Project Management 1st Edition A Risk-Management Approach

ForewordPrefaceAcknowledgmentsAbout the Authors1 An Introduction to Project Management1.1 Introduction1.1.1 Risk Management1.1.2 Increasing Project Complexity1.1.3 Change Management1.1.4 Shrinking Project Life Cycles1.1.5 Newer Methodologies1.1.6 Implications and Costs of a Lack of Project Management1.2 What Defines a Project?1.2.1 A Taxonomy of Project Types1.2.2 Project Governance1.3 The Project Life Cycle1.4 Measures of Project Success and Failure1.4.1 Organizational Structure and Project Success1.4.2 Success and Failure of Information Technology Projects1.4.3 When to “Pull the Plug”1.5 Managing Project Risks1.5.1 Risk Classes Defined1.6 Project Management Trade-Offs1.7 Program Versus Project Management1.8 Agile Project Management: A Modern Development1.9 A Brief History of Project Management1.10 Overview of the Text1.10.1 Important Concepts to RememberSummary2 Project Initiation and Selection2.1 Introduction2.2 The Relationship of Projects to Strategic and Operational Goals2.2.1 Initiating Project Proposals2.3 Simple Numerical Measures2.3.1 Payback Period2.3.2 Net Present Value2.3.3 Internal Rate of Return2.3.4 Accounting Rate of Return2.3.5 Profitability Index2.4 Advanced Measures2.4.1 Risk-Adjusted Discount Rates2.5 Implementing “Options Thinking”2.5.1 Putting Options Thinking Into Practice2.5.2 Project Timing: The Defer Option2.6 “Stage Gates” Defined2.7 Ranking and Scoring Methods2.8 Evaluating Project Portfolios2.8.1 Importance of Project Portfolios2.8.2 Mathematical Programming Model That Defines a Project PortfolioSummary3 Project Planning3.1 Introduction3.2 Outline of a Project Plan3.2.1 Executive Summary3.2.2 Project Description3.2.3 Approach and Phasing Strategy3.2.4 Assumptions and Constraints3.2.5 Critical Success Factors3.2.6 Project Completion Criteria3.2.7 Responsibilities Matrix3.2.8 Project Schedule3.2.9 Time and Cash Management Plan3.2.10 Quality Assurance Plan3.3 Risk Management Strategy and Plan3.3.1 The Need for a Risk Management Plan3.3.2 Strategies for Managing Project Risks3.3.3 Understanding Risk3.3.4 Risk Management Tactical Plan3.4 Communications Strategy and Plan3.5 Identifying Project Requirements3.5.1 Types of Requirements3.5.2 Characteristics of Good RequirementsSummary3 Supplement: Agile Project Management3S.1 Introduction3S.2 Agile Project Management3S.2.1 Advantages of Agile PM3S.2.2 Disadvantages of Agile PM3S.3 Implementing Agile PM3S.4 Scrum and Extreme Programming3S.5 Velocity and Burndown Charts3S.5.1 Burndown Charts3S.6 Risk Management and the Agile–Traditional Continuum3S.7 Agile PM Analogy: American FootballSummary4 Defining Project Content4.1 Introduction4.2 Costs Defined4.2.1 Resource (Direct) Costs4.2.2 Time-Dependent Costs4.2.3 Incentive Payments: Penalty Costs and Bonuses4.3 Defining Project Work4.3.1 The Work Breakdown Structure4.3.2 Constructing a WBS4.3.3 Guidelines for Defining Tasks4.4 Estimating Work Content and Task Duration4.4.1 Methodologies for Estimating Project Duration and Cost4.4.2 Estimating Software Projects4.5 Deterministic Versus Stochastic Estimates4.5.1 Deterministic Estimates4.5.2 Stochastic Estimates4.6 Common Pitfalls and Perils4.6.1 Insufficient Task Granularity4.6.2 Problems Associated With Task Durations4.6.3 Internally Inconsistent Estimates4.6.4 Estimates That Do Not Facilitate Project Monitoring and Control4.6.5 Tasks That Focus on Work Rather Than Deliverables4.6.6 Project Schedules Not Based on the Risk Management PlanSummary4 Supplement: Review of Probability and Distribution Functions4S.1 Introduction4S.2 Probability Distributions4S.2.1 Discrete Probability Distributions4S.2.2 Continuous Probability Distributions4S.3 Summary Measures for Probability Distributions4S.3.1 Mean4S.3.2 Variance4S.3.3 