Project Management: The Managerial Process, Eighth Edition
By Erik W Larson and Clifford F Gray
Contents:
Preface ix
Chapter 1
Modern Project Management 2
1.1 What Is a Project? 6
What a Project Is Not 7
Program versus Project 7
The Project Life Cycle 9
The Project Manager 10
Being Part of a Project Team 11
1.2 Agile Project Management 12
1.3 Current Drivers of Project Management 15
Compression of the Product Life Cycle 15
Knowledge Explosion 15
Triple Bottom Line (Planet, People, Profit) 15
Increased Customer Focus 15
Small Projects Represent Big Problems 16
1.4 Project Management Today: A Socio-Technical Approach 17
Summary 18
Chapter 2
Organization Strategy and Project Selection 28
2.1 Why Project Managers Need to Understand Strategy 30
2.2 The Strategic Management Process: An Overview 31
Four Activities of the Strategic Management Process 31
2.3 The Need for a Project Priority System 36
Problem 1: The Implementation Gap 36
Problem 2: Organization Politics 37
Problem 3: Resource Conflicts and Multitasking 38
2.4 Project Classification 38
2.5 Phase Gate Model 39
2.6 Selection Criteria 41
Financial Criteria 41
Nonfinancial Criteria 43
Two Multi-Criteria Selection Models 43
2.7 Applying a Selection Model 46
Project Classification 46
Sources and Solicitation of Project Proposals 47
Ranking Proposals and Selection of Projects 49
2.8 Managing the Portfolio System 52
Senior Management Input 52
Governance Team Responsibilities 52
Balancing the Portfolio for Risks and Types of Projects 52
Summary 54
Chapter 3
Organization: Structure and Culture 68
3.1 Project Management Structures 70
Organizing Projects within the Functional Organization 70
Organizing Projects as Dedicated Teams 73
Organizing Projects within a Matrix Arrangement 77
Different Matrix Forms 78
3.2 Project Management Office (PMO) 81
3.3 What Is the Right Project Management Structure? 83
Organization Considerations 83
Project Considerations 83
3.4 Organizational Culture 84
What Is Organizational Culture? 85
Identifying Cultural Characteristics 87
3.5 Implications of Organizational Culture for Organizing Projects 89
Summary 92
Chapter 4
Defining the Project 104
4.1 Step 1: Defining the Project Scope 106
Employing a Project Scope Checklist 107
4.2 Step 2: Establishing Project Priorities 111
4.3 Step 3: Creating the Work Breakdown Structure 113
Major Groupings in a WBS 113
How a WBS Helps the Project Manager 113
A Simple WBS Development 114
4.4 Step 4: Integrating the WBS with the Organization 118
4.5 Step 5: Coding the WBS for the Information System 118
4.6 Process Breakdown Structure 121
4.7 Responsibility Matrices 122
4.8 Project Communication Plan 124
Summary 126
Chapter 5
Estimating Project Times and Costs 134
5.1 Factors Influencing the Quality of Estimates 136
Planning Horizon 136
Project Complexity 136
People 136
Project Structure and Organization 137
Padding Estimates 137
Organizational Culture 137
Other Factors 137
5.2 Estimating Guidelines for Times, Costs, and Resources 138
5.3 Top-Down versus Bottom-Up Estimating 139
5.4 Methods for Estimating Project Times and Costs 142
Top-Down Approaches for Estimating Project Times and Costs 142
Bottom-Up Approaches for Estimating Project Times and Costs 146
A Hybrid: Phase Estimating 147
5.5 Level of Detail 149
5.6 Types of Costs 150
Direct Costs 151
Direct Project Overhead Costs 151
General and Administrative (G&A) Overhead Costs 151
5.7 Refining Estimates 152
5.8 Creating a Database for Estimating 154
5.9 Mega Projects: A Special Case 155
Summary 158
Appendix 5.1: Learning Curves for Estimating 164
Chapter 6
Developing a Project Schedule 168
6.1 Developing the Project Network 169
6.2 From Work Package to Network 170
6.3 Constructing a Project Network 172
Terminology 172
Basic Rules to Follow in Developing Project Networks 172
6.4 Activity-on-Node (AON) Fundamentals 173
6.5 Network Computation Process 176
Forward Pass—Earliest Times 177
Backward Pass—Latest Times 179
Determining Slack (or Float) 180
6.6 Using the Forward and Backward Pass Information 183
6.7 Level of Detail for Activities 184
