Project Management: Achieving Competitive Advantage, Fifth Edition
By Jeffrey K. Pinto
CONTENTS:
Preface 13
Chapter 1 INTRODUCTION: WHY PROJECT MANAGEMENT? 23
PROJECT PROFILE: Development Projects that are Transforming Africa 23
The Need for Projects 25
What is a Project? 25
General Project Characteristics 27
PROJECT PROFILE: Royal Mail: Moving with the Times 30
Why are Projects Important? 31
PROJECT PROFILE: London’s Crossrail: Europe’s Largest Construction Project 32
Project Life Cycles 34
◾◾BOX 1.1: Project Managers in Practice 36
Determinants of Project Success 37
◾◾BOX 1.2: Project Management Research in Brief 40
Developing Project Management Maturity 41
Employability Skills 45
Communication 45
Critical Thinking 45
Collaboration 45
Knowledge Application And Analysis 45
Business Ethics And Social Responsibility 45
Information Technology Application And Computing Skills 46
Data Literacy 46
Project Elements and Text Organization 46
Summary 50 • Key Terms 51 • Discussion Questions 51
Case Study 1.1 MegaTech, Inc. 52 • Case Study 1.2 The HealthSMART
Program 52 • Case Study 1.3 Disney’s Expedition Everest 53
Case Study 1.4 “Throwing Good Money after Bad”: the BBC’s Digital
Media Initiative 54 • Internet Exercises 57 • PMP Certification Sample
Questions 57 • Answers 57 • Notes 57
Chapter 2 THE ORGANIZATIONAL CONTEXT: STRATEGY, STRUCTURE,
AND CULTURE 60
PROJECT PROFILE: The Airbus A 380: A Failure of Strategy? 60
Implementing Strategy Through Projects 62
Projects and Organizational Strategy 63
Stakeholder Management 65
Identifying Project Stakeholders 66
Managing Stakeholders 69
Organizational Structure 71
Forms of Organizational Structure 72
Functional Organizations 72
Project Organizations 75
Moving to Heavyweight Project Organizations 79
◾◾BOX 2.1: Project Management Research in Brief 80
Project Management Offices 81
Contents 5
Organizational Culture 84
How Do Cultures Form? 86
Organizational Culture and Project Management 88
PROJECT PROFILE: Electronic Arts and the Power of Strong Culture in Design Teams 89
Summary 90 • Key Terms 92 • Discussion Questions 92
Case Study 2.1 Rolls-Royce Corporation 93 • Case Study 2.2 Classic
Case: Paradise Lost—The Xerox Alto 94 • Case Study 2.3 Project Task Estimation
and the Culture of “Gotcha!” 95 • Case Study 2.4 Widgets
’R Us 95 • Internet Exercises 96 • PMP Certification Sample
Questions 96 • Answers 97 • Integrated Project—Building Your
Project Plan 98 • Notes 100
Chapter 3 PROJECT SELECTION AND PORTFOLIO MANAGEMENT 102
PROJECT PROFILE: Project Selection Procedures: A Cross-Industry Sampler 102
Introduction: Project Selection 103
Approaches to Project Screening and Selection 106
Method One: Checklist Model 106
Method Two: Simplified Scoring Models 107
Limitations of Scoring Models 109
Method Three: The Analytical Hierarchy Process 110
Method Four: Profile Models 113
Financial Models 115
Payback Period 116
Net Present Value 117
Discounted Payback 119
Internal Rate of Return 119
Choosing a Project Selection Approach 121
PROJECT PROFILE: Project Selection and Screening at GE: The Tollgate Process 122
Project Portfolio Management 123
Objectives and Initiatives 124
The Portfolio Selection Process 125
Developing a Proactive Portfolio 127
Keys to Successful Project Portfolio Management 130
Problems in Implementing Portfolio Management 130
Summary 132 • Key Terms 133 • Solved Problems 133
Discussion Questions 134 • Problems 134 • Case Study 3.1 Keflavik
Paper Company
137 • Case Study 3.2 Pracht: Selecting a New Ethical
Product
Line 138 • Internet Exercises 140 • Notes 140
