Project Management Fundamentals

Project Management Fundamentals
(Premium) Teaching Strategies Let the students know that this course is not only for project managers. Anyone who is involved in working on a project will benefit from this course. Stress to them that what makes projects successful are the people involved. In order for this class to be successful they must be involved actively. Encourage all students to participate by asking them to identify different projects in which they have been involved. For each project ask them what the objective was, what the constraints were, what the schedule was, and what resources were used. Ask them if they can identify any project managers in the real world. If they get stuck, give them some hints. For example, have them think about sports or music, or some other area of interest. Ask your students to discuss something they did during the past summer or winter break, such as take a vacation, go to a concert, or watch a play. Ask them how those activities relate to project management. The Internet exercises in this chapter are very important. They involve having students peruse the Project Management Institute’s website. Since it was founded in 1969, the Project Management Institute (PMI) has grown to over 350,000 members in more than 170 countries. Pennsylvania-based PMI is, by far, the leading nonprofit professional association in the area of project management. It establishes standards, sponsors seminars, develops educational programs, has a professional certification program, and publishes Project Management Journal and PM Network. It has an excellent website for project management. The students can have some fun with this site. Optional Supplemental Activities Have students contact a local not-for-profit organization in your community. Tell them that they are interested in learning about their operations. Ask them to describe a project that they are currently working on. What is the objective? The constraints? The resources? The budget? The schedule? If possible, have teams contribute a few hours to the project. Through this process they will be helping someone in need and learn about a real-world project at the same time. Have each group prepare a report that summarizes the project and what they learned from this experience. Give students about three weeks for this effort Have a project manager be a guest lecturer in class to present the benefits of project management techniques. If the project manager has had international experience, have the project manager discuss the complexity of managing an international project.

Project Management Concepts
1 Project Management Concepts (Premium) Teaching Strategies Let the students know that this course is not only for project managers. Anyone who is involved in working on a project will benefit from this course. Stress to them that what makes projects successful are the people involved. In order for this class to be successful they must be involved actively. Encourage all students to participate by asking them to identify different projects in which they have been involved. For each project ask them what the objective was, what the constraints were, what the schedule was, and what resources were used. Ask them if they can identify any project managers in the real world. If they get stuck, give them some hints. For example, have them think about sports or music, or some other area of interest. Ask your students to discuss something they did during the past summer or winter break, such as take a vacation, go to a concert, or watch a play. Ask them how those activities relate to project management. The Internet exercises in this chapter are very important. They involve having students peruse the Project Management Institute’s website. Since it was founded in 1969, the Project Management Institute (PMI) has grown to over 350,000 members in more than 170 countries. Pennsylvania-based PMI is, by far, the leading nonprofit professional association in the area of project management. It establishes standards, sponsors seminars, develops educational programs, has a professional certification program, and publishes Project Management Journal and PM Network. It has an excellent website for project management. The students can have some fun with this site. Optional Supplemental Activities Have students contact a local not-for-profit organization in your community. Tell them that they are interested in learning about their operations. Ask them to describe a project that they are currently working on. What is the objective? The constraints? The resources? The budget? The schedule? If possible, have teams contribute a few hours to the project. Through this process they will be helping someone in need and learn about a real-world project at the same time. Have each group prepare a report that summarizes the project and what they learned from this experience. Give students about three weeks for this effort Have a project manager be a guest lecturer in class to present the benefits of project management techniques. If the project manager has had international experience, have the project manager discuss the complexity of managing an international project.

Chapter Concepts Definition of a project and its attributes
Key constraints within which a project must be managed Life cycle of a project Definition of project management Elements of the project management process Implications of global project management Project Management Institute Benefits of project management Chapter Concepts This chapter presents an overview of project management concepts. This chapter will help students to become familiar with the following concepts: Definition of a project and its attributes Key constraints within which a project must be managed Life cycle of a project Definition of project management Elements of the project management process Implications of global project management Project Management Institute Benefits of project management

Learning Outcomes Define what a project is
List and discuss the attributes of a project Explain what is meant by project objective Define what is meant by project deliverable Provide examples of projects Discuss project constraints Describe the phases of the project life cycle Define and apply project management Discuss the steps of the planning process Identify the three elements of the executing process Discuss some implications of global project management Discuss the Project Management Institute List benefits of project management techniques Learning Outcomes After studying this chapter, students should be able to: Define what a project is List and discuss the attributes of a project Explain what is meant by project objective Define what is meant by project deliverable Provide examples of projects Discuss project constraints Describe the phases of the project life cycle Define and apply project management Discuss the steps of the planning process Identify the three elements of the executing process Discuss some implications of global project management Discuss the Project Management Institute List benefits of project management techniques

Project Integration Management
Project Management Knowledge Areas from PMBOK® Guide Project Integration Management Project Management Knowledge Areas from PMBOK® Guide Concepts in this chapter support the following Project Management Knowledge Areas of the PMI Guide to the Project Management Body of Knowledge (PMBOK® Guide): Project Integration Management

Feds and Contractor Share Blame for Afghan Plant Delays
Background Outcomes Initial plant costs $125 million Similar plants cost $105 million Scope and budget changes were estimated at $260 million Planned completion date > year delayed Modifications and issues Costs ~ $300 million Fast tracking required turbines built in Germany and flown to site Contractor had cost-plus contract Subcontractors had fixed price contracts The plant may not be used Operation costs three times similar plants Mistakes were made Not pay attention to lessons learned Failure related to needs, resources, risks, and schedules Lack of critical project management components Planners ignored local officials' alternative recommendations Vignette A: Feds and Contractor Share Blame for Afghan Plant Delays The 105-megawatt, dual-fuel Tarakhil Power Plant project near Kabul has experienced many delays and cost overruns. Initial costs were estimated at $125 million for 18 diesel generators in an existing plant. Typical costs estimates for similar plants are $105 million, or $1 million per megawatt planned. Scope and budget changes were estimated at $260 million, with an initial completion date of April 2009. Modifications and issues have resulted in more delays and cost overruns. A January 2010 report had the scheduled completion date at April 2010. At that time, costs were nearing $300 million. Fast tracking required turbines built in Germany and flown to site. Outcomes: The plant may not be used due to high costs of operation, which is three times the cost to Afghan taxpayers as similar plants. Similar mistakes were made on this project as other projects due to not paying attention to lessons learned from the previous projects. Planners ignored local officials' alternative recommendations. Subcontractors had fixed price contracts and may not be fully reimbursed for costs. The original contractor had a cost-plus contract for the project, which we will learn about later in the text. It is a kind of contract that can result in higher pay for the contractor. The contractor failed to identify needs, examine and secure resources, manage risks, and secure a performance schedule. Failures occurred in the critical components of planning, scheduling, organization, teamwork, communication, and leadership.

Causal Inferences on the Cost Overruns and Schedule Delays of Large-Scale U.S. Federal Defense and Intelligence Acquisition Programs Causes for Delays Solutions Failures to translate customer needs into specific capabilities Incorrect commercial products selected Delays cost $12 million a week in personnel costs Non-existent succession planning Communication with stakeholders Mentoring of junior project personnel Adoption and execution of project management skills and techniques Vignette B: Causal Inferences on the Cost Overruns and Schedule Delays of Large-Scale U.S. Federal Defense and Intelligence Acquisition Programs Cost overruns and schedule slips have plagued large-scale U.S. federal defense and intelligence acquisition programs. National security is impacted by delays. Other innovative programs could be using the cost overrun funds. In 2008, 95 weapon systems projects were overrun by $295 billion with an average delay of 21 months. Causes: There was improper evaluation of contractor proposals and a lack of experience translating customer needs into specific capabilities. Incorrect commercial products were selected, resulting in a $130 million overrun. Delays cost $12 million a week in personnel costs. The organizations in question had non-existent succession planning that would have allow for smooth growth and to retain good personnel. Solutions: Better communication with stakeholders Mentoring of junior project personnel Adoption and execution of project management skills and techniques These vignettes occur in every chapter and are great short stories that can get the class discussion moving forward. Each of these projects (successful or failures) should have included serious planning, scheduling, organization, teamwork, communications, and leadership—all of which will be discussed in detail in this course.

Project Attributes Clear objective Series of interdependent tasks
Various resources Specific time frame Unique, one-time endeavor Sponsor or customer Degree of uncertainty Project Attributes A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources. The following attributes help define a project: A project has a clear objective that establishes what is to be accomplished. It is the tangible end product that the project team must produce and deliver. The project objective is usually defined in terms of end product or deliverable, schedule, and budget. Furthermore, it is expected that the work scope will be accomplished in a quality manner and to the customer’s satisfaction. A project is carried out through a series of interdependent tasks in a certain sequence in order to achieve the project objective. A project utilizes various resources to carry out the tasks. A project has a specific time frame, or finite life span - a start time and a date by which the objective must be accomplished. A project may be a unique or one-time endeavor such as developing a new product, building a house, or planning a wedding. A project has a sponsor or customer that provides the funds necessary to accomplish the project. In a business setting, the customer can be internal or external to your organization. Finally, a project involves a degree of uncertainty and is based on certain assumptions and estimates for the project budget, schedule, and work scope.

List examples of projects
Student Discussion List examples of projects Get your students to list as many examples of real projects as they can. For each example listed, discuss some of the project attributes.

Possible responses to Student Discussion
Staging a theatrical production Developing and introducing a new product Planning a wedding Designing and implementing a computer system Issuing a new $1.00 coin Modernizing a factory Consolidating two manufacturing plants Converting a basement to a family room Hosting a conference Designing and producing a brochure Executing an environmental cleanup of a contaminated site Holding a high school reunion Building a shopping mall Performing a series of surgeries on an accident victim Organizing a community festival Rebuilding a town after a natural disaster Hosting a dinner for 20 relatives Designing a business internship program for high school students Building a tree house List examples of projects Get your students to list as many examples of real projects as they can. For each example listed, discuss some of the project attributes. Some examples are: Staging a theatrical production Developing and introducing a new product Planning a wedding Designing and implementing a computer system Issuing a new $1.00 coin Modernizing a factory Consolidating two manufacturing plants Converting a basement to a family room Hosting a conference Designing and producing a brochure Executing an environmental cleanup of a contaminated site Holding a high school reunion Building a shopping mall Performing a series of surgeries on an accident victim Organizing a community festival Rebuilding a town after a natural disaster Hosting a dinner for 20 relatives Designing a business internship program for high school students Building a tree house

Balancing Project Constraints
The successful accomplishment of the project objective is usually constrained by many factors, including scope, quality, schedule, budget, resources, risks, and customer satisfaction. Various resources are needed to perform the project tasks and accomplish the project objective. Resources include people, materials, equipment, facilities, and so on. Risks adversely affect accomplishing the project objective. Customer satisfaction goes beyond just completing the project scope within budget and on schedule or asking if the customer is satisfied at the end of the project. It means not only meeting the customer’s expectations but also developing and maintaining an excellent working relationship throughout the project. Project scope is all the work that must be done in order to produce the project deliverables (the tangible product or items to be provided), satisfy the customer that the deliverables meet the requirements or acceptance criteria, and accomplish the project objective. Quality expectations must be defined from the onset of the project. The project work scope must be accomplished in a quality manner and meet specifications. The schedule for a project is the timetable that specifies when each task or activity should start and finish. The project objective usually states the time by which the project scope must be completed in terms of a specific date agreed upon by the sponsor and the organization performing the project. The budget of a project is the amount the sponsor or customer has agreed to pay for acceptable project deliverables. The project budget is based on estimated costs associated with the quantities of various resources that will be used to perform the project. During the project, it is sometimes challenging to balance these factors, which often constrain one another and can jeopardize accomplishing the project objective. To help assure the achievement of the project objective, it is important to develop a plan before starting the project work rather than starting without a plan. Lack of a plan decreases the chances of successfully accomplishing the full project scope within budget and on schedule.

Student Discussion List unforeseen circumstances that jeopardize the project with respect to: Scope Cost Schedule Once a project is started, unforeseen circumstances may occur that jeopardize the achievement of the project objective with respect to scope, cost, or schedule. Have students list examples of unforeseen circumstances.

Costs are more than estimated Inclement weather Additional redesign Modifications Delivery of critical components is delayed Key project team member leaves the project List unforeseen circumstances that jeopardize the project with respect to Scope Cost Schedule Some examples of unforeseen circumstances are: The cost of some of the materials is more than originally estimated. Inclement weather causes a delay. Additional redesign and modifications to a new sophisticated medical instrument are required to get it to meet the performance specifications and meet government testing requirements. Delivery of a critical component for an aviation control system is delayed several months. A key project team member with unique technical knowledge decides to retire, which creates a gap in critical expertise. Students can be creative and encourage them to list any others they think of.

Project Manager Actions
Prevent, anticipate, overcome Have good planning and communication Be responsible Project Manager Actions The project manager must perform a number of actions throughout the duration of a project. Prevent, anticipate, and/or overcome problems and limitations in order to complete the project scope on schedule, within budget, and to the customer’s satisfaction. Have good planning and communication – they are essential to preventing problems from occurring and to minimize their impact. Be responsible to make sure the customer is satisfied. This goes beyond merely completing the project within budget and on schedule. It requires ongoing communication with the customer.

The Project Life Cycle The Project Life Cycle
The project life cycle has four general phases: initiating, planning, performing, and closing the project, which you can see in the figure on this slide. The time span of each phase and the associated level of effort will vary depending on the specific project. Project life cycles can vary in length from a few weeks to several years, depending on the content, complexity, and magnitude of the project in question.

Initiating Phase First phase Identify need, problem, or opportunity
Determine if select project Develop project charter Rationale Project objective Expected benefits General requirements and conditions Decide if RFP needed Initiating Phase In the initiating phase, projects are identified and selected and then authorized using a document referred to as a project charter. The first phase of the project life cycle: Involves the identification of a need, problem, or opportunity and can result in the sponsor authorizing a project to address the identified need or solve the problem May take several months to identify the need, gather data, and define the project objective It is very important to define the right need. Needs are often defined as part of an organization's strategic planning process. Organizations must have a project selection process to determine what projects to pursue The project charter includes: Rationale, or justification, for the project Project objective and expected benefits General requirements and conditions such as amount of funds authorized, required completion date, major deliverables, and required reviews and approvals; and key assumptions If it decides to use external resources, an organization develops a request for proposals, or RFP, asking contractors to submit proposals describing how to address the need, associated costs, and schedule.

Planning Phase Second Phase
Show how project scope will be accomplished Plan the work and work the plan Develop baseline plan What needs to be done -- scope, deliverable How it will get done -- activities, sequence Who will do it -- resources, responsibilities How long it will take -- durations, schedule How much it will cost -- budget What the risks are Have actual resources plan the work Planning Phase The planning phase is the second phase of the project life cycle, It includes defining the project scope, identifying resources, developing a schedule and budget, and identifying risks, all of which make up the baseline plan for doing the project work. Shows how the project scope will be accomplished within budget and on schedule Plan the work and work the plan The detailed plan results in a baseline plan What needs to be done— scope, deliverable How it will get done– activities, sequence Who will do it– resources, responsibilities How long it will take– durations, schedule How much it will cost— budget What the risks are Benchmark the baseline plan to allow for comparison with actual progress. Include the people that will actually do the work in the planning process. They have knowledge of detailed activities to be done. Participation also builds commitment.

Performing Phase Third phase Accomplish project objectives
Project manager leads Project team completes the project Increase pace as more resources are added Monitor and control progress Take corrective action as needed Manage and control changes with sponsor approval Achieve customer satisfaction with acceptance of deliverable Performing Phase In the performing phase, the project plan is executed and work tasks are carried out to produce all the project deliverables and to accomplish the project objective. The project progress is monitored and controlled to assure the work remains on schedule and within budget, the scope is fully completed according to specifications, and all deliverables meet acceptance criteria. Any changes need to be documented, approved, and may be incorporated into an updated baseline plan. This is the third phase of the project life cycle. The project manager leads the project team to complete the project. The pace of the project increases as more and various resources are involved in the project. It is necessary to monitor and control the project's progress by comparing accomplishments to the baseline plan. Corrective actions are taken if a project is off track. Changes are managed and controlled through documentation, approval, and communication with agreement between the sponsor and the contractor. Some change is trivial The end of the phase, customer satisfaction, is achieved when the work and deliverables are accepted by the customer and the project objective is accomplished. Several alternative actions may be evaluated to determine the best approach to bring the project back within the scope, schedule, and budget constraints of the project. Determine if any sacrifices to scope, budget, schedule, or quality are necessary to accomplish the project. The costs of changes vary with the timing in the project– generally, the later in the project that changes are identified, the greater their effect on accomplishing the project objective.

Closing Phase Final phase Collect and make final payments
Recognize and evaluate staff Conduct post project evaluation Document lessons learned Archive project documents Record lessons learned Closing Phase In the closing phase, project evaluations are conducted, lessons learned are identified and documented to help improve performance on future projects, and project documents are organized and archived. This is the final phase of the project life cycle It includes a variety of actions such as: Collecting and making final payments Staff recognition and evaluation Conducting a post project evaluation Documenting lessons learned Archiving project documents Using a knowledge base to record lessons learned and post-project evaluation A knowledge base is helpful to retrieve the lessons and information that can help with doing business with the customer or other customers in the future.

Project Planning Process
Establish project objective Define scope Create WBS Assign responsibility Define specific activities Sequence activities Estimate activity resources Estimate activity durations Develop project schedule Estimate activity costs Determine budget Project Planning Process Project management is planning, organizing, coordinating, leading, and controlling resources to accomplish the project objective. The project management process involves planning the work (establishing the plan) and then working the plan (executing that plan). There are many steps in the project planning process, as you can see on this slide. Establish project objective– agreed upon by sponsor and contractor Define scope– includes customer requirements, defines major work tasks, lists deliverables and associated acceptance criteria Create a work breakdown structure, or WBS– a hierarchical decomposition of the project scope into work elements to be executed by the project team and produce the project deliverables Assign responsibility–the person or organization responsible for each work item is identified Define specific activities– develop a list of detailed activities needed to perform each work package and produce any required documents Sequence activities–create a network diagram that shows the necessary sequence and dependent relationships Estimate activity resources–determine the types of resources needed for each activity. These may include people, materials, or equipment that are internal or external to the contractor. Estimate activity durations– time estimates for how long each activity will take to be completed based on the estimate of resources available applied to each activity Develop project schedule– determine the start and finish times for each activity to complete the project by its required completion date Estimate activity costs– use the appropriate labor cost or unit cost rate for each type of resource to determine the cost of each activity Determine budget– aggregate the costs associated with each activity and each work package and add indirect costs and profits to determine the costs of completing the project. Allocate the costs over time to determine the time-phased budget.

Create WBS and Assign Responsibility
A work breakdown structure, or WBS, is a hierarchical decomposition of the project scope into work elements to be executed by the project team and produce the project deliverables. You can see a WBS in this slide. Assigning responsibility involves determining who will be the person or organization responsible for each work item in the WBS.

Sequence Activities Sequence Activities
The figure on this slide shows a network diagram that reveals the sequence of activities for a project. Sequencing activities involves creating a network diagram that shows the necessary sequence and dependent relationships in a project.

Develop the Project Schedule
This table shows the project schedule for a consumer market study project. Developing project schedule involves determining the start and finish times for each activity in order to complete the project by its required completion date.

Determine Budget Determine Budget
Here we see a time-phased project budget. Determining the budget involves aggregating all the costs associated with each activity and each work package and adding indirect costs and profits to determine the costs of completing the project. Allocate the costs over time to determine the time-phased project budget.

Why is it critical to develop a baseline plan for a project?
Student Discussion Why is it critical to develop a baseline plan for a project? The result of the planning process is a baseline plan. Taking the time to develop a well thought out plan is critical to the successful accomplishment of any project. A baseline plan is highly important for keeping a project on track. Why is it critical to develop a baseline plan for a project?

Many projects overrun their budgets or miss completion dates A baseline plan helps to compare progress The graphical or tabular display shows the start and finish dates for each activity The amounts of resources are known The budget is displayed for each time period and the project Why is it critical to develop a baseline plan? Why is it critical to develop a baseline plan? Many projects overrun their budgets, miss their completion dates, or only partially met their requirements because there was no viable baseline plan before the project was started A baseline plan helps to compare projects to initial benchmarks The baseline plan for a project can be displayed in graphical or tabular format for each time period (week, month) from the start of the project to its completion. It shows the start and completion dates for each activity. It helps to establish and display the amounts of the various resources that will be needed during each time period of a project It shows the budget for each time period as well as the cumulative budget from the start of the project and for each time period

Execute the Project Plan
Perform the work Monitor and control progress Control changes Execute the Project Plan Once a baseline plan has been established, the plan must be executed. The executing process involves performing the work according to the plan, monitoring and controlling the work, and controlling for changes so that the project scope is achieved within the budget and schedule, to the customer’s satisfaction. Perform the work— all activities are performed to produce the deliverables and meet their acceptance criteria with regular communication with stakeholders and the customers Monitor and control progress– regularly monitor the project to see if progress is going according to plan, measure the actual progress, and take corrective action if activities are behind schedule Control changes— change to the work activities and to the project scope will occur for a variety of reasons. Changes need to be agreed upon by the sponsor and the contractor.

Global Project Management
Globalization Helpful Competencies Adds a dimension of complexity Changes project dynamics Requires awareness of factors Cultural differences Currency Codes and regulations Business organization Political relations Workforce availability Foreign language skills Knowledge of Cultures Geography World history and contemporary events International economics Awareness of Customs and etiquette Geopolitical environment Technology adoption and translation software Global Project Management Globalization adds a unique dimension to managing projects. It changes the dynamics of the project and adds a layer of complexity that can adversely affect the project outcome if the project participants are not aware of what they might encounter regarding cultural differences and multinational economic transactions. Different factors can create a dynamic, and even unstable environment, over the life of a project and include: Cultural differences Currency fluctuations and exchange rates Country-specific work codes and regulations, such as hours per day, holidays, and religious observances Corporate joint ventures and partnerships create entities with a presence and facilities in multiple countries and can make international business more complication Political relations between countries Availability of high-demand workforce skills Some competencies can be helpful, even required, for global project management success: Foreign language skills Knowledge and understanding of other countries and cultures, geography, world history and contemporary events, and international economics Awareness and understanding of cultures, customs, and etiquette and of the geopolitical environment are also very important to international project success. Finally, technology adoption to international environments and use of good language translation software is also very important for international project management.