6.8 Practical Considerations 184
Network Logic Errors 184
Activity Numbering 184
Use of Computers to Develop Networks 185
Calendar Dates 185
Multiple Starts and Multiple Projects 185
6.9 Extended Network Techniques to Come Closer to Reality 188
Laddering 188
Use of Lags to Reduce Schedule Detail and Project Duration 188
An Example Using Lag Relationships—the Forward and Backward Pass 192
Hammock Activities 193
Summary 194
Chapter 7
Managing Risk 212
7.1 Risk Management Process 214
7.2 Step 1: Risk Identification 216
7.3 Step 2: Risk Assessment 219
Probability Analysis 222
7.4 Step 3: Risk Response Development 223
Mitigating Risk 223
Avoiding Risk 225
Transferring Risk 225
Escalating Risk 225
Retaining Risk 225
7.5 Contingency Planning 226
Technical Risks 227
Schedule Risks 229
Cost Risks 229
Funding Risks 229
7.6 Opportunity Management 230
7.7 Contingency Funding and Time Buffers 231
Contingency Reserves 231
Management Reserves 232
Time Buffers 232
7.8 Step 4: Risk Response Control 233
7.9 Change Control Management 234
Summary 237
Appendix 7.1: PERT and PERT Simulation 248
Chapter 8
Scheduling Resources and Costs 258
8.1 Overview of the Resource Scheduling Problem 260
8.2 Types of Resource Constraints 262
8.3 Classification of a Scheduling Problem 263
8.4 Resource Allocation Methods 263
Assumptions 263
Time-Constrained Projects: Smoothing Resource Demand 264
Resource-Constrained Projects 265
8.5 Computer Demonstration of Resource-Constrained Scheduling 270
The Impacts of Resource-Constrained Scheduling 274
8.6 Splitting Activities 277
8.7 Benefits of Scheduling Resources 278
8.8 Assigning Project Work 279
8.9 Multiproject Resource Schedules 280
8.10 Using the Resource Schedule to Develop a Project Cost Baseline 281
Why a Time-Phased Budget Baseline Is Needed 281
Creating a Time-Phased Budget 282
Summary 287
Appendix 8.1: The Critical-Chain Approach 308
Chapter 9
Reducing Project Duration 318
9.1 Rationale for Reducing Project Duration 320
9.2 Options for Accelerating Project Completion 321
Options When Resources Are Not Constrained 322
Options When Resources Are Constrained 324
9.3 Project Cost-Duration Graph 327
Explanation of Project Costs 327
9.4 Constructing a Project Cost-Duration Graph 328
Determining the Activities to Shorten 328
A Simplified Example 330
9.5 Practical Considerations 332
Using the Project Cost-Duration Graph 332
Crash Times 333
Linearity Assumption 333
Choice of Activities to Crash Revisited 333
Time Reduction Decisions and Sensitivity 334
9.6 What If Cost, Not Time, Is the Issue? 335
Reduce Project Scope 336
Have Owner Take on More Responsibility 336
Outsource Project Activities or Even the Entire Project 336
Brainstorm Cost Savings Options 336
Summary 337
Chapter 10
Being an Effective Project Manager 354
10.1 Managing versus Leading a Project 356
10.2 Engaging Project Stakeholders 357
10.3 Influence as Exchange 361
Task-Related Currencies 362
Position-Related Currencies 363
Inspiration-Related Currencies 363
Relationship-Related Currencies 363
Personal-Related Currencies 364
10.4 Social Network Building 364
Mapping Stakeholder Dependencies 364
Management by Wandering Around (MBWA) 366
Managing Upward Relations 367
Leading by Example 369
10.5 Ethics and Project Management 372
10.6 Building Trust: The Key to Exercising Influence 373
10.7 Qualities of an Effective Project Manager 375
Summary 378
Chapter 11
Managing Project Teams 390
11.1 The Five-Stage Team Development Model 393
11.2 Situational Factors Affecting Team Development 395
11.3 Building High-Performance Project Teams 397
Recruiting Project Members 397
Conducting Project Meetings 399
Establishing Team Norms 401
Establishing a Team Identity 403
Creating a Shared Vision 404
Managing Project Reward Systems 406
Orchestrating the Decision-Making Process 408
Managing Conflict within the Project 410
Rejuvenating the Project Team 413
11.4 Managing Virtual Project Teams 415
11.5 Project Team Pitfalls 419
Groupthink 419
Bureaucratic Bypass Syndrome 419
Team Spirit Becomes Team Infatuation 419
Summary 421
Chapter 12
Outsourcing: Managing Interorganizational Relations 434
