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Read the case study To Bid or Not to Bid on page 1011 and then answer the questions on page 1012.(attached textbook)words:250Search the Internet for IT governance planning. Select a specific governance plan that exists at a company or a plan framework from an organization. Write a 2-page paper on three or four of the most important suggestions from the plan you select.You must provide a reference to the site where you found the governance plan, in APA format. kerzner_h_project_management_a_systems_approach_to_planning.pdf Unformatted Attachment Preview PROJECT MANAGEMENT Dr. Kerzner’s 16 Points to Project Management Maturity 1. Adopt a project management methodology and use it consistently. 2. Implement a philosophy that drives the company toward project management maturity and communicate it to everyone. 3. Commit to developing effective plans at the beginning of each project. 4. Minimize scope changes by committing to realistic objectives. 5. Recognize that cost and schedule management are inseparable. 6. Select the right person as the project manager. 7. Provide executives with project sponsor information, not project management information. 8. Strengthen involvement and support of line management. 9. Focus on deliverables rather than resources. 10. Cultivate effective communication, cooperation, and trust to achieve rapid project management maturity. 11. Share recognition for project success with the entire project team and line management. 12. Eliminate nonproductive meetings. 13. Focus on identifying and solving problems early, quickly, and cost effectively. 14. Measure progress periodically. 15. Use project management software as a tool—not as a substitute for effective planning or interpersonal skills. 16. Institute an all-employee training program with periodic updates based upon documented lessons learned. PROJECT MANAGEMENT A Systems Approach to Planning, Scheduling, and Controlling ELEVENTH EDITION HAROLD KERZNER, Ph.D. Senior Executive Director for Project Management The International Institute for Learning New York, New York Cover illustration: xiaoke ma/iStockphoto This book is printed on acid-free paper. Copyright © 2013 by John Wiley & Sons, Inc. 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Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Library of Congress Cataloging-in-Publication Data: Kerzner, Harold. Project management : a systems approach to planning, scheduling, and controlling / Harold Kerzner, Ph. D. Senior Executive Director for Project Management, the International Institute for Learning, New York, New York. — Eleventh edition. pages cm Includes bibliographical references and index. ISBN 978-1-118-02227-6 (cloth); ISBN 978-1-118-41585-6 (ebk); ISBN 978-1-118-41855-0 (ebk); ISBN 978-1-118-43357-7 (ebk); ISBN 978-1-118-48322-0 (ebk); ISBN 978-1-118-48323-7 (ebk) 1. Project management. 2. Project management—Case studies. I. Title. HD69.P75K47 2013 658.4’04 —dc23 2012026239 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 To Dr. Herman Krier, my Friend and Guru, who taught me well the meaning of the word “persistence” Contents Preface 1 xxiii OVERVIEW 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1 Introduction 1 Understanding Project Management 2 Defining Project Success 7 Success, Trade-Offs, and Competing Constraints 8 The Project Manager–Line Manager Interface 9 Defining the Project Manager’s Role 14 Defining the Functional Manager’s Role 15 Defining the Functional Employee’s Role 18 Defining the Executive’s Role 19 Working with Executives 19 Committee Sponsorship/Governance 20 The Project Manager as the Planning Agent 23 Project Champions 24 The Downside of Project Management 25 Project-Driven versus Non–Project-Driven Organizations 25 Marketing in the Project-Driven Organization 28 Classification of Projects 30 Location of the Project Manager 30 Differing Views of Project Management 32 Public-Sector Project Management 34 International Project Management 38 Concurrent Engineering: A Project Management Approach 38 Added Value 39 Studying Tips for the PMI® Project Management Certification Exam Problems 40 42 Case Study Williams Machine Tool Company 44 vii viii CONTENTS 2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS 47 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 Introduction 47 General Systems Management 48 Project Management: 1945–1960 48 Project Management: 1960–1985 49 Project Management: 1985–2012 55 Resistance to Change 59 Systems, Programs, and Projects: A Definition 64 Product versus Project Management: A Definition 66 Maturity and Excellence: A Definition 68 Informal Project Management: A Definition 69 The Many Faces of Success 70 The Many Faces of Failure 73 The Stage-Gate Process 76 Project Life Cycles 78 Gate Review Meetings (Project Closure) 83 Engagement Project Management 84 Project Management Methodologies: A Definition 85 Enterprise Project Management Methodologies 87 Methodologies Can Fail 91 Organizational Change Management and Corporate Cultures 94 Project Management Intellectual Property 100 Systems Thinking 101 