Project Management Associations
Project Management Institute Global Associations Worldwide not-for-profit association of practitioners 350,000 members in >170 countries 250 chapters in >70 countries Online communities for collaboration PMBOK® Guide PMI Code of Ethics and Professional Conduct Certifications Links available at Project Management Associations The Project Management Institute (PMI) is a premier worldwide not-for-profit association for practitioners in the project management profession and individuals who want to learn more about the profession. Founded in 1969, PMI has approximately 350,000 members in more than 170 countries and about 250 chapters in over 70 countries Has a number of online communities where peers can collaborate on specific topics of interest Publishes A Guide to the Project Management Body of Knowledge (PMBOK® Guide), which provides a framework of processes and guidelines for the application of project management concepts, practices, and techniques Created the PMI Code of Ethics and Professional Conduct, which sets standards and establishes expectations for professional behavior Offers a certification program that provides the opportunity to earn credentials in various project management disciplines Additional and current information about the Project Management Institute can be found at Many other project management associations exist around the globe. Appendix C provides a list of approximately 60 such associations. Website addresses can be found on this book’s student companion website, the link found through a search for the ISBN of Successful Project Management 5e (from the back cover of your book) using the search box at the top of the page.

What are benefits of Project Management?
Student Discussion What are benefits of Project Management? There are many benefits of implementing project management techniques, as you will see in the upcoming slides. The ultimate benefit is customer satisfaction, but there are a number of other such as satisfaction, job referrals, and enhanced reputation. What are some of these benefits of project management?

Customer satisfaction Complete the project scope in a quality manner, on time, and within budget Project managers have satisfaction, enhance their reputation, and expand their career opportunities Project team members contribute to the project's success, expand knowledge, and enhance skills What are benefits of Project Management? There are many benefits to good project management: The ultimate benefit of implementing project management techniques is having a satisfied customer—whether you are the customer of your own project, such as remodeling your basement, or a business (contractor) being paid by a customer to perform a project. Completing the full project scope in a quality manner, on time, and within budget provides a great feeling of satisfaction and possibly referrals for more business. When they do a good job, project managers benefit from professional satisfaction, enhanced reputation, and expanded career opportunities. Project team members contribute to the project's success through expanding the knowledge base and enhancing skills.

When projects are successful,
everyone wins! When projects are successful, everyone wins!

Critical Success Factors
Planning and communication are critical to successful project management. They prevent problems from occurring or minimize their impact on the achievement of the project objective when they do occur. Taking the time to develop a well thought-out plan before the start of the project is critical to the successful accomplishment of any project. A project must have a clear objective of what is to be accomplished and defined in terms of end product or deliverable, schedule, and budget; and is agreed upon by the customer. Involve the sponsor or customer as a partner in the successful outcome of the project through active participation during the project. Achieving customer satisfaction requires ongoing communication with the customer to keep the customer informed and to determine whether expectations have changed. The key to effective project control is measuring actual progress and comparing it to planned progress on a timely and regular basis and taking any needed corrective action immediately. After the conclusion of a project, the project performance should be evaluated to learn what could be improved if a similar project were to be undertaken in the future. Feedback should be obtained from the sponsor or customer and the project team. Learning and understanding the culture and customs of other project participants will demonstrate respect, help build trust, and aid in developing an effective project team; and it is critical for successful global project management. Critical Success Factors Planning and communication are critical to successful project management. They prevent problems from occurring or minimize their impact on the achievement of the project objective when they do occur. Taking the time to develop a well thought-out plan before the start of the project is critical to the successful accomplishment of any project. A project must have a clear objective of what is to be accomplished and defined in terms of end product or deliverable, schedule, and budget, and agreed upon by the customer. Involve the sponsor or customer as a partner in the successful outcome of the project through active participation during the project. Achieving customer satisfaction requires ongoing communication with the customer to keep the customer informed and to determine whether expectations have changed. The key to effective project control is measuring actual progress and comparing it to planned progress on a timely and regular basis and taking any needed corrective action immediately. After the conclusion of a project, the project performance should be evaluated to learn what could be improved if a similar project were to be done in the future. Feedback should be obtained from the sponsor or customer and the project team. Learning and understanding the culture and customs of other project participants will demonstrate respect, help build trust, and aid in developing an effective project team; and it is critical for successful global project management.

Summary A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources. The successful accomplishment of the project objective could be constrained by many factors, including scope, quality, schedule, budget, resources, risks, and customer satisfaction. The project life cycle has four phases: initiating, planning, performing, and closing the project. Project management is planning, organizing, coordinating, leading, and controlling resources to accomplish the project objective. The project management process involves two major functions: first establishing a plan and then executing that plan to accomplish the project objective. Globalization changes the dynamics of a project and adds a layer of complexity that can adversely affect the project outcome if the project participants are not aware of what they can encounter regarding cultural differences and multinational economic transactions. The Project Management Institute is a premier worldwide not-for-profit association for practitioners in the project management profession. The ultimate benefit of implementing project management techniques is having a satisfied customer—whether you are the customer of your own project or a business (contractor) being paid by a customer to perform a project. Summary A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources. The successful accomplishment of the project objective could be constrained by many factors, including scope, quality, schedule, budget, resources, risks, and customer satisfaction. The project life cycle has four phases: initiating, planning, performing, and closing the project. Project management is planning, organizing, coordinating, leading, and controlling resources to accomplish the project objective. The project management process involves two major functions: first establishing a plan and then executing that plan to accomplish the project objective. Globalization changes the dynamics of a project and adds a layer of complexity that can adversely affect the project outcome if the project participants are not aware of what they can encounter regarding cultural differences and multinational economic transactions. The Project Management Institute is a premier worldwide not-for-profit association for practitioners in the project management profession. The ultimate benefit of implementing project management techniques is having a satisfied customer— whether you are the customer of your own project or a business (contractor) being paid by a customer to perform a project.

Chapter Questions The following slides include a number of questions that will test student understanding of the chapter. Each chapter will conclude with questions like these.

Question 1 A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources. Define project. 1. Define project. A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources.

Question 2 A project has a well-defined objective—an expected result or product. The objective of a project is usually defined in terms of scope, schedule, and cost. Furthermore, it is expected that the work scope will be accomplished in a quality manner and to the customer’s satisfaction. For example, to produce 5,000 two-page marketing brochures by July 1 for a cost of $15,000. Define the term project objective and give some examples. 2. Define the term project objective and give some examples. A project has a well-defined objective—which is an expected result or product. The objective of a project is usually defined in terms of scope, schedule, and cost. Furthermore, it is expected that the work scope will be accomplished in a quality manner and to the customer’s satisfaction. For example, to produce 5,000 two-page marketing brochures by July 1 for a cost of $15,000.

The list of resources will be dependent upon the type of project.
Question 3 The list of resources will be dependent upon the type of project. Some examples are: People Equipment Money Materials List some examples of resources that are used on a project. 3. List some examples of resources that are used on a project. Resources used in a project will vary depending on the type of project. Some examples are: people, equipment, money, materials, etc.

The customer should be involved throughout the project life cycle.
Question 4 The customer should be involved throughout the project life cycle. The customer is the one who is paying for the project. Unsatisfied customers have been known to withhold payments, to deny repeat business, and to spread the word of their dissatisfaction. On the other hand, a satisfied customer will do the opposite of those things. What role does a customer have during the project life cycle? Why is it important to satisfy the customer? 4. What role does a customer have during the project life cycle? Why is it important to satisfy the customer? The customer should be involved throughout the project life cycle. The customer is the one who is paying for the project. Unsatisfied customers have been known to withhold payments, never call you again for repeat business, and spread the word of their dissatisfaction. On the other hand, a satisfied customer will do the opposite of those things.

Not everything in a project can be planned, scheduled, or budgeted.
Question 5 Many aspects can have some degree of uncertainty, such as the schedule or the budget. An unexpected snowstorm may delay a highway construction project. Increased lumber rates may increase the cost of building a new home. Not everything in a project can be planned, scheduled, or budgeted. What aspects of a project might involve some degree of uncertainty? Why? 5. What aspects of a project might involve some degree of uncertainty? Why? Many aspects can have some degree of uncertainty, such as the schedule or the budget. An unexpected snowstorm may delay a highway construction project. Increased lumber rates may increase the cost of building a new home. Not everything in a project can be planned, scheduled, or budgeted.

Question 6 Define scope, schedule, cost, and customer satisfaction.
The scope of a project is all the work that must be done in order to satisfy the customer that the deliverables meet the requirements or acceptance criteria agreed upon at the onset of the project. The cost of a project is the amount the customer has agreed to pay for acceptable project deliverables. The project cost is based on a budget that includes an estimate of the costs associated with the various resources that will be used to accomplish the project. The schedule for a project is the timetable that specifies when each activity should start and finish. The project objective usually states the time by which the project scope must be completed in terms of a specific date agreed upon by the customer and the individual or organization performing the work. Customer Satisfaction is the level to which the customer is pleased with the end result of the project. The objective of any project is to complete the scope within budget by a certain time to the customer’s satisfaction. Any of these four factors can put limitations on the final product. Define scope, schedule, cost, and customer satisfaction. Why are these considered to be constraints? 6. Define scope, schedule, cost, and customer satisfaction. Why are these considered to be constraints? The scope of a project is all the work that must be done in order to satisfy the customer that the deliverables meet the requirements or acceptance criteria agreed upon at the onset of the project. The cost of a project is the amount the customer has agreed to pay for acceptable project deliverables. The project cost is based on a budget that includes an estimate of the costs associated with the various resources that will be used to accomplish the project. The schedule for a project is the timetable that specifies when each activity should start and finish. The project objective usually states the time by which the project scope must be completed in terms of a specific date agreed upon by the customer and the individual or organization performing the work. Customer Satisfaction is the level to which the customer is pleased with the end result of the project. The objective of any project is to complete the scope within budget by a certain time to the customer’s satisfaction. Any of these four factors can put limitations on the final product.

Question 7 The first phase, the initiating phase, is when projects are identified and selected. They are then authorized, using a document referred to as a project charter. The second phase is the planning phase and includes defining the project scope, identifying resources, developing a schedule and budget, and identifying risks, all of which make up the baseline plan for doing the project work. The third phase, the performing phase, the project plan is executed and work tasks are carried out to produce all the project deliverables and to accomplish the project objective. During this phase, the project progress is monitored and controlled to assure the work remains on schedule and within budget, the scope is fully completed according to specifications, and all deliverables meet acceptance criteria. Also, any changes need to be documented, approved, and may be incorporated into an updated baseline plan. The final phase of the project life cycle is the closing phase, project evaluations are conducted, lessons learned are identified and documented to help improve performance on future projects, and project documents are organized and archived. List and describe the main phases of the project life cycle. 7. List and describe the main phases of the project life cycle. The first phase, the initiating phase, is when projects are identified and selected. They are then authorized, using a document referred to as a project charter. The second phase of the project life cycle is the planning phase and includes defining the project scope, identifying resources, developing a schedule and budget, and identifying risks, all of which make up the baseline plan for doing the project work. The third phase, the performing phase, the project plan is executed and work tasks are carried out to produce all the project deliverables and to accomplish the project objective. During this phase, the project progress is monitored and controlled to assure the work remains on schedule and within budget, the scope is fully completed according to specifications, and all deliverables meet acceptance criteria. Also, any changes need to be documented, approved, and may be incorporated into an updated baseline plan. The final phase of the project life cycle is the closing phase, project evaluations are conducted, lessons learned are identified and documented to help improve performance on future projects, and project documents are organized and archived.

Question 8 Establish project objective -- clearly define the project objective and have it agreed upon by the sponsor or customer. Define scope -- include customer requirements, define the major work tasks or elements, as well as provide a list of deliverables and associated acceptance criteria that can be used to verify that the work and deliverables meet specifications. Create a work breakdown structure -- divide and subdivide the project scope into pieces or work packages. Assign responsibility - identify the person or organization responsible for each work item in the work breakdown structure. Define the specific activities -- develop the list of detailed activities that need to be performed for each work package to produce any required deliverables. Sequence activities -- graphically portray the activities in a network diagram to display the sequence and dependent relationships of the detailed activities. Estimate activity resources -- determine which types and skills or expertise of resources and how many of each resource are needed for each activity with consideration of the availability of the resources. Estimate activity durations -- make a time estimate for how long it will take to complete each activity, based on the estimate of the resources that will be applied. Develop the project schedule -- develop the overall project schedule, including when each activity is expected to start and finish, as well as the latest times that each activity must start and finish in order to complete the project by the project required completion date. Estimate activity costs -- determine the costs for the types and quantities of resources estimated for each activity using the appropriate labor cost rate or unit cost for each type of resource. Determine the budget -- aggregate the cost estimates for each activity. List and describe the steps required to develop a baseline plan. 8. List and describe the steps required to develop a baseline plan. Establish project objective– clearly define the project objective and have it agreed upon by the sponsor or customer. Define scope— include customer requirements, define the major work tasks or elements, as well as provide a list of deliverables and associated acceptance criteria that can be used to verify that the work and deliverables meet specifications. Create a work breakdown structure (WBS)— divide and subdivide the project scope into pieces or work packages. Assign responsibility— identify the person or organization responsible for each work item in the work breakdown structure. Define the specific activities— develop the list of detailed activities that need to be performed for each work package to produce any required deliverables. Sequence activities— graphically portray the activities in a network diagram to display the sequence and dependent relationships of the detailed activities. Estimate activity resources– determine which types and skills or expertise of resources and how many of each resource are needed for each activity with consideration of the availability of the resources. Estimate activity durations– make a time estimate for how long it will take to complete each activity, based on the estimate of the resources that will be applied. Develop the project schedule– develop the overall project schedule, including when each activity is expected to start and finish, as well as the latest times that each activity must start and finish in order to complete the project by the project required completion date. Estimate activity costs— determine the costs for the types and quantities of resources estimated for each activity using the appropriate labor cost rate or unit cost for each type of resource. Determine the budget– aggregate the cost estimates for each activity.

Question 9 A manager must monitor progress to ensure that everything is going according to plan. It is also necessary to measure actual progress and compare it to planned progress. If at any time during the project the comparison of actual progress to planned progress reveals that the project is behind schedule, overrunning the budget, or not meeting the technical specifications, corrective action must be taken to get the project back on track within the scope, schedule, and budget constraints of the project objective. These actions include adding or changing resources to make up time and get back on schedule. Why must a manager monitor the progress of a project? What can be done if a project is not proceeding according to plan? 9. Why must a manager monitor the progress of a project? What can be done if a project is not proceeding according to plan? A manager must monitor progress to ensure that everything is going according to plan. It is also necessary to measure actual progress and compare it to planned progress. If at any time during the project the comparison of actual progress to planned progress reveals that the project is behind schedule, overrunning the budget, or not meeting the technical specifications, corrective action must be taken to get the project back on track within the scope, schedule, and budget constraints of the project objective. These actions include adding or changing resources to make up time and get back on schedule.

Question 10 Global projects have several unique influencing factors such as currency fluctuations and exchange rates, country-specific work codes and regulations, corporate joint ventures and partnerships creating entities with a presence and facilities in multiple countries, political relations between countries, and availability of high-demand workforce skills. Globalization changes the dynamics of the project and adds a layer of complexity, which can adversely affect the project outcome if the project participants are not aware of what they might encounter regarding cultural differences and multinational economic transactions. Describe how a global project can be more complex than a project performed within just one country. How might these elements affect the successful outcome of the global project? 10. Describe how a global project can be more complex than a project performed within just one country. How might these elements affect the successful outcome of the global project? Global projects have several unique influencing factors such as currency fluctuations and exchange rates, country-specific work codes and regulations, corporate joint ventures and partnerships creating entities with a presence and facilities in multiple countries, political relations between countries, and availability of high-demand workforce skills. Globalization changes the dynamics of the project and adds a layer of complexity, which can adversely affect the project outcome if the project participants are not aware of what they might encounter regarding cultural differences and multinational economic transactions.

Question 11 The ultimate benefit of implementing project management techniques is having a satisfied customer. Completing the full project scope in a quality manner, on time, and within budget provides a great feeling of satisfaction. It could lead to additional business. Successful projects can expand career opportunities. A feeling of satisfaction from being on a winning team. An expansion of knowledge, enhancement of skills, and preparation of more complicated projects. When projects are successful, everybody wins! List some benefits of using project management techniques. 11. List some benefits of using project management techniques. The ultimate benefit of implementing project management techniques is having a satisfied customer. Completing the full project scope in a quality manner, on time, and within budget provides a great feeling of satisfaction. It could lead to additional business. Successful projects can expand career opportunities. It can lead to a feeling of satisfaction from being on a winning team. Project management techniques can lead to an expansion of knowledge, enhancement of skills, and preparation of more complicated projects. When projects are successful, everybody wins!

Question 12 Answers to this question will vary depending on the student. Responses should include the definition of a project, an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources. Consider a project in which you are currently involved (or in which you have been involved recently). Describe the objectives, scope, schedule, cost, and any assumptions made. Where are you in the project life cycle? Does this project have a baseline plan? If yes, describe it. If not, create it. Are you or is anyone else monitoring the progress of the project? If so, how? If not, how could you do so? Describe some unexpected circumstances that could jeopardize the success of the project. Describe the anticipated benefits of the project. 12. Consider a project in which you are currently involved (or in which you have been involved recently). Describe the objectives, scope, schedule, cost, and any assumptions made. Where are you in the project life cycle? Does this project have a baseline plan? If yes, describe it. If not, create it. Are you or is anyone else monitoring the progress of the project? If so, how? If not, how could you do so? Describe some unexpected circumstances that could jeopardize the success of the project. Describe the anticipated benefits of the project. Answers to this question will vary depending on the student. Check responses to be sure students include the definition of a project, an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources.

Project Management Project Management Institute Executive Planet TM
Internet Exercises Project Management Project Management Institute Executive Planet TM Internet Exercises The Internet Exercises can be a very valuable part of this course. Assign these exercises to your students as homework or complete them with students in a computer lab. They help to reinforce the concepts in the chapter and expose the students to additional resources that are available through the Internet.

Internet Exercises Examination of broad field of project management will reinforce the growth of the project management field. Many organizations are realizing the value of employees having project management training and certifications. Exploration of the project management information provides information about additional education or certifications. Using your favorite Web search engine, perform a search for “project management.” Do several additional Web searches by adding, after the words “project management,” some of the key words listed in this chapter. Check out the PMI website for information regarding memberships, certification, education, and publications. Search for PMI Global Congresses. Executive PlanetTM provides valuable tips on business etiquette, customs, and protocol for doing business worldwide. Go to the organization’s website and explore the business culture guides for three different countries. Internet Exercises This slide lists a number of different ideas for Internet exercises, which can be a very valuable part of this course. Examination of broad field of project management will reinforce the growth of the project management field. Many organizations are realizing the value of employees having project management training and certifications. Exploration of the project management information might motivate students to seek additional education or certifications.

A Not-For-Profit Organization
Case Study 1 A Not-For-Profit Organization Case Study #1: A Not-For-Profit Organization This case study involves a meeting of the officers of the student community service organization that collects, buys, and distributes food for the needy. Their funds are almost exhausted and the demand for service is growing. Group Activity Many community service organizations are facing the same issues as this student community service organization: they need additional funds for operation, more volunteers, and more donations to fund activities and operations. Having students learn about how not-for-profit organizations plan their projects and complete funding and donation requests will provide a rich learning opportunity and insight into project management that can only be gained through experience and direct observation.

They need to find a way to get more funds. They need more volunteers.
Case Study 1 Question 1 They need to find a way to get more funds. They need more volunteers. They need more space. Some respondents may point out that they do not have a project plan for how to spend their current funding and need a project plan for their current work. What are the needs that have been identified? 1. What are the needs that have been identified? They need to find a way to get more funds. They need more volunteers. They need more space. Some students may point out that they do not have a project plan for how to spend their current funding and need a project plan for their current work.

At this point they don’t all agree on the objective.
Case Study 1 Question 2 At this point they don’t all agree on the objective. What is the project objective? 2. What is the project objective? At this point they don’t all agree on the objective.

Case Study 1 Question 3 You must always be careful when making assumptions. However, the following statements are made in the case study. Some may or may not actually be true. They will run out of funds in two months. The local government is not able to provide additional funds. The demand is increasing. They need more space and more volunteers. They get some food donations, but maybe not on a regular basis. What assumptions, if any, should be made regarding the project to be undertaken? 3. What assumptions, if any, should be made regarding the project to be undertaken? You must always be careful when making assumptions. However, the following statements are made in the case study. Some of these may not actually be true. They will run out of funds in two months. The local government is not able to provide additional funds. The demand is increasing. They need more space and more volunteers. They get some food donations, but maybe not on a regular basis.

Case Study 1 Question 4 If the statements in the story are true, then the risk of not succeeding with this project is that the organization will have to shut down and members of the community in need of food will no longer have this student community service organization as a source of assistance. What are the risks involved in the project? 4. What are the risks involved in the project? If the statements in the story are true, then the risk of not succeeding with this project is that the organization will have to shut down and members of the community in need of food will no longer have this student community service organization as a source of assistance.

E-Commerce For A Small Supermarket
Case Study 2 E-Commerce For A Small Supermarket Case Study #2: E-Commerce for a Small Supermarket This case study involves a small supermarket in a rural town with a large and growing elderly population. The owners are discussing the possibility of putting their operation online. Group Activity Have two students act out the parts of Matt and Grace. These students should role play the interaction between the consultant and Matt and Grace. Be sure to have the students focus on the needs identification of the potential project for the store. Optional Activity Have course participants, individually or in small groups, contact a business that went ‘‘online’’ and ask the business what led it to that decision and if the project met its initial expectations.

They also have a need to repave the parking lot.
Case Study 2 Question 1 They believe that putting their grocery store on-line will bring increased sales. They also have a need to repave the parking lot. What are the needs that have been identified? 1. What are the needs that have been identified? They believe that putting their grocery store on-line will bring increased sales. They also have a need to repave the parking lot.

At this point, Matt and Grace have not decided.
Case Study 2 Question 2 At this point, Matt and Grace have not decided. They have an idea to create an online ordering site or just have a page with a picture of the market and them. What is the project objective? 2. What is the project objective? At this point, Matt and Grace have not decided. They have an idea to create an online ordering site or just have a page with a picture of the market and them.

Case Study 2 Question 3 They must list, and possibly test, some of their assumptions. You must always be careful when making assumptions. However, the following statements are made in the case study. Some may or may not actually be true. They can increase sales by putting their operation online. There is a demand for online services. The benefits of doing this will outweigh the costs. Matt and Grace also need to determine the motivations of the consultant. They need to find out if the consultant is selling services for web development or if the consultant is a technical assistance specialist that will provide well-informed suggestions to Matt and Grace. What are some things Matt and Grace should do before they talk with the consultant? 3. What are some things Matt and Grace should do before they talk with the consultant? They must list, and possibly test, some of their assumptions. You must always be careful when making assumptions. However, the following statements are made in the case study. Some may not actually be true. They can increase sales by putting their operation online. There is a demand for online services. The benefits of doing this will outweigh the costs. Matt and Grace also need to determine the motivations of the consultant. They need to find out if the consultant is selling services for web development, or if the consultant is a technical assistance specialist that will provide well-informed suggestions to Matt and Grace.

