1-1 The World of Project Management

1-2 Projects and their characteristics. Project life cycle. Selection methods. Exercise. Homework: 21, 22, 25, 26

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“A project is a unique temporary endeavor, with a set beginning and end ” PMI defines project management as “the application of knowledge, skills, tools and techniques to a broad range of activities in order to meet the requirements of a particular project” 1-5

Why organize an activity or job as a project?  It allows you to better structure and organize the tasks that need to be performed  Well developed approaches and tools are available for managing projects  Easy-to-use software is available for scheduling and budgeting projects  Experience has shown that the work/job can be done faster, cheaper, and better when managed as a project 1-6

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1-8 ProjectsOperations

What are some examples of projects you’ve worked on? –What were the desired deliverables/outcomes? –What was the project time frame? –What was the biggest challenge during the project? –Which goals were more important? –Were all goals fully met? 1-9

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There are many patterns that project life cycles can follow, but the following chart depicts a fairly common pattern:  slow start  quick momentum  slow finish 1-12 Initiate Plan Execute Monitor And Control Monitor And Control Close Stages or Process Groups in the Project Life Cycle

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1-16 Chapter 07 Chapter 04 Chapter 03 Chapter 08 Chapter 06 Chapter 05 Chapter 02 Chapter 04

1-17 Time Slow start Quick momentum Slow finish % Project completion

1-18 Time % Project completion

 Project life cycle shape will affect the timing of resource and funding needs.  Understanding the general project life cycle may help the stakeholders better understand and accept the current status of the project.  Understanding the general project life cycle may also help the PM make better goal tradeoff decisions at particular times during the project. 1-19

Who decides which projects will be undertaken by an organization? What are some examples of criteria that might be used in selecting projects? Why should the PM be made aware of why a project was selected? 1-20

 Sacred Cow  Operating/Competitive Necessity  Comparative Benefits 1-21

 Financial Assessment Methods »payback period »discounted cash flow  Scoring Methods »Unweighted factor method »weighted factor scoring method 1-22

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Expected project costs are $700,000 Expected returns are $200,000 per year 1-24

1-25 where I 0 = the initial investment F t = the net cash flow in period t k = the required rate of return or hurdle rate

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Initial cost = $700,000; 4-year annual cash flow = $200,000; required rate of return = 15% NPV = -700, ,000/(1.15) ,000/(1.15) ,000/(1.15) ,000/(1.15) 4 NPV = -700, , , , ,351=-129,

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1-30 OutcomeProbPay 3H 100 2H 75 1H 10 0H 0 EV

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1-32 Distribution Means

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1-34 where S i = the total score of the i th project s ij = the score of the i th project on the j th criterion w j = the weight or importance of the j th criterion

1-35 FactorWt.ProjectAProjectBProjectC Cost.4243 Risk.3431 Suitable.1425 Skills.2225 Wtd. Score Example: 3 projects, 4 factors, 1-5 (5=best)

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The mix of projects undertaken should support the firm’s corporate strategy. Derivative projects—small improvements Platform projects—develop new line of products using existing technology Breakthrough projects—new generation of products using new technology R&D projects—develop new knowledge 1-37

Quality Fleet Ads case Divide into small groups Read case (5 min.) Assignment: (25 min.) –Discuss the advantages of each project –Discuss the cost and budget implications –Rank the projects from most important to least –Which set of projects do you recommend? –What is your proposed budget? 1-38