Chapter 4 LEADERSHIP AND THE PROJECT MANAGER 142
PROJECT PROFILE: NASA Taps a Leader with the Right Stuff to Run Their Mars
2020 Project 142
Introduction: Successful Projects Need Leaders 144
Leaders Versus Managers 144
How the Project Manager Leads 146
Acquiring Project Resources 146
Motivating and Building Teams 147
Having a Vision and Fighting Fires 147
Communicating 148
◾◾BOX 4.1: Project Management Research in Brief 151
Traits of Effective Project Leaders 151
Conclusions about Project Leaders 152
6 Contents
PROJECT PROFILE: Leading by Example for the London Olympics—Sir John Armitt 153
Project Champions 154
Champions—Who Are They? 155
What Do Champions Do? 156
How to Make a Champion 157
The New Project Leadership 158
◾◾BOX 4.2: Project Managers in Practice 159
PROJECT PROFILE: The Challenge of Managing Internationally 160
Project Management Professionalism 160
Project Management and Ethics 162
Unethical Behaviors in Project Management 164
PROJECT PROFILE: British Luxury Automobile Maker Caught in Corruption
Charges 165
Summary 166 • Key Terms 167 • Discussion Questions 168
Case Study 4.1 In Search of Effective Project Managers 168
Case Study 4.2 Finding the Emotional Intelligence to Be a Real
Leader 169 • Case Study 4.3 Volkswagen and Its Project to Cheat
Emissions
Tests 169 • Case Study 4.4 Problems with John 171
Internet Exercises 174 • PMP Certification Sample Questions 174
Answers 175 • Notes 175
Chapter 5 SCOPE MANAGEMENT 178
PROJECT PROFILE: Berlin’s Brandenburg Willy Brandt International Airport 178
Introduction: The Importance of Scope Management 180
Conceptual Development 180
The Statement of Work 183
The Project Charter 186
PROJECT PROFILE: Statements of Work: Then and Now 186
The Scope Statement 186
The Work Breakdown Structure 187
Purposes of the Work Breakdown Structure 187
The Organization Breakdown Structure 192
The Responsibility Assignment Matrix 195
PROJECT PROFILE: Defining a Project Work Package 196
Work Authorization 197
Scope Reporting 198
◾◾BOX 5.1: Project Management Research in Brief 199
Control Systems 200
Configuration Management 201
Project Closeout 202
Project Management and Sustainability 203
Managing Projects for Sustainability 205
PROJECT PROFILE: Nicaragua’s Canal and Sustainability Challenges 207
Summary 208 • Key Terms 209 • Discussion Questions 210 •
Problems 210 • Case Study 5.1 Boeing’s Virtual Fence 210 • Case
Study 5.2 California’s High-Speed Rail Project 212 • Case Study 5.3 Five
Star Hotel ELV Project 214 • Case Study 5.4 The Expeditionary Fighting
Vehicle 215 • Internet Exercises 217 • PMP Certification Sample Questions
217 • Answers 218 • MS Project Exercises
218 • Appendix
5.1: Sample Project Charter 218 • Integrated Project—Developing the
Work Breakdown Structure 221 • Notes 222
Chapter 6 PROJECT TEAM BUILDING, CONFLICT, AND NEGOTIATION 225
PROJECT PROFILE: Team-Building Events – Heli-skiing and Zombie Apocalypses 225
Introduction 227
Building the Project Team 227
Identify Necessary Skill Sets 227
Identify People Who have the required Skills 228
Talk to Potential Team Members and Negotiate with Functional
Heads 229
Build in Fallback Positions 229
Assemble the Team 230
Characteristics of Effective Project Teams 230
A Clear Sense of Mission 230
A Productive Interdependency 231
Cohesiveness 231
Trust 231
Enthusiasm 232
Results Orientation 232
Reasons Why Teams Fail 232
Poorly Developed or Unclear Goals 233
Poorly Defined Project Team Roles and Interdependencies 233
Lack of Project Team Motivation 233
Poor Communication 234
Poor Leadership 234
