8-1 Chapter 8 Managing Projects © David O’Sullivan

8-2 Reflections  What is creativity?  List and explain five graphic-based tools that can be used for generating ideas.  Where do ideas come from?  Explain the mind mapping tool.  How are failure modes scored in the failure mode effects analysistechnique?  Detail a simple form for capturing critical data for an idea.  Explain the importance of lead users in generating new ideas.

8-3 Activities [Discussion of selected student ‘Activities’ from previous chapter]

8-4 Learning Targets  Outline the key stages of a project life cycle  Understand the types of investments necessary for projects  Explain the importance of risk management in projects  Construct a simple cost–benefit analysis for a project  Understand a number of tools for managing projects  Understand the six stages of the buyer experience life cycle  Detail a simple form for capturing critical data for a project

8-5 Projects and Portfolios  Project Management Managing an individual project Managing project resources Achieving project goals  Portfolio Management Managing a group of projects Managing organisational resources Achieving organisational goals

8-6 Semantics  Projects  Initiatives  Actions  Tasks  Portfolios  Programs  Initiatives

8-7 Projects  A unique, nonpermanent, goal-centered activity with a predefined life cycle, constrained by cost and resource availability  Sample projects related to innovation: Installing a new piece of production equipment Developing a new technology or science Restructuring a department Installing a new computer system Developing a preventive maintenance program Building a new plant Developing a new product or service

8-8 Project Characteristics  Goal Centered  Resources  Life Cycle  Unique  Budgets  Responsibilities

8-9 Project Planning  A project can represent a large investment of time, money, and resources  Planning a project effectively can: Maximize contribution to goals Fundamental to the financial considerations Crucial to scheduling of resources and the control of progress and costs

Structured Approach ScheduleCostScope of work

8-11 Project Planning Elements  Workpackages  Tasks  Deliverables  Gates and milestones  Resources

Work Breakdown Structure

8-13 Sample Work package

8-14 Sample Deliverables

8-15 Project Scheduling  A schedule is the conversion of a project action plan into an operating timetable  Scheduling of people, equipment, information and their interrelationship  Fundamental basis for Understanding project complexity Monitoring and controlling project activity and budget Tool for the management of projects.

8-16 Worker-Month Allocation

8-17 Gantt Charts

8-18 Project Control  Once operational, control of the project is necessary to: Measure progress Identify deviations Take corrective action (when needed)  Continuous cycles of planning, implementation, and reviewing take place throughout the project lifecycle

8-19 Risks  Identification Which risks are likely to affect the project  Quantification Probability and consequences of risks  Mitigation Methods for the reduction and control of risks  Control Documenting the lessons learned

The Three Dimensions of Risk

Communication Risk

ConversationAttribution Norwegian: How long will it take to finish this report? Norwegian: I asked him to participate. Venezuelan: His behaviour makes no sense. He is the boss. Why doesn’t he tell me? Venezuelan: I do not know. How long should it take? Norwegian: He refuses to take responsibility. Venezuelan: I asked him for an order. Norwegian: You are in the best position to analyse time requirements Norwegian: I press him to take responsibility for his own actions. Venezuelan: What nonsense! I better give him an answer. Venezuelan: 10 days. Norwegian: He lacks the ability to estimate time; 10 days is totally inadequate Conversation Example

Social Risk  Power  Individualism  Masculinity  Uncertainty Avoidance 8-23

Power Distance SMALL POWER DISTANCELARGE POWER DISTANCE Inequalities should be minimizedInequalities expected and desired Parents treat children as equalsParents teach children obedience Organizational hierarchies viewed as inequality of roles, established for convenience Organizational hierarchies reflect existential inequality between higher-ups and lower-downs Decentralization is popularCentralization is popular Narrow salary range between top and bottom of organizations Wide salary range between top and bottom of organizations The ideal boss is a resourceful democratThe ideal boss is a benevolent autocrat Privileges and status symbols are frowned upon (or under communicated) Privileges and status symbols for managers are popular and expected

Individualism INDIVIDUALISMCOLLECTIVISM Children learn to think in terms of “I”Children learn to think in terms of “we” Speaking one’s mindMaintaining harmony Employee-employer relationship a contractEmployee-employer relation like family Management is management of individualsManagement is management of groups Tasks prevail over relationshipsRelationships prevail over tasks

Masculinity MASCULINTYFEMININITY Sympathy for the strongSympathy for the weak Money and things are importantPeople and relationships important Live in order to workWork in order to live Men should be assertive, ambitious and tough Everybody is supposed to be modest Stress on equity, competition and performance among colleagues Stress on equality, solidarity and quality of life.