An honest consultant would determine the feasibility of this project.
Case Study 2 Question 4 An honest consultant would determine the feasibility of this project. It might very well not be feasible, but it is very possible that the consultant will just give them a price for building the system. What should the consultant tell Matt and Grace? 4. What should the consultant tell Matt and Grace? An honest consultant would determine the feasibility of this project. It might very well not be feasible, but it is very possible that the consultant will just give them a price for building the system.

Identifying and Selecting Projects
2 Identifying and Selecting Projects (Premium) Teaching Strategies The first vignette in this chapter reinforces the need for a systematic approach to identify a project's needs and to evaluate data collected from sites. Project identification is the start of the project life cycle. Have students describe systematic processes they use for evaluation. The second vignette underscores that the need, problem, or opportunity for a project may not always have a formal request for proposals, or RFP, developed. Proposals are sometimes sent unsolicited. The sponsor needs to have evaluation criteria for assessment of the proposal just as would be developed in the RFP. Have students describe when they have suggested a solution for a problem and how the organization or person evaluated their suggestions. Have the students read the case studies in class and answer the questions in groups of three or four. Next, select five participants to act out the group activity. This is an excellent way to stimulate class discussion and interest. This is a good case study to do right before you lecture on this chapter and to repeat after you lecture on the chapter. The difference in responses “before” and “after” will reinforce the importance of the topics covered. Ask your students if they have ever seen an RFP or written an RFP; to identify situations in the real world that would require an RFP; and to describe in detail what the RFP might look like. Optional Supplemental Activities This is a good time to get your students to start reading some of PMI’s publications—either on-line or printed. These articles are typically very readable and might relate to something that interests them. Have each student read one such article and prepare a one-page summary. If time permits, have each student discuss his or her article in class. Have students find a Request for Proposal on the Web and evaluate it against the guidelines in this book. Have a certified Project Management Professional make a presentation to the class and answer questions about the value of certification. Show the class a copy of the PMI Guide to the Project Management Body of Knowledge (PMBOK® Guide). Have students examine the sections on project integration management and project procurement management.

Chapter Concepts How projects are identified and selected
A project charter Outsourcing projects using a request for proposal The proposal solicitation process Chapter Concepts This chapter discusses the initiating phase of the project life cycle. Based on the material in this chapter, students will become familiar with: How projects are identified and selected A project charter Outsourcing projects using a request for proposal, or RFP The proposal solicitation process

Learning Outcomes Discuss how projects are identified
Explain how projects are prioritized and selected Identify and describe at least eight elements of a project charter Prepare a project charter Prepare a request for proposal Learning Outcomes After studying this chapter, students should be able to: Discuss how projects are identified Explain how projects are prioritized and selected Identify and describe at least eight elements of a project charter Prepare a project charter Prepare a request for proposal

Project Integration Management Project Procurement Management
Project Management Knowledge Areas from PMBOK® Guide Project Integration Management Project Procurement Management Project Management Knowledge Areas from PMBOK® Guide Concepts in this chapter support the following Project Management Knowledge Areas of A Guide to the Project Management Body of Knowledge (PMBOK® Guide): Project Integration Management Project Procurement Management

King County and Phoenix Schools Prioritized Safe Routes to School
Background Outcomes National Center for Safe Routes to School Three-step identification process Prioritize schools that could benefit Assess traffic, geography, and costs on same form Evaluate criteria and make decision about solution and implementation Determine highest priority locations and countermeasures Work to have the greatest benefit for the most number of students Used same metrics for all schools Completed side-by-side comparison to determine greatest needs Completed project identification efficiently Two schools were featured to explain process used King County, Washington Phoenix, Arizona Vignette A: King County and Phoenix Schools Prioritized Safe Routes to School The National Center for Safe Routes to School, a clearinghouse for the Federal Highway Administration’s Safe Routes to School Program, developed a three-step project identification process to determine the highest-priority locations and countermeasures for Safe Routes to School projects. The first step— prioritize schools that could benefit from the projects The highest priority was given to schools with history of child pedestrian-related crashes. Other factors were public and school officials' concerns for safety and routes to school Additional considerations for project identification were traffic volume, travel speed, existing infrastructure and road crossings, geography, socioeconomic distribution, and costs of implementations The finalists were evaluated and the group determined which schools would be funded and how the projects would be implemented. Two schools were featured as a means of explaining the process that was used: King County, Washington— used a worksheet to gather information in a systematic and consistent manner Phoenix, Arizona— tested a prioritization tool and schools submit annual reports to demonstrate need The process used the same metrics to measure each potential candidate in order to have comparable data that shows which school has the greatest need. A systematic approach to project identification is the start of the project life cycle, with the recognition of the need, problem, or opportunity for which a project or projects are identified to solve a problem or address an expressed need. This systematic approach has been very effective when used to evaluate, prioritize, and select projects that are completed by internal teams and by contractors. This approach aimed to provide the greatest benefit to the greatest number of students and schools.

Spokane Builder and Others Propose Methow Project
Problem Identification Solution Local business employees have difficulty finding affordable housing Employees make long commute to work in the Methow Valley A seven-acre parcel could be developed with affordable housing No RFP was developed, any proposals for development are unsolicited Development firm build relationship with housing authority Market survey being completed Determine the housing requirements for seniors, farm workers, and others Develop the evaluation criteria for the project proposal Needs assessments would inform funding proposals Vignette B: Spokane Builder and Others Propose Methow Project In Spokane, Washington, proximity to affordable housing is a problem for many employees. Many have to make a long commute to work from the Methow Valley. To help with this problem, a development company is proposing to develop and construct a $10 million to $12 million affordable housing project on a seven-acre parcel two blocks from the business district. No RFP was developed for this project and proposals for development were unsolicited. Although no RFP was developed, the company clearly identified a problem that needed solving. A solution to the problem will be developed by first gathering data and conducting a market survey involving those affected Evaluation criteria are being developed to prioritize and select the project Sometimes a need, problem, or opportunity is identified and no RFP is created; solutions are offered and the sponsor must have evaluation criteria developed to determine if the project should be funded or not funded. The solution for this housing problem involves: Developing a solid relationship with the local housing authority Completing a market survey Determine the housing requirements for different groups, such as seniors, farm workers, and others Develop the evaluation criteria for the project proposal A needs assessments would inform funding proposal

Project Identification
Start of Initiating phase Recognize need, problem, or opportunity Various ways for identification Organizations strategic planning Response to unexpected events Group organized to address a need Important to clearly identify need to determine if worth pursuing Use decision making process to prioritize and select project with greatest need Project Identification The initiating phase of the project life cycle starts with recognizing a need, problem, or opportunity for which a project or projects are identified to address the need. Projects are identified in various ways: During an organization’s strategic planning As part of its normal business operations In response to unexpected events The result of a group of individuals deciding to organize a project to address a particular need It is important to clearly define the need. This may require gathering data about the need or opportunity to help determine if it is worth pursuing. Sometimes organizations identify several or many needs, but have limited funds and people available to pursue potential projects to address all of those needs. In such cases, the company must go through a decision-making process to prioritize and select those projects that will result in the greatest overall benefit.

Project Selection Evaluate needs, costs, benefits
Determine which are projects Select project Develop criteria List assumptions Gather data Evaluate each opportunity Combine “gut” feelings and quantitative information to make decision Project Selection Project selection involves evaluating various needs or opportunities and then deciding which of those should move forward as a project to be implemented. The benefits and consequences, advantages and disadvantages, plusses and minuses of each opportunity need to be considered and evaluated. They can be quantitative and qualitative, tangible and intangible. Each person's decision will be a combination of quantitative evaluation and "gut" feelings based upon experience. The steps in project selection are: Develop a set of criteria against which the opportunity will be evaluated. For example: Alignment with company goals Anticipated sales volume Increase in market share Establishment of new markets Anticipated retail price Investment required Estimated manufacturing cost per unit Technology development required Return on investment Human resources impact Public reaction Competitors’ reaction Expected time frame Regulatory approval Risks List assumptions that will be used as the basis for each opportunity. If an opportunity is to build an on-site day care center for children and elderly relatives of company employees, one assumption might be that the company would be able to obtain a bank loan to build such a center. Gather data and information for each opportunity to help ensure an intelligent decision regarding project selection. It may be necessary to gather some preliminary financial estimates associated with each opportunity, such as estimated revenue projections and implementation and operating costs. In addition to gathering hard data, it may also be necessary to obtain other information, such as opinions and reactions from various stakeholders who would be affected by the opportunity. Evaluate each opportunity against the criteria. Once all the data and information has been collected, analyzed, and summarized for each opportunity, it should be given to all the individuals responsible for performing the evaluation. It is beneficial to have several individuals involved in the evaluation and selection decision in order to get a variety of viewpoints. These individuals will combine the collected data with their gut feelings regarding the project when making their decision.

Describe the positives and negatives for this development project.
Student Discussion Describe the positives and negatives for this development project. This figure depicts a project evaluation and selection form used to evaluate three possible projects. Have students describe the positive and negatives for possible scenarios for a development project.

Positives All projects will be evaluated on common criteria Project A gets to market in the least time Project B gains the greatest market share Project B has highest ROI Projects A and C have high chance of success Negatives Prices for each project have great differences; implying that each has a different level of effort for the project solution Project B has high risk and medium chance of success Project C may not be accepted globally Project B may put the company reputation at risk if the technology does not work as expected Describe the positives and negatives for this development project. Project development is rarely clear-cut. It usually involves weighing a series of pros and cons. In this example, there are many potential positives and negatives. Positives: All projects will be evaluated on common criteria Project A gets to market in the least time Project B gains the greatest market share Project B has highest ROI Projects A and C have high chance of success Negatives: Prices for each project have great differences, implying that each has a different level of effort for the project solution Project B has high risk and medium chance of success Project C may not be accepted globally Project B may put the company reputation at risk if the technology does not work as expected

Project Charter Purpose Possible Elements Provides sponsor approval
Commits funding for the project Summarizes key conditions and parameters Establishes framework to develop baseline plan Project title Purpose Description Objective Success criteria or expected benefits Funding Major deliverables Acceptance criteria Milestone schedule Key assumptions Constraints Major risks Approval requirements Project manager Reporting requirements Sponsor designee Approval signature Project Charter Once a project is selected, it is formally authorized using a document referred to as a project charter, sometimes called a project authorization or project initiation document. This document serves a number of purposes. Provides sponsor approval to go forward with the project Commits the funding for the project Summarizes the key conditions and parameters for the project Establishes the framework for developing a detailed baseline plan for performing the project The project charter includes many possible elements, including the ones seen on this slide. Project title Purpose Description Objective Success criteria or expected benefits Funding Major deliverables Acceptance criteria Milestone schedule Key assumptions Constraints Major risks Approval requirements Project manager Reporting requirements Sponsor designee Approval signature

Student Discussion Examine the project charter and comment on - the completeness of the information - possible evaluation criteria The figure on this slide depicts a project charter. This is an extract from the entire charter you will find in the text. Have students review the parts of the project charter and comment on the completeness of the information and how it could be developed from the statements in an RFP and the evaluation criteria for the project.

Completeness of information Describes the project that needs to be addressed Lists requirements, constraints, assumptions, and risks An RFP could be developed from the charter’s information Possible evaluation criteria Meets the purpose Cost Reduces delivery costs by 26% the first year Experience Risks Appropriate instructional strategies Examine the project charter and comment on Completeness of the information Possible evaluation criteria Examine the project charter and comment on the completeness of the information and how it could be developed from the statements in an RFP and the evaluation criteria for the project. Completeness of information: Describes the project that needs to be addressed Lists requirements, constraints, assumptions, and risks An RFP could be developed from the charter’s information Possible evaluation criteria: Meets the purpose Cost Reduces delivery costs by 26% the first year Experience Risks Appropriate instructional strategies

Preparing a Request for Proposal
Decision made to outsource to external resource Comprehensively describe project requirements Includes need, problem, or opportunity description Allows contractors to develop a thorough proposal Facilitates the development of evaluation criteria May be communicated informally or formally, in writing or verbally Preparing a Request for Proposal If an organization does not have the expertise or staff capacity to plan and perform the project or major portions of the project, outsourcing the work to an external resource (such as a contractor) is a good choice. An RFP helps the organization decide which contractor to use. The purpose of preparing an RFP is to state, comprehensively and in detail, what is required, from the customer’s point of view, to address the identified need. A good RFP allows contractors or a project team to understand what the customer expects so that they can prepare a thorough proposal that will satisfy the customer’s requirements at a realistic price. It should be noted that in many situations a formal RFP might not be prepared; the need is instead communicated informally, sometimes orally, rather than in writing. This is often the case when the project will be implemented by a firm's internal staff rather than by an external contractor.

Guidelines for Developing an RFP
State project objective or purpose Provide a statement of work Include customer requirements State deliverables the customer expects State acceptance criteria List customer supplied items State approvals required State type of contract State payment terms State schedule and key milestones List format and content instructions Indicate due date Include evaluation criteria Include level of effort or funds available Guidelines for Developing an RFP Following are some guidelines for drafting a formal request for proposal to external contractors: The RFP must state the project objective or purpose, including any rational or background information that may be helpful to contractors so that they can prepare thorough and responsive proposals. An RFP must provide a statement of work (SOW). An SOW deals with the scope of the project, outlining the tasks or work elements the customer wants the contractor or project team to perform. The RFP must include the customer requirements, which define specifications and attributes. Requirements cover size, quantity, color, weight, speed, performance, and other physical or operational parameters the contractor’s proposed solution must satisfy. The customer may also use these requirements as acceptance criteria. The RFP should state what deliverables the customer expects the contractor to provide. Deliverables are the tangible items that the contractor is to supply. Deliverables could include periodic progress reports or a final report as well as a final product. The RFP should state the acceptance criteria the customer will use to determine if the project deliverables are completed according to the customer’s requirements. The RFP should list any customer-supplied items. The RFP might state the approvals required by the customer. Some RFPs mention the type of contract the customer intends to use. It could be fixed price, in which case the customer will pay the contractor a fixed amount regardless of how much the work actually costs the contractor. (The contractor accepts the risk of taking a loss.) Or the contract might be for time and materials. In this case, the customer will pay the contractor whatever the actual costs are. An RFP might state the payment terms the customer intends to use. The customer may specify progress payments or pay when the entire project is finished. The RFP should state the required schedule for completion of the project and key milestones. It might only state a completion date, or it might give a more detailed schedule. The RFP should provide instructions for the format and content of the contractor proposals. Instructions might state the maximum number of pages, the number of details the customer wants the contractor to show regarding the costs, and other specifications. The RFP should indicate the due date by which the customer expects potential contractors to submit proposals. An RFP may include the evaluation criteria that will be used to assess proposals from competing contractors. Criteria might include: the contractor’s experience with similar projects; the technical approach proposed by the contractor; the schedule; or the costs. In rare cases, an RFP will indicate the funds the customer has available to spend on the project. Contractors can then submit proposals that are appropriate to that level of funding.

Student Discussion Examine the RFP example. What additional questions need to be answered? This figure depicts a request for proposal. The image here depicts an extract from the RFP in the text. Have students review the parts of the RFP and list any additional questions they would have. These are the types of questions that would be submitted in RFP clarification meetings. What additional questions still need to be answered?

Will AJACKS supply the names of the firms to be surveyed? What manufacturing industries are the target? What marketing information already exists? What are the page limitations for the proposal and supplemental information? What is an acceptable return rate on the survey? Examine the RFP example. What additional questions need to be answered? The figure depicts a request for proposal. What additional questions need to be answered? Some sample questions are: Will AJACKS supply the names of the firms to be surveyed? What manufacturing industries are the target? What marketing information already exists? What are the page limitations for the proposal and supplemental information? What is an acceptable return rate on the survey?

Soliciting Proposals Solicitation Conditions
Notify potential contractors Identify selected group in advance to send copy Advertise in selected journals, newspapers, or websites Maintain competitive situation Provide equal information to all bidders Hold bidders’ meeting to answer questions Requirements are sometimes communicated verbally instead of via a formal RFP All RFPs start with identification of a need, problem, or opportunity Soliciting Proposals Once the RFP has been prepared, the customer solicits proposals by notifying potential contractors that the RFP is available. One way for customers to notify potential bidders is by identifying a selected group of contractors in advance and sending each of them a copy of the RFP. Another approach is to advertise in business newspapers and on websites that the RFP is available. For example, federal government organizations advertise their RFPs in Commerce Business Daily. Business customers and contractors consider the RFP/proposal process to be competitive. Customers should be careful to provide the same information to all interested contractors. Business or government customers may hold a bidders’ meeting to explain the RFP and answer questions from interested contractors. Not all project life cycles include the preparation of a written RFP. Some bypass the proposal steps and move right into planning and performing the project. There are other projects in which requirements are not written down in a formal RFP, but are communicated verbally to several providers or suppliers (contractors). Although projects can vary from very formal and businesslike to highly informal, all RFPs start with the identification of a need, problem, or opportunity.

The need must be clearly defined before preparing a request for proposal (RFP). When selecting a project from among several needs or opportunities, the decision should be based on which project will provide the greatest overall benefits compared to its costs and possible consequences. Having a well-understood evaluation and selection process and a well-rounded committee will increase the chances of making the best project selection decision. Establish quantitative project success criteria, or expected benefits. A good RFP allows contractors to understand what the customer expects so that they can prepare a thorough proposal that addresses the customer’s needs and requirements. A request for proposal should include a statement of work, customer requirements, expected deliverables, and the criteria by which the customer will evaluate proposals. An RFP should provide instructions for the format and content of contractor proposals so that the customer will be able to make a consistent and fair comparison and evaluation of all the proposals. Customers must be careful not to provide information to only some of the contractors because it would give these contractors an unfair competitive advantage in preparing their proposals. Critical Success Factors The need must be clearly defined before preparing a request for proposal (RFP). When selecting a project from among several needs or opportunities, the decision should be based on which project will provide the greatest overall benefits compared to its costs and possible consequences. Having a well-understood evaluation and selection process and a well-rounded committee will increase the chances of making the best project selection decision. Establish quantitative (measurable) project success criteria, or expected benefits. A good RFP allows contractors to understand what the customer expects so that they can prepare a thorough proposal that addresses the customer’s needs and requirements. A request for proposal should include a statement of work, customer requirements, expected deliverables, and the criteria by which the customer will evaluate proposals. An RFP should provide instructions for the format and content of contractor proposals so that the customer will be able to make a consistent and fair comparison and evaluation of all the proposals. Customers must be careful not to provide information to only some of the contractors because it would give these contractors an unfair competitive advantage in preparing their proposals.

Summary The initiating phase of the project life cycle starts with recognizing a need, problem, or opportunity for which a project or projects are identified to address the need. Sometimes organizations identify several or many needs but have limited funds and people available to pursue potential projects to address all of those needs. In such cases, the company must go through a decision-making process to prioritize and select those projects that will result in the greatest overall benefit. Project selection involves evaluating potential projects and then deciding which should move forward to be implemented. Once a project is selected, it is formally authorized using a document referred to as a project charter, sometimes called a project authorization or project initiation document. In some cases, an organization does not have the expertise or staff capacity to plan and perform the project or major portions of the project, and therefore decides to have the project completed by an external resource (contractor) and prepares and RFP. Once the RFP has been prepared, the customer solicits proposals by notifying potential contractors that the RFP is available. Not all project life cycles include the preparation of a written request for proposal by a customer and subsequent submittal of proposals from contractors. Some endeavors move from the initiating phase, where a project is identified and selected, into the planning and performing phases of the life cycle. Summary The initiating phase of the project life cycle starts with recognizing a need, problem, or opportunity for which a project or projects are identified to address the need. Sometimes organizations identify several or many needs but have limited funds and people available to pursue potential projects to address all of those needs. In such cases, the company must go through a decision-making process to prioritize and select those projects that will result in the greatest overall benefit. Project selection involves evaluating potential projects and then deciding which of these should move forward to be implemented. Once a project is selected, it is formally authorized using a document referred to as a project charter, sometimes called a project authorization or project initiation document. In some cases, an organization does not have the expertise or staff capacity to plan and perform the project or major portions of the project, and therefore decides to have the project done by an external resource (contractor) and prepares and RFP. Once the RFP has been prepared, the customer solicits proposals by notifying potential contractors that the RFP is available. Not all project life cycles include the preparation of a written request for proposal by a customer and subsequent submittal of proposals from contractors. Some endeavors move right from the initiating phase, where a project is identified and selected, into the planning and performing phases of the life cycle.

Chapter Questions

Question 1 It is important to thoroughly study the problem or opportunity in order to develop a quality RFP and/or quality solution. If the need is not clearly defined, you cannot expect the proposed solutions to be clearly defined either. Why is it important to do a thorough and detailed job of needs identification? 1. Why is it important to do a thorough and detailed job of needs identification? It is important to thoroughly study the problem or opportunity in order to develop a quality RFP and/or quality solution. If the need isn’t clearly defined, you cannot expect the proposed solutions to be clearly defined either.

Answers will vary from student to student.
Question 2 Answers will vary from student to student. Answers should contain a description of why the student identified the need, problem, or opportunity. Describe a situation in your life in which you performed needs identification. 2. Describe a situation in your life in which you performed needs identification. Answers will vary between students. Make sure that students adequately defend their responses and that they contain a description of why the student identified the need, problem, or opportunity.

In reality, too many projects are started that should never have been.
Question 3 In reality, too many projects are started that should never have been. It is wise to take the time to decide which plans to address identified needs, problems, or opportunities should go forward as a project before you start working. Why is it important to select the right project before you begin working? 3. Why is it important to select the right project before you begin working? In reality, too many projects are started that should never have been. It is wise to take the necessary time to decide which plans to address identified needs, problems, or opportunities should go forward as a project before you start working.

A four-step process is recommended:
Question 4 A four-step process is recommended: 1) Develop a set of criteria against which the opportunity will be evaluated 2) List assumptions that will be used as the basis for each project 3) Gather data and information for each project 4) Evaluate each opportunity against the criteria Describe how a business selects which projects to work on when there are numerous projects that could be done. 4. Describe how a business selects which projects to work on when there are numerous projects that could be done. A four-step process is recommended: 1) Develop a set of criteria against which the opportunity will be evaluated 2) List assumptions that will be used as the basis for each project 3) Gather data and information for each project 4) Evaluate each opportunity against the criteria

Student responses will vary.
Question 5 Student responses will vary. Responses should include the elements of a project charter that describe the outcomes of the student's project with enough clarity for the contractor to deliver an approved product at the end of the project. Which elements of a project charter would you use to help plan if you have a project that does not require a project charter? Why? 5. Which elements of a project charter would you use to help plan if you have a project that does not require a project charter? Why? Student responses will vary. Responses should include the elements of a project charter that describe the outcomes of the student's project with enough clarity for the contractor to deliver an approved product at the end of the project.