Turnover Among Project Team Members 234
Dysfunctional Behavior 234
Stages in Group Development 235
Stage One: Forming 235
Stage Two: Storming 236
Stage Three: Norming 236
Stage Four: Performing 236
Stage Five: Adjourning 236
Punctuated Equilibrium 237
Achieving Cross-Functional Cooperation 238
Superordinate Goals 238
Rules and Procedures 239
Physical Proximity 239
Accessibility 239
Outcomes of Cooperation: Task and Psychosocial Results 240
Virtual Project Teams 240
PROJECT PROFILE: Tele-Immersion Technology Eases the Use of Virtual Teams 242
Conflict Management 243
What Is Conflict? 243
Sources of Conflict 244
Methods for Resolving Conflict 246
PROJECT PROFILE: Engineers Without Borders: Project Teams Impacting Lives 247
Negotiation 248
Questions to Ask Prior to the Negotiation 248
Principled Negotiation 249
Invent Options for Mutual Gain 251
8 Contents
Insist on Using Objective Criteria 252
Summary 253 • Key Terms 254 • Discussion Questions 254
Case Study 6.1 Columbus Instruments 254 • Case Study 6.2 The Bean
Counter and the Cowboy 255 • Case Study 6.3 Johnson & Rogers
Software
Engineering, Inc. 256 • Exercise in Negotiation 258
Internet Exercises 259 • PMP Certification Sample Questions 259
Answers 260 • Notes 260
Chapter 7 RISK MANAGEMENT 263
PROJECT PROFILE: Samsung’s Galaxy Note 7—Failure to Manage a New Product
for Risk 263
Introduction: What is Project Risk? 265
◾◾BOX 7.1: Project Managers in Practice 267
Risk Management: A Four-Stage Process 268
Risk Identification 268
PROJECT PROFILE: Dubai Reinstates The World Project 270
Risk Breakdown Structures 271
Analysis of Probability and Consequences 271
Risk Mitigation Strategies 274
Use of Contingency Reserves 276
Other Mitigation Strategies 277
Control and Documentation 277
PROJECT PROFILE: Collapse of Shanghai Apartment Building 279
Project Risk Management: An Integrated Approach 281
Summary 283 • Key Terms 284 • Solved Problem 284 • Discussion
Questions 284 • Problems 284 • Case Study 7.1 Classic Case:
de Havilland’s Falling Comet 285 • Case Study 7.2 The Building
that Melted Cars 288 • Case Study 7.3 Classic Case: Nicoll Highway
Collapse
289 • Internet Exercises 291 • PMP Certification Sample
Questions 291 • Answers 292 • Integrated Project—Project Risk
Assessment 293 • Notes 295
Chapter 8 COST ESTIMATION AND BUDGETING 296
PROJECT PROFILE: New York City’s Second Avenue Subway – Two Miles Completed for
Only $5 Billion Spent 296
Cost Management 298
Direct Versus Indirect Costs 299
Recurring Versus Nonrecurring Costs 300
Fixed Versus Variable Costs 301
Normal Versus Expedited Costs 301
Cost Estimation 301
Learning Curves in Cost Estimation 305
Software Project Estimation—Function Points 308
◾◾BOX 8.1: Project Management Research in Brief 309
Problems with Cost Estimation 311
◾◾BOX 8.2: Project Management Research in Brief 312
Creating a Project Budget 313
Top-Down Budgeting 314
Bottom-Up Budgeting 315
Activity-Based Costing 315
Developing Budget Contingencies 317
Summary 319 • Key Terms 320 • Solved Problems 320 • Discussion
Questions 321 • Problems 322 • Case Study 8.1 The Hidden Costs of
Infrastructure Projects—The Case of Building Dams 325
Case Study 8.2 Sochi Olympics—What’s the Cost of National Prestige? 327
Internet Exercises 329 • PMP Certification Sample
Questions 329 • Answers 330 • Integrated Project—Developing the Cost
Estimates and Budget 331 • Notes 333
Chapter 9 PROJECT SCHEDULING: NETWORKS, DURATION ESTIMATION,
AND CRITICAL PATH 335
PROJECT PROFILE: Preparing for a Major Golf Tournament – It’s a Long Road to the
