In this book, Olaf Passenheim, reveals that the ‘Know-how’ and the ‘Do-how’ can transform project managers into excellent project managers. Project managers can no longer be onlookers directing a team. Today, gaining and sharing project information is not the only key to success. With changing times, the role of project managers has also evolved. They require working with their teams in a real-time environment to successfully achieve set goals. Projects typically have identifiable phases and each phase has a unique set of challenges that the project manager requires to face.

Through well categorized chapters, Passenheim describes how project managers can face challenges of project organization, project execution and manage risk factors effectively. This book is a must read for project managers , who need to constantly adapt to project milestones, growing technologies and projects coming with deadlines.

— Harrison

Project Management

Contents

1	Project Management
1.1	Introduction
1.1	Project Management and Process Management
1.2	Conceptual Framework
2	Project Organization
2.1	Introduction
2.2	Project Organization and Responsibilities
2.3	Organizational Models
2.4	Choosing the Project Organization
2.5	Conclusion
3	Project Scope and Estimation of Times and Cost
3.1	Introduction
3.2	Project Kick-Off Meeting
3.3	Project Scope Management
3.4	Activity Resource Estimating
3.5	Project Time Management
3.6	Estimation of Project Cost
3.7	Conclusion
4	Project Plan
4.1	Introduction
4.2	Developing a Project Network Plan
4.3	Activity-On-Node Network Techniques
4.4	Time Calculations
4.5	Conclusion
5	Progress and Performance Measurement
5.1	Introduction
5.2	The Project Control Process
5.3	Performance Indicators
5.4	Project Monitoring, Evaluation and Control
5.5	Conclusion
6	Risk Management
6.1	Introduction
6.2	Risk Management
6.3	Risk Identification
6.4	Risk Analysis
6.5	Risk Response
6.6	Risk Control
6.7	Conclusion
7	Documentation, Audit, Termination and Closure
7.1	Introduction
7.2	Documentation
7.3	Audit
7.4	Project Termination
7.5	Project Closure
7.6	Conclusion
8	Final Remarks and further Readings
	End notes

Index of Tables

Table 4 1: Activity List

Table 4 2: Time Estimation

Table 5 1: Scope change management process

Index of Figures

Figure 1 1: Conceptual Framework

Figure 2 1: Internal Project Organization

Figure 2 2: Pure Line organization

Figure 2 3: Pure Project Organization

Figure 2 4: Matrix Organization

Figure 2 5: Organizational Structures in the Project Life Cycle

Figure 3 1: Magic Triangle

Figure 3 2: Work Breakdown Structure

Figure 3 3: Project Time Management

Figure 4 1: Example of a Project Network Plan

Figure 4 2: AON Example A

Figure 4 3: AON Example B

Figure 4 4: AON Example C

Figure 4 5: AON Example D

Figure 4 6: AON Example Suspension Bridge

Figure 4 7: Node with extended information

Figure 4 8: Forward Pass

Figure 4 9: Finished Graph

Figure 4 10: Critical Path

Figure 4 11: PERT Formula

Figure 4 12: PERT Example

Figure 5 1: GANTT Chart

Figure 5 2: Control Cycle

Figure 5 3: Scope Control

Figure 6 1: Risk Management Process

Figure 6 2: Risk Identification

Figure 6 3: Evaluation of Risks

Figure 6 4: Risk Matrix

Figure 7 1: Impact of Termination

Foreword

Searching in any library for books on project management will definitely lead to success. Much seems to have been written about how to manage a project successfully. But why do most projects in real life still fail or end up exceeding the originally agreed upon budget, time or resources? The answer is quite easy: The project simply does not exist. Every project and as a consequence every project manager has to deal with different targets, different environments and, last but not least, with different people. Therefore, only the Know-how and the Do-how will transform a project manager into an excellent project manager.

This book is based upon the global project management experiences I gained in different positions, especially with international management consulting companies and working as a member and chairman of executive boards. I now have the pleasure to share my knowledge and gain new experiences (not only in project management) as a professor with eager and enthusiastic students.

Every project manager will develop his or her own management style in their career. Due to the constraints in the number of pages of this book I have limited the examples and case studies to an absolute minimum. Also the so-called “soft-skills” of project management could not be discussed in detail.

This book should provide the interested reader with an overview of the methods and tools which have been proven successful for project managers. Everybody who would like to have an extended reading about some chapters should refer to the endnotes, where additional references are listed.

1 ) Project Management

1.1 Introduction

It was just a few decades ago, in the 1950s, that modern project management was first seen as an individual subject within the area of economic sciences. Centuries back, so-called “projects” were finished successfully, e.g. the building of the aqueducts in Roman times or the construction of the Great Wall in China, but these projects were managed more on an ad-hoc basis mostly using informal techniques and tools.