There are many possible answers to this question.
Some examples might include an RFP for a new billing system, an RFP for a comprehensive management training program, an RFP for a new heating system for a major office building, etc. Responses should include a description of an activity that cannot be completed by the organization or is better completed by an external resource or contractor. Give examples of situations in which a business might develop a request for proposal. 6. Give examples of situations in which a business might develop a request for proposal. There are many possible answers to this question. Some examples might include an RFP for a new billing system, an RFP for a comprehensive management training program, an RFP for a new heating system for a major office building, etc. Responses should include a description of an activity that cannot be completed by the organization or is better completed by an external resource or contractor.

There are many possible answers to this question.
Some examples might include an RFP for a new in-ground pool, a new deck, or a new house. These may or may not be written. Responses should include a description of an activity that cannot be completed by the person, or that is better completed by an external resource or contractor. Give examples of situations in which an individual might develop a request for proposal. 7. Give examples of situations in which an individual might develop a request for proposal. There are many possible answers to this question. Some examples might include an RFP for a new in-ground pool, a new deck, or a new house. These RFPs may or may not be written. Responses should include a description of an activity that cannot be completed by the person, or that is better completed by an external resource or contractor.

Question 8 If a business did not quantify the benefits of a solution in advance, it might discover that the costs of the solution exceed the benefits. In addition, because most businesses have limited resources, they must prioritize their projects based on the expected benefits. Why is it important for a business to try to quantify the expected benefits of implementing a solution to a problem? 8. Why is it important for a business to try to quantify the expected benefits of implementing a solution to a problem? If a business did not quantify the benefits of a solution in advance, it might discover that the costs of the solution exceed the benefits. In addition, because most businesses have limited resources, they must prioritize their projects based on the expected benefits.

The SOW should be very precise.
Question 9 A statement of work should define the scope of the project and outline the tasks or work elements to be performed. The SOW should be very precise. What should be contained in a statement of work? 9. What should be contained in a statement of work? A statement of work should define the scope of the project and outline the tasks or work elements to be performed. The SOW should be very precise.

Question 10 The RFP must include the customer requirements, which define specifications and attributes. Requirements cover size, quantity, color, weight, speed, performance, and other physical or operational parameters that the contractor’s proposed solution must satisfy. These requirements must be very precise because this is what the contractor will use as a guideline as he or she develops the proposal and/or solution; the customer may also use it as acceptance criteria for the project. What is meant by customer requirements? Why must they be precise? 10. What is meant by customer requirements? Why must they be precise? The RFP must include the customer requirements, which define specifications and attributes. Requirements cover size, quantity, color, weight, speed, performance, and other physical or operational parameters that the contractor’s proposed solution must satisfy. These requirements must be very precise because this is what the contractor will use as a guideline as he or she develops the proposal and/or solution; the customer may also use it as acceptance criteria for the project.

Question 11 It is important to state the approvals required during the project so the final solution matches what the customer expects. Examples might include: reviewing the design specifications for a house before construction begins, reviewing a prototype user interface for a new software system before coding begins, etc. Examples will vary and should include projects of a sufficient complexity level where changes as the project advances could result in higher costs. Why would an RFP state the approvals that will be required during the project? Give some examples. 11. Why would an RFP state the approvals that will be required during the project? Give some examples. It is important to state the approvals required during the project so the final solution matches what the customer expects. Examples might include: reviewing the design specifications for a house before construction begins, reviewing a prototype user interface for a new software system before coding begins, etc. Student examples will vary and should include projects of a sufficient complexity level where changes as the project advances could result in higher costs.

Question 12 Instructions ensure that all proposals have a standard form and are thus easier to evaluate and compare. If instructions were not followed, one proposal might be 5 pages and another might be 50 pages. One might include technical specifications and another might not. Why would a customer give contractors instructions in the RFP to submit their proposals according to a standard format? 12. Why would a customer give contractors instructions in the RFP to submit their proposals according to a standard format? Instructions ensure that all proposals have a standard form and are thus easier to evaluate and compare. If instructions were not followed, one proposal might be 5 pages and another might be 50 pages. One might include technical specifications and another might not.

Answers will vary from student to student.
Question 13 Answers will vary from student to student. Responses should include the guideline elements as the elements are appropriate for the need, problem, or opportunity defined by the student. Develop an RFP for a real-world project such as landscaping the grounds surrounding a nearby business office, building a deck for your house, or holding a big graduation celebration. Be creative in specifying your needs. Feel free to come up with unique ideas for the RFP. (This RFP will be used to provide the basis for the development of a proposal in Chapter 3 questions.) 13. Develop an RFP for a real-world project such as landscaping the grounds surrounding a nearby business office, building a deck for your house, or holding a big graduation celebration. Be creative in specifying your needs. Feel free to come up with unique ideas for the RFP. Answers will vary from student to student. Responses should include the guideline elements as the elements are appropriate for the need, problem, or opportunity defined by the student.

Request for Proposals Internet Exercises Internet Exercises
The Web Exercises can be a very valuable part of this course. You should assign these exercises to your students as homework or complete them with them in a computer lab.

Some RFPs will be very short and others many pages long.
Internet Exercises Many RFPs are available on the Web that address needs, problems, and opportunities. Some RFPs will be very short and others many pages long. Use the guidelines to evaluate an RFP for its strengths, weaknesses, and missing aspects. Revisions to the RFP should clarify the information and provide enough detail for the development of proposals that will address the need of the RFP. Using your favorite Web search engine, perform a search for “requests for proposals.” For an RFP that was found What company developed the RFP, and what is the company looking to accomplish? What are the strengths and weaknesses of the RFP? What is missing from the RFP? How should the RFP be revised? Search for suggestions for developing an RFP. How does this compare to the chapter’s suggestions? Download a software system for developing an RFP. Describe how it works. Internet Exercises Here you find a listing of various Web exercises for this chapter that involve investigating and evaluating a Request for Proposal found on the Web. Examination of RFPs found on the Internet could inform students about how to develop their own RFP and help to reinforce the elements of a clearly written RFP. Many RFPs are readily available on the Web that address needs, problems, and opportunities. Some RFPs will be very short and others many pages long. Use the guidelines to evaluate an RFP for its strengths, weaknesses, and missing aspects. Revisions to the RFP should clarify the information and provide enough detail for the development of proposals that will address the need of the RFP.

A Midsize Pharmaceutical Company
Case Study 1 A Midsize Pharmaceutical Company Case Study #1: A Midsize Pharmaceutical Company This case study involves an owner and Chief Executive Officer of a midsize global pharmaceutical company who states that profits for the year are expected to be $2,000,000 more than anticipated. She asks her three key managers to get together to develop a prioritized list of potential projects and then to meet with her to “sell” her on their ideas. A fourth manager also has some ideas for how to use this extra money. Group Activity This is an excellent way to stimulate class discussion and interest. Take a few minutes and have some students act it out in class. Select five course participants to play the roles of Jennifer, Julie, Tyler, Jeff, and Joe. After Jennifer and Joe leave the room, have Julie, Tyler, and Jeff role-play (preferably in front of the remaining class) a meeting in which they discuss their proposed projects and develop a prioritized list to “sell” to Jennifer. After Jennifer and Joe re-enter the room, have all five participants role-play a meeting with Jennifer in which Julie, Tyler, and Jeff try to sell her on the prioritized list of projects and Joe promotes his agenda. Have the class discuss what took place. What positions did the players take? How was the final decision made? What was the final decision?

Case Study 1 Question 1 She has identified an opportunity. She has $2,000,000 of unexpected profits that she would like reinvest in the company. In this case, she is soliciting proposals from her internal managers. She should state comprehensively, and in detail, what she expects in the proposals including several of those items discussed in this chapter (due date for proposals, format required, evaluation criteria to be used, etc.). In this case, the RFP may or may not be in written form. She should then evaluate each proposal submitted based on the stated criteria. How should Jennifer go about making her decision? 1. How should Jennifer go about making her decision? Jennifer has identified an opportunity. She has $2,000,000 of unexpected profits that she would like reinvest in the company. In this case, she is soliciting proposals from her internal managers. She should state comprehensively, and in detail, what she expects in the proposals including several of those items discussed in this chapter (due date for proposals, format required, evaluation criteria to be used, etc.). In this case, the RFP may or may not be in written form. She should then evaluate each proposal submitted based on the stated criteria.

Additional data such as specific tasks and timeframes is also needed
Case Study 1 Question 2 Among other things, information on cost and benefits should be collected. Costs should include one-time and on-going expenses. Additional data such as specific tasks and timeframes is also needed What kind of additional data or information should she collect? 2. What kind of additional data or information should she collect? Among other things, information on cost and benefits should be collected. Costs should include one-time and on-going expenses Additional data such as specific tasks and timeframes is also needed.

Case Study 1 Question 3 Each proposal should include the cost and anticipated benefits of the project. At a minimum, it should also include the tasks to be performed, the resources used, and a schedule What exactly should Jennifer require the others to submit in the way of proposals? 3. What exactly should Jennifer require the others to submit in the way of proposals? Each proposal should include the cost and anticipated benefits of the project. At a minimum, it should also include the tasks to be performed, the resources used, and a schedule.

Case Study 1 Question 4 At this point, it is too early to tell.
Jennifer must evaluate each of the proposals based on the established criteria and then select the proposal or proposals that provide the greatest benefit to the company. Responses should include a description of each person's position and additional information that Jennifer would need to evaluate their response. The responses should include why or why not Jennifer would fund the projects based upon the student's experiences and interpretation of the projects. What do you think Jennifer should do with the $2,000,000? In explaining your answer, address the concerns and positions of Julie, Tyler, Jeff, and Joe. 4. What do you think Jennifer should do with the $2,000,000? In explaining your answer, address the concerns and positions of Julie, Tyler, Jeff, and Joe. At this point it is too early to tell what should be done with the money. Jennifer must evaluate each of the proposals based on the established criteria and then select the proposal or proposals that provide the greatest benefit to the company. Responses should include a description of each person's position and additional information that Jennifer would need to evaluate their response. The responses should include why or why not Jennifer would fund the projects based upon the student's experiences and interpretation of the projects.

Transportation Improvements
Case Study 2 Transportation Improvements Case Study #2: Transportation Improvements This case involves a large but sparsely populated county that has a fairly mountainous terrain. Various road projects are being discussed. Group Activity Ask each course participant to individually answer the first case question. Then divide the course participants into groups of three or four to discuss the case questions. Each group must select a spokesperson to present its answers to the entire class.

Case Study 2 Question 1 Various options can be used, as discussed in this chapter. The criteria should be defined in advance of evaluating the projects. Explain why the particular criteria was selected to evaluate the projects. What criteria should Zachary use to evaluate the projects? 1. What criteria should Zachary use to evaluate the projects? Various options can be used, as discussed in this chapter. The criteria should be defined in advance of evaluating the projects. Encourage students to explain why they chose particular criteria to evaluate the projects.

Each of Zachary's assumptions needs to be evaluated.
Case Study 2 Question 2 Zachary has to make assumptions regarding the safety to the entrance outside of Big John’s superstore, the need to widen and repair Elk Mountain Road, and the condition of County Route 1045 and the bridge. Each of Zachary's assumptions needs to be evaluated. What assumptions should he make? 2. What assumptions should he make? Zachary has to make assumptions regarding the safety to the entrance outside of Big John’s superstore, the need to widen and repair Elk Mountain Road, and the condition of County Route 1045 and the bridge. Each of Zachary's assumptions needs to be evaluated.

Case Study 2 Question 3 Surveys and various types of research methods could be used to gather data related to the assumptions in the case study. What data and information should he gather and how should he go about gathering the data and information? 3. What data and information should he gather and how should he go about gathering the data and information? Surveys and various types of research methods could be used to gather data related to the assumptions in the case study.

Case Study 2 Question 4 The four step project selection process is a possible way to evaluate the three projects. After he has evaluated each project against the evaluation criteria, how should he decide the priority of the three projects? 4. After he has evaluated each project against the evaluation criteria, how should he decide the priority of the three projects? This is a great opportunity to get the class to walk through the four step project selection process. Split the class into groups and have the students compare the outcomes and suggestions developed in each group with the others.

Developing Project Proposals
3 Developing Project Proposals (Premium) Teaching Strategies The two vignettes that accompany this chapter reinforce the need to develop a relationship with an organization before submitting a proposal to an RFP. It is not always sufficient to have a competitive proposal in order to win a bid. Developing strong professional relationships during the pre-RFP stage and after the project is complete is helpful for winning future projects and other business opportunities. The vignettes also reinforce the necessity to listen to the customer's need and reflect the understanding of the need, problem, or opportunity within each of the three sections of the proposal. Optional Supplemental Activities Have the students read the case studies in class and answer the questions in groups of three or four. Next, select five participants to act out the group activity. This is an excellent way to stimulate class discussion and interest. This is a good case study to do right before you conduct the lecture on this chapter and then repeat after you lecture on the chapter. The difference in responses “before” and “after” will reinforce the importance of the topics covered. Try to bring real-world examples into each discussion section. Always ask the students if they can think of any examples that apply. This will help keep the class interaction high. Ask your students if they have ever seen or written a proposal. Ask your students what is more important—developing a quality proposal or doing a quality job. Let them debate this chicken and the egg issue. Have students review RFPs found on the web and outline a possible response. Within the outline, have the students identify the project scope. Teams could be assigned to describe the technical, management, and cost sections of the proposal. Have students evaluate proposal writing software they find on the Web for its ability to complete the technical, management, and cost sections of the proposal. Students can rate the ease of use of the software and the learning curve necessary to learn to use the software.

Chapter Concepts Building relationships with customers and partners
Proposal marketing strategies Decision making to develop a proposal Creating winning proposals The proposal preparation process Elements that may be included in a proposal Pricing considerations Customer evaluation of proposals Types of contracts between the customer and the contractor Measuring the success of proposal efforts Chapter Concepts This chapter covers the development of proposals by interested contractors in response to a customer’s request for proposal. When the customer decides which contractor to engage to perform the project, the customer and the contractor sign an agreement (contract). For some projects, there is neither a request for proposal nor an actual formal proposal. Rather, after the need is identified, the project moves right into the planning and performing phases of the project life cycle. Examples include a project that one or two individuals do by themselves, such as remodeling a basement into a family room, or a project carried out by a volunteer group, such as organizing a fundraising event. Based upon the information from this chapter, students will become familiar with: Building relationships with customers and partners Proposal marketing strategies Decision making to develop a proposal Creating winning proposals The proposal preparation process Elements that may be included in a proposal Pricing considerations Customer evaluation of proposals Types of contracts between the customer and the contractor Measuring the success of proposal efforts

Learning Outcomes Develop relationships with customers and partners
Decide whether to prepare a proposal in response to a customer’s RFP Create a credible proposal Determine a fair and reasonable price for a proposal Discuss how customers evaluate proposals Explain types of contracts and various terms and conditions Measure the success of proposal efforts Learning Outcomes After studying this chapter, students should know how to: Develop relationships with customers and partners Decide whether to prepare a proposal in response to a customer’s RFP Create a credible proposal Determine a fair and reasonable price for a proposal Discuss how customers evaluate proposals Explain types of contracts and various terms and conditions Measure the success of proposal efforts

Project Procurement Management
Project Management Knowledge Areas from PMBOK® Guide Project Procurement Management Project Management Knowledge Areas from PMBOK® Guide Concepts in this chapter support the following Project Management Knowledge Areas of the PMI Guide to the Project Management Body of Knowledge (PMBOK® Guide): Project Procurement Management

Mortenson Construction Selects Skire Unifier as Enterprise Project Management System
Background Outcomes A collaboration platform as needed Improved quality and timeliness of information required Skire built relationship with Mortenson Skire identified needs required Six months of evaluation Determine integration Reduce costs Improve quality Solution system selected Had evaluation criteria Built relationship into strategic partnership with Skire Providing the solution was more than answering the RFP Vignette A: Mortenson Construction Selects Skire Unifier as Enterprise Project Management System Mortenson Construction was founded in 1954 and has grown to be one of the nation’s top builders, with offices in six major U.S. cities and international offices in Canada and China. Planning, program management, preconstruction, general contracting, construction management, design-build, and turn-key development are some of the services offered to clients. Mortenson was looking for a system that would work as an important component for its collaboration platform between the key stakeholders on its construction projects and company personnel. Improved quality and timeliness of information is required for this project. After six months of evaluation, Mortenson selected the Skire Unifier solution to integrate schedule files from Microsoft Project with change orders, action items, and other files into a centralized system. This system provides for better document control and helps with lowering costs, improving quality, and accelerating schedules of all aspects of a project. Skire was able to win this project because it: Built a relationship with Mortenson during the evaluation period. The chief executive officer of Skire stated, “Mortenson’s people, knowledge and culture are an excellent fit with Skire’s and this relationship represents a strategic partnership for Skire.” Providing a solution to a customer is more than answering the request for proposals and solving the problem; it is about creating a relationship that goes beyond the solution. Organizations that practice relationship building are viewed as partners. When responding to a request for proposal, make it so that your company and the client organization are commencing a long-term relationship by starting the relationship before the proposal-writing phase and continuing it after the project is concluded, even if your organization is not chosen to provide the solution to the request.

Kings Arena Proposal Gains Support
Background Solutions New arena needed in Sacramento Desire to create a multi-use development Pre-RFP meetings with developers and officials Developers with long history of successful development projects invited to bid Desire to create new revenue for city Winning proposal had creative funding that did not use tax funds Development plan included additional areas of the city Redevelopments at other locations were a better use of the land Winning bidders developed relationships with key stakeholders Winning bidders listened to needs of officials and the city Vignette B: Kings Arena Proposal Gains Support The National Basketball Association (NBA) worked with consultants to evaluate a development plan for the state fairgrounds in Sacramento, California. Officials prepared to extend an RFP to developers for a $1.9 billion redevelopment of the 350-acre fairgrounds site for offices, stores, housing, and a new arena for the Sacramento Kings. Cal Expo officials worked with a group of developers in the pre–RFP stage to develop a conceptual plan for the project and determine if the project was viable. The RFP included standards for green commerce and sustainability, including environmentally friendly construction techniques that would develop new jobs and tax revenue for the city. The RFP required that the development plans would need to describe public-private partnerships to fund the project. The team of developers chosen from seven proposal submissions had a long history of successful development projects in the region. The complex plan called for something different from the original thoughts of the NBA and Cal Expo officials. The original site was not to become the site for the Arena; another area had been selected. The officials took their time and had many meetings with consultants and developers to create an RFP that would help the city and keep the Kings in Sacramento. Discussions with developers helped shape the RFP. The developers worked to build relationships with the NBA and city officials, and together they shaped an RFP to create a solution that best served the city. The winning proposal addressed the concerns of stakeholders by not raising taxes for the residents. Just as the developers worked on establishing relationships during the pre-RFP stages, contractors must listen to the customer and incorporate what is learned into the proposal solution. In this case, the winning developer made sure that the cost section of the proposal offered a financial plan that met the needs of the customer. The management and technical sections of the proposal demonstrated a strong plan that reflected the efforts of the NBA, the city officials, and the King’s owners. Organizations that forge strong relationships and develop quality proposals have a higher probability of success!

Student Discussion Why is this statement true? Customers (clients) and partner organizations prefer to work with people they know and trust. Why is the following statement true? Customers or clients and partner organizations prefer to work with people they know and trust.

Organizations know what to expect. Organizations know they will get a good product. They know how each party communicates and communications may be easier than with a stranger. Past knowledge of the organization helps the customer perform the same work for less money because they have gone through the learning curve already. Why is this statement true? Customers (clients) and partner organizations prefer to work with people they know and trust. Customers (clients) and partner organizations prefer to work with people they know and trust. Some possible explanations for the statement are: Organizations know what to expect. Organizations know they will get a good product. They know how each party communicates and communications may be easier than with a stranger. Past knowledge of the organization helps the customer perform the same work for less money because they have gone through the learning curve already.

Building Relationships with Customers and Partners
Foundation for successful funding and opportunities Requires good listening and constant learning Frequent and regular contact; express appreciation for the client’s time Trust is key and ethics are imperative First impression is important Problem solving and credibility grows with good performance Partner with several key individuals in an organization Building Relationships with Customers and Partners Generally speaking, customers (clients) and partner organizations prefer to work with people they know and trust. Relationships establish the foundation for successful funding and contract opportunities. Relationship building requires being proactive and engaged. It requires face-to-face contacts; it cannot be done as effectively through or phone conversations. Relationship building requires being a good listener and a good learner. When you are with clients, ask questions and listen. Make the client feel good. Empathize with their issues, whether they are business or personal. Contacts with potential clients should be frequent and regular– not just when there is a current opportunity for funding or just before they will be issuing a RFP. During contacts, do not focus on discussing potential contract opportunities. After meeting with a client, always express your appreciation and thank them for making the time to meet with you. Establishing and building trust is key to developing effective and successful relationships with clients and partners. One way to foster this is to be reliable and responsive. Ethical behavior in dealing with clients and partners is also imperative for building trust. The first impression you make on a client is pivotal to developing a continuing and fruitful relationship. Clients want to work with people who can solve problems, not with those who merely identify them. Build credibility based on good performance. Always put the client first. Clients want to be confident that any projects they undertake with the contractor will be successful, will involve a good working relationship with the contractor, and will help the clients achieve their business goals. It is advisable not to rely on a good relationship with just one individual in a client or partner organization, but rather to build relationships with several key people in a client or partner organization, since key individuals may leave the organization while others become more influential.

Building effective and successful relationships takes time and work;
it does not happen overnight. Building effective and successful relationships takes time and work; it does not happen overnight. Share stories or have student share stories of successful relationships.

Pre-RFP/Proposal Marketing
Begin developing the relationship before RFP is prepared Can help client identify needs Better position to win the contract Develop a more clearly focused response to RFP Pre-RFP and pre-proposal efforts are business development No cost to the customer Help build the relationship Unsolicited proposals and uncompetitive contracts Result of identified needs and problem solving Eliminates preparation of an RFP and soliciting process Pre-RFP/Proposal Marketing Contractors whose business depends on creating winning proposals in response to business or government RFPs should not wait until formal RFP solicitations are announced by customers before starting to develop proposals. Contractors need to develop relationships with potential customers long before the customers prepare RFPs. Contractors should maintain frequent contacts with past and current customers and initiate contacts with potential new customers. A contractor who is familiar with a customer’s needs and requirements can prepare a better proposal in response to the customer’s RFP. These pre-RFP or pre-proposal efforts by a contractor are considered marketing or business development and are performed at no cost to the customer. In some cases, the contractor may prepare an unsolicited proposal and present it to the customer. If the customer is confident that the unsolicited proposal will solve the problem at a reasonable cost, the customer may simply negotiate a contract with the contractor to implement the proposal, thus eliminating the preparation of an RFP and the subsequent competitive proposal process. Whether the goal is winning a competitive RFP or obtaining a noncompetitive contract from a customer, a contractor’s pre-RFP/proposal efforts are crucial to establishing the foundation for eventually winning a contract from the customer to perform the project.