First Tee 335
Introduction 337
Project Scheduling 337
Key Scheduling Terminology 339
Developing A Network 341
Labeling Nodes 341
Serial Activities 342
Concurrent Activities 342
Merge Activities 343
Burst Activities 343
Duration Estimation 346
Constructing the Critical Path 350
Calculating the Network 350
The Forward Pass 351
The Backward Pass 353
Probability of Project Completion 355
Laddering Activities 357
Hammock Activities 358
Options for Reducing the Critical Path 359
◾◾BOX 9.1: Project Management Research in Brief 360
Summary 361 • Key Terms 362 • Solved Problems 362
Discussion Questions 364 • Problems 364 • Case Study 9.1 Moving
the Historic Capen House 367 • Internet Exercises 369
MS Project Exercises 369 • PMP Certification Sample
Questions 370 • Answers 370 • Notes 371
Chapter 10 PROJECT SCHEDULING: LAGGING, CRASHING, AND ACTIVITY
NETWORKS 372
PROJECT PROFILE: Kiruna, Sweden – A Town on the Move! 372
Introduction 374
Lags in Precedence Relationships 374
Finish to Start 374
Finish to Finish 375
Start to Start 375
Start to Finish 376
Gantt Charts 377
Adding Resources to Gantt Charts 378
Incorporating Lags in Gantt Charts 379
◾◾BOX 10.1: Project Managers in Practice 379
Crashing Projects 381
Options for Accelerating Projects 381
Crashing the Project: Budget Effects 386
Contents 9
Activity-On-Arrow Networks 389
How Are They Different? 389
AOA Versus AON 394
Controversies in the Use of Networks 395
Conclusions 396
Summary 397 • Key Terms 397 • Solved Problems 398 • Discussion
Questions 399 • Problems 399 • Case Study 10.1 Project Scheduling
at Blanque Cheque Construction (A) 401 • Case Study 10.2 Project
Scheduling at Blanque Cheque Construction (B) 402 • MS Project
Exercises
402 • PMP Certification Sample Questions 403
Answers 404 • Integrated Project—Developing the Project
Schedule 405 • Notes 406
Chapter 11 ADVANCED TOPICS IN PLANNING AND SCHEDULING:
AGILE
AND CRITICAL CHAIN 408
PROJECT PROFILE: Adopting the Agile Methodology in Ericsson 409
Introduction 409
Agile Project Management 410
What Is Unique About Agile PM? 411
Tasks Versus Stories 413
Key Terms in Agile PM 413
Steps in Agile 415
Sprint Planning 415
Daily Scrums 415
The Development Work 416
Sprint Reviews 416
Sprint Retrospective 417
Keys to Success with Agile 417
Problems with Agile 418
◾◾BOX 11.1: Project Management Research in Brief 419
Extreme Programming (XP) 419
Theory of Constraints and Critical Chain Project Scheduling 420
Theory of Constraints 420
The Critical Chain Solution to Project Scheduling 421
Developing the Critical Chain Activity Network 424
Critical Chain Solutions Versus Critical Path Solutions 426
PROJECT PROFILE: Eli Lilly Pharmaceuticals and Its Commitment to Critical Chain Project
Management 427
Critical Chain Solutions to Resource Conflicts 428
Critical Chain Project Portfolio Management 429
◾◾BOX 11.2: Project Management Research in Brief 432
Critiques of CCPM 433
Summary 433 • Key Terms 435 • Solved Problem 435 • Discussion
Questions 436 • Problems 436 • Case Study 11.1 It’s an Agile
World 438 • Case Study 11.2 Ramstein Products, Inc. 439 • Internet
Exercises 440 • Notes 440
Chapter 12 RESOURCE MANAGEMENT 442
PROJECT PROFILE: Environmental Concerns and Political Leadership Impact Fossil Fuel
Project Cancellations 442
Introduction 444
The Basics of Resource Constraints 444
Time and Resource Scarcity 445
10 Contents
Resource Loading 447
Resource Leveling 448
Step One: Develop the Resource-Loading Table 452
Step Two: Determine Activity Late Finish Dates 452
Step Three: Identify Resource Overallocation 454