Project management nowadays is regarded as a very high priority as all companies or organizations, whether small or large, are at one time or another involved in implementing new undertakings, innovations and changes etc. – projects! These projects may be individually diverse, however over time, some tools, management techniques and problem-solving approaches have proven themselves to be more rewarding than others in bringing projects to a successful end.

The development of project management has always been in parallel to the development of general trends in worldwide economics. The 1990’s were all about globalization; the 2000’s are about velocity and close to the edge of a new decade in which the world maybe has to face an economic recession. Nowadays, almost more than ever, everybody asks for “projects” to return the world economy to its former speed. This also underlines the importance of continuous learning and development of project management capabilities in organizations to allow corporate teams in a fast changing world to work collaboratively in defining plans and managing complex projects by synchronizing team-oriented tasks, schedules, and resource allocations.

However, gaining and sharing project information is not the only key to success. Today’s information technologies allow project managers to practice and work with their teams in a real-time environment. As a consequence of this potential, project team members are able to concurrently view, act and react to the same updated information immediately.

Additionally to external challenges, project teams are forced on a macro level to deliver satisfying results for internal or external customers and stay within the restrictions of budget, time and resources (quality and quantity). In parallel to these deliverable, executives are also asking the project management on a micro level to ensure the use of modern management tools, such as (1) customizing the project organization to fit the operational style of the project teams and respective team members, (2) informing the executive management about the project’s progress on a real-time basis, (3) ensuring that critical task deadlines are met and (4) ensuring that project team members know about and monitor project risk and share accurate, meaningful and timely project documents.

As a result, the thrilling and demanding position of a project manager not only requires a particular set of skills – how to communicate, to control and to motivate people, but also the specific knowledge about tools and techniques required to run a project successfully.

1.2 Project Management and Process Management

Looking at process management and project management, on one side these terms go hand-in-hand with delivering successful (project and routine) work, yet on the other side, hardly any terms more often result in confusion and misunderstandings.

According to Johansson [Johansson et al. (1993)], a process can be defined as the constitution of links between activities and the transformation that takes place within the process. This can include the upstream part of the value chain as a possible recipient of the process output. Therefore, every process has the following characteristics:

• Def inability: It must have clearly defined boundaries, input and output.
• Order: It must consist of activities that are ordered according to their position in time and space.
• Customer: There must be a recipient of the process’ outcome, i.e. a customer.
• Value-adding: The transformation taking place within the process must add value to the recipient, either upstream or downstream.
• Embedded: A process can not exist in and of itself; it must be embedded in an organizational structure.
• Cross-functionality: A process regularly can, but not necessarily must, span several functions.

Frequently, a process owner, i.e. a person being responsible for the performance and continuous improvement of the process, is also considered as a prerequisite. The fundamental nature of a project on the other hand is that it is a temporary endeavor undertaken to create a unique product, service, or result. Projects are distinguished from operations (and therefore also from processes) and from programs.

A project will deliver business and/or technical objectives, is made up of defined processes & tasks, will run for a set period of time, has a budget and resources. Project Management deals with tracking this process’ execution, from a schedule and cost perspective. It includes functions for developing the optimal project schedule, producing a financial model of the project, scheduling and tracking of effort against plan, managing costs against budget, and reporting of status, to name but a few. The uniqueness of the deliverable, whether it is a product, service, or result, requires a special approach in that there may not be a per-existing blueprint for the project’s execution and there may not be a need to repeat the project once it is completed. Uniqueness does not mean that there are not similarities to other projects, but that the scope for a particular project has deliverable that must be produced within constraints, through risks, with specific resources, at a specific place, and within a certain period; therefore, the process to produce the deliverable as well as the deliverable itself is unique.

To be temporary signifies that there is a discrete and definable commencement and conclusion; the management of a project requires tailored activities to support this characteristic and, as such, a key indicator of project success is how it performs against its schedule-that is, does is start and end on time?

Therefore, every project has the following characteristics:

• Consists of temporary activities that have predetermined start and end dates.
• Uses restricted resources.
• It has a single goal or a set of goals.
• All events are to be realized to develop a single and new output.
• Usually has a budget.
• Usually a project manager is responsible for co-coordinating all activities.

Projects are usually chartered and authorized external to the project organization by an enterprise, a government agency, a company, a program organization, or a portfolio organization, as a result of one or more of the following features:

• A market demand (e.g., a consumer product company authorizing a project to develop a new fruit drink for kids with less sugar in response to an increased health awareness)
• A business need (e.g., a publisher authorizing a project to write a new book to increase its revenues)
• A customer request (e.g., an amusement park authorizing a company to develop a new roller coaster)
• A technological advance (e.g., an electronics firm authorizing a new project to develop a faster, cheaper, and smaller net book)
• A legal requirement (e.g., U.S. federal government authorities a project to establish laws for controlling the home loan system)
• A social need (e.g., a non-governmental organization authorizing a project to raise the awareness of donating blood)

These features can also be called problems, opportunities, or business requirements. The central theme of all these features is that management must make a decision about how to respond and what projects to authorize and charter.

