Project Management: Achieving Competitive Advantage, 5th Edition PDF by Jeffrey K. Pinto

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Project Management: Achieving Competitive Advantage, Fifth Edition

By Jeffrey K. Pinto

Project Management

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

Matrix Organizations 76

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

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