Student Discussion Why should contractors not wait until an RFP is announced to start developing the proposal? Contractors whose business depends on creating winning proposals in response to business or government RFPs should not wait until formal RFP solicitations are announced by customers before starting to develop proposals. Why is it that contractors should not wait?

Proposal development times are often very short Can develop a better proposal in response to the RFP Prepare for bidders’ meeting Increase percentage of proposals being funded Proposal development takes effort Why should contractors not wait until an RFP is announced to start developing the proposal? Contractors need to develop relationships with potential customers long before the customers prepare requests for proposal. Contractors should maintain frequent contacts with past and current customers and initiate contacts with potential new customers. A contractor who is familiar with a customer’s needs and requirements can prepare a better proposal more quickly in response to the customer’s RFP. Some of the reasons why contractors should not wait to develop proposals, and should rather anticipate a client’s needs are: Proposal development times are often very short, so it pays to already have some of the legwork finished. Contractors can develop a better proposal in response to the RFP if he or she already has a relationship with the client. A relationship can help the contractor prepare for the bidders’ meeting. It can increase the percentage of proposals being funded. Proposal development takes effort, and therefore it is good to be in a constant state of preparedness.

Decision to Develop a Proposal
Development is costly and time consuming Contractors must be realistic about their probability of winning a contract Evaluate bid/no-bid decision Many non-winning proposals hurt reputation May be hard to decide to no-bid an RFP Decision to Develop a Proposal The development and preparation of a proposal can be costly and time-consuming. Contractors interested in submitting a proposal must be realistic about the probability of being selected as the winning contractor. Evaluating whether or not to go forward with the preparation of a proposal is sometimes referred to as the bid/no-bid decision. Contractors need to be realistic about their ability to prepare proposals and about the probability of winning the contract because submitting a lot of non-winning proposals in response to RFPs can hurt a contractor’s reputation. Sometimes the hardest thing for a contractor to do is to decide to no-bid an RFP.

Bid or No-Bid? Factors to consider Competition Risk Mission
Extension of capabilities Reputation Customer funds Proposal resources Project resources Bid or No-Bid? Some factors that a contractor might consider in making a bid/no-bid decision are: Competition—which other contractors might also submit a proposal? Risk—is there a risk that the project will be unsuccessful (either technically or financially)? Mission—is the proposed project consistent with the contractor’s business mission? Extension of capabilities—would the proposed project provide the contractor with an opportunity to extend and enhance its capabilities? Reputation—what is the contractor’s reputation with the customer? Customer funds—does the customer really have funds available to go forward with the project? Proposal resources—are appropriate resources available to prepare a quality proposal? Project resources—are appropriate resources available to perform the project if the contractor is selected as the winner? If a contractor is not sure that it has the resources to perform the project, it needs a plan for securing the necessary resources to successfully perform the project.

Bid or No-Bid? Should a proposal be submitted?
Student Discussion Bid or No-Bid? Should a proposal be submitted? This figure shows an example of a Bid/No-Bid Checklist. Ask the students if they should submit a proposal to Ace? (Their answer should be = YES.)

Yes, a proposal should be developed Positives Rated highly in five categories Low risk project Reputation and experience could outweigh lack of familiarity with the client Bid or No-Bid? Should a proposal be submitted? Looking at the Bid/No-Bid checklist on the previous slide, the proposal should be developed. This project is low risk and is rated highly in five categories. The contractor’s reputation and experience could outweigh the lack of familiarity with the client.

Creating a Winning Proposal
Selling document The best idea to solve the problem Highlight unique factors Emphasize benefits to the customer Be simple and concise Addresses requirements from RFP Be realistic Creating a Winning Proposal The proposal process can be highly competitive and a proposal is a selling document - not a technical report. In the proposal, the contractor must convince the customer that the contractor is the best one to solve the problem. The contractor should highlight the unique factors of its proposal that differentiate it from competing contractors. The proposal should always emphasize the benefits to the customer. Proposals should be written in a simple, concise manner. Proposals must be specific in addressing the customer’s requirements as laid out in the RFP. Proposals must be realistic, in terms of the proposed scope, cost, and schedule, in the eyes of the customer.

Proposal Preparation Proposal team Proposal development
Can be one person or many Various skills and expertise Proposal manager for large proposals Proposal development Time for writing, review, and management approval Length dependent upon the RFP requirements Cost of proposal development is part of normal business costs Proposal Preparation The preparation of a proposal can be a straightforward task performed by one person, or it can be a resource-intensive effort requiring a team of organizations and individuals with various expertise and skills. In large scale efforts, the contractor may designate a proposal manager who coordinates the efforts. The proposal schedule must allow adequate time for writing, review, and approval by the management of the contractor’s organization. Proposals in response to RFPs can be as brief as a few pages or as long as hundreds of pages, including text and drawings. Customers do not pay contractors to prepare proposals. Contractors absorb the costs of proposal development as part of normal marketing costs.

Proposal Contents Three sections Detail level Technical Management
Cost Detail level Depends on complexity of the project Requirements from the RFP Proposal Contents Proposals are often organized into three sections: Technical Management Cost The amount of detail the contractor includes will depend on the complexity of the project and the requirements stipulated by the RFP.

Technical Section Understand the need Proposed approach or solution
Benefits to the customer Technical Section The objective of this section is to convince the customer that the contractor understands the problem or need and can provide the least risky and most beneficial solution. The technical section should contain the following elements: Understanding of the need—the contractor must show the customer that they thoroughly understand the problem to be solved. Proposed approach or solution—the proposal should describe the approach or methodology that would be used in developing the solution. Benefits to the customer—the contractor should state how the proposed solution or approach would benefit the customer and achieve the project’s success criteria or expected outcomes, including cost savings; reduced processing time; reduced inventory; better customer service; reduced errors; improved safety conditions; more timely information; reduced maintenance, etc.

Management Section Description of work tasks Deliverables
Project schedule Project organization Related experience Equipment and facilities Management Section The objective of the management section is to convince the customer that the contractor can do the proposed work and achieve the intended results. The management section should contain the following elements: Description of work tasks—the contractor should define the major tasks that will be performed in carrying out the project. Deliverables—the contractor should include a list of all deliverables that will be provided during the project (such as reports, drawings, manuals, and equipment). Project schedule—the contractor should provide a schedule for performing the major tasks required to complete the project. The task schedule can be given in any one of several formats: a list of tasks with their estimated start and completion dates, a Gantt chart, or a network diagram. Project organization—the contractor should describe how the work and resources will be organized to perform the project. An organization chart, resumes of the key people, and a responsibility matrix are often helpful. Related experience—the contractor should provide a list of similar projects it has completed and the dollar value of those contracts. Equipment and facilities—the contractor may want to provide a list of the equipment and special facilities it has in order to convince the customer that it possesses the necessary resources.

Cost Section Include estimated costs Labor Materials Equipment
Facilities Subcontractors and consultants Travel Documentation Overhead Escalation Contingency Fee or profit Cost Section The objective of the cost section of the contractor proposal is to convince the customer that the contractor’s costs for the proposed project are realistic and reasonable. The cost section usually consists of tabulations of the contractor’s estimated costs for such elements as the following: Labor—the estimated costs for the various classifications of people who are expected to work on the project It might include the estimated hours and hourly rate for each person or classification. Materials—the cost of materials the contractor needs to purchase for the project Equipment— the cost of equipment that must be purchased to complete the project Facilities—sometimes the contractor will have to rent special facilities or specialty space for the project team. Subcontractors and consultants—when contractors do not have the expertise or resources to do certain project tasks, they may outsource some of the work to subcontractors or other consultants. Travel—such as airfare, lodging, and meals if trips are required during the project Documentation—some customers want the contractor to show separately the costs associated with the project documentation deliverables. This would be the cost of printing manuals, drawings, reports, or the cost of DVDs. Overhead—contractors will add a percentage to costs of the above items to cover the indirect costs of doing business (such as insurance, depreciation, accounting, general management, marketing, and human resources). Escalation—for large projects that are expected to take several years to complete, the contractor needs to include the costs of escalation in wage rates and materials costs over the length of the project. Contingency or management reserve—an amount the contractor may want to include to cover unexpected items that have been overlooked. Fee or profit— all the above items are costs. The contractor must add an amount for its fee or profit. The total cost plus the contractor’s fee is the contractor’s price for the proposed project. Cost estimates should be reasonable and realistic. If possible, it is good practice to have the person who will be responsible for the major work tasks estimate the associated costs.

Student Discussion Why is it beneficial to have a person who would be responsible for the major work tasks to help write the project proposal? Why is it beneficial to have a person who would be responsible for the major work tasks to help write the project proposal?

The person can estimate the project organization, schedule, and costs more accurately. The experience will be reflected in the language used to describe the solution. The person can list related experiences that show expertise. The person can describe what makes the contractor unique and demonstrate the benefits of the solution. Why is it beneficial to have a person who would be responsible for the major work tasks to help write the project proposal? Possible responses: The person can estimate the project organization, schedule, and costs more accurately. The experience will be reflected in the language used to describe the solution. The person can list related experiences that show expertise. The person can describe what makes the contractor unique and demonstrate the benefits of the solution.

Pricing Considerations
Competition Price Not overpriced or underpriced Factors Reliability of cost estimates Risk Value of project to the contractor Customer’s budget Competition level Pricing Considerations When contractors prepare a proposal, they are generally competing with other contractors. There are three main factors that contractors should consider when setting a price for a proposal: competition, prices compared to competitors, and other factors like risk and the customer’s budget. Contractors need to be careful not to overprice the proposed project, or else the customer may select a lower-priced contractor. They must be equally careful not to underprice the proposed project; otherwise, the contractor may lose money. The contractor must consider the following items when determining the price for the proposed project: Reliability of the cost estimates—the level of confidence that the total cost for the proposed project is complete and accurate Risk - if the proposed project involves an endeavor that has not been undertaken before, it may be necessary to include a large amount of contingency funds. Value of the project to the contractor—there may be situations in which the contractor is willing to live with a low price. For example, in order to get a contract so it will not have lay off workers. Customer’s budget—a proposal should not exceed what the customer has available. Competition—if many contractors are expected to submit, it may be necessary to submit a price that includes only a small profit to increase the chances of winning the contract.

Simplified Project Proposal
Complex Simplified Large number of pages Defined sections Charts and figures Tables of information Statement of the customer’s need Assumptions Project scope Deliverables Resources Schedule Price Risks Expected benefits Simplified Project Proposal Sometimes a proposal is complex for a large multi-million dollar project. These proposals will be lengthy, with many defined sections, charts, figures and tables. At other times, the proposal may not need to be complex. A simplified or basic proposal may be appropriate and sufficient. All proposals should include the following elements as a minimum: Statement of the customer's need— should clearly describe the contractor's understanding of the customer's need or problem and reference any information or data to support the need Assumptions– state any assumptions that may affect the contractor’s scope, schedule, or price Project scope— describe the contractor’s approach to addressing the customer’s need or solving the problem, define specifically what work tasks the contractor proposes to do, and outline how the contractor expects the customer to be involved throughout the project Deliverables— list all the tangible products or items it will provide to the customer during the performance of the project Resources— types of expertise and skills that the contractor will utilize on the project, including any key subcontractors, consultants, or suppliers Schedule— list of key milestones with their target dates or cycle time from the start of the project in sufficient detail to demonstrate a well-thought-out plan Price— indicate the bottom-line price to perform the project. Emphasize the value provided and not on how low, or “cheap,” the price is. Risks—identify potential concern about any risks that have a high likelihood of occurrence or a high degree of potential impact. Try to demonstrate that the contractor has experience with these risks and outline a realistic approach to dealing with them in the project. Expected benefits— pull together information from the preceding sections and make a case to justify the “value” of the proposal in terms of expected quantitative benefits, such as return on investment, payback, cost savings, an increase in productivity, reduced processing times, faster time-to-market, and so on. The focus of the proposal should be on quality of the content—clear, concise, and convincing—rather than quantity or number of pages. Many simplified project proposals range from 4 to 8 pages, and they are usually less than 20 pages. It is appropriate to attach appendices for items such as resumes of key people who will be assigned to the project, back-up details for cost estimates, or a list of past related projects and associated references.

Proposal Submission and Follow-up
On time Formatted properly Sent in manner required Hard copies Electronic form Two sets by different delivery methods Be proactive Professional manner Follow RFP guidelines Proposal Submission and Follow-up Proposals should be: Submitted on time Late or incomplete proposals are often not accepted Formatted properly In the manner specified Possibly deliver two sets by different delivery methods Depending on the dollar value of the proposal, some contractors have been known to hand-deliver the proposal or send two sets of proposals by different express mail services. Contractors must continue to be proactive even after the proposal is submitted. Any follow-up needs to be done in a professional manner and in accordance with the RFP guidelines.

Customer Evaluation of Proposals
Customer sets criteria Customer may request a best and final offer (BAFO) Helps to have common comparison criteria Customer Evaluation of Proposals Customers evaluate contractors’ proposals in many different ways. Some customers first look at the prices and select only the three lowest-priced proposals for further evaluation. Some screen out proposals with prices above their budget or those whose technical section does not meet all the requirements. Others, especially on large projects, create a proposal review team that uses a scorecard to rate each proposal. The figure above depicts a proposal evaluation scorecard. Have the students review the proposal evaluation scorecard and make suggestions of what could be done to raise the scores for the proposal submission. The scorecard can be a valuable tool because it helps to have uniform comparison criteria for different proposals.

Student Discussion List examples of criteria used by customers to evaluate contractor proposals. What are some of the criteria used by customers to evaluate contractor proposals?

Compliance with the customer’s statement of work (SOW) Understanding of the problem/need Soundness of the proposed approach Contractor’s experience with similar projects Experience of key individuals Management capability Realism of schedule Price List examples of criteria used by customers to evaluate contractor proposals. Some of the criteria that might be used by customers in evaluating contractor proposals include: Compliance with the customer's statement of work, or SOW The understanding of the customer’s problem or need Soundness and practicality of the proposed approach to solving the problem Contractor’s experience and success with similar projects The experience of key individuals Management capability, including the contractor’s ability to plan and control the project Realism of the contractor’s schedule Price—customers are concerned about the reasonableness, realism, and completeness of the contractor’s costs. Did the contractor use sound cost-estimating methodology? Are the labor hours, classifications, and rates appropriate for the type of project? Were any items left out? The customer wants to be sure that a contractor isn’t “low-balling” the price to win the contract, only to find added costs later.

Contracts Agreement Types Contract must be signed before starting work
Establishes communication Agreement of deliverables for a certain price Fixed Price Price remains fixed Low risk for customer High risk for contractor For well-defined projects with little risk Cost-Reimbursement Price for actual costs High risk for customer Low risk for contractor For higher risk projects Contracts Just because the contractor has been selected as the winner does not mean the contractor begins the work right away. Before the project can proceed, a contract must be signed between the customer and the contractor. A contract is a vehicle for establishing good customer-contractor communications and arriving at a mutual understanding and clear expectations to ensure project success. It is an agreement between the contractor, who consents to provide a product or service (deliverables), and the customer, who agrees to pay the contractor a certain amount in return. The contract must clearly spell out the deliverables the contractor is expected to provide. There are basically two types of contracts: fixed price and cost reimbursement. In a fixed-price contract, the customer and the contractor agree on a price for the proposed work. The price remains fixed unless the customer and contractor agree on changes. This type of contract is low risk for the customer, since the customer will not pay more than the originally agreed-upon price. This type of contract is high risk for the contractor because, if the cost of completing the project is more than originally planned, the contractor will make a lower profit than anticipated— or may even lose money. Fixed-price contracts are most appropriate for projects that are well defined and entail little risk. In a cost-reimbursement contract, the customer agrees to pay the contractor for all actual costs (labor, materials, and so forth), regardless of amount, plus some agreed-upon profit. This type of contract is high risk for the customer, since contractor costs can overrun the proposed price. In cost-reimbursement contracts, the customer usually requires that, throughout the project, the contractor regularly compare actual expenditures with the proposed budget and reforecast cost-at-completion. This type of contract is low risk for the contractor because all costs will be reimbursed by the customer. The contractor cannot lose money on this type of contract. Cost-reimbursement contracts are most appropriate for projects that involve a higher degree of risk.

Contract Terms and Conditions
Misrepresentation of costs Notice of cost overruns or schedule delays Approval of subcontractor Customer furnished equipment of information Patents Disclosure of proprietary information International considerations Termination Terms of payments Bonus/penalty payments Changes Contract Terms and Conditions The following are some of the terms and conditions that are commonly included in project contracts: Misrepresentation of costs—states that it is illegal for the contractor to overstate the hours or costs expended on the project Notice of cost overruns or schedule delays—outlines the circumstances under which the contractor must notify the customer of any schedule delays Approval of subcontractor—indicates when the contractor needs to obtain approval before hiring a subcontractor Customer-furnished equipment or information—lists the items that the customer will provide to the contractor throughout the project and the dates by which the customer will make these items available Patents—covers ownership of patents that may result from conducting the project Disclosure of proprietary information—prohibits one party from disclosing confidential information, technologies, or processes pertaining to the project International considerations—specifies accommodations that must be made for customers from other countries Termination—states the conditions under which the customer can terminate the contract, such as nonperformance by the contractor Terms of payment—addresses the basis on which the customer will make payments to the contractor Bonus/penalty payments—some contracts have a bonus provision, wherein the customer will pay the contractor a bonus if the project is completed ahead of schedule or exceeds other customer performance requirements On the other hand, some contracts include a penalty provision, wherein the customer can reduce the final payment to the contractor if the project is not completed on schedule or if performance requirements are not met. Changes—Covers the procedure for proposing, approving, and implementing changes to the project scope or schedule

Measuring Proposal Success
Measures Strategies Win ratio Number won/number submitted All proposals weighted equally Total dollar value Value won/value submitted More weight to larger values Submit many to win fair share Increase chances of winning May be viewed negatively Bid on potential successes Respond where better than average chance to win Must have bid/no-bid process Measuring Proposal Success Contractors measure the success of their proposal efforts by the number of times their proposals are selected by customers or by the total dollar value of their proposals that are selected. Win ratio: The percentage of the number of proposals a contractor won out of the total number of proposals the contractor submitted to various customers over a particular time period; gives equal weight to all proposals. Total dollar value: Total dollar value of proposals that the contractor won as a percentage of the total dollar value of all the proposals the contractor submitted to various customers during a specific time period; gives more weight to proposals with larger dollar amounts. Some contractors have a strategy of submitting proposals in response to as many RFPs as they can with the hope that they will eventually win their fair share. Their philosophy is that if they do not submit a proposal then they do not have any chance to win and by submitting more proposals they increase their chances of winning more contracts. Other contractors are more selective in submitting proposals; they respond to only those RFPs where they think they have a better-than-average chance of winning the contract. These contractors seriously consider the bid/no-bid decision process in responding to RFPs and submit fewer proposals in an attempt to have a high win ratio.

Customers and partner organizations prefer to work with people they know and trust. Relationships establish the foundation for successful funding and contract opportunities. Establishing and building trust is key to developing effective and successful relationships with clients and partners. The first impression one makes on a client is pivotal to developing a continuing and fruitful relationship. Pre-RFP/proposal efforts are crucial to establishing the foundation for eventually winning a contract from the customer. Do not wait until formal RFP solicitations are announced by customers before starting to develop proposals. Rather, develop relationships with potential customers long before they prepare their RFPs. Working closely with a potential customer puts a contractor in a better position to be selected as the winning contractor. Learn as much as possible about the customer’s needs, problems, and decision-making process during pre-RFP/proposal marketing. Critical Success Factors Customers and partner organizations prefer to work with people they know and trust. Relationships establish the foundation for successful funding and contract opportunities. Establishing and building trust is key to developing effective and successful relationships with clients and partners. The first impression one makes on a client is pivotal to developing a continuing and fruitful relationship. Pre-RFP/proposal efforts are crucial to establishing the foundation for eventually winning a contract from the customer. Do not wait until formal RFP solicitations are announced by customers before starting to develop proposals. Rather, develop relationships with potential customers long before they prepare their RFPs. Working closely with a potential customer puts a contractor in a better position to be selected as the winning contractor. Learn as much as possible about the customer’s needs, problems, and decision-making process during pre-RFP/proposal marketing.

Critical Success Factors (continued)
Becoming familiar with the customer’s needs, requirements, and expectations will help in preparing a more clearly focused proposal. Be realistic about the ability to prepare a quality proposal and about the probability of winning the contract. It is not enough just to prepare a proposal; rather, the proposal must be of sufficient quality to have a chance of winning. A proposal is a selling document, not a technical report. It should be written in a simple, concise manner and should use terminology with which the customer is familiar. In a proposal, it is important to highlight the unique factors that differentiate it from competitors’ proposals. Proposals must be realistic. Proposals that promise too much or are overly optimistic may be unbelievable to customers, and may raise doubt about whether the contractor understands what needs to be done or how to do it. When bidding on a fixed-price project, the contractor must develop accurate and complete cost estimates and include sufficient contingency costs. Critical Success Factors (continued) Becoming familiar with the customer’s needs, requirements, and expectations will help in preparing a more clearly focused proposal. Be realistic about the ability to prepare a quality proposal and about the probability of winning the contract. It is not enough just to prepare a proposal; rather, the proposal must be of sufficient quality to have a chance of winning. A proposal is a selling document, not a technical report. It should be written in a simple, concise manner and should use terminology with which the customer is familiar. In a proposal, it is important to highlight the unique factors that differentiate it from competitors’ proposals. Proposals must be realistic. Proposals that promise too much or are overly optimistic may be unbelievable to customers and may raise doubt about whether the contractor understands what needs to be done or how to do it. When bidding on a fixed-price project, the contractor must develop accurate and complete cost estimates and include sufficient contingency costs.

Summary Interested contractors develop proposals in response to a customer’s RFP. Relationships establish the foundation for successful funding and contract opportunities. Relationship building requires being proactive and engaged. Contractors should develop relationships with potential customers long before customers prepare an RFP. Because the development and preparation of a proposal take time and money, contractors interested in submitting a proposal in response to an RFP must be realistic about the probability of being selected as the winning contractor. It is important to remember that the proposal process is competitive and that the proposal is a selling document that should be written in a simple, concise manner. In the proposal, the contractor must highlight the unique factors that differentiate it from competing contractors. Proposals are often organized into three sections: technical, management, and cost. Customers evaluate contractors’ proposals in many different ways. Once the customer has selected the winning contractor, the contractor is informed that it is the winner, subject to successful negotiation of a contract: fixed-price and cost reimbursement are the two types of contracts. Contractors measure the success of their proposal efforts by the number of times their proposals are selected by customers and/or by the total dollar value of their proposals that are selected. Summary Interested contractors develop proposals in response to a customer’s RFP. Relationships establish the foundation for successful funding and contract opportunities. Relationship building requires being proactive and engaged. Contractors should develop relationships with potential customers long before customers prepare an RFP. Because the development and preparation of a proposal take time and money, contractors interested in submitting a proposal in response to an RFP must be realistic about the probability of being selected as the winning contractor. It is important to remember that the proposal process is competitive and that the proposal is a selling document that should be written in a simple, concise manner. In the proposal, the contractor must highlight the unique factors that differentiate it from competing contractors. Proposals are often organized into three sections: technical, management, and cost. Customers evaluate contractors’ proposals in many different ways. Once the customer has selected the winning contractor, the contractor is informed that it is the winner, subject to successful negotiation of a contract: fixed-price and cost reimbursement are the two types of contracts. Contractors measure the success of their proposal efforts by the number of times their proposals are selected by customers and/or by the total dollar value of their proposals that are selected.

