simply components of a production process
Emipircal Theory
30. Under empirical theory, there are basic and essential similarities between the systems and processes adopted by organisations.
31. Empirical theory and research is based on observation and interpretation.
32. The idea is that is enough observations are carried out, the correct process or approach will materialise from the sample data set.
Behavioural Theory 33. Two main schools
a. Human Relations : Considers the interpersonal relationship between people and their work
i. The ideal is to match organisational and individual goals/objectives (an underlying theory of total quality management)
ii. Simple example is profit sharing. More complex examples include expectancy theory behaviour
b. Social System : Considers the social characteristics of an organisation and of its component individuals
i. As the social characteristics of the organisation evolve, that of the individuals must also evolve
ii. As the social characteristics of the individual evolve, that of the organisation will also evolve
Decision Theory
34. Based on the concept that management and organisations can be studied mathematically (input, process, output)
35. Makes use of management science and operational research techniques
Systems Management Theory
36. Assumes systems models can be applied to management and organisations.
37. Inputs, processes and outputs can be considered separately or as component parts of the whole
2.2.3.5
Controlling
38. Controlling is essentially a 4‐stage process a. Targeting
i. Workable/achievable target(s) b. Measuring
i. Actual progress versus targeted progress c. Evaluating
i. Identifying and isolating non‐conforming areas of progress ii. Consideration of options for corrective action
iii. Variance analysis is often used; this is a retrospective tool and compares actual and planned activities/events
iv. If variance analysis is the only analysis used it can be dangerous – it needs to be used in conjunction with a system for forecasting and predicting (need to pre‐empt/anticipate and not just react to events)
d. Correcting
i. Development and implementation of corrective actions
2.2.3.6
Directing
39. Directing is the process of converting organisational goals into reality a. Setting up the project team
i. Selecting compatible team members b. Team training and development
i. Maintaining focus over time on the project deliverables c. Supervision
i. Tactical and strategic guidance to team members at all levels d. Individual and team motivation
i. Alignment of project/organisation goals and individual team members goals e. Co‐ordination
i. Classification and prioritisation of work to ensure deliverables are achieved ii. Establish, maintaining and monitoring communication channels and
communications
iii. Balancing of functional (i.e. Department) and project demands on team members and resources
2.2.3.7
Team
Building
40. Individual and team commitment
a. Team members need to share the overall aims and objectives of the project as a minimum; a difference will naturally exist between internal and external project team members
41. Developing a sense of team spirit
a. It is a measure of the motivation of the team and the extent to which its members can work effectively together
b. Team spirit and commitment to the team are not the same thing
42. Obtaining the necessary project resources
a. Securing the right level of resources (and skills) at the right time; matched to the demands of the project
b. A mismatch between success criteria and resource investment can result in quality comprises as productivity increases
43. Establishment of clear individual and team goals and success/failure criteria a. Clearly define scope
b. Clearly establish firm goals; communicate effectively if these must change
c. Clearly establish metrics that will determine the success/failure and communicate! 44. Formalisation of visible senior management support
a. Establish the perception/reality of Senior Mgmt backing of the project 45. Demonstration of effective programme leadership
a. Establish personal ownership
b. Establish competency and build respect of the team members 46. Development of open formal and informal communications
a. This is one of the most neglected areas in most organisations, and also projects b. Develop communications only to the level of complexity as required by the size and
scope of the project
c. Effective communications (formal and informal) have a big impact on team members commitment, spirit and buy‐in/ownership of the project objectives 47. Application of reward and retribution systems
a. Be consistent
b. Recognise good performance
c. Reprimand unaccetable performance 48. Identification and management of conflict
a. Conflict can be personal, technical, financial etc
b. Conflict needs to be identified and managed – some conflict can be good; not all conflict is bad
2.2.3.8
Leadership
49. Classical leadership traits include a. Decision making ability b. Problem solving ability
c. Ability to integrate new members d. Interpersonal skills
e. Ability to identify and manage conflict f. Communication skills
g. Interface management skills h. Factor balancing skills
2.2.3.9
Life
cycle
Leadership
50. If the lifecycle of a team is considered in terms or four phases, the characteristics will be
51. Phase 1 : high task, low people related leadership (commanding)