This book will provide a framework demonstrating how a project can be initiated, planned, executed and closed within a regular project life cycle, which also forms the conceptual framework of this book and is shown in Figure 1-1.

Figure 1-1: Conceptual Framework

1.3 Conceptual Framework

Projects typically have identifiable phases and each phase has a unique set of challenges for the project manager. If we view the project from the highest level, these basic project phases can be also identified as major factors influencing the project success. If one of these phases is planned or executed wrongly, the project will have a high probability of failure.

Chapter 2 will describe the challenges of a project organization. Project management is used in almost every organization or industry; however the bigger and therefore more complex an organization is, the more professional the approach has to be implemented for the right project organization. Specialists from different departments can not just be pulled away from their line responsibilities or new employees can’t just be hired without the internal and external communication requirements, career perspectives and the distribution of power being taken into consideration.

In Chapter 3 the project work finally starts: The major deliverable and the participating work groups are identified. The team begins to take shape. Questions of possibility (can we do the project?) and justification (should we do the project?) are addressed.

Next is the Planning Phase (Chapter 4), where the project scope is further developed in as detailed a level as possible. Intermediate project outcomes and milestones are identified, along with the strategy for achieving them. Formulating this strategy begins with the definition of the required elements of work tasks and the optimum sequence for executing them. Estimations are made regarding the amount of time and money needed to perform the work and when the work is to be done.

Chapter 5 describes the execution phase: the project work is performed under the watchful eye of the project management. Performance and progress is continuously monitored and appropriate adjustments are made according to a strictly regulated change in management procedure and recorded as distinctions from the once defined strategy. Throughout this phase, the project team concentrates on meeting the objectives regarding time, budget and resources developed and agreed upon at the beginning of the project.

Chapter 6 deals with the increasingly important requirements of risk management. Especially during the last economic crisis, it was proven that inadequate risk management systems played an important role more in many project disasters. Proper risk management tracks the progress of outstanding action plans, describes who is responsible for those actions, and sets the expected time frame for resolution.

As shown in fig. 1-1, the arrow points again to chapter 3, defining the project scope. This, however, just reflects the idea and practical experience that rarely does a project comes within the set boundaries of time, budget or resources. Project Management also has a lot to do with constantly rehearsing and slightly adapting the original project scope in a controlled way.

2 ) Project Organizations

2.1 Introduction

The ambition is to achieve technologically and economically the best results in the development of continuously more complex and organizational problem-solving strategies. Complex tasks in large organizations require the greatest possible co-operation between corporate divisions and specialists and requires a great deal of multidisciplinary. The more project work becomes important for affected organizations, the less traditional management and organizational concepts will be successful. Traditional organizations are mainly characterized by a split-up between competence and management (leadership), which is focused on an efficient and effective job processing. Project management seems the ideal solution to maximize the possibility of the successful completion of a task, which is, by definition, time-limited.

But the implementation of project teams within the organizations can not only be challenging, but also dangerous, as the fulfillment of a project task has usually never been achieved before and therefore implies a lot of uncertainty, especially for the project member affected. Looking at the institutional side of project management – mainly structural aspects of the organization, the link with the parent organizations as well as Human Resources are considered. Questions concerning the best project organization, the (personnel) configuration of the project team and the decision powers also have to be answered. As a project is mainly run under time restrictions and therefore tolerance for adaption or failure-correction is hardly available, the set-up of the project organization is probably the largest obstacle to project success.

When deciding on a project organization it should be the aim to give the involved departments and project members a maximum degree of freedom in their decisions, to consider personnel restrictions and requirements of the organization and to avoid havoc caused by unclear job descriptions or an accumulation of co-ordination requirements. But also, simply choosing the best position of a project organization -between a pure line organization and a pure project organization, won’t necessarily be successful. By using such a standardized road map, opportunities and risks of different organizational structures can not be seen and “powerlessness” and areas of conflict can not be identified.

The common understanding of project managers nowadays is that there is not a single best option for setting up a project organization. The chosen organizational structure has to reflect the requirements of the project and the organizations, has to fit the possible requirements as well as technological opportunities of the future and therefore is the best balance between technological and human-social factors. Project Management has to identify prior to a project start the internal and external requirements in order to give the best possible recommendation for a successful project.