Chapter Questions

Question 1 It is important to build relationships with customers and partners, since they prefer to work with people they know and can trust. Relationships establish the foundation for successful funding and contract opportunities. Relationship building requires being proactive and engaged. Relationship building, in many ways, is a contact sport. It requires getting out of the office and having face-to-face interactions. It cannot be done as effectively through or phone conversations. Describe why building relationships with customers and partners is important. How is this accomplished? 1. Describe why building relationships with customers and partners is important. How is this accomplished? It is important to build relationships with customers and partners, since customers generally prefer to work with people they know and can trust. Relationships establish the foundation for successful funding and contract opportunities. Relationship building requires being proactive and engaged. Relationship building, in many ways, is a contact sport. It requires getting out of the office and engaging with customers and potential customers in face-to-face interactions. It cannot be done as effectively through or phone conversations.

Question 2 Describe what is meant by pre-RFP/proposal marketing.
Pre-RFP/proposal marketing is an opportunity for a client to help customers identify areas in which the customers might benefit from the implementation of projects that address needs, problems, or opportunities. Contractors should not wait until formal RFP solicitations are announced by customers before starting to develop proposals. Contractors need to develop relationships with potential customers long before the customers prepare RFPS. Contractors should maintain frequent contacts with past customers and current customers and initiate contacts with potential new customers. Working closely with a potential customer puts a contractor in a better position to be selected eventually as the winning contractor when the customer issues an RFP. Describe what is meant by pre-RFP/proposal marketing. Why should contractors do it? 2. Describe what is meant by pre-RFP/proposal marketing. Why should contractors do it? Pre-RFP/proposal marketing is an opportunity for a client to help customers identify areas in which the customers might benefit from the implementation of projects that address needs, problems, or opportunities. Contractors should not wait until formal RFP solicitations are announced by customers before starting to develop proposals. Rather, such contractors need to develop relationships with potential customers long before the customers prepare requests for proposal. Contractors should maintain frequent contacts with past customers and current customers and initiate contacts with potential new customers. Working closely with a potential customer puts a contractor in a better position to be selected eventually as the winning contractor when the customer does issue an RFP.

Question 3 Most companies have limited resources and preparing a proposal can be a time consuming and costly process. Therefore companies must make bid/no-bid decisions. Some factors to be considered are the competition, risk involved, mission of the company, opportunity to extend capabilities, reputation with the customer, available customer funds, proposal resources, and project resources. Discuss why contractors must make bid/no-bid decisions and the factors involved in making these decisions. Give an example of when a contractor should bid and when a contractor should not bid. 3. Discuss why contractors must make bid/no-bid decisions and the factors involved in making these decisions. Give an example of when a contractor should bid and when a contractor should not bid. Most companies have limited resources and preparing a proposal can be a time consuming and costly process. Therefore companies must make bid/no-bid decisions. Some factors to be considered are the competition, risk involved, mission of the company, opportunity to extend capabilities, a contractor’s reputation with the customer, available customer funds, proposal resources, and project resources. Answers will vary from student to student. Responses should contain a description of risks for the factors outweighing the benefits of winning the project.

Question 4 A proposal is a selling document and its purpose is to convince the customer that you understand what the customer wants and that you are the best one for the job. Sections Technical – describe solution Management – describe capabilities and experience Cost – estimate budget Define proposal, and describe the purpose of a proposal. In addition, list the three major sections of a proposal and the purpose and elements of each. 4. Define proposal, and describe the purpose of a proposal. In addition, list the three major sections of a proposal and the purpose and elements of each. A proposal is a selling document and its purpose is to convince the customer that you understand what the customer wants and that you are the best one for the job. Proposals are often organized into three sections: technical, management, and cost. The objective of the technical section is to convince the customer that the contractor understands the need or problem and can provide the least risky and most beneficial solution. The objective of the management section is to convince the customer that the contractor can do the proposed work (the project) and achieve the intended results. The objective of the cost section aims to persuade the customer that the contractor’s price for the proposed project is realistic and reasonable. The technical section typically contains a statement of the problem that is intended to show that the contractor understands the issues at play; the proposed solution; and the benefits to the customer. The management section typically includes a description of the work tasks; deliverables; project schedule; project organization; related experience; and equipment and facilities. The cost section typically includes a discussion of labor; materials; subcontractors and consultants; equipment and facilities rented; travel; documentation; overhead; escalation; contingency; and a fee or profit.

Question 5 Some factors to be considered include: reliability of cost estimates; risk; value of the project to the contractor; customer’s budget; and the competition. The proposal process is competitive. Contractors must make sure they do not bid too high or they might lose the bid. Contractors must make sure they do not bid too low or they might lose money even if they win the contract. What factors must be considered when a contractor develops the proposal price? Why is this not an easy task? 5. What factors must be considered when a contractor develops the proposal price? Why is this not an easy task? Contractors should consider a number of different factors, including: reliability of cost estimates; risk; value of the project to the contractor; customer’s budget; and the competition. The proposal process can be highly competitive. Contractors must make sure they do not bid too high or they might lose the bid. Contractors must make sure they do not bid too low or they might lose money even if they win the contract.

Question 6 Contractors must continue to be proactive even after the proposal is submitted. The contractor should call the customer to confirm that the proposal was received. After several days, the contractor should contact the customer again and ask whether the customer has any questions or needs clarification of anything in the proposal. Such follow-up needs to be done in a professional manner in order to make a favorable impression on the customer. Some industrial and government customers usually do not respond to attempted follow-up communications from contractors so that no contractor gains an unfair advantage in influencing the proposal evaluation process. This is one of the reasons why it pays to do some good pre-proposal marketing, so you know your customers better and know what is acceptable. Should a contractor try to contact a customer after a proposal has been submitted? Why or why not? 6. Should a contractor try to contact a customer after a proposal has been submitted? Why or why not? Contractors must continue to be proactive even after the proposal is submitted. The contractor should call the customer to confirm that the proposal was received. After several days, the contractor should contact the customer again and ask whether the customer has any questions or needs clarification of anything in the proposal. Such follow-up needs to be carried out in a professional manner in order to make a favorable impression on the customer. However, follow-ups are not necessary in all industries. Some industrial and government customers usually do not respond to attempted follow-up communications from contractors so that no contractor gains an unfair advantage in influencing the proposal evaluation process. This is one of the reasons why it pays to do some good pre-proposal marketing, so you know your customers better and know what is acceptable.

Question 7 Customers evaluate contractors’ proposals in many different ways. Some customers first look at the prices. Other customers initially screen out those proposals with prices above their budget or those whose technical section does not meet all the requirements stated in the RFP. Others, especially on large projects, create a proposal review team that uses a scorecard to determine whether each proposal meets all requirements in the RFP and to rate the proposal against predefined evaluation criteria, such as price, schedule, capabilities, and experience. How do customers evaluate proposals? What factors might they consider? 7. How do customers evaluate proposals? What factors might they consider? Customers evaluate contractors’ proposals in many different ways. Some customers first look at the prices of the various proposals and select only the lowest-priced proposals for further evaluation. Other customers initially screen out those proposals with prices above their budget or those whose technical section does not meet all the requirements stated in the RFP. Others, especially on large projects, create a proposal review team that uses a scorecard to determine whether each proposal meets all requirements in the RFP and to rate the proposal against predefined evaluation criteria, such as price, schedule, capabilities, and experience.

Question 8 No. The lowest-priced proposal should not always be selected as the winner. There are many other factors to consider, such as the reputation of the contractor, their experience, materials used, etc. An example would be selecting the right company to build an addition to your house. One contractor might come highly recommended, use top quality materials, and be able to fit the project into your schedule. Another company might be much lower in price, but it has a questionable reputation, uses cheap materials, and does not provide a schedule. Should the lowest-priced proposal always be selected as the winner? Why or why not? Give examples. 8. Should the lowest-priced proposal always be selected as the winner? Why or why not? Give examples. No. The lowest-priced proposal should not always be selected as the winner. There are many other factors to consider, such as the reputation of the contractor, their experience, materials used, etc. An example would be selecting the right company to build an addition to your house. One contractor might come highly recommended, use top quality materials, and be able to fit the project into your schedule. Another company might be much lower in price, but it has a questionable reputation, uses cheap materials, and does not provide a schedule.

Cost-reimbursement contract
Question 9 Fixed-price contract Well-defined projects with low risk Low risk for customer High risk for contractor Cost-reimbursement contract Projects that involve risks High risk for customer Low risk for contractor Describe two different types of contracts, when each should be used, and the risks associated with each. 9. Describe two different types of contracts, when each should be used, and the risks associated with each. Fixed-price contract In a fixed-price contract, the customer and the contractor agree on a price for the proposed work. The price remains fixed unless the customer and contractor agree on changes. This type of contract provides low risk for the customer, since the customer will not pay more than the fixed price, regardless of how much the project actually costs the contractor. A fixed-price contract is high risk for the contractor, because if the cost of completing the project is more than originally planned, the contractor will make a lower profit than anticipated, or even lose money. Fixed-price contracts are most appropriate for projects that are well-defined and entail little risk. Cost-reimbursement contract In a cost-reimbursement contract, the customer agrees to pay the contractor for all actual costs regardless of amount, plus some agreed-upon profit. This type of contract provides high risk for the customer, since contractor costs can overrun the proposed price. This type of contract is low risk for the contractor, because all costs will be reimbursed by the customer. The contractor cannot lose money on this type of contract. Cost-reimbursement contracts are most appropriate for projects that involve higher levels of risk.

Payments will be made at the end of the project
Question 10 Payments will be made at the end of the project Bonus or penalty payments related to schedule performance Misrepresentation of costs Approval of subcontractors Customer furnished equipment or information Disclosure of information International considerations Termination Handling of changes Give examples of some miscellaneous provisions that might be found in a contract. 10. Give examples of some miscellaneous provisions that might be found in a contract. There are many different provisions that one might find in a contract. Some examples are that any patents developed from the project will be owned by the customer; that payments will be made at the end of the project; and that there will be bonus or penalty payments related to schedule performance. Other considerations include misrepresentation of costs, approval of subcontractors, customer furnished equipment or information, disclosure of information, international considerations, termination, and handling of changes.

Total dollar value of proposals
Question 11 Win ratio Number of proposals won / Number of proposals submitted Total dollar value of proposals Value of proposals won / Value of proposals submitted Describe two methods for measuring the effectiveness of your proposal efforts. 11. Describe two methods for measuring the effectiveness of your proposal efforts. The win ratio is the percentage of the number of proposals a contractor won out of the total number of proposals the contractor submitted to various customers over a particular time period. This approach gives equal weight to all proposals, regardless of the size of the project. An alternative method of determining the win ratio is to base it on the total dollar value of proposals that the contractor won as a percentage of the total dollar value of all the proposals the contractor submitted to various customers during a specific time period. This approach gives more weight to proposals with larger dollar amounts.

Question 12 Responses will vary.
Responses should match the RFP developed for Chapter 2, Question 13 Responses should include at least the information in a simplified proposal Statement of the customer’s need Assumptions Project scope Deliverables Resources Schedule Price Risks Expected benefits If the three sections are used, they do not have to be labeled Develop a complete proposal in response to the RFP you created for question 13 at the end of Chapter 2. 12. Develop a complete proposal in response to the RFP you created for question 13 at the end of Chapter 2. Answers will vary from student to student. Responses should match the RFP completed for Chapter 2 and include the appropriate factors to clearly describe what is being proposed. The technical, management, and cost sections do not have to be labeled. The information for each section should be included.

Project Proposals Internet Exercises Internet Exercises
The Web Exercises can be a very valuable part of this course. You should assign these exercises to your students as homework or complete them with them in a computer lab. The Web exercises in this chapter involve evaluating proposals and investigating the software that can help an organization develop a proposal. Evaluation of a proposal and its revision reinforce the skills necessary for writing proposals and winning bids. Have the students find a demo copy on the Web of software that can help develop a proposal and evaluate its ease of use and similarities to other software they have used.

Internet Exercises Many proposals are available on the Web that address needs, problems, and opportunities. Some proposals will be very short and others many pages long. Use the guidelines to evaluate a proposal for its strengths, weaknesses, and missing aspects. Revisions to the proposal should clarify the information and provide enough detail for the evaluators to determine if the need is being addressed and the project can be successful. Using your favorite Web search engine, perform a search for sample proposals. For a proposal that was found What company developed the proposal, and what is the company looking to accomplish? What are the strengths and weaknesses of the proposal? What is missing from the proposal? How should the proposal be revised? Search for suggestions for developing a proposal. How does this compare to the chapter’s suggestions? Download a software system for developing a proposal. Describe how it works. Internet Exercises Have students search the Web for different kinds of proposals. Many proposals are available on the Web that address needs, problems, and opportunities. Some proposals will be very short and others many pages long. Use the guidelines to evaluate a proposal for its strengths, weaknesses, and missing aspects. Revisions to the proposal should clarify the information and provide enough detail for the evaluators to determine if the need is being addressed and the project can be successful.

Medical Information Systems
Case Study 1 Medical Information Systems Case Study #1: Medical Information Systems This case study involves a small consulting firm of three people, who specialize in designing and installing computer-based information systems for physicians. These systems usually include patient records, prescriptions, billings, and medical insurance processing. The cost of most of these projects ranges from $10,000 to $40,000, but now they have an opportunity to compete with larger firms for a much larger project. There is disagreement about whether or not they should proceed based on their current workload. Group Activity Break the course participants into teams of three or four to discuss the case and decide whether the consulting firm should submit a proposal. Each team must provide reasons for its decision. Have each team should choose a spokesperson to present its decision and reasons for that decision to the entire class. In presenting their decisions, make sure the groups provide lists of pros and cons.

The purchasing manager was not familiar with their firm.
Case Study 1 Question 1 The purchasing manager was not familiar with their firm. Why didn’t this team receive the RFP at the same time the larger consulting firms did? 1. Why didn’t this team receive the RFP at the same time the larger consulting firms did? The purchasing manager was not familiar with their firm.

Case Study 1 Question 2 This team is being considered because Paul had completed a project for Dr. Houser when she had a private practice and she told him about it. Why is this team being considered as a candidate to submit a proposal? 2. Why is this team being considered as a candidate to submit a proposal? This team is being considered because Paul had done a project for Dr. Houser when she had a private practice and she told him about it.

Student answers will vary.
Case Study 1 Question 3 Student answers will vary. Responses should contain the information presented in the structure provided in the chapter. Students should develop appropriate scores. Develop a bid/no bid checklist to help determine if they should submit a proposal. 3. Develop a bid/no bid checklist to help determine if they should submit a proposal. Student answers will vary. Responses should contain the information presented in the structure provided in the chapter Students should develop appropriate scores.

Case Study 1 Question 4 If any of them can find the time (and maybe Maggie cannot), they should make a serious attempt to put together a quality proposal. They should also contact the purchasing manager, based on Dr. Houser’s comments, and see if they can get some additional information. In their proposal, they should also stress their previous success with Dr. Houser. If they win the contract, this is a great opportunity to grow the firm. What should Maggie, Paul, and Steve do? In explaining your answer, address the concerns of each of the three team members. 4. What should Maggie, Paul, and Steve do? In explaining your answer, address the concerns of each of the three team members. Maggie is concerned because they are already overloaded and have some big deadlines that are approaching. If they miss these deadlines, they could lose future business. Steve is concerned because if they submit a proposal and win, they do not have enough people to work on the project. Paul sees this as an opportunity to grow the firm and take on bigger challenges. If any of them can find the time (and maybe Maggie cannot), they should make a serious attempt to put together a quality proposal. They should also contact the purchasing manager, based on Dr. Houser’s comments, and see if they can get some additional information. In their proposal, they should stress their previous success with Dr. Houser. If they win the contract, this is a great opportunity to grow the firm.

New Manufacturing Facility In China
Case Study 2 New Manufacturing Facility In China Case Study #2: New Manufacturing Facility in China This case study involves an organization's progress in building a new manufacturing facility in China. The firm’s president selects a four-member team to develop an RFP and solicit proposals from contractors. After the RFP is announced, only four proposals were received, falling short of the number expected. The team schedules a meeting to discuss the proposals and finalize a contractor. Group Activity Divide the course participants into teams of three or four to discuss this case and decide which contractor should be selected to design and build the new manufacturing facility in China. Each team must provide reasons for its decision. Have each team select a spokesperson to present its decision and reasons for that decision to the entire class.

Case Study 2 Question 1 Since very few proposals were received, the team should have reviewed their RFP and included the budget cost. They should have asked each of the contractors to give an oral presentation of their proposals. Is there anything the team should have done when they received only three proposals by June 30? 1. Is there anything the team should have done when they received only three proposals by June 30? Since very few proposals were received, the team should have reviewed their RFP and included the budget cost. They should have asked each of the contractors to give an oral presentation of their proposals.

Responses will vary between yes and no.
Case Study 2 Question 2 Responses will vary between yes and no. Yes. Since very few proposals were received. Asia General Contractors’ proposal fits within budget and timelines and the have the experience to be evaluated at par with the other contractors. No, the proposal was submitted late and should not be accepted. It is not fair to the others that submitted on time and could have used the additional time to further develop their proposals. Should the team consider the proposal from Asia General Contractors? Why or why not? 2. Should the team consider the proposal from Asia General Contractors? Why or why not? Student responses will be split between yes and no. For each response, be sure to examine the supporting rationale for response. Possible responses and explanations: Yes. Since very few proposals were received. Asia General Contractors’ proposal fits within budget and timelines and the have the experience to be evaluated at par with the other contractors. No, the proposal was submitted late and should not be accepted. It is not fair to the others that submitted on time and could have used the additional time to further develop their proposals.

Case Study 2 Question 3 The team should evaluate and decide upon a contractor based upon their evaluation criteria – taking into consideration budget, timeliness, experience, and ethical standards of the contractors. They should schedule meetings with each of the shortlisted contractors to address any questions. Most importantly, the team should provide the budget details and ask contractors that are above budget to return with a best and final offer. After sharing their individual comments at the start of the July 15 meeting, how should the team proceed with the rest of the meeting and any follow-up? 3. After sharing their individual comments at the start of the July 15 meeting, how should the team proceed with the rest of the meeting and any follow-up? The team should evaluate and decide upon a contractor based upon their evaluation criteria – taking into consideration budget, timeliness, experience, and ethical standards of the contractors. They should schedule meetings with each of the shortlisted contractors to address any questions. Most importantly the team should provide the budget details and ask contractors above their budget to return with a best and final offer.

Case Study 2 Question 4 Selection process improvements
The RFP should have included funding information. They could have been strategic with the placement of the proposal bid – which may have increased the number of responses. The evaluation criteria should be streamlined to ascertain credibility and capability of the contractors. They could have had more pre-RFP meetings and been familiar with the companies and the number of companies that potentially would have bid on the project. How could the selection process have been improved? Is there anything the Board, I.M. Uno, Alysha, or the team could have done differently? 4. How could the selection process have been improved? Is there anything the Board, I.M. Uno, Alysha, or the team could have done differently? The RFP should have included funding information. They could have been strategic with the placement of the proposal bid – which may have increased the number of responses. The evaluation criteria should also be streamlined to ascertain credibility and capability of the contractors. Students may also respond that they should have had more pre-RFP meetings and been familiar with the companies and the number of companies that potentially would have bid on the project.

Defining Scope, Quality, Responsibility, and Activity Sequence
4 Defining Scope, Quality, Responsibility, and Activity Sequence (Premium) Teaching Strategies The two vignettes in this chapter reinforce the need to plan the project before beginning. This practice helps to save money and time, and minimize rework and wasted effort. Have students work in groups and review one of the quotes from vignette, What Went Wrong?--Learning from Past Postmortems, then suggest how planning could have saved that organization from project failure. Sometimes planning seems to be a waste of time for a short project. However, even very small projects need some degree of planning. Tell the students a story of a failed project. Have students identify how having a clear project objective, a project scope document, a project plan, a work breakdown structure, a responsibility assignment matrix, and a network diagram could have changed the outcome. The quotes from the What Went Wrong?--Learning from Past Postmortems vignette could serve as the story. Have students create a work breakdown structure and network diagram for a project they will have to complete during the class semester. Have the students explain the relationship between tasks that must be completed sequentially and those that can be completed simultaneously. The network diagram for the consumer market study is included in the chapter materials. Have the students compare the textbook diagram with the one created in Microsoft Project. Have the students report on the similarities and the differences. Optional Supplemental Activities Recall that Chapter 1 offered an optional activity for student groups to contribute several hours to a not-for-profit organization. Have each group that participated in this activity give a 10 minute presentation and submit a 2-3 page write-up that discusses how that organization’s projects are planned, performed, controlled, and terminated. In addition, require each group to give at least 3 suggestions on ideas that could improve the projects at that organization. Have students seek a project management mentor and report on their experiences related to developing the project scope and identifying the work breakdown structure. Have students present an article from the International Journal of Project Management to the class. Have them post their critical review of the article to the class website, blog, wiki, or other class space to allow others to review and comment.