52. Phase 2 : high task oriented and high people oriented leadership (persuading) 53. Phase 3 : low task oriented and high people oriented leadership (participating) 54. Phase 4 : low task oriented and low people oriented leadership (delegating control) 55. Not all teams reach phase 4 – it depends on the length of the project
2.3.2
Project
Teams
within
Functional
Organisation
56. See p 2/31 and p2/32 for a listing of Advantages and Disadvantages with project teams operating within Functional Organisations
2.3.3
Team
Multi
disciplinary
and
Heterogeneity
Issues
57. Sentience is the tendency for individuals to identify with their own professions and background rather than with the projects or organisations and their goals
58. Interdependency is the tendency for teams to depend on inputs from more than one individual in order for the whole system to develop (also: pooled interdependency, sequential interdependency, reciprocal interdependency)
59. Integration is simply the process of defining responsibilities and control, and ensuring everyone adheres to the definition
a. High Integration : knowing exactly what to do and when to do it (exact scope and timings)
b. Low Integration : knowing what to do and approx when to do it (vague timings and possible vague scope)
c. No Integration : NOT knowing what to do or when to do it (unknown scope and/or unknown timing)
2.4.2
Team
Staffing
60. Ideally:
a. Staffing is voluntary (team members are asked rather than directed to join a project) b. Staffing levels and skills are a reflection of the project value and importance
c. Flexibility and dynamism in structure is important d. Project Managers lead by example
e. Teams are flexible and responsive to changing demands and issues f. Organisational and project interface is key
g. Project teams innovate and evolve
2.4.4
Project
Team
Operation
61. Establish measurable objectives a. Identify Stakeholders b. Establish success criteria 62. Stakeholder management
a. Manage stakeholders (‘invisible team’) to ensure continued support b. Protect the image of the team. Manage perceptions
63. Define measurable targets
a. Realistic and achievable milestones b. Contingency plans
64. Define processes
a. Establish firm ground rules that establish boundaries and expectations. These do need to be flexible
b. Create an environment that encourages opinions, responsibility and creativity c. Develop and manage relationship to maintain morale – this will not happen
automatically and must be a conscious effort 65. Leadership
a. Reward good performance b. Do not tolerate poor performance 66. Membership and Identify
a. A Project Manager must respect and support team members b. Team members must respect and support the project manager c. All project members need to identify with the project group
d. All project members need to be aware of their roles and expectations 67. Communication Systems
a. Informal meetings are as important as formal meetings b. Nemawashi improves the effectiveness of meetings
(Nemawashi (根回し) in Japanese means an informal process of quietly laying the foundation for some proposed change or project, by talking to the people concerned, gathering support and feedback, and so forth. It is considered an important element in any major change, before any formal steps are taken, and successful nemawashi enables changes to be carried out with the consent of all sides.)
c. Meetings should result in actions, preferably with documented time scales and assigned responsibility for follow‐up actions
68. Team Separation
a. Regular contact within the team should be maintained if working in separate locations
69. Information Technology a. ADVANTAGES include
i. Potential to reduce physical facility requirements
ii. Less control bureaucracy and increased autonomy for members iii. Easier to maintain records
b. DISADVANTAGES include
i. Loneliness can be an issue if working remotely ii. Managers can lose control of the work
iii. IT hiccups can always occur (Murphy’s Law)
iv. Lack of physical face to face interaction can affect team spirit 70. Teams in general
a. Operate at peak efficiency and effectiveness when
i. Regular face to face contact and meeting with/between members ii. Measurables and Success criteria is clearly defined
iii. Responsibility and accountability is bestowed on members iv. Schedule is clear and understood
2.5.2
Project
Life
Cycles
71. Usually at least five clear stages. Broadly: a. Conception and Feasibility
i. Preliminary conception ii. Feasibility analysis b. Outline Proposals and Definition
i. More detailed analysis
ii. More detailed time and cost estimates
iii. This information is used to gain approval to proceed (usually) iv. Approval barriers sometimes know as gateways or stagegates c. Operation and Production
i. Production Phase (with numerous substages usually) d. Decommissioning
i. Project windup and wrapup ii. Reflections (if appropriate)
iii. Should also include recycling where possible (cradle to grave approach)
2.5.3
Project
Change
Control
and
Management
72. British Standard for Project Management Practice BS6079 73. Standard generic strategic project plan (SPP)
2.5.4
Project
Team
Evolution
74. Bruce Tucker’s four stages of team development: Forming, Storming, Norming, Performing a. Forming : start of the process
b. Storming : establishment of team cohesiveness and dynamics. It is imperative to develop a cohesive group ideal to ensure productivity and effectiveness
2.5.5
Groupthink
75. Can occur where a group of individuals becomes overcommitted and motivated towards a set of beliefs, aims and objective – often supplanting their own.