2.2 Project Organization and Responsibilities

The structural organization is a static framework of an organization that defines on one side the internal distribution of tasks to individuals or departments, and on the other side the relationship between the individuals / departments. While the structural organization defines who has to do a job, the operational structure follows a more dynamic approach, namely when, where and how often something has to be done.

In Project Management, the structural organization has to fulfill two tasks:

• Definition, how a project organization is embedded within the parent organization (organizational models, see discussion below).
• Definition, how the organization is structured internally within the project team.

The general framework of such an internal project organization is shown in Figure 2-1:

Figure 2-1: Internal Project Organization

The project sponsor is the manager or executive within an organization who is not directly involved in the operational work of the project but who can oversee a project, delegate authority to the Project Manager and can provide support as a trainer or coach to the Project Manager. The Project Sponsor has sufficient authority or influence to direct all the staff involved in a project – or as many as possible – and to get the co-operation of key stakeholders. He ensures that the project is aligned with the organizational strategy and compliant with policy. In larger projects, he has frequent contact with the Project Manager so as to monitor his effectiveness. Depending on the initial set-up of the project he can also chair the Steering Committee, approve final deliverable and communicate about the project inside the agency and with external stakeholders.

The steering committee is a group of senior managers responsible for business issues affecting the project. They usually have budget approval authority, make decisions about changes in goals and scope and are the highest authority to resolve issues or disputes. The steering committee assists with resolving strategic level issues and risks, can approve or reject changes to the project with a high impact on timelines and budget and has to assess project progress and report on the project to senior management and higher authorities. The steering committee provides advice and guidance on business issues facing the project and they use influence and authority to assist the project in achieving its outcomes.

Both the project sponsor and the steering committee also have to carry out the project governance of a project. As much as corporate governance is required nowadays not only in stock listed companies, project organizations also require compliance with certain rules. Governance in general can be described as all activities and processes which ensure that directors and managers act in the interests of the organization and are accountable for their use of those assets.

Project governance is carried out by regular review of project documents, such as plans and status reports, looking for evidence that the project is in the interests of the organization and uses assets responsibly. In discussions and decisions, the person responsible for the Project Governance has to vote for what he believes is best for the organization and its stakeholders. To fulfill all these requirements it is compulsory that the Project Manager and his team demonstrate competence, ethics, and compliance with organizational policy.

An advisory committee is a group of people that represents key project stakeholders and provides advice to the project. Like steering committees, advisory committees are generally recruited from senior management. Unlike steering committees, advisory committees can not make decisions regarding a project. Their role is to provide insights to the team regarding stakeholder interests, technical advice and other relevant initiatives. Parallel to the steering committee, they assist with resolving issues and risks and should use their influence and authority to assist the project in achieving its outcomes and to communicate about the project progress within their organizations.

The project manager is naturally the key person within the project organization and has the overall responsibility for meeting project requirements within the agreed to time, cost, scope and quality constraints which form the framework of the project plan. Project managers report to the steering committee, which has delegated its authority to the project manager. The general tasks of a project manager are:

• Supervision and guidance to the project team
• Regular (weekly or monthly) project status reports to the project sponsor/ steering committee
• Chair risk and change control committees (if applicable for a project)
• Attend steering committee meetings and prepare supporting materials with the project sponsor
• Execute project management processes: risk, issues, change, quality, and document management
• Ensure project plan, schedule and budget are up-to-date; detect and manage variances

A team leader is a person responsible for managing one part of a project, or a “sub project.” This position only exists on larger projects where sub projects are required due to the number of employees involved or different project goals allow the parallel work. A team leader ideally has project management skills, including human resource management, in addition to relevant technical skills. Usually, junior project managers are selected for this position. A team leader reviews all sub-team deliverable, holds regular sub-team status meetings and provides regular status reports to the project manager.

Last but not least, a team member is a person assigned to a team who is responsible for performing a clearly defined part of the project activities. Depending on the organizational set-up a team member may report directly or indirectly to the project manager and is assigned to work part-time or full-time on the project.

2.3 Organizational Models

There are two fundamentally different ways of organizing projects within the parent organization:

• The project as part of the functional organization or pure line organization
• The project as a free-standing part of the parent organization (project organization)
• A third type, called a matrix organization, is a hybrid of the two main types

The pure line organization or functional organization (see Figure 2-2) does not have a specific position for project managers. Project managers are specialist or line managers who are aligned to the project for a specific time. The project is divided into partial tasks and delegated to responsible departments. The team members continue to report to their line-directors and upper managers.