Studying Tips for the PMI® Project Management Certification Exam Problems 107 Case Study Creating a Methodology 108 3 ORGANIZATIONAL STRUCTURES 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 111 Introduction 111 Organizational Work Flow 113 Traditional (Classical) Organization 114 Developing Work Integration Positions 117 Line-Staff Organization (Project Coordinator) 121 Pure Product (Projectized) Organization 122 Matrix Organizational Form 125 Modification of Matrix Structures 132 The Strong, Weak, or Balanced Matrix 136 Center for Project Management Expertise 136 Matrix Layering 137 104 ix Contents 3.11 3.12 3.13 3.14 3.15 3.16 3.17 Selecting the Organizational Form 138 Structuring the Small Company 143 Strategic Business Unit (SBU) Project Management 146 Transitional Management 147 Barriers to Implementing Project Management in Emerging Markets 149 Seven Fallacies that Delay Project Management Maturity 156 Studying Tips for the PMI® Project Management Certification Exam 159 Problems 161 Case Studies Jones and Shephard Accountants, Inc. Coronado Communications 168 4 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM 171 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 Introduction 171 The Staffing Environment 172 Selecting the Project Manager: An Executive Decision 174 Skill Requirements for Project and Program Managers 178 Special Cases in Project Manager Selection 184 Selecting the Wrong Project Manager 184 Next Generation Project Managers 188 Duties and Job Descriptions 189 The Organizational Staffing Process 193 The Project Office 199 The Functional Team 204 The Project Organizational Chart 205 Special Problems 208 Selecting the Project Management Implementation Team 210 Mistakes Made by Inexperienced Project Managers 213 Studying Tips for the PMI® Project Management Certification Exam Problems 5 166 216 MANAGEMENT FUNCTIONS 5.0 5.1 5.2 5.3 5.4 5.5 5.6 223 Introduction 223 Controlling 225 Directing 225 Project Authority 230 Interpersonal Influences 237 Barriers to Project Team Development 240 Suggestions for Handling the Newly Formed Team 243 214 x CONTENTS 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 Team Building as an Ongoing Process 246 Dysfunctions of a Team 247 Leadership in a Project Environment 250 Life-Cycle Leadership 252 Value-Based Project Leadership 255 Organizational Impact 257 Employee–Manager Problems 259 Management Pitfalls 262 Communications 265 Project Review Meetings 274 Project Management Bottlenecks 275 Cross-Cutting Skills 276 Active Listening 277 Project Problem-Solving 278 Brainstorming 288 Project Decision-Making 293 Predicting the Outcome of a Decision 301 Facilitation 303 Handling Negative Team Dynamics 306 Communication Traps 307 Proverbs and Laws 309 Human Behavior Education 311 Management Policies and Procedures 312 Studying Tips for the PMI® Project Management Certification Exam 313 Problems 318 Case Studies The Trophy Project 327 Communication Failures 329 McRoy Aerospace 332 The Poor Worker 333 The Prima Donna 334 The Team Meeting 335 Leadership Effectiveness (A) 337 Leadership Effectiveness (B) 341 Motivational Questionnaire 347 6 MANAGEMENT OF YOUR TIME AND STRESS 6.0 6.1 6.2 6.3 Introduction 355 Understanding Time Management 356 Time Robbers 356 Time Management Forms 358 355 xi Contents 6.4 6.5 6.6 Effective Time Management 359 Stress and Burnout 360 Studying Tips for the PMI® Project Management Certification Exam 362 Problems 363 Case Study The Reluctant Workers 7 CONFLICTS 7.0 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 364 365 Introduction 365 Objectives 366 The Conflict Environment 367 Types of Conflicts 368 Conflict Resolution 371 Understanding Superior, Subordinate, and Functional Conflicts 372 The Management of Conflicts 374 Conflict Resolution Modes 375 Studying Tips for the PMI® Project Management Certification Exam 377 Problems 379 Case Studies Facilities Scheduling at Mayer Manufacturing 382 Telestar International 383 Handling Conflict in Project Management 384 8 SPECIAL TOPICS 8.0 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 391 Introduction 392 Performance Measurement 392 Financial Compensation and Rewards 399 Critical Issues with Rewarding Project Teams 405 Effective Project Management in the Small Business Organization 408 Mega Projects 410 Morality, Ethics, and the Corporate Culture 411 Professional Responsibilities 414 Internal Partnerships 417 External Partnerships 418 Training and Education 420 Integrated Product/Project Teams 422 Virtual Project Teams 424 Breakthrough Projects 427 xii CONTENTS 8.14 Managing Innovation Projects 427 8.15 Agile Project Management 430 8.16 Studying Tips for the PMI® Project Management Certification Exam 431 Problems 437 Case Study Is It Fraud? 