76. Sometimes an unintended consequence of highly successful team development 77. Starts to express itself during the performing stage of team development
78. Absolute commitment to the project
a. Misdirected certainty in the minds of group members 79. Lack of respect for competitors
a. Negative propaganda is another aspect of group think 80. Intolerance
a. Powerful group cohesion and commitment can lead to an intolerance of any dissenters
81. Fear
a. Team members can perceive that something is wrong but choose to censor themselves and remain silent rather than challenge the leader or be seen t obe in conflict with the aims and objectives of the group
82. Self‐delusion
a. Incoming information is filtered to portray only good results b. False sense of invincibility
83. Selective reporting
a. Filter information to ensure only good/positive news is reported within the group and to management
2.6
Project
Team
Motivation
84. Classical theory is focussed on the goods and product/services produced by the company
2.6.2
McGregor
and
Maslow
85. McGregor advocated Theory X and Theory Y to characterise opposing views on motivation within teams and organisations
a. Theory X : operatives are basically lazy and unmotivated. They dislike work and will avoid it if possible. They must be carefully supervised and threatened with
punishment if they do not perform
b. Theory Y : operatives are willing to work and complete the job without close supervision
86. Theory X implies that a highly centralised and authoritarian management structure would be most appropriate
87. Theory Y implies a less authoritarian management style, with more operative initiative and enterprise
88. Functional managers tend towards Theory X 89. Project managers tend towards Theory Y
90. Maslow supported a hierarchy of needs (rather than two alternative contrasting theories) [Highest to Lowest levels]
a. Self‐actualisation
i. E.g. feeling that one has the freedom to make the best of one’s talents within very limited constraints
b. Esteem
i. E.g. feel good about what they do; sense of value within the system c. Belongingness
i. E.g. sense of identity, togetherness, belonging, loyalty d. Safety
i. E.g. job security and safety e. Physiology
i. E.g. food and water
91. The relative importance of each need will vary depending on circumstances 92. Higher level needs generally take longer to fulfil
93. Higher level needs are more subjective than lower level needs
94. Fulfilled needs are no longer motivators. Motivation is therefore based on anticipation. 95. Fulfilled needs are hygiene factors, not motivators, and maintenance of these is expected
2.6.3.1
Equity
Theory
96. Equity theory is based on the perceptions of individuals in relation to what they do and how they are rewarded.
97. Employees perceive the fairness or otherwise of their rewards by comparing these, and the level of effort necessary to obtain them, with those of other employees. Any perception of receiving an inadequate personal reward generates a feeling of inequity (unfairness) 98. Ways in which an employee can improve equity
a. Seek promotion
b. Seek increased reward level c. Make a lesser contribution d. Increase other inputs
99. Positive inequity is where the individual perceives the inequity as being to their advantage 100. Negative inequity is where the individual perceives the inequity being to their disadvantage
2.6.3.2
Expectancy
Theory
101. Expectancy theory suggests that people are motivated to make efforts to achieve goals that they believe will result in obtaining the rewards they desire.