Figure 2-2: Pure Line organization

The advantages are:

• Reduced overhead, as no additional project team members have to be hired
• Provides clearly marked career paths for hiring and promotion
• Employees work alongside colleagues who share similar interests, therefore the expertise of the team members stays within their departments
• No structural change for running the project required
• Flexibility for changes in the project scope
• Easy post-project transition as the project team members simply continue doing their line job again

The disadvantages are:

• Co-ordination of functional tasks is difficult as little reward for co-operation with other departments is granted since authority resides with functional supervisor
• Provides scope for different department heads to pass off company project failures as being due to the failures of other departments
• Slow reaction time due to long communication lines within the project

Within the pure project organization (“task-force”) the project manager is fully responsible for a group of specialists, which have temporarily dedicated their entire workforce to the project (see Figure 2-3).

Figure 2-3: Pure Project Organization

The advantages are:

• Simple and fast, as the project manager has full line authority over the project and all members of the project team are reporting directly to the project manager
• The lines of communication are shortened; the ability to make a swift decision is enhanced
• A cross-functional integration is supported as a pure project organization can maintain a permanent cadre of experts who develop skills in specific technologies
• A project team that has a strong and separate identity and develops a high level of commitment from its members
• The organizational structure tends to support a holistic approach to the project

The disadvantages are:

• Each project has to be fully staffed which can lead to a duplication of staff numbers
• Project managers tend to stockpile equipment and technical assistance as this represents the importance of their project within the organization
• Pure project groups seem to foster inconsistency in the way in which policies and procedures are carried out
• In a pure project organization, the project takes on a life of its own, with own rules and processes
• The post-project transition is difficult as there tends to be concern among team members about career after the project ends

The matrix organization as shown in figure 2-4 is a combination of a functional and a pure project organization. This organizational structure allows for participation on multiple projects while performing normal functional duties. A greater integration of expertise and project requirements can be achieved.

Figure 2-4: Matrix Organization

A matrix organization can take on a wide variety of specific forms:

“Project” or “strong” matrix organizations most closely resemble the pure project organization. The project manager decides work- and personnel-progress, the line manager provides resources and consults the project manager as a specialist.

The “co-ordination” or “functional” or “weak” matrix most closely resembles the functional form. The project manager only co-ordinates the contributions of the different departments, the authority stays with the department-directors.

The “balanced” matrix lies in between the others. Project and line managers approximately have equal competence and agree upon a common decision.

The advantages are:

• The advantages of a functional organization and project team structure are retained
• Resources can be co-ordinates in a way that applies them effectively to different projects
• Team Members can maintain contact with project teams as well as with their functional department colleagues, they can be chosen in-time, according to the needs of the project
• The project team will be more agile and able to view problems in a different way as specialists have been brought together in a new environment.
• Project managers are directly responsible for completing the project by a specific deadline and budget.
• Team members can return to their old line responsibility after finishing the project

The disadvantages are:

• Potential for conflict between functional vs. project groups due to unclear responsibilities as the principle of unity of command is violated with a matrix organization
• A conflict of loyalty between line managers and project managers over the allocation of resources
• Costs can be increased if more (project) managers are created through the use of project teams
• The balance of power between the project and functional areas is very delicate
• The division of authority and responsibility in a matrix organization is complex and uncomfortable for the project manager
• Project workers have at least two bosses, their functional heads and the project manager.

2.4 Choosing the Project Organization

Choosing the right project organization is the first and probably the most important key to success for project management. Therefore a great deal of time should be spent in considering the decision about formation, preparation and initiation of the project organization.

Best practice is a step-wise approach, to define the goals and implications of the project within the current organization structure:

Step 1: Definition of the project, with a statement that reflects the major outcomes from all different points of view (top management, shareholder, stakeholder etc.) Standardized decision matrices are available in a wide range with experienced project managers. However, the following points already will give an indication of what should be considered:

• Size of project
• Strategic importance, how important is the project to the firm’s success?
• Novelty and need for innovation
• Integration requirements (departments involved)
• Complexity (number of external interfaces)
• Budget and time constraints
• What level of resources (human and physical) is available?
• Stability of resource requirements

Step 2: Determination of the key tasks which are linked with every sub-goal or objective and identification of the specialist/ individuals within the parent organization and their “home” departments.

Step 3: Breaking down the project into tasks and determining which organizational units are required to carry out the work packages and which units will work particularly closely with which others (this will be discussed in more detail in the next chapter).

Step 4: List of any special characteristic or hampering factor associated with the project.

Step 5: With the findings gained from steps 1-4 and the knowledge of all advantages and disadvantages choice of structural organization form.

Recent developments are showing that companies tend more and more to change the project organization during the project, as shown in figure 2-5.

Figure 2-5: Organizational Structures in the Project Life Cycle

The advantages of different project organizations are utilized by such an approach. During the planning period, maximum knowledge of different departments can be given to the project, while not all team members have to be involved full-time in the project. In the realization phase, a pure project organization helps the project team to solely concentrate on the fulfillment of the project goals and in the last stage, team members can more easily reintegrate into their line function by selecting a functional project organization and can help to integrate the newly found knowledge into their “home” departments.