Chapter Concepts Clearly defining the project objective
Preparing a project scope document Understanding the importance of planning for quality Creating a work breakdown structure Assigning responsibility for work elements Defining specific activities Creating a network diagram Utilizing a project management methodology called the systems development life cycle for information systems development projects Chapter Concepts This chapter discusses the project scope document, quality, how to define what activities need to be done, who will be responsible for them, and in what sequence they will be performed. It describes techniques and tools used to plan the work elements and activities that need to be performed in order to accomplish the project objective successfully. The project scope defines what work needs to be done and what deliverables need to be produced. Then, specific activities are defined and arranged in a sequence of dependent relationships to determine how the work will be performed. This chapter will help student to become familiar with: Clearly defining the project objective Preparing a project scope document Understanding the importance of planning for quality Creating a work breakdown structure Assigning responsibility for work elements Defining specific activities Creating a network diagram Utilizing a project management methodology called the systems development life cycle for information systems development projects

Learning Outcomes Establish a clear project objective
Prepare a project scope document Discuss the importance and elements of a project quality plan Develop a work breakdown structure Prepare a responsibility assignment matrix Describe how to define specific activities Create a network diagram Learning Outcomes After studying this chapter, students should be able to: Establish a clear project objective Prepare a project scope document Discuss the importance and elements of a project quality plan Develop a work breakdown structure Prepare a responsibility assignment matrix Describe how to define specific activities Create a network diagram

Project Management Knowledge Areas from PMBOK® Guide
Project Integration Management Project Scope Management Project Quality Management Project Time Management Project Management Knowledge Areas from PMBOK® Guide Concepts in this chapter support the following Project Management Knowledge Areas of the PMI Guide to the Project Management Body of Knowledge (PMBOK® Guide): Project Integration Management Project Scope Management Project Quality Management Project Time Management

Plan of Attack Background Project Manager Advice
Boeing developed the FA-18E/F for the US Navy Costs exceeded budget 150 stakeholders reviewed proposal in a two-week meeting Line-by-line proposal review Determine deliverables Only those necessary Reduced costs to within budget Adopted rigorous change control processes “If you start out on the wrong foot with a program, it likely will get worse.” “There’s no question your plan will change along the way—but if you don’t at least start with a good plan, it’s almost impossible to succeed.” Vignette A: Plan of Attack Boeing developed the FA-18E/F Super Hornet for the United States Navy, a combat-proven strike fighter. The stakeholders included navy officials and prime contractor program managers. The initial costs of the plan exceeded the project budget. Chuck Allen gathered 150 stakeholders for a two-week-long meeting to extensively review the proposal in order to determine the deliverables for each work package. The planning meeting trimmed the deliverables to those that were requirements and necessary for operational capacity. Rigorous change control processes were adopted with the customer and the principal subcontractor. The project management electronic system continually pulled and correlated the project data related to the design, development, schedule, and earned value status of the project into charts for all project team members to review. Some good project management advice is: “If you start out on the wrong foot with a program, it likely will get worse,” cautions Chuck Allen, Vice President for Integrated Defense Systems at Boeing. “There’s no question your plan will change along the way—but if you don’t at least start with a good plan, it’s almost impossible to succeed,” advises Allen. As you work on projects, consider Chuck Allen’s advice to help increase your probability of project success.

What Went Wrong?—Learning from Past Postmortems
Developer Comments Solutions “Competing demands for time and resources …” Keeping the schedule … it’s absolutely critical.” “… didn’t hire aggressively enough.” “ … things tended to fall through the cracks.” “Playing catch up from day one …” Schedule assignment of resources Keep the schedule that is agreed upon Acquire enough resources to complete the tasks Have a solid project management structure Have proper schedule and project management Vignette B: What Went Wrong?—Learning from Past Postmortems Analysis of a project during and after completion is a valuable way of providing lessons learned for future projects. The planning stage is a good time to look at these past postmortems and incorporate the lessons into the next project. A review of past project outcomes should be a part of the planning process so as not to doom future projects to the same mistakes. Game Developer magazine published a series of articles about the problems associated with game development projects. While this is limited to a specific industry, the problems are common to projects in all industries. “Competing demands for time and resources meant that, unfortunately, some of the important narrative details of the game weren’t created until the final rewrite, that therefore required quite a bit of work to retrofit into an existing game.”-- Alyssa Finley of 2K Boston, developer of BioShock “Schedules aren’t always determined by developers, but they agreed upon them. Keeping the schedule and the scope of your game within reasonable limits while still doing the best you can is not easy. But it’s absolutely critical.” -- Brandon Sheffield, Guitar Hero “Despite all this, we still didn’t hire aggressively enough. Many years of making small, tightly focused games had ingrained an efficiency bias and ’smaller is better’ mentality that were hard to shake.” -- Rob Kay, Rock Band, a product of Harmonix in reference to not having enough resources with responsibility to complete tasks “Not having a solid management structure meant that things tended to fall through the cracks. There was no one to set goals for the programming team or art group. There was no one to assert what needed to be done day-to-day, or week-to-week, or month-to-month. The employees sometimes drifted, unsure of what they should work on next, spending too much time on assets that were unimportant, neglecting elements of the game that were actually critical.” -- Brian Reynolds from Big Huge Games “Playing catch up from day one is the key phrase here, and proper schedule and project management are the solution. Easier said than done!” -- Joseph Triangle from 5th Cell, developer of Drawn to Life As you work on developing your project management skills, consider what these developers did wrong and how they let the same problems persist in their development projects. There are a number of things that projects managers can do to avoid these mistakes: Schedule the assignment of resources Keep the schedule that is agreed upon Acquire enough resources to complete the tasks Have a solid project management structure Have proper schedule and project management

Establish Project Objective
Planning process is based on the project objective Establishes what is to be accomplished Often stated in the project charter or RFP Is the tangible end product Project objective includes Expected benefits Primary project end product or deliverable Date required to be completed Budget Changes agreed upon by customer and contractor Establish Project Objective The planning process is based on the project objective. The project objective establishes what is to be accomplished. Often the project objective is stated in the project charter or RFP. It is the tangible end product that the project team or contractor must produce and deliver in order for the sponsor or customer to achieve the expected benefits from implementing the project. The project objective should include the following elements: Expected benefits that will result from implementation of the project and define success Primary project end product or deliverable Date by which the project is required to be completed Budget within which the project must be completed Situations can arise where the project objective needs to be modified as the project proceeds because of extenuating circumstances or new information. The project manager and the customer must agree on all changes to the project objective. Any such changes might affect the remaining work scope, deliverables, completion date, and final cost.

List examples of project objectives.
Student Discussion List examples of project objectives. Ask students to list some examples of project objectives– these can be from projects they worked on, or hypothetical.

To increase emergency room capacity by 20 percent and reduce average patient waiting time by 50 percent through a reconfiguration and process improvement project to be completed in 12 months and within a $400,000 budget. To reduce outstanding accounts payable by $20 million by implementing a new billing, collection, and receiving system by May 31 with a budget not to exceed $220,000. To raise $40,000 for hunger relief by organizing a community festival for the last weekend in September with a budget of $3,000. To double annual sales revenue by creating an online shopping and fulfillment capability by April 30 with a budget not to exceed $40,000. To expand market share by 3 percent by introducing a new portable food preparation appliance within 10 months with a budget of $2 million. To increase August sales revenue by 10 percent above that of last August by producing and distributing a back-to-school catalog by July 15 with a budget not to exceed $40,000. To meet new environmental regulatory requirements by installing a new filtration system within 15 months and a budget of $3.2 million. List examples of project objectives Some examples of project objectives are: To increase emergency room capacity by 20 percent and reduce average patient waiting time by 50 percent through a reconfiguration and process improvement project to be completed in 12 months and within a $400,000 budget. To reduce outstanding accounts payable by $20 million by implementing a new billing, collection, and receiving system by May 31 with a budget not to exceed $220,000. To raise $40,000 for hunger relief by organizing a community festival for the last weekend in September with a budget of $3,000. To double annual sales revenue by creating an online shopping and fulfillment capability by April 30 with a budget not to exceed $40,000. To expand market share by 3 percent by introducing a new portable food preparation appliance within 10 months with a budget of $2 million. To increase August sales revenue by 10 percent above that of last August by producing and distributing a back-to-school catalog by July 15 with a budget not to exceed $40,000. To meet new environmental regulatory requirements by installing a new filtration system within 15 months and a budget of $3.2 million. To obtain information about consumer preferences by conducting a consumer market study to be completed in 26 weeks with a budget of $40,000.

Define Project Scope Project Scope Project Scope Document
Defines what needs done Includes Items contained in project charter, RFP, proposal More detail Establishes common understanding of scope with stakeholders Usually contains Customer requirements Statement of Work Deliverables Acceptance Criteria Work Breakdown Structure Establishes baseline Change control system to avoid scope creep Define Project Scope The project scope defines what needs to be done. A project scope document includes many of the items contained in the project charter, RFP, or contractor’s proposal, but in much greater detail. The document is valuable for establishing a common understanding among project stakeholders regarding the scope of the project. The project scope document usually contains the following sections: Customer requirements define the functional or performance specifications for the project’s end product and other project deliverables. It should also include or reference applicable technical specifications, standards, and codes that must be used and met regarding quality and performance of the project work and deliverables. Statement of Work (SOW) defines the major tasks or work elements that will need to be performed to accomplish the work that needs to be done and produce all the project deliverables. Deliverables are the products or outputs that the project team or contractor will produce and provide to the customer during and at the completion of the performance of the project. Acceptance criteria for all project deliverables must be described in greater detail than what is stated in the project charter or request for proposal Work Breakdown Structure (WBS) is a hierarchical decomposition of the project work scope into work packages that produce the project deliverables. The agreed-upon project scope document establishes the baseline for any changes that may be made to the scope during the performance of the project. A change control system needs to be established to define how changes will be documented, approved, and communicated. The project team or contractor must avoid scope creep, which is informally making changes to the project scope without appropriate approval.

Why should scope creep be avoided?
Student Discussion Why should scope creep be avoided? Have students think about scope creep. First, make sure they understand what it is. Once they have accurately defined it, ask them why it should be avoided.

Informal changes to the project No approvals for changes Additional work that is not documented May cause errors May cause rework Could make the project overtime and over budget Why should scope creep be avoided? Why should scope creep be avoided? Possible responses: Informal changes to the project can lead the entire project astray No approvals for changes Can result in additional work that is not documented May cause errors May cause some of the sections of the project to be reworked Could make the project go overtime and over budget

Plan for Quality Complete work according to specifications and standards Plan for assuring quality as project progresses Include References for specifications and standards Written procedures for quality tools and techniques Key aspects Monitor as the project progresses Do work right the first time rather than rework Plan for Quality Planning for quality is a necessary, yet often forgotten or dismissed, function on a project. It is essential to have a plan for assuring the quality of project deliverables and results, rather than waiting until the end of the project to check if the sponsor/customer requirements and expectations on project deliverables have been met. It is important to plan for quality in performing the project. This helps assure that the work is done according to specifications and applicable standards and that deliverables meet acceptance criteria. A project quality plan includes or references: Project specifications and standards Industry or government standards (for design, testing, safety, construction, etc.) Codes that must be used and met during the performance of the project work Written procedures for using various quality tools and techniques The key to quality control is to: Monitor the quality of the work early and regularly throughout the performance of the project Compare results with quality standards Make any necessary corrective actions immediately, rather than waiting until all the work is completed before checking or inspecting for quality To ensure that a project is done right the first time, a project should focus on doing the work in accordance with quality standards, and therefore preventing quality problems.

Student Discussion It is often said that some people think they never have enough time to do the work right the first time, but then must take the time later to redo it correctly—haste makes waste! What can be done to change this thinking? It is often said that some people think they never have enough time to do the work right the first time, but then must take the time later to redo it correctly— haste makes waste! What can be done to change this thinking?

Clearly list quality standards Have monitors in place to see if the work is meeting quality standards Submit sample work to be sure work meets standards If it means a higher quality product, determine the effects and costs of a later delivery It is often said that some people think they never have enough time to do the work right the first time, but then must take the time later to redo it correctly—haste makes waste! What can be done to change this thinking? Have students talk about why people think this way and how they think this line of thinking can be changed. Students may come up with the following ideas: Clearly list quality standards Have monitors in place to see if the work is meeting quality standards Submit sample work to be sure the work meets standards If it means a higher quality product, determine the effects and costs of a later delivery time

Create Work Breakdown Structure
Deliverable-oriented hierarchical decomposition Organize project work and deliverables Create logical groupings Subdivide into more manageable components Deliverable is output of work package Resource requirements and durations can be assigned Accountability can be assigned Project manager can monitor and control Graphic chart or indentured list Create Work Breakdown Structure Once the project scope document has been agreed on and prepared, the next step in the planning phase is to create a detailed work breakdown structure (WBS) This is a deliverable-oriented hierarchical decomposition of the project work scope into work packages, or activity groupings, that produce the project deliverables. Creating a WBS is a structured approach for organizing all the project work and deliverables into logical groupings. This helps to subdivide the deliverables into more manageable components called work items, to help ensure that all tasks required to complete the project are identified and included in the baseline project plan. The WBS should be deconstructed to a level that identifies individual work packages for each specific deliverable listed in the project scope document. Dividing a project into work packages and work items helps a contractor increase the level of confidence that: All the activities that need to be performed to produce the deliverable can be defined The types and quantities of resources can be determined The associated activity durations and costs can be reasonably estimated. Work items should be broken down to the level at which a single organization (marketing communications, materials engineering, human resources, a subcontractor, etc.) or individual can be assigned responsibility and accountability for accomplishing the work package. The WBS can be created using a graphic chart format or as a list.

WBS with Breakdown to Different Levels
This figure depicts the work breakdown structure in a graphic chart format for a community festival project. Note that not all of the branches in a WBS have to be broken down to the same level.

WBS Graphic Chart Indentured List WBS
The top figure depicts the WBS for the consumer market study project example. This project is also the example used in the Microsoft Project appendices. Have students examine the relationship between this figure and the entries in the Microsoft Project task list. The bottom figure depicts an indentured list for the work breakdown structure. For each of the work packages, the deliverable is listed. This format is helpful for large projects where a diagram would become too large and unwieldy.

Assign Responsibility
Responsibility assignment matrix Designate responsible individuals P = Primary responsibility S = Support responsibility Associates responsibility For each work item For each individual Only one primary per work item Assign Responsibility A responsibility assignment matrix (RAM) defines who will be responsible for the work. It is a tool used to designate the individuals responsible for accomplishing the different work items in the work breakdown structure (WBS). This figure depicts the RAM for the WBS in Figure 4.1, the community festival project. The RAM often uses a P to designate primary responsibility and an S to indicate support responsibility for a specific work item. The RAM shows all the individuals associated with each work item in the WBS, as well as all the work items associated with each individual. Only one individual should be designated as the lead, or primary, person responsible for each work item.

Define Activities Responsible resources define activities
Breakdown work packages to work items Level needed to perform deliverable May not be able to define all Comprehensive activity list Not always require expenditure of effort Could be wait time Define Activities Using the WBS, the individual or team responsible for each work package must next define all the specific activities that need to be performed to produce the end item, or deliverable. Breaking down each work package into its component activities reveals the level at which each activity must be performed to produce the deliverable. Some activities may not be easily definable. When all the specific activities have been defined for all of the work packages, they should be consolidated into a comprehensive activity list. Because of the allocation of resources, there may be wait time between the end of one activity and the start of another one. This figure shows the work breakdown structure for a consumer market study project. It depicts the specific activities that need to be performed for each work package. Have the students compare this list to the entries for the tasks in the Microsoft Project appendix.

Sequence Activities Network diagram Common techniques
Defines the sequence of activities and relationships Tool for arranging order Common techniques PERT CPM PDM Sequence Activities A network diagram defines the sequence of how the activities will get done. It is a tool for arranging the specific activities in the best sequence and defining their dependent relationships. The three most common techniques of network diagramming are program evaluation and review technique (PERT), the critical path method (CPM), and the precedence diagramming method (PDM). In the past, there were distinguishable methodological differences between PERT and CPM. Today, however, when most people refer to a CPM diagram or PERT chart, they mean a generic network diagram. The top figure shows a complete network diagram for a consumer market study project, with the person responsible for each activity included on the diagram. The bottom figure shows a network diagram for a web-based reporting system project.

Network Principles Activities Relationships Represented by a box
Consume time Described by verb Relationships Linked in serial sequence Complete concurrently Network Principles Each activity is represented by a box in the network diagram and the description of the activity is written within the box, as shown in this figure. Activities consume time, and their description usually begins with a verb (such as get, wash, and dry in this example). Activities have a dependent relationship—that is, they are linked in a logical sequence in a network diagram to show which activities must be finished before others can start. Certain activities have to be done in serial sequence. Some activities may be done concurrently.

Loops Illogical relationship among activities
Perpetually repeats itself Not acceptable Loops An illogical relationship among activities is known as a loop. In preparing a network diagram, drawing activities in a loop is not acceptable because it portrays a path of activities that perpetually repeats itself.

Laddering Set of repeating activities Serial sequence One work
Two wait Can be performed at same time Would need triple resources Laddering Some projects have a set of activities that are repeated several times. The top figure shows a series of activities that must be done in serial sequence, which means that, for an activity with three people, at any one time only one person is working while two other people are waiting. The middle figure shows a set of activities that can be performed concurrently. However, it is often not practical to perform the activities in this way because the organization would need triple the experts– one for each room. The bottom figure shows a technique known as laddering. This approach allows the project to be completed in the shortest possible time, while making the best use of available resources. Ladder activities Allow for shortest possible time for completion Best use of the three workers and experts

Create Network Diagram
Tips and Techniques Development of Diagram Logical sequence of activities Show dependent relationships Elaborate as project progresses Use subnetworks for similar activity sequences and relationships Questions to answer Finish before next start? Done concurrently? Cannot be started next? Guidelines for detail level Define each work package Draw summary level network then add detail Detail to responsibility or deliverable change Duration less than project progress review Create Network Diagram A network diagram is a drawing of the activities for a project, displayed in boxes in their logical sequence and connected by arrows to indicate dependent relationships. The network diagram shows how the project should be performed from start to completion. Three questions need to be answered regarding each activity. The network is based upon the answers: Which activities must be finished immediately before this activity can be started? Which activities can be done concurrently with this activity? Which activities cannot be started until immediately after this activity is finished? Guidelines for the level of detail in the network diagram are: Based on the work breakdown structure for a project; specific activities should be defined for each work package. It may be preferable to draw a summary-level network first that depicts a small number of higher level activities and then expand to a more detailed network. The level of detail may be determined by certain obvious interface or transfer points such as a change in responsibility or if there is a tangible output or product or deliverable as a result of an activity. Activities should not be longer in estimated duration than the project progress review. It is not unusual to progressively elaborate the network diagram as the project progresses and more information becomes clear. Sub-networks can be used to represent similar projects for different customers. Certain portions of projects may include the same types of activities in the same sequence and with the same dependent relationships.

Planning for Information Systems Development
Definition Process Computer-based system Accepts data as input Processes the data Produces useful information Examples Computerized order entry E-commerce Automatic teller machines Billing, payroll, and inventory Plan, execute, and control Systems Development Life Cycle Problem definition System analysis System design System development System testing System implementation Planning for Information Systems Development The Microsoft Project example will continue through chapters 4 – 8. It highlights the concepts for each chapter in the example. The Microsoft Project file for the example is available with the instructor materials. An information system (IS) is a computer-based system that accepts data as input, processes the data, and produces useful information for users. Information systems include computerized order entry systems, e-commerce systems, automatic teller machines, and billing, payroll, and inventory systems. The development of an IS is a challenging process that requires extensive planning and control to ensure that the system meets user requirements and is finished on time and within budget. A project management planning tool, or methodology, called the systems development life cycle (SDLC) is often used to help plan, execute, and control IS development projects. It consists of the following steps: Problem definition -- Data are gathered and analyzed and problems and opportunities are clearly defined. System analysis -- The development team defines the scope of the system to be developed, interviews potential users, studies the existing system (which might be manual), and defines user requirements. System design -- Several alternative conceptual designs are produced and evaluated. The best is selected for further design and development. System development -- The actual system is brought into existence. System testing – This step involves looking for logical errors, database errors, errors of omission, security errors, and other problems that might prevent the system from being successful. System implementation -- The existing system is replaced with the new, improved, system and users are trained.

An IS Example: Internet Applications Development for ABC Office Designs
Project Large number of sales representatives Sell office furniture to major corporations State assignments in four regions Management monitor state and regional sales Build Web-based IS system to track prices, inventory, and competition Project manager identified WBS follows SDLC Responsibility assignment matrix completed List of tasks compiled and predecessors identified Network diagram created An IS Example: Internet Applications Development for ABC Office Designs A corporation called ABC Office Designs has a large number of sales representatives who sell office furniture to major corporations. Each sales representative is assigned to a specific state, and each state belongs to one of four regions in the country. To enable management to monitor the number and amount of sales for each representative, for each state, and for each region, ABC has decided to build a Web-based information system that will track prices, inventory, and the competition. The IS department within the corporation has assigned Beth Smith to be the project manager of the Web-based reporting system development project. The following four slides depict figures related to this project. First, we will see the major tasks that were identified for the project. Then we will look at the responsibility assignment matrix for the project with the primary and secondary responsibilities for each task assigned. We will then look at a list of all tasks to be done, with the immediate predecessor for each task listed to the right of the task. Finally, we will examine the network diagram created by Beth and the project team that represents the interdependencies listed in the immediate predecessor list.

IS Example: WBS follows SDLC
This figure depicts the major tasks that were identified for the project. The WBS follows the SDLC.

IS Example: Responsibility Assignment Matrix
Here we see the responsibility assignment matrix for the project, with the primary and secondary responsibilities for each task assigned. Make sure that students note that all the tasks in the WBS appear in the responsibility assignment matrix.

IS Example: Task List and Predecessors
This figure depicts a list of all tasks to be completed, with the immediate predecessor for each task listed to the right of the task. Have the students examine the interdependencies of the tasks.

IS Example: Network Diagram
Here is the network diagram created by Beth and the project team. This figure represents the interdependencies listed in the immediate predecessor list.

Project Management Information Systems
Wide variety of systems available Plan and control projects in interactive mode Plan and test different options Create reports, diagrams, and charts Interface with other software applications Appendix A has additional information Project Management Information Systems A wide variety of affordable project management information systems are available for purchase. These systems allow the project manager and the project team to plan and control projects in a completely interactive mode. Planning and testing different options for task durations, dependencies, constraints, resources, schedules, and costs can be completed in a project management information system. Information systems help project managers to create reports, change management, network diagrams, and Gantt charts. Project management information systems also interface with other software applications. Appendix A contains information related to project management information systems.

Plan the work and then work the plan. It is important to develop a plan before starting to perform the project. Taking the time to develop a well-thought-out plan is critical to the successful accomplishment of any project. Participation builds commitment. By participating in the planning of the work, individuals will become committed to accomplishing it according to the plan. The project must have a clear objective of what is to be accomplished. The objective should be defined in terms of end product or deliverable, schedule, and budget, and it must be agreed upon by the customer and the project team that will perform the project. The project scope document is valuable for establishing a common understanding and agreement among project stakeholders regarding the scope of the project. Having a quality plan at the outset of the project is extremely beneficial because it will help prevent incurring additional costs and schedule extensions due to rework caused by work and deliverables that fail to meet quality requirements and customer expectations. The key to quality control is to monitor the quality of the work early and regularly throughout the performance of the project, rather than waiting until all the work is completed before checking or inspecting for quality. The network diagram is also is a communication tool for the project team because it shows who is responsible for each activity and how each person’s work fits into the overall project. Critical Success Factors Plan the work and then work the plan. It is important to develop a plan before starting to perform the project. Taking the time to develop a well-thought-out plan is critical to the successful accomplishment of any project. Participation builds commitment. By participating in the planning of the work, individuals will become committed to accomplishing it according to the plan. The project must have a clear objective of what is to be accomplished. The objective should be defined in terms of end product or deliverable, schedule, and budget, and it must be agreed upon by the customer and the project team that will perform the project. The project scope document is valuable for establishing a common understanding and agreement among project stakeholders regarding the scope of the project. Having a quality plan at the outset of the project is extremely beneficial because it will help prevent incurring additional costs and schedule extensions due to rework caused by work and deliverables that fail to meet quality requirements and customer expectations. The key to quality control is to monitor the quality of the work early and regularly throughout the performance of the project, rather than waiting until all the work is completed before checking or inspecting for quality. The network diagram is also is a communication tool for the project team because it shows who is responsible for each activity and how each person’s work fits into the overall project.