102. Expectancy theory suggests project managers can motivate team members even where the individuals have no immediate financial incentive to improve their performance. The
individual is motivated by the belief that they will personally benefit from a successful project outcome
2.7.2
Project
Communication
103. In successful projects there tends to be frequent review meetings for open exchanges and updates
104. Access to meetings should be open and attendance encouraged
105. Inadequate project communications is a common cause of many project failures
2.7.3
Formal
and
Informal
Communication
106. Operational islands (silos) can occur within an organisation and on large projects
107. Operational islands (silos) introduce barriers to communication; these barriers need to be overcome
108. Formal lines of communication are setup to ensure stakeholders get the information required within a suitable timeframe. However, this can engender a tendency to ‘cover your back’. This needs to avoided
109. Formal lines of communication are not always sufficiently flexible and fast enough to be the only forms of communication
110. Informal communications tend to revolve around the ‘grapevine’. Whilst it is impossible to control the grapevine, it is possible to influence it to ensure it is neither destructive nor counterproductive
2.7.4
Internal
and
External
Communications
111. Good internal communications rely on team member’ willingness to communicate and disseminate information openly
112. Good external communication is almost the antithesis of this and requires absolute control in the dissemination of information
113. It is essential to nominate an individual who is responsible for all external communications (non‐routine). It is vital this is communicated and understood by all project members. This helps to manage external perceptions
2.8.2
Origins
and
Symptoms
of
Team
Member
Stress
114. Stress leads to a real loss in productivity and efficiency 115. Three main sources of project team stress:
a. Personal Stress
i. Originates from within the project team member concerned ii. Can also include personal issues
iii. Almost always outside the control of the project manager b. Work Stress
i. Originates from the work environment
ii. Project manager has limited control over these stresses c. Environmental Stress
i. Originates from outside both the individual and the work place ii. Almost always outside the control of the project manager
Symptoms
119. Psychological symptoms affect reasoning and mental capacity
120. Behavioural symptoms : Include loss of energy and enthusiasm, increased complaints etc 121. Behavioural symptoms can have a direct and immediate effect on the functioning and
efficiency of the whole team
2.8.3.1
Individual
Stress
Management
122. Physiological control seeks to counter stress through breathing techniques etc 123. Communication is perhaps the most important single element in avoiding or reducing
stress
2.8.3.2
Project
Team
Stress
Management
124. Ways to mitigate work/project induced stress includes a. Deregulation – allow flexible working hours
b. Reasonableness – The PM should expect of others only what s/he would expect of themselves
c. Fairness – Ensure fair play and that all team members are performing to the required level
d. Open‐mindedness – maintain an open minded and be flexible in your approach and routine
e. Flexibility – Utilise troughs in the work cycle to allow/encourage breaks, training etc f. Approachableness – The PM needs to establish a position where he or she is viewed
as being immediately approachable
2.9.3
Conflict
Characteristics
125. The greater the heterogeneity or multidisciplinary nature of the team the greater the chance of conflict
126. The lower the Project Manager’s power and authority within the functional organisation the greater the chance of conflict
127. Increased vagueness regarding metrics and objectives increases the chance of conflict 128. Low levels of accountability and reduced individual communication increase the potential
for conflict
129. The greater the change required (to implement the project) the greater the risk of conflict 130. The lower the relative perceived prestige of the project the greater the potential for
conflict
2.9.5
Conflict
Management
131. Alternative approaches for managing conflict include a. Conflict avoidance
b. Conflict absorption
c. Conflict resolution imposition d. Negotiated conflict resolution
132. It is always best to present outcomes as WIN‐WIN
Module
2
Learning
Summary
133. Frequently there is a mismatch between the project manager’s level of responsibility and level of authority
134. The senior manager on the project team acts like a managing director, financial director and operations director of the business that is the project
135. The project mgmt team members should cover the main areas of the project in terms of skills and expertise, or at the very least should recognise and explicitly state any gaps or weaknesses
136. There are four generally recognised stages of group development. These are summarised by Tuckman as forming, storming, norming and performing
137. Groupthink is one possible stage of project team evolution and should be avoided where possible
138. McGregor’s Theory X and Theory Y model offers one approach to motivation theory. Theory X states that operatives are generally lazy and unmotivated, disliking work and avoiding it if at all possible. Theory Y states that operatives are willing to work and complete the job without close supervision; they want to do well at their jobs, they find work
stimulating and satisfying, and they want to improve themselves and generate greater self‐ respect
139. Maslow’s hierarchy of needs is an alternative view point. This theory suggests there are different levels of need depending on the relative position of the individual within the needs of the hierarchy. The different levels of needs are terms: physiology, safety, belongingness, esteem and self‐actualisation [lowest to highest].