The organizational set-up determines the way a project is delivered. An effective organization is therefore crucial to the successful delivery of projects on time, to budget and to specification. Therefore a great deal of time and attention should be given to project organizations when initiating new projects.

Effective project organizations have to identify all key positions across the wider organization, also including the advisory team, the steering committee and the sponsor, if possible. After deciding upon these key roles, clear terms of reference and account abilities for all key roles and bodies; e.g. project manager; steering committee have to be set up and also communicated (in writing) to the project team. The position and the role of the organization framework, like supplier, partner or customer interfaces has to be defined at all levels, along with their specific responsibilities towards the project.

The operational structure also has to include the ways of working for the team, detailing how the work with key partners, supplier and the customer will be executed and, last but not least, a governance structure for the project has to be developed.

2.5 Conclusion

The project organization is one of the first “visible” parts when a new project is started. Many industries are beginning to realist the benefits of closer working relationships and more integrated working environments on projects. Approaches like collaborations and co-operations have existed for some time, but many organizations resisted, often on the grounds of cost, to adopt such methods.

Project Management is starting to mature at individual and corporate levels, and businesses are understanding not just the benefit, but the fundamental need to adopt such practices if they are going to deliver projects ‘faster, better, cheaper’. Such aims are truly attainable, but only if less effective organizational practices are replaced by more concurrent and integrated project organization during key phases of projects.

In some cases, this involves businesses working together much earlier in the project cycle, which can challenge traditional methods and thinking. Many industries are now realizing that the benefits far outweigh the risks, and are embracing new “ways of organization”.

3 ) Project Scope and Estimation of Times and Cost

3.1 Introduction

This chapter will provide a framework as to how to define the project scope and how to estimate times and costs. Project Management is usually always about meeting the issues in the magic triangle: scope, time and cost. If one of the goals is missed or wrongly planned, the project’s success usually can only be achieved by reallocation of more resources, which costs money and/or will take more time. Planning is the key to careful overview and balances these three parallel goals. Top-down and Bottom-up approaches can be used. This chapter illustrates which tools exist to identify activities and how to sequence and schedule them in a positive way and how a bridge between these steps can be built. Last but not least methods for estimating the time, the progress and the cost for projects are shown.

3.2 Project Kick-Off Meeting

Experienced project managers know that it is crucial to get projects off to a successful start. According to one veteran project manager: “The first team meeting sets the tone for how the team will work together. If it is disorganized, or becomes bogged down with little sense of closure, then this can often become a self-fulfilling prophecy for subsequent group work. On the other hand, if it is crisply run, focusing on real issues and concerns in an honest and straightforward manner, members come away excited about being part of the project team.” [Gray/ Larson 2002].

Holding a good kick-off meeting is an efficient way to commence. A kick-off meeting is a meeting held at the beginning of a project but not until the first tasks of the initial phase are completed. The project charter is already set up and the project team is aware of the peculiarities of several stakeholders. There are three typical objectives project managers try to achieve during the first meeting of the project team. The first is to provide an overview of the project, including the scope and objectives, the general schedule, methods and procedures. It is important to establish basic rules as guidelines for the upcoming work. The second is to begin to address some of the interpersonal concerns captured in the team development model:

• Who are the other team members?
• How will I fit in?
• Will I be able to work with these people?

The third and most important objective is to begin to model how the team is going to work together to complete the project. The project manager will recognize and evaluate for the first time the behavior of the team members. This can be critical, especially in intercultural teams where often different kinds of behaviors and personalities can be observed, which can have a high potential to collide.

3.3 Project Scope Management

Defining the project scope sets the stage for developing a project plan. Project scope is a precise explanation of the expected result of the project or product for the customer from an external as well as from an internal point of view in a specific, tangible, and measurable way. The scope should be developed under the joint direction of the project manager and customer. The project manager is responsible for an agreement with the customer on project objectives, deliverable at each stage of the project, technical requirements, etc. The project scope will be fixed in a document. Depending on its complexity it is stated in the project charter if it is at a manageable level, or in a special project scope statement frequently done on large projects. These documents are normally published and used by the customer and the other project participants for planning and measuring project success. Scope describes what one expects to deliver to the customer when the project is complete. Due to the high priority of the project scope, a checklist including all elements of the project plan is a favorable way to ensure that scope definition is complete. A project scope should contain the following elements:

1. Project objective
2. Deliverable
3. Milestones
4. Technical requirements
5. Limits and exclusions
6. Reviews with customer