Uncertainty Avoidance WEAK UNCERTAINTY AVOIDANCESTRONG UNCERTAINTY AVOIDANCE Lenient rules for children on what is dirty and taboo Tight rules for children on what is dirty and taboo Uncertainty is a normal feature of life Uncertainty is seen as a threat which must be fought Low stress, high well-beingHigh stress, anxiety Aggression and emotion should not be shown Aggression and emotions may be ventilated at proper occasions Managers and teachers may say “I don’t know” Managers and teachers are supposed to have all the answers Comfortable feeling when “lazy”. Hard- working only when required Emotional need to be busy; inner urge to work hard

8-28 Quantitative Techniques  Payback  Return on investment (ROI)  Net present value (NPV)  Disadvantage with all quantitative techniques in project assessment is that the figures used often are estimates at best and can be incorrect

8-29 Payback  Net annual cash flow (NACF) revenues derived from investment (IC) should pay back investment over a certain payback period (n)

8-30 Example  Machine costs €85,000 and generates revenues of €55,000 per year for 7 years. It costs €30,000 to operate machine. At the end of year 7 machine is scrapped. NACF = 55,000-30,000=25,000 IC = 85,000 n = 85,000/25,000 = 3.4 years

8-31 Payback  Capital  Recurrent Costs  Recurrent Revenues Additional Revenues Cost Avoidance Cost Savings  Payback=(Capital-Costs)/Revenues

Estimate Classification TypeAccuracyPurpose Proposal± 50 %Appraisal viability to start feasibility study Budget± 20 %Appraisal viability to start systems design Sanction± 10 %Appraisal viability to approve project Control± 5 %Measure progress, assign resources Tender± 2 %Prepare tender

Earned Value Management Volume (MHs) Time BCWS T BCWS: Budgeted Cost of Work Scheduled Cost Variance ACWP ACWP: Actual Cost of Work Performance t BCWP BCWP: Budgeted Cost of Work Performed Resource variance Volume variance

8-34 Qualitative techniques  Fit with organizational goals and objectives  Fit with competitive necessity for sustainability  Fit with existing product or service range  Fit with available resources  Fit with existing competencies  Fit with desired future competencies  Fit relative to competitor direction  Fit relative to risk quotient  Fit with other innovation projects, ongoing or planned

8-35 Qualitative Techniques CriteriaWeightScoreW.Score Fit with mission5315 Impact on objectives10440 Impact on indicators10220 Fit with competencies7535 Fit with skills5525 Level of Risk10440 Total Score 175

8-36 Project Innovation

Portfolio and Project Management Portfolio Management Project Management Team s Individual s Teams Skills Learning Review Goals Statements Requirements Strategies Measures Results Status Scorecard Trends Innovatio ns Stimuli Creations Problems Ideas Projects Specification Ranking Schedules Deployment

8-38 Project Tools  Concurrent engineering  Quality function deployment (QFD)  Buyer utility mapping  Rapid prototyping

8-39 House of Quality

8-40 Buyer Utility Map

8-41 Summary  Outline the key stages of a project life cycle  Understand the types of investments necessary for projects  Explain the importance of risk management in projects  Construct a simple cost–benefit analysis for a project  Understand a number of tools for managing projects  Understand the six stages of the buyer experience life cycle  Detail a simple form for capturing critical data for a project

8-42 Activities

8-43 Search Online  Saul Griffith: Hardware solutions to everyday problems (video) Johnny Lee: Creating tech marvels out of a $40 Wii Remote... What's Next in Tech