140. Equity theory is another approach to motivation theory. It is based on the perceptions of individuals in relation to what they do and how they are rewarded versus how other employees or groups are treated.
141. Expectancy theory is another approach. It is based on the idea that motivation is related to personal goals and objectives. Expectancy theory allows project managers to motivate project team members, even where there is no immediate or direct financial incentive from the project itself (because of a potential benefit in the future if a good/successful outcome is achieved)
142. Successful projects are often characterised by good communication and high quality information sharing and exchange
143. The greater the heterogeneity or multidisciplinary nature of the team, the greater the potential for project team conflict
144. The lower the project manager’s degree of power and authority within the functional organisation, the greater the potential for conflict
145. The more vague the specified and measurable objectives for the project, the greater the potential for conflict
146. The lower the level of individual communication and accountability within the project, the greater the potential for conflict
147. Classical or traditional view, management is the process that is executed in order to meet some form of organisational objective or group of organisational goals
148. Empirical theory, there are basic and essential similarities between the systems and
149. Behavioural Theory has two main schools
a. Human Relations : Considers the interpersonal relationship between people and their work
b. Social System : Considers the social characteristics of an organisation and of its component individuals
150. Decision Theory is based on the concept that management and organisations can be studied mathematically (input, process, output)
Module
3
–
Project
Risk
Management
1. The nearest thing to an internationally recognised and accepted standard/code of practice in risk management is Australia and New Zealand Standard ANZ 4360:2000 Risk Management.
3.2.2
The
Concept
of
Risk
2. Risk as a work originates from the French word Risqué, meaning daring
3. Risk management as a discipline evolved with the design and development of commercial nuclear reactors in the 1950’s
4. Risk in the context of this unit is a measure of the probability and consequence of not achieving a specific project goal.
5. Risk depends on both the likelihood (probability) and the consequences (impact) of an event occurring
6. First level risk equation
a. Risk =
ƒ
(event, uncertainty, consequences) 7. Second level risk equationa. Risk =
ƒ
(event, hazard, safeguard)8. Exposure is a measure of the vulnerability of an organisation to the identified risks 9. Sensitivity of an organisation to risk is a function of 3 elements
a. Significance (severity) b. Likelihood (probability)
c. Ability to manage the implications and variables
10. ERE – Effective Risk Exploitation – allows organisations to capitalise on circumstances and manage/accept risk in order to attain a competitive edge
3.2.3.1
Pattern
Recognition
and
Attention
11. In assessing risk, the human cognitive process involves three distinct processes a. Pattern recognition (comparison of new information against stored memory) b. Attention (kind of filter to identify important information)
c. Memory (storage of this latest ‘update’ for recall and future comparative evaluation
3.2.3.2
Bounded
Rationality
12. Bounded rationality is based on the philosophy that a being will generally opt for rational behaviour within constraints
13. Uses past events to assess current risks in making a decision
3.2.3.3
Risk
Forecasting
and
Prediction
Momentum
14. Risk forecasting assumes acceptable outcomes from the past will be acceptable outcomes for the future in order to make use of past and current events and outcomes to
forecast/identify future risks
15. Prediction momentum is analogous to Newton’s Second Law (i.e. Momentum ‐ a body will remain in its present state unless an external force acts upon it). This is to say that what happened in the past and present will happen in the future unless something changes
16. A number of factors influence the accuracy of forecasting and predicting. These include: a. Accuracy of input data
b. Time scale to consider
c. Allowable cost to build the models etc to facilitate forecasting/prediction
d. Vision – the ability to identify all reasonably foreseen and unforeseen events and circumstances affecting the risk profile