Project objectives and deliverable already have been discussed several times in this book. A milestone is a special event in a project that is reached at a point in time. The milestone schedule shows only major segments of work. It represents first, rough cut estimates of time, cost and resources for the project. The milestone schedule is built using the deliverable, as a platform to identify major segments of work and an end-date. The technical requirements have to ensure the proper performance. For example, a technical requirement for a project with a university library could be that a student can be identified with his Computer IP-Address if he logs in into an internal database, to enable the university to track down any misuse. The importance of technical requirements is obvious because such a malfunction on a project could cause enormous damage. The limits and exclusions should be well defined. Failure can lead to false expectations and to expending resources and time on the wrong problem. The completion of the scope checklist ends with a review with the customer, internal or external. The objective is the common understanding and agreement of expectations. Is the customer getting what he or she desires in deliverable? Does the project definition identify key accomplishments, budgets, timing, and performance requirements? Are questions of limits and exclusions covered? Clear communication on all these issues is imperative to avoid claims or misunderstandings.

Many projects suffer from scope creep, which is the tendency for the project scope to expand over time, usually by changing requirements, specifications, and priorities. Scope creep can be reduced by carefully writing the project charter or project scope statement. A scope that is too broad is an invitation for scope creep. Scope creep can have a positive or negative effect on the project, but in most cases scope creep means added costs and possible project delays. Changes in requirements, specifications and priorities often result in cost overruns and delays. Examples are abundant: the Trans rapid train project in Shanghai, the opening of the new terminal at Heath row Airport, etc.

Setting clear project priorities, listed depending on their importance, also helps to avoid a scope creep. The management and/or the costumer define the order of priorities in accordance with their needs. Therefore the priorities can be set arbitrarily and vary from project to project. The three important factors for the success of a project are the meeting or exceeding of the expectations of the costumer and/or the management in terms of costs (budget), time (schedule) and performance (scope). The interrelationships among these criteria vary and can be seen as trade-offs between the project team and the customer. Fig. 3-1 illustrates this dilemma:

Figure 3-1: Magic Triangle

The trade-offs among time, costs and performance have to be allocated and managed by project managers. The trade-offs in a project occur between scope, cost and time. It should make clear that project managers have to balance these three points (regarding the magic triangle). If one of these objectives is missed, a project easily fails. In order to evaluate priorities there has to be a candid discussion between project managers, customers and upper management to establish the relative importance of each criterion. The work breakdown structure and the priority-matrix are tools which are used in practice to identify and define which criterion is constrained, which should be enhanced and which can be accepted.

The Work Breakdown Structure (WBS) is a grouping of the work involved in a project oriented towards the deliverable that defines the total scope of the project. The WBS can be imagined as a road map of the project which breaks down the total work required for the project into separate tasks and helps group them into a logical hierarchy (see example fig. 3-2). Different levels of detail assure the project managers that all products and work tasks are identified in order to integrate the project with the current organization and to establish a basis for control. Furthermore, the WBS organizes and divides the work into logical parts based on how the work will be performed. This is important as usually a lot of people are involved in a project and many different deliverable are set to reach one main objective to fulfill the project.

In addition to this, the WBS serves as a framework for tracking cost and work performance because every element which is defined and described in it can be estimated with reference to its costs and time needed. Consequently, the WBS enables the project managers to make a solid estimation of costs, time, and technical performance at all levels in the organization through all phases of the project life-cycle.

Figure 3-2: Work Breakdown Structure

Decomposition is the key to success in creating a professional WBS. Decomposition describes the process of subdividing project deliverable into smaller, more compact and manageable components until the work and deliverable are defined at the work package level. This aforesaid work package is the lowest level in the WBS, and is the base at which the cost and schedule for the work can be estimated in a reliable way. The complexity of the project determines the level of detail for work packages.

To follow a hierarchical breakdown it is reasonable to start with the project as the final deliverable. Afterwards, the different deliverable can be decomposed into work packages. The decomposition to a lower level of detail enhances the ability to plan, manage and control the work. On the other hand, project managers have to be careful with the decomposition of sub-deliverable because an exaggerated decomposition can lead to non-productive management effort, inefficient use of resources, and decreased efficiency in performing the work. Therefore the project team has to find the balance of the level of detail during the planning process.

Outputs after creating a WBS are in most cases an update of the project scope statement and a draft of Project Communication Plan (PCP). Change requests as a result of the created WBS can be accepted. Afterwards the project scope statement is updated to include those approved changes. The key document generated by the WBS process is the actual WBS. Each WBS component is generally assigned a unique identifier from the code of accounts. These provide a structure for the hierarchical summation of costs, schedule and resource information.