Summary The planning process is based on the project objective, which establishes what is to be accomplished. The project scope defines what needs to be done. The project scope document usually contains the customer requirements, statement of work, deliverables, acceptance criteria, and a work breakdown structure. The quality plan must include or reference the specifications, industry or government standards, and codes that must be used and met during the performance of the project work. The work breakdown structure establishes the framework for how the work will get done to produce the project deliverables. A responsibility assignment matrix defines who will be responsible for the work. Activities define more specifically how the work will get done. A network diagram defines the sequence of how and when the activities will be performed. Project planning is a critical activity in developing an information system (IS). A project management planning tool or methodology, called the systems development life cycle (SDLC), is often used to help plan, execute, and control IS development projects. Numerous project management information systems are available to help project managers plan, track, and control projects in a completely interactive way. Summary The planning process is based on the project objective, which establishes what is to be accomplished. The project scope defines what needs to be done. The project scope document usually contains the customer requirements, statement of work, deliverables, acceptance criteria, and a work breakdown structure. The quality plan must include or reference the specifications, industry or government standards, and codes that must be used and met during the performance of the project work. The work breakdown structure establishes the framework for how the work will get done to produce the project deliverables. A responsibility assignment matrix defines who will be responsible for the work. Activities define more specifically how the work will get done. A network diagram defines the sequence of how and when the activities will be performed. Project planning is a critical activity in developing an information system (IS). A project management planning tool or methodology, called the systems development life cycle (SDLC), is often used to help plan, execute, and control IS development projects. Numerous project management information systems are available to help project managers plan, track, and control projects in a completely interactive way.

Chapter Questions

Question 1 Planning is the systematic arrangement of tasks to accomplish an objective. The plan lays out what needs to be accomplished and how it is to be accomplished. The people who will be involved in performing the work should be involved in planning the work. What is meant by planning a project? What does this encompass? Who should be involved in planning the work? 1. What is meant by planning a project? What does this encompass? Who should be involved in planning the work? Planning is the systematic arrangement of tasks to accomplish an objective. The plan lays out what needs to be accomplished and how it is to be accomplished. The plan becomes a benchmark against which progress can be compared. If deviations occur, corrective action can be taken. It is important that the people who will be involved in performing the work are also involved in planning the work. They are usually the most knowledgeable about what detailed activities need to be done and how long each should take. By participating in the planning of the work, individuals will become committed to accomplishing it according to the plan and within the schedule and budget. Participation builds commitment.

Question 2 The project objective is the target—the tangible end product that the project team must deliver. The objective must be clear, attainable, specific and measurable. If the objective is not clearly written, the end product may not meet the needs of the customer Responses should contain the expected benefits of the project, the primary project end product or deliverable, and the date required for completion. What is meant by the term project objective? What might happen if a project objective is not clearly written? Give three examples of clearly written project objectives. 2. What is meant by the term project objective? What might happen if a project objective is not clearly written? Give three examples of clearly written project objectives. The project objective is the target—the tangible end product that the project team must deliver. The objective must be clear, attainable, specific and measurable. If the objective is not clearly written, the end product may not meet the needs of the customer Specific examples will vary. Responses should contain the expected benefits of the project, the primary project end product or deliverable, and the date required for completion.

Question 3 A project scope document includes sections for the customer requirements, statement of work, project deliverables, acceptance criteria, and work breakdown structure. It is important to clearly define the project scope to establish a common understanding among project stakeholders regarding what needs to be done to produce all the deliverables for the project. Describe a project scope document. Why is it important to clearly define the project scope? 3. Describe a project scope document. Why is it important to clearly define the project scope? A project scope document includes sections for the customer requirements, statement of work, project deliverables, acceptance criteria, and work breakdown structure. The contents of these sections include many items contained in a project charter, RFP, or contractor's proposal in greater detail. It is important to clearly define the project scope to establish a common understanding among project stakeholders regarding what needs to be done to produce all the deliverables for the project.

Question 4 The WBS is a hierarchical tree or an indentured list of end items that will be accomplished. The responsibility assignment matrix is a method used to display, in tabular format, the individuals responsible for accomplishing the work items in the WBS. The WBS and the responsibility assignment matrix are related. All the work items and work packages listed in the WBS are also listed in the responsibility assignment matrix. What is a work breakdown structure? What is a responsibility assignment matrix? How are they related? 4. What is a work breakdown structure? What is a responsibility assignment matrix? How are they related? The WBS breaks a project down into manageable pieces, or work items. It is a hierarchical tree or an indentured list of end items that will be accomplished. The graphic structure subdivides the project into smaller pieces called work items. The lowest-level item of any one branch is called a work package. An end product is the item that will be produced as a result of carrying out the project. The responsibility assignment matrix is a method used to display, in tabular format, the individuals responsible for accomplishing the work items in the WBS. Some responsibility matrices use an X to show who is responsible for each work item; others use a P to designate primary responsibility and an S to indicate support responsibility. The WBS and the responsibility assignment matrix are related. All the work items and work packages listed in the WBS are also listed in the responsibility assignment matrix.

Question 5 Creating a project quality plan is important to prevent poor quality and to avoid quality problems. Responses should reference how knowing the specifications, industry or government standards, and codes that were to be met during the project could have helped to prevent the quality problems of the project. Why is creating a plan for quality important? From your experiences, give an example of how having and controlling a quality plan could have prevented quality problems in a project. 5. Why is creating a plan for quality important? From your experiences, give an example of how having and controlling a quality plan could have prevented quality problems in a project. Creating a project quality plan is important to prevent poor quality and to avoid quality problems. Student responses will vary. Answers should reference how knowing the specifications, industry or government standards, and codes that were to be met during the project could have helped to prevent the quality problems of the project.

Question 6 An activity is a defined piece of work that consumes time. It does not necessarily require the expenditure of effort by people. List of detailed activities needed to accomplish work package 3.3: Prizes Identify prizes Specify the number and type of prizes Buy prizes Gift wrap prizes Move prizes to festival site List of detailed activities needed to accomplish work package 4.2: Permits Identify required permits Specify where the permits need to be acquired from Identify costs and timelines for acquiring permits Obtain the permits What is an activity? Does it always require human effort? Refer to Figure 4.1. Provide a detailed list of activities needed to accomplish work package 3.3. Do the same for work package 4.2 6. What is an activity? Does it always require human effort? Refer to Figure 4.1. Provide a detailed list of activities needed to accomplish work package 3.3. Do the same for work package 4.2. An activity is a defined piece of work that consumes time. It does not necessarily require the expenditure of effort by people. For example, waiting for concrete to harden can take several days but does not require any human effort. List of detailed activities needed to accomplish work package 3.3: Prizes Identify prizes Specify the number and type of prizes Buy prizes Gift wrap prizes Move prizes to festival site List of detailed activities needed to accomplish work package 4.2: Permits Identify required permits Specify where the permits need to be acquired from Identify costs and timelines for acquiring permits Obtain the permits

Question 7 “Mail Questionnaire & Get Responses” and “Test Software” must be done before “Input Response Data” can start. “Prepare Mailing Labels,” “Print Questionnaire,” “Develop Data Analysis Software,” and “Develop Software Test Data” can start after “Review Comments & Finalize Questionnaire” has been completed. Any of the four activities listed above that can start after “Review Comments & Finalize Questionnaire” has been completed. They can be done concurrently. Refer to Figure 4.9. What activities must be accomplished before “Input Response Data” can start? What activities can start after “Review Comments & Finalize Questionnaire” has finished? List two activities that can be done concurrently. 7. Refer to Figure 4.9. What activities must be accomplished before “Input Response Data” can start? What activities can start after “Review Comments & Finalize Questionnaire” has finished? List two activities that can be done concurrently. “Mail Questionnaire & Get Responses” and “Test Software” must be completed before “Input Response Data” can start. “Prepare Mailing Labels,” “Print Questionnaire,” “Develop Data Analysis Software,” and “Develop Software Test Data” can start after “Review Comments & Finalize Questionnaire” has been finished. Any of the four activities listed above that can start after “Review Comments & Finalize Questionnaire” has been completed. They can be done concurrently.

Question 8 Laddering should be used when a project has a set of activities that are repeated several times and appropriate resources are available to handle tasks concurrently. Specific examples will vary. Responses should contain a set of activities that are repeated and for which there are adequate resources to do the tasks concurrently. When would you use laddering in a network diagram? Give an example, different from the one provided in the chapter, and draw the corresponding network diagram. 8. When would you use laddering in a network diagram? Give an example, different from the one provided in the chapter, and draw the corresponding network diagram. Laddering should be used when a project has a set of activities that are repeated several times and appropriate resources are available to handle tasks concurrently. Specific examples will vary. Students’ responses should contain a set of activities that are repeated and for which there are adequate resources to do the tasks concurrently.

Features and benefits include the ability to:
Question 9 They allow the project manager and the project team to plan and control projects in a completely interactive mode. Features and benefits include the ability to: Plan and control projects in interactive mode Plan and test different options Create reports, diagrams, and charts Interface with other software applications Why would you recommend project management software to someone involved in project management? What features and benefits does it provide? 9. Why would you recommend project management software to someone involved in project management? What features and benefits does it provide? Project management software packages are available for purchase. They allow the project manager and the project team to plan and control projects in a completely interactive mode. Common features of project management software allow the user to: Create lists of tasks with their estimated durations Establish interdependencies among tasks Work with a variety of time scales, including hours, days, weeks, months, and years Handle certain constraints—for example, a task cannot start before a certain date, a task must be started by a certain date, labor unions allow no more than two people to work on the weekends Track team members, including their pay rates, hours worked thus far on a project, and upcoming vacation days Incorporate company holidays, weekends, and team member vacation days into calendaring systems Handle shifts of workers (day, evening, night) Monitor and forecast budgets Look for conflicts—such as over-allocated resources and time conflicts Generate a wide variety of reports Interface with other software packages such as spreadsheets and databases Sort information in a variety of ways—for example, by project, by team member, or by work assignment Handle multiple projects Work on-line and respond quickly to changes in schedule, budget, or personnel Compare actual costs with budgeted costs Display data in a variety of ways, including network diagrams and Gantt or bar charts

Question 10 Draw a network diagram representing the following logic:
As the project starts, activities A and B can be performed concurrently. When activity A is finished, activities C and D can start. When activity B is finished, activities E and F can start. When activities D and E are finished, activity G can start. The project is complete when activities C, F, and G are finished. 10. Draw a network diagram representing the following logic: as the project starts, activities A and B can be performed concurrently. When activity A is finished, activities C and D can start. When activity B is finished, activities E and F can start. When activities D and E are finished, activity G can start. The project is complete when activities C, F, and G are finished. (See the slide for the drawing of the network diagram)

Question 11 Draw a network diagram representing the following information: The project starts with three activities, A, B, and C, which can be done concurrently. When A is finished, D can start; when B is finished, F can start; When B and D are finished, E can start. The project is complete when C, E, and F are finished. 11. Draw a network diagram representing the following information: The project starts with three activities, A, B, and C, which can be done concurrently. When A is finished, D can start; when B is finished, F can start; When B and D are finished, E can start. The project is complete when C, E, and F are finished. (See the slide for the drawing of the diagram)

Question 12 Draw a network diagram that represents the following IS development task list. Activity Immediate Predecessor 1. Problem Definition — 2. Study Current System 1 3. Define User Requirements 1 4. Logical System Design 3 5. Physical System Design 2 6. System Development 4, 5 7. System Testing 6 8. Convert Database 4, 5 9. System Conversion 7, 8 12. Draw a network diagram that represents the following IS development task list. Activity Immediate Predecessor 1. Problem Definition — 2. Study Current System 1 3. Define User Requirements 1 4. Logical System Design 3 5. Physical System Design 2 6. System Development 4, 5 7. System Testing 6 8. Convert Database 4, 5 9. System Conversion 7, 8 (See the above slide for the drawing)

Internet Exercises Project Planning Tools International Project Management Association International Journal of Project Management Internet Exercises Assign the Internet Exercises to your students as homework or complete them with students in a computer lab. The Web exercises in this chapter involve investigating project planning, the International Project Management Association and its Website, and the International Journal of Project Management and its Website.

Internet Exercises The IPMA website has information related to certifications, memberships, publications, awards, events, and educational opportunities. The “Young Crew” site has information about nurturing future project management leaders. The International Journal of Project Management contains a number of articles related to project management. Issues often have a topic for the articles. Look at the references for the chapters to see additional articles that are supplemental to the information presented in the chapters. Using your favorite Web search engine, perform a search for project planning tools and describe what you found. Visit the International Project Management Association website. Explore the site. Click on the “Young Crew” link. Go to the International Journal of Project Management homepage. Click on the “Free Tables of Contents and Abstracts” link. Do a search for planning. Click on the “View Related Articles” link. Internet Exercises The IPMA website has information related to certifications, memberships, publications, awards, events, and educational opportunities. The “Young Crew” site has information about nurturing future project management leaders. The International Journal of Project Management contains a number of articles related to project management. Issues often have a topic for the articles. Look at the references for the chapters to see additional articles that are supplemental to the information presented in the chapters.

A Not-For-Profit Medical Research Center
Case Study 1 A Not-For-Profit Medical Research Center Case Study #1: A Not-For-Profit Medical Research Center This is an open-ended case study. Encourage the students to use their creativity. This case continues through to chapter 8. Each chapter has questions to reinforce the concepts presented. Have students save their work from this case study for the work they will do in chapters 5 to 8. As the director of external affairs for a national not-for-profit medical research center you are tasked with producing a shorter, simpler, easy-to-read annual report to show the benefits of the center's research and the impact on people's lives in an effort to help raise funds for the center. Group Activity Form students into groups of three to five members. Have each group perform their assigned tasks. Allow each group to present their answers.

Case Study 1 Question 1 Responses should include their interpretation of the project objective and list the assumptions for the project. One possible response: The project objective is to create a new annual report. An assumption is that the new shorter report will bring in additional funding for the center. Establish the project objective and make a list of your assumptions about the project. 1. Establish the project objective and make a list of your assumptions about the project Student responses should include their interpretation of the project objective and list the assumptions for the project. One possible response: The project objective is to create a new annual report. An assumption is that the new shorter report will bring in additional funding for the center.

Case Study 1 Question 2 Responses should have an indentured list or a hierarchical structure for the WBS, that shows the major tasks necessary to achieve the project objective. Develop a work breakdown structure. 2. Develop a work breakdown structure Student responses should have an indentured list or a hierarchical structure for the WBS, that shows the major tasks necessary to achieve the project objective.

Case Study 1 Question 3 The WBS should contain enough detail for the student responses to manage the tasks and assign responsibility and resources to the tasks. Prepare a list of the specific activities that need to be performed to accomplish the project objective. 3. Prepare a list of the specific activities that need to be performed to accomplish the project objective The WBS should contain enough detail for the student responses to manage the tasks and assign responsibility and resources to the tasks.

Case Study 1 Question 4 Responses should show the name of the person responsible for each task. For each activity, assign the person who will be responsible. 4. For each activity, assign the person who will be responsible Student responses should show the name of the person responsible for each task.

Case Study 1 Question 5 Responses should sequence the tasks to show the dependencies of the tasks and what tasks can be done concurrently, if any. Create a network diagram that shows the sequence and dependent relationships of all the activities. 5. Create a network diagram that shows the sequence and dependent relationships of all the activities. Student responses should sequence the tasks to show the dependencies of the tasks and what tasks can be done concurrently, if any.

The Wedding Case Study 2 Case Study #2: The Wedding
This is an open-ended case study. Again, encourage the students to be creative. This case continues through to chapter 8. Each chapter has questions to reinforce the concepts presented. Have students save their work from this case study for the work they will do in chapters 5 to 8. Tony and Peggy Sue want to get married and have family that want to plan the wedding for them without considering what Tony or Peggy Sue would want. Group Activity Form groups of three to five members. Have each group perform their assigned tasks. Allow each group to present their answers.

Case Study 2 Question 1 Responses should include their interpretation of the project objective and list the assumptions for the project. One possible response: the project objective is Peggy Sue and Tony have a wedding that they want. An assumption is that Peggy Sue's mother and Tony's mother decide that they do not have to control everything and slow down a little on the plans. Make a list of assumptions that will be used as the basis for planning the wedding. And no, it is not acceptable to assume that Tony and Peggy Sue will just elope, no matter how tempting that may be! 1. Make a list of assumptions that will be used as the basis for planning the wedding. And no, it is not acceptable to assume that Tony and Peggy Sue will just elope, no matter how tempting that may be! Student responses should include their interpretation of the project objective and list the assumptions for the project. One possible response: The project objective is Peggy Sue and Tony have a wedding that they want. An assumption is that Peggy Sue's mother and Tony's mother decide that they do not have to control everything and slow down a little on the plans.

Case Study 2 Question 2 Responses should include an indentured list or a hierarchical structure for the WBS that shows the major tasks necessary to achieve the project objective. Develop a work breakdown structure. 2. Develop a work breakdown structure. Student responses should include an indentured list or a hierarchical structure for the WBS that shows the major tasks necessary to achieve the project objective.

Case Study 2 Question 3 The WBS should contain enough detail for the student responses to manage the tasks and assign responsibility and resources to the tasks. Make a list of the specific activities that need to be done between now and the wedding day. 3. Make a list of the specific activities that need to be done between now and the wedding day. The WBS should contain enough detail for the student responses to manage the tasks and assign responsibility and resources to the tasks.

Case Study 2 Question 4 Responses should show the name of the person responsible for each task. For each activity, identify the person (Tony, Peggy Sue, etc.) who will be responsible for seeing that the activity is accomplished. 4. For each activity, identify the person (Tony, Peggy Sue, etc.) who will be responsible for seeing that the activity is accomplished. Student responses should show the name of the person responsible for each task.

Case Study 2 Question 5 Responses should sequence the tasks to show the dependencies of the tasks and what tasks can be done concurrently, if any. Create a network diagram that shows the sequence and dependent relationships of all the activities. 5. Create a network diagram that shows the sequence and dependent relationships of all the activities. Student responses should sequence the tasks to show the dependencies of the tasks and what tasks can be done concurrently, if any.

Microsoft Project Appendix
The Appendix in this chapter introduces Microsoft Project. Have the students produce the displays that are shown in the chapter.

Appendix Microsoft Project
Appendix activities are Enter the work breakdown structure in a hierarchical indentured list format Determine predecessors for tasks Assign responsibility for each activity Create the network diagram Most widely used project management software system in the business environment today. It is powerful, easy to use, and available at a very reasonable price. A free trial version is included with new copies of the text or on the Microsoft website. The Gantt Chart View and the Task ribbon are the default view when Microsoft Project is first opened. Other views are chosen by clicking on the arrow in the View group on the Task ribbon and selecting the name from the drop down list. Have students work through the example to apply the concepts presented in the chapter in the Microsoft Project software. Microsoft Project is the most widely used project management software system in business today. It is powerful, easy to use, and available at a reasonable price. A free trial version is included with new copies of the textbook. If students do not have the disk, a trial version of Microsoft project is available on the Microsoft website. The Gantt Chart View and the Task ribbon are the default view when Microsoft Project is first opened. Other views are chosen by clicking on the arrow in the View group on the Task ribbon and selecting the name from the drop down list. This first appendix has students: Enter the work breakdown structure in a hierarchical indentured list format Determine predecessors for tasks Assign responsibility for each activity Create the network diagram

Figure 4A.1, Project Properties
This image depicts how to enter information about the project file in the Project Information Project Properties window. Entering information about the project is important to communicate to project members and to others in the organization the name of who is responsible for the project file.

Figure 4A.2, Project Information
This image shows the entry of the start date for the project. Students have to decide if they want to schedule from the project start date for from the project finish date. If they schedule from the project start date and the calculated finish date is earlier than the project due date, then the project has slack or float. If they schedule from the finish date and start on the calculated start date, then there is no time in the schedule for any delays. If the project is delayed, then other tasks would have to be fast tracked in order to finish by the project finish date.

Figure 4A.3, Work Package and Activity Entry
This image depicts the entry of the work breakdown structure work items and work packages. Remember, the work packages are the activities that start with a verb. The summary tasks all start with a verb. The project title is entered on the first task line to help students see the summary information. Project has the capability to hide and view the summary tasks and the project title. If the project summary is used to enter the title, the project title would be entered as task 0 and not have to be entered as task 1. This is a more advanced level than the introductory lessons on Project in the text. If you have more advanced students, it will be beneficial to show them this feature. It is on the Gantt Chart Tools Format ribbon in the Show/Hide group. A check in the box next to Summary Tasks shows the summary tasks and a check in the box next to Project Summary Task shows the project title entered in the Project Properties window (Figure 4.1) as task 0 and next to the project title.

Figure 4A.4, Tasks – Entering Predecessor Data
This image shows how to enter predecessor data. The predecessor data is determined by following the network diagram presented in the chapter for the Consumer Market Study. Be sure to reinforce with the students that the task number entered in the Predecessor column is the task number for the line where the task is listed in Microsoft Project and not the task number as shown on the network diagram.

Figure 4A.5, Resources Figure 4A.5, Resources
This image depicts the entry of the resources on the Gantt Chart View in the Resources column. Resources can be entered on the Resource Sheet and then selected from a drop down list in the Resource column on the Gantt Chart View. Entering additional work resources after the first entry may trigger Microsoft Project to ask if the task should be shortened or if there is more work.

Figure 4A.6, Network Diagram
This image shows a portion of the network diagram generated by the entry of the tasks, predecessors, and resources. At this time, the task durations have not been added so they are not reflected in the start and finish times shown in the activity boxes in the network diagram. The duration of the tasks do not change the size of the boxes in the network diagram. Only the length of the bars in the Gantt chart change to show the length of the tasks. The dates in the network diagram will change.

Figure 4A.7, Set Baseline for Project
This image depicts how to set a baseline for the project. It is important that students develop the habit of setting a baseline to examine changes to the project after planning is complete. Comparison of the project's actual performance to the planned performance saved in the baseline shows how the project has deviated from the plan and reveals where the project may have problems that need to be addressed.

Project Management Fundamentals

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