Step Four: Level the Resource-Loading Table 454
Resource-Loading Charts 457
◾◾BOX 12.1: Project Managers in Practice 460
Managing Resources in Multiproject Environments 461
Schedule Slippage 461
Resource Utilization 461
In-Process Inventory 462
Resolving Resource Decisions in Multiproject Environments 462
Summary 464 • Key Terms 465 • Solved Problem 465 • Discussion
Questions 466 • Problems 466 • Case Study 12.1 The Problems of
Multitasking 468 • Case Study 12.2 “First Come, First Served”: Resource
Challenges for Sunrise Restoration 469 • Internet Exercises 470
MS Project Exercises 470 • PMP Certification Sample Questions 471
Answers 472 • Integrated Project—Managing Your Project’s
Resources 473 • Notes 473
Chapter 13 PROJECT EVALUATION AND CONTROL 474
PROJECT PROFILE: U.S. Army Can’t Track Spending on its Spending Tracker Project 474
Introduction 475
Control Cycles—A General Model 476
Monitoring Project Performance 476
The Project S-Curve: A Basic Tool 477
S-Curve Drawbacks 479
Milestone Analysis 479
Problems with Milestones 481
The Tracking Gantt Chart 481
Benefits and Drawbacks of Tracking Gantt Charts 482
Earned Value Management 482
Terminology for Earned Value 483
Creating Project Baselines 484
Why Use Earned Value? 484
Steps in Earned Value Management 486
Assessing a Project’s Earned Value 487
Using Earned Value to Manage a Portfolio of Projects 492
Flow of Earned Value System 492
PROJECT PROFILE: Earned Value at Northrop Grumman 493
Issues in the Effective Use of Earned Value Management 494
Human Factors in Project Evaluation and Control 496
Critical Success Factor Definitions 498
Conclusions 499
Summary 500 • Key Terms 501 • Solved Problem 501 • Discussion
Questions 502 • Problems 503 • Case Study 13.1 The IT Department
at Kimble College 505 • Case Study 13.2 The Superconducting
Supercollider
506 • Case Study 13.3 “Dear Mr. President—Please
cancel our project!”: The Honolulu Elevated Rail Project 507 • Internet
Exercises 509 • MS Project Exercises 509 • PMP Certification Sample
Questions 510 • Answers 511 • Appendix 13.1: Earned
Schedule 511 • Notes 516
Contents 11
Chapter 14 PROJECT CLOSEOUT AND TERMINATION 518
PROJECT PROFILE: Amazon’s Golden Touch Fails with a High-Tech Gadget 518
Introduction 519
Types of Project Termination 520
◾◾BOX 14.1: Project Managers in Practice 520
Natural Termination—the Closeout Process 522
Finishing the Work 522
Handing Over the Project 522
Gaining Acceptance for the Project 523
Harvesting the Benefits 523
Reviewing How It All Went 524
Putting It All to Bed 526
Disbanding the Team 526
What Prevents Effective Project Closeouts? 527
Early Termination for Projects 527
Making the Early Termination Decision 529
PROJECT PROFILE: Aftermath of a “Feeding Frenzy”: Dubai and Canceled Construction
Projects 530
Shutting Down the Project 531
Allowing for Claims and Disputes 532
◾◾BOX 14.2: Project Management Research in Brief 533
Preparing the Final Project Report 535
Conclusion 536
Summary 536 • Key Terms 537 • Discussion Questions 537
Case Study 14.1 New Jersey Kills Hudson River Tunnel Project 538
Case Study 14.2 The Project That Wouldn’t Die 539 • Case Study 14.3
A Failure Eight Years in the Making 540 • Internet Exercises 541 • PMP
Certification Sample Questions
542 • Answers 543 • Appendix 14.1:
Sample Pages from Project Sign-off Document 544 • Notes 548
Appendix A The Cumulative Standard Normal Distribution 550
Appendix B Tutorial for MS Project 2016 551
Appendix C Project Plan Template 561
Glossary 565
Company Index 575
Name Index 577
Subject Index 581
12 Contents