12.1 Outsourcing Project Work 436
12.2 Request for Proposal (RFP) 440
Selection of Contractor from Bid Proposals 441
12.3 Best Practices in Outsourcing Project Work 442
Well-Defined Requirements and Procedures 442
Extensive Training and Team-Building Activities 444
Well-Established Conflict Management Processes in Place 445
Frequent Review and Status Updates 447
Co-location When Needed 448
Fair and Incentive-Laden Contracts 449
Long-Term Outsourcing Relationships 449
12.4 The Art of Negotiating 450
- Separate the People from the Problem 451
- Focus on Interests, Not Positions 452
- Invent Options for Mutual Gain 453
- When Possible, Use Objective Criteria 454
Dealing with Unreasonable People 454
12.5 A Note on Managing Customer Relations 455
Summary 458
Appendix 12.1: Contract Management 467
Chapter 13
Progress and Performance Measurement and Evaluation 474
13.1 Structure of a Project Monitoring Information System 476
What Data Are Collected? 476
Collecting Data and Analysis 476
Reports and Reporting 476
13.2 The Project Control Process 477
Step 1: Setting a Baseline Plan 477
Step 2: Measuring Progress and Performance 477
Step 3: Comparing Plan against Actual 477
Step 4: Taking Action 478
13.3 Monitoring Time Performance 478
Tracking Gantt Chart 478
Control Chart 479
Milestone Schedules 479
13.4 Earned Value Management (EVM) 480
The Need for Earned Value Management 480
Percent Complete Rule 484
What Costs Are Included in Baselines? 484
Methods of Variance Analysis 485
13.5 Developing a Status Report: A Hypothetical Example 487
Assumptions 487
Baseline Development 487
Development of the Status Report 488
13.6 Indexes to Monitor Progress 492
Performance Indexes 493
Project Percent Complete Indexes 494
Software for Project Cost/Schedule Systems 494
Additional Earned Value Rules 495
13.7 Forecasting Final Project Cost 496
13.8 Other Control Issues 498
Technical Performance Measurement 498
Scope Creep 500
Baseline Changes 500
The Costs and Problems of Data Acquisition 502
Summary 503
Appendix 13.1: The Application of Additional Earned Value Rules 522
Appendix 13.2: Obtaining Project Performance Information from MS
Project 2010 or 2016 528
Chapter 14
Project Closure 532
14.1 Types of Project Closure 534
14.2 Wrap-up Closure Activities 536
14.3 Project Audits 539
The Project Audit Process 540
Project Retrospectives 543
14.4 Project Audits: The Big Picture 543
Level 1: Ad Hoc Project Management 546
Level 2: Formal Application of Project Management 546
Level 3: Institutionalization of Project Management 547
Level 4: Management of Project Management System 547
Level 5: Optimization of Project Management System 548
14.5 Post-implementation Evaluation 548
Team Evaluation 548
Individual, Team Member, and Project Manager Performance Reviews 550
Summary 552
Appendix 14.1: Project Closeout Checklist 555
Chapter 15
Agile Project Management 562
15.1 Traditional versus Agile Methods 564
15.2 Agile PM 566
15.3 Agile PM in Action: Scrum 569
Roles and Responsibilities 570
Scrum Meetings 572
Product and Sprint Backlogs 573
Sprint and Release Burndown Charts 575
15.4 Extreme Programming and Kanban 576
Kanban 577
15.5 Applying Agile PM to Large Projects 578
15.6 Limitations and Concerns 580
15.7 Hybrid Models 580
Summary 581
Chapter 16
International Projects 590
16.1 Environmental Factors 592
Legal/Political Factors 593
Security 593
Geography 594
Economic Factors 594
Infrastructure 596
Culture 597
16.2 Project Site Selection 599
16.3 Cross-Cultural Considerations: A Closer Look 600
Adjustments 601
Working in Mexico 602
Working in France 605
Working in Saudi Arabia 606
Working in China 608
Working in the United States 609
Summary Comments about Working in Different Cultures 611
Culture Shock 611
16.4 Selection and Training for International Projects 614
Summary 617
Appendix One: Solutions to Selected Exercises 626
Appendix Two: Computer Project Exercises 639
Glossary 656
Acronyms 663
Project Management Equations 664
Cross Reference of Project Management 665
Socio-Technical Approach to Project Management 666
Index 667