Standard Deviation4S.4 Common Discrete Distributions4S.4.1 The Binomial Distribution4S.4.2 The Poisson Distribution4S.5 Common Continuous Distributions4S.5.1 The Beta Distribution4S.5.2 The Continuous Uniform Distribution4S.5.3 The Exponential Distribution4S.5.4 The Shifted Exponential Distribution4S.5.5 The Normal Distribution4S.5.6 The Triangular Distribution4S.6 Sums of Random VariablesSummary5 Scheduling a Deterministic Project5.1 Introduction5.2 Determining a Project’s Schedule5.2.1 Precedence Networks5.3 The Critical Path Method5.3.1 CPM Algorithm (Calculations)5.4 Calculating Slacks (Floats)5.4.1 Total Slack5.4.2 Free Slack5.4.3 Safety Slack5.4.4 Independent Slack5.4.5 Putting It All Together5.5 Types of Precedence Relations5.6 Linear Programming Formulation5.6.1 Formulating the Project LP5.6.2 Solving the Project LP (Table Approach)5.6.3 Solving the Project LP (Matrix Approach)5.6.4 Some Important Variations5.7 Gantt Charts: Representing the Schedule Graphically5.8 Activity-on-Arc Precedence Networks5.8.1 Comparison of AOA and AON Networks5.8.2 CPM Calculations for AOA Networks5.9 A Note Regarding Software ProgramsSummary6 Project Trade-Offs and Risk Mitigation6.1 Introduction6.2 Preparing a Budget: The Basic Time–Cost Relationship6.3 Project Compression: Time–Cost Trade-Offs6.3.1 Trade-Offs Between Direct Resource Costs and Overhead/Indirect Costs6.3.2 Using Linear Programming to Solve the Time–Cost Trade-Off Problem6.3.3 Using a (Matrix) Solver Model to Solve the Time–Cost Trade-Off Problem6.3.4 Nonlinear Time–Cost Trade-Offs6.3.5 Discrete Time–Cost Trade-Offs6.4 Risk Management and Time–Cost Trade-Offs6.5 Time–Cost Trade-Offs in Stochastic Projects6.6 Other Trade-Off Issues: Concurrent Engineering and Coordination Costs6.6.1 Concurrent Engineering: Serial Versus Parallel ProcessingSummary7 Scheduling Stochastic Projects7.1 Introduction7.2 Proactive Versus Reactive Scheduling7.3 Using Buffers to Protect the Schedule7.3.1 Robust Scheduling7.3.2 Risk Pooling7.4 Planning Under Task Time Uncertainty Using Classic PERT7.4.1 Classic PERT7.4.2 Calculating Task Expected Durations and Variances7.4.3 Finding Path Expected Durations and Variances7.4.4 Calculating Starting and Ending Time Probabilities7.4.5 Limitations of the Classic PERT Model7.4.6 Avoiding Classic PERT Biases: Setting a Project Buffer7.5 Planning Under Task Time Uncertainty Using Monte Carlo Simulation Models7.5.1 Simulating a Project With Continuous Probability Distributions7.5.2 Simulating a Project With Discrete Probability Distributions7.6 Managing Exogenous Uncertainties7.6.1 Cycles and Probabilistic Branching: A New Product Development Example7.6.2 Analyzing Cost Uncertainties7.6.3 Addressing Resource Uncertainties7.7 Task Time Uncertainty and the Theory of Constraints7.7.1 Implications of Task Uncertainty7.7.2 Schoenberger’s HypothesisSummary7 Supplement: Monte Carlo Simulation7S.1 Introduction7S.2 The Basic Concept7S.3 Generating Random Variates7S.3.1 The Inverse Transform Method7S.4 Generate Trials7S.4.1 Replication Method7S.4.2 Single-Trial Worksheet Method7S.5 Analyzing the Simulation7S.5.1 Calculating Probabilities7S.5.2 Calculating Inverse Cumulative ProbabilitiesSummary8 Managing Project Resources8.1 Introduction8.2 Defining Resource Types8.2.1 Rate-Constrained Resources8.2.2 Capacity-Constrained Resources8.2.3 Doubly Constrained Resources8.3 Criteria for Scheduling Resource Types8.3.1 Resource Leveling Problem8.3.2 Resource Allocation Problem8.4 The Resource Leveling Problem Defined8.5 The Rate-Constrained Resource Allocation Problem8.5.1 Solving the Rate-Constrained Resource Allocation Problem: Ranking the Tasks8.6 Heuristics for the Rate-Constrained Resource Allocation Problem8.6.1 Task-Based Algorithms (Serial Heuristics)8.6.2 Time-Based Algorithms (Parallel Heuristics)8.7 An Easily Solvable Rate-Constrained Resource Allocation Problem: The Critical Chain Defined8.8 The Critical Chain Methodology8.9 Defining Resource Buffers8.10 Capacity-Constrained Resource Allocation8.11 Supply Chain Management and Projects8.12 Impact of Worker Behaviors on Project Outcomes8.12.1 Parkinson’s Law8.12.2 Procrastinating WorkersSummary9 Project Teams9.1 Introduction9.2 Forming a Project Team9.2.1 Determining Team Composition9.2.2 Bringing a Team Together9.2.3 Promoting Team and Project Success9.3 Assigning Potential Team Members to a Project9.3.1 Finding the Smallest Team That Satisfies Skill Requirements9.3.2 Minimizing Costs of a Team That Satisfies Skill Requirements9.4 Making Trade-Off Decisions When Creating Project Teams9.4.1 Team Versus Individual Performance9.4.2 The Cost of Coordination and Communication9.4.3 Makespan Reduction Versus Team Efficiency9.5 Determining Team Size When Resource Availability Is Uncertain9.5.1 Finding the Optimal (Cost-Minimizing) Team Size With Uncertain Resources9.6 Managing the Project Team9.6.1 Planning the Project as a Team9.6.2 Using Performance Incentives to Manage Schedule Risk9.6.3 Conflict in Project Teams9.6.4 Long-Term Team Considerations9.6.5 Publicizing Team Success9.6.6 Launching the Project9.7 Managing the End of Project Transition9.7.1 Project Team Performance EvaluationsSummary10 Managing Decentralized Projects10.1 Introduction10.2 Decentralized Projects10.3 Subcontracting Issues Defined10.3.1 Evaluating Potential Contractors10.3.2 Request for Proposals and Request for Bids10.4 Underlying Economic Concepts10.5 Contract Types Defined10.5.1 Fixed-Price Contracts10.5.2 Cost-Plus Contracts (Also Known as Cost-Reimbursable Contracts)10.5.3 Time and Material Contracts10.5.4 Performance-Based Contracts10.5.5 Incentive Contracts10.5.6 Optional-Scope Contracts10.6 Defining a Contract That Maximizes the Project Value10.6.1 When Is an Incentive Contract a Coordinating Contract?10.6.2 Comparing the Incentive Contract With a Fixed-Price Contract10.6.3 Final Issues Related to Defining a Coordinating ContractSummary11 Assessing Project Progress11.1 Introduction11.2 Assessing In-Control Versus Out-of-Control Project States11.2.1 Project Control System Illustrated11.3 Earned Value Analysis Defined11.3.1 Actual Cost of Work Performed11.3.2 Budgeted Cost of Work Scheduled11.3.3 Budgeted Cost of Work Performed11.3.4 Total Variance and Time Variance Defined11.3.5 Critical Ratio11.3.6 Fixed Rules to Estimate Earned Value11.4 Limitations of Earned Value Analysis11.5 Updating Cost and Schedule Forecasts11.5.1 Naive Method 111.5.2 Naive Method 211.5.3 Using a Monte Carlo Simulation Model to Update ForecastsSummary12 Managing a Multiproject Environment12.1 Introduction12.2 Managing the Project Portfolio12.2.1 Selecting and Funding Projects12.2.2 Assigning Resources to Multiple Projects12.2.3 Scheduling Projects With Shared Resources12.2.4 Multitasking Shared Resources12.2.5 Prioritizing Projects in the Real World: Should Incentives Be Used?12.2.6 Scheduling When Projects Arrive at Random Times12.3 Ensuring Projects Deliver Their Value Propositions12.3.1 Project Audits and Data Collection12.3.2 Managing Stage (Toll) Gates12.3.3 Project Performance Measurement12.3.4 Project Closure12.4 The Role of the Project Manager12.4.1 The Project Manager as Business Leader12.4.2 The Work of a Project Manager12.4.3 Selecting a Project Manager12.4.4 Project Manager Competency Frameworks12.4.5 Sources of Influence12.4.6 Finding the Perfect Project Manager12.5 The Role of the PMO12.5.1 PMO Organizational Scope12.5.2 PMO Functional Scope12.5.3 PMO Contributions to Project SuccessSummaryAppendix A: Textbook Notations DefinedAppendix B: MS Project Practice ProblemsGlossaryBibliographyIndex