When the project deliverable and work packages are clearly identified it is essential to communicate them to all project members in the right way. Poor communication is a major contributor to project failure in most cases. Communication is a key component in co-coordinating and tracking project schedules, issues, and action times. The PCP is a fundamental part of the overall project plan because it maps out the flow of information to all different stakeholders in a project. When developing a PCP the following points should be considered:

• Stakeholder communications requirements
• Information to be communicated, including format, content, and level of detail
• Identification of who will receive the information and who will produce it
• Suggested methods or guidelines for conveying the information
• Escalation procedures for resolving issues
• Revision procedures for updating the communications management plans
• A glossary of common terminology used on the project

To develop a PCP which considers these points one has to follow these basic steps:

Stakeholder analysis: Identifies the target groups. Typical groups could be the customer, sponsor, project team, project office, or anyone who needs project information in order to make decisions and/or contribute to the project processes.

Information needs: What information is important for whom? For example, top management needs to know how the project is progressing, whether it is encountering critical problems and the extent to which project goals are being realized. This information is required so that they can make strategic decisions and manage the portfolio of projects. Furthermore, team members need to see schedules, task lists and specifications, so that they know what needs to be done next. External groups need to know changes in the schedule as well and they need to know performance requirements of the components they are providing.

Sources of information: When the information needs are identified, the next step is to determine the sources of information. Information can be collected using milestone reports, team meetings, and project status meetings.

Distribution modes: One of the most common distribution channels in modern companies is e-mailing. There are of course other methods through which information can be distributed, for example through teleconferencing, Lotus Notes, SharePoint, SAP and a variety of database sharing programs. Companies can use the “Web” to create “virtual” project offices in which to store project information. Project management software is used by companies to transfer information directly to the Web site so that different people have can immediate access to relevant project information. In some cases it is a standardized routine that important information is transferred directly to key stakeholders.

Responsibility and timing: Determine who will send out the information. For example, a common practice is to have minutes of meetings or specific information forwarded to the appropriate stakeholders. Other centers of competence can be the project manager or the project office. Timing and frequency of allocation appropriate to the information needs to be established.

One advantage of developing a PCP is that the flow of information is controlled by a certain person or department which is responsible for it. Furthermore, it is not necessary to respond to information requests because everyone who is involved in a project is supplied with the requisite information.

3.4 Activity Resource Estimating

Activity resource estimating (ARE) is closely related and co-ordinates with the cost estimating process. The schedule for activity resource estimating involves determining what resources (staff, equipment, or material) and in what quantity each resource is needed.

Inputs for the estimation are in general:

Enterprise Environmental Factors: The infrastructure resource availability information can also be found in the project charter. These factors can be, for example, the organizational or industry standard, the existing human resource or the personnel evaluation system.

Activity List: The activity list identifies the schedule activities for resources that are estimated.

Activity Attributes: The activity attributes provide the primary data input for use in estimating those resources required for each schedule in the activity list.

Resource availability: Information on which resources are potentially available is used for estimating the resource types. This knowledge includes consideration of various geographical locations from which the resources originate and when they may be available.

Major tools and techniques for such an ARE are:

• An expert judgment which is used to rehearse the resource-related inputs. Any group or person with specialized knowledge in resource planning and estimating can provide such expertise
• An alternatives analysis which includes such thoughts as, for instance, make or buys, hand versus automated, different size or type of machine
• Published estimating data which are routinely published by various companies, e.g. on production rates and unit costs of resources for an extensive array of labor trades, equipment for different countries and geographical locations within countries
• PM-Software, that helps planning, organizing, and managing resource pools and develops resource estimates
• Bottom-up estimation which is used when a scheduled activity cannot be estimated with a reasonable degree of confidence, whereby the work within the scheduled activity is decomposed in more detail.

The output of the activity resource estimating process is an identification and description of the types and quantities of resources required for each scheduled activity in a work package.

Resources Breakdown Structure: The resource breakdown structure is a hierarchical structure of the identified resources by resource category and resource type.

Resource Calendar: A composite resource calendar for the project documents working days and non-working days that determine those dates on which a specific resource, whether a person or equipment, can be active or is idle. The resource calendar typically identifies resource-specific holidays and resource availability periods.

Request Changes: The activity resource estimating process can result in request changes to add or delete planned scheduled activities within the activity list.

3.5 Project Time Management

The project time management includes the necessary processes to finish the project on time. Fig. 3-3 gives an overview of the different processes:

Figure 3-3: Project Time Management

All of these processes interact with each other and with processes in the other organizational competence. Each process can involve effort from one or more persons or groups of persons, based on the needs of the project. Each process occurs at least once in every project and occurs in one or more project phases, if the project is divided into phases. Although the processes are described as individual items with clearly defined interfaces, in practice they may overlap each other and correlate in interactions.

On some projects, especially ones of a smaller scope, activity sequencing, activity duration estimating, and schedule development are so tightly linked that they are viewed as a single process that