3.2.3.4
Intuition
and
Bias
17. Intuition is an example of pooled interdependency within the cognitive process.
18. Bias is the tendency to misinterpret data or observations because of one’s own perceptions and preferences, or a desire for a particular outcome
3.3.2
Risk
Assessment
and
Control
19. Risk management is a strategic approach
20. Risk feedback is an essential section in the process of risk assessment, analysis and handling. 21. Project Risk Management is often separated into two principal activities: Project Risk
Assessment, and Project Risk Control
3.3.2.1
Elements
of
Risk
Assessment
22. Risk assessment is about identifying and assessing all potential risk areas within the project 23. The assessment process allows the risk taker to develop a risk typology (classification
according to general type)
24. This typology can be based on probability and impact, or on safeguard and hazard
3.3.2.2
Elements
of
Risk
Control
25. Risk control involves the thorough investigation of the entire project 26. Risk control is particularly important in monitoring the evolution of risks
3.3.3
Project
and
Strategic
Risk
27. Project risk is limited to those aspects of risk that are considered entirely in relation to the project
28. Strategic risk is generally more difficult to manage than project risk 29. Strategic risk tends to be applicable over the long term
30. Strategic risk often relates to an organisation moving from their current position (A) to a desired future position (B) and having to navigate through potential risks in order to attain position (B)
31. The risks along the way include both foreseen and unforseen risks
32. Most strategies would allow for a variance envelope
33. A variance envelope allows for a certain amount of variation to the original plan, after which point a warning is sounded that something is amiss
34. A variance envelope typically contracts as a function of time
3.4.1
Generic
Risk
Headings
35. Strategic Risk : includes risk relating to the long term performance of the organisation 36. Operational Risk : includes the process itself, the asset base the people within the project
team and the legal controls within which the organisation operates
37. Financial Risk : includes market, credit, capital structure and reporting risks
38. Knowledge Risk : includes IT, information management, knowledge management and planning
39. Catastrophic Risk : includes risk that cannot be predicted effectively 40. These risks are all linked to some extent
3.4.2
Market
Risk
and
Static
Risk
41. Market risk is dynamic
42. Market risk has two primary components: a. Market Business Risk
b. Market Financial Risk
43. Market business risk is primarily concerned with the risk to all the stakeholders 44. Market business risk arises from the company trading with its assets
45. Market financial risk is restricted to equity holders
46. Market financial risk arises from the gearing ratio (financing position)
47. Static risk considers only losses
48. Static risk refers to risks that only provide the potential for losses
3.4.3.1
External
Risk
49. External risk originates and operates outside the organisation 50. Obvious external risks include
f. Political risk g. Statute risk h. Impact risk
3.4.3.2
Internal
Risk
51. Internal risk originate from within an organisation 52. Obvious internal risks include
a. Operations processes risk b. Financial risk
c. Management risk d. IT and Technology risk
3.5
Risk
Conditions
and
Decision
Making
53. Risk assessment and control are tools for decision making
54. Essentially, three main conditions under which decisions can be made a. Conditions of Certainty : outcome is known
i. No risk and the decision is easy
b. Condition of Risk : ‘known unknown’ – reasonable probability an event will occur i. Risk is known, outcome unclear, risk can be evaluated in some way
c. Conditions of Uncertainty : ‘unknown unknown’ – unknown events with an unknown probability of occurring
i. Risk cannot be evaluated with any accuracy
ii. It is generally not possible to transfer risk under conditions of uncertainty
3.5.1
Conditions
of
Certainty
55. Pay‐off matrix under conditions of certainty requires two primary assumptions
a. There will be one dominant strategy or risk that will produce larger gains or smaller losses than any other risk or strategy
b. There are no probabilities assigned to each state of nature (equal chance of occurecnce)
3.5.2
Decision
Making
Under
Conditions
of
Risk
56. If no dominant strategy a probability is assigned to each state of nature
. . . .
3.5.3
Decision
Making
Under
Conditions
of
Uncertainty
57. Unknown unknowns
58. Probabilities of events are unknown; Often the events themselves are unknowns
3.5.3.1
Hurwicz
Criterion
(maximax
criterion)
59. Also known as the maximax criterion 60. Decision maker always optimistic 61. All or nothing approach
62. Seeks to maximise profits with scant regard for potential losses
3.5.3.2
Wald
Criterion
(maximin
criterion)
63. Also known as the maximin criterion 64. Decision maker is pessimistic 65. Seeks to minimise losses
66. DOES NOT consider losses, only minimum profits (aims to always make a profit regardless of how small)
3.5.3.3
Savage
Criterion
(minimax
criterion)
67. Also known as the minimax criterion 68. Decision maker is a ‘bad loser’
69. Attempts to minimise the maximum regret
70. The total regret values represent the difference between the maximum possible outcome and the minimum possible outcome
3.5.3.4
Laplace
Criterion
71. Attempts to convert decision making under uncertainty into decision making under risk 72. Makes use of subjective probabilities
73. Objective probabilities based on long term frequency of occurrence
74. Subjective probabilities are based on the degree of belief of confidence as experienced by the decision maker (akin to ‘gut feel’)
a. E.g. To determine the risk of strategy S1, the decision maker might strategy S1 as opposed to drawing a white ball from a bag containing 5white balls and 5black balls. The chance of drawing a white ball is obviously 50%. If the decision maker opts to select a white ball rather than strategy S1, the chance of strategy S1 is less than 50%. This process is repeated, with reducing chance of success of picking a white ball (i.e. 6black 5white; 7black 3white; etc) until the decision maker opts for strategy S1. This is the point at which the decision maker intuitively feels that strategy S1 has a higher chance of success than picking a white ball
75. Assumes Bayesian theory applies; if probabilities of each state of nature are unknown they can assumed to be equal
3.5.4
The
Need
for
a
Risk
Management
Strategy
76. Total Strategic Risk Management (TSRM) 77. Reach all sections of an enterprise 78. Needs to be holistic and pre‐emptive 79. Predictive rather than reactive
80. A TSRM is better suited for strategic planning than tactical response
3.6
The
Concept
of
Risk
Management
81. A risk management system must be a. Practical
b. Realistic
c. Compliant with internal and external standards d. Cost‐efficient
82. Most risk management systems contain five distinct areas a. Risk identification
b. Risk classification c. Risk analysis d. Risk attitude
e. Risk response, control, policy and reporting
3.6.2
Risk
Identification
83. Risks can be
a. Internal (3‐ or 4‐ level WBS will allow identification of most obvious risk areas) b. External
c. Project (these overlap internal and external risk)
84. It is important that the identification process is concerned with the source of the risk rather than the event itself or the effect
3.6.4
Risk
Analysis
85. Most risk analysis methodologies comprise six basic steps a. Evaluate all the options
b. Consider the risk attitude
c. Consider the characteristics of the risks d. Establish a measurement system e. Interpret the results
f. Make the decision
3.6.4.1
Risk
Map
86.
87.
88.
89.
3.6.6.2
Response
Options
90. Hierarchy of Controls [highest to lowest; highest = most preferred] a. Elimination
b. Substitution c. Isolation d. Engineering
e. Administrative controls f. PPE
91. Response options include a. Risk retention b. Risk reduction
c. Risk transfer. Factors to consider: i. Insurability of the risk
ii. Cost of the insurance premium iii. Maximum probably loss iv. Likely cost of the loss
v. Likely cost of paying for the loss if uninsured d. Risk avoidance
e. Seek further (clarifying) information
3.6.7
Risk
Control,
Policy
and
Reporting
92. Risk policy establishes a number of elements: a. Overall aims and objectives
b. Accountability for individual managers c. Formalised reporting channels
d. Risk tolerances e. Authorisation
3.7
Risk,
Contracts
and
Procurement
93. The purpose of the contract is to define the rights, dues, obligations and liabilities of each party
95. Commensurate risk is the risk of being unable to fulfil the obligation or duty because of one’s own inadequacy, incapacity, inadvertence or error, or because of interference from outside events or sources.
3.7.2
Basic
Contract
Theory
96. In order for a contract to exist there must be a. Offer and Acceptance
b. Consideration c. Capacity (i.e deposit) d. Legal relations e. Communications
97. A contract can be successfully performed or it can be terminated 98. Alternatives to performance (successful completion) include:
a. Breach b. Frustration c. Rescission d. Rectification e. Void
f. Termination/determination
Module
3
Leaning
Summary
99. Risk =
ƒ
(event, uncertainty, consequences) 100. Risk =ƒ
(event, hazard, safeguard)10