440 9 THE VARIABLES FOR SUCCESS 9.0 9.1 9.2 9.3 9.4 9.5 9.6 9.7 443 Introduction 443 Predicting Project Success 444 Project Management Effectiveness 448 Expectations 449 Lessons Learned 450 Understanding Best Practices 451 Best Practices versus Proven Practices 458 Studying Tips for the PMI® Project Management Certification Exam Problems 459 460 Case Study Radiance International 460 10 WORKING WITH EXECUTIVES 10.0 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 463 Introduction 463 The Project Sponsor 464 Handling Disagreements with the Sponsor 474 The Collective Belief 475 The Exit Champion 476 The In-House Representatives 477 Stakeholder Relations Management 478 Politics 486 Studying Tips for the PMI® Project Management Certification Exam 487 Problems 488 Case Studies Corwin Corporation 491 The Prioritization of Projects 499 The Irresponsible Sponsors 500 Selling Executives on Project Management 502 xiii Contents 11 PLANNING 11.0 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.17 11.19 11.20 11.21 11.22 11.23 11.24 11.25 11.26 11.27 11.28 11.29 11.30 11.31 11.32 11.33 11.34 11.35 11.36 Introduction 505 Validating the Assumptions 508 Validating the Objectives 509 General Planning 510 Life-Cycle Phases 513 Proposal Preparation 516 Kickoff Meetings 516 Understanding Participants’ Roles 519 Project Planning 519 The Statement of Work 521 Project Specifications 526 Milestone Schedules 528 Work Breakdown Structure 529 WBS Decomposition Problems 536 Work Breakdown Structure Dictionary 540 Role of the Executive in Project Selection 541 Role of the Executive in Planning 546 The Planning Cycle 546 Work Planning Authorization 547 Why Do Plans Fail? 548 Stopping Projects 549 Handling Project Phaseouts and Transfers 550 Detailed Schedules and Charts 551 Master Production Scheduling 554 Project Plan 556 Total Project Planning 561 The Project Charter 565 Project Baselines 566 Verification and Validation 570 Requirements Traceability Matrix 571 Management Control 572 The Project Manager–Line Manager Interface 575 Fast-Tracking 577 Configuration Management 578 Enterprise Project Management Methodologies 579 Project Audits 582 Studying Tips for the PMI® Project Management Certification Exam 583 Problems 12 505 586 NETWORK SCHEDULING TECHNIQUES 12.0 Introduction 597 12.1 Network Fundamentals 600 597 xiv CONTENTS 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14 12.15 12.16 12.17 12.18 12.19 12.20 12.21 Graphical Evaluation and Review Technique (GERT) 604 Dependencies 605 Slack Time 606 Network Replanning 612 Estimating Activity Time 616 Estimating Total Project Time 617 Total PERT/CPM Planning 618 Crash Times 620 PERT/CPM Problem Areas 623 Alternative PERT/CPM Models 626 Precedence Networks 627 Lag 630 Scheduling Problems 632 The Myths of Schedule Compression 632 Understanding Project Management Software 634 Software Features Offered 634 Software Classification 636 Implementation Problems 637 Critical Chain 638 Studying Tips for the PMI® Project Management Certification Exam Problems 640 643 Case Studies Crosby Manufacturing Corporation The Invisible Sponsor 658 13 PROJECT GRAPHICS 13.0 13.1 13.2 13.3 13.4 13.5 661 Introduction 661 Customer Reporting 662 Bar (Gantt) Chart 663 Other Conventional Presentation Techniques 670 Logic Diagrams/Networks 673 Studying Tips for the PMI® Project Management Certification Exam Problems 14 675 PRICING AND ESTIMATING 14.0 14.1 14.2 14.3 14.4 14.5 656 677 Introduction 677 Global Pricing Strategies 678 Types of Estimates 679 Pricing Process 682 Organizational Input Requirements Labor Distributions 686 684 674 xv Contents 14.6 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 14.15 14.16 14.17 14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 14.29 14.30 Overhead Rates 690 Materials/Support Costs 692 Pricing Out the Work 695 Smoothing Out Department Man-Hours 696 The Pricing Review Procedure 698 Systems Pricing 700 Developing the Supporting/Backup Costs 701 The Low-Bidder Dilemma 705 Special Problems 705 Estimating Pitfalls 706 Estimating High-Risk Projects 707 Project Risks 708 The Disaster of Applying the 10 Percent Solution to Project Estimates Life-Cycle Costing (LCC) 714 Logistics Support 719 Economic Project Selection Criteria: Capital Budgeting 720 Payback Period 720 The Time Value of Money 721 Net Present Value (NPV) 722 Internal Rate of Return (IRR) 723 Comparing IRR, NPV, and Payback 724 Risk Analysis 724 Capital Rationing 725 Project Financing 726 Studying Tips for the PMI® Project Management Certification Exam Problems 730 Case Study The Estimating Problem 15 COST CONTROL 15.0 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 734 737 Introduction 737 Understanding Control 741 The Operating Cycle 744 Cost Account Codes 745 Budgets 750 The Earned Value Measurement System (EVMS) 752 Variance and Earned Value 754 The Cost Baseline 773 Justifying the Costs 775 The Cost Overrun Dilemma 778 Recording Material Costs Using Earned Value Measurement 779 The Material Accounting Criterion 782 712 728 xvi CONTENTS 15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19 15.20 15.21 15.22 15.23 15.24 Material Variances: Price and Usage 783 Summary Variances 784 Status Reporting 785 Cost Control Problems 792 Project Management Information Systems 793 Enterprise Resource Planning 793 Project Metrics 794 Key Performance Indicators 800 Value-Based Metrics 806 Dashboards and Scorecards 812 Business Intelligence 815 Infographics 816 Studying Tips for the PMI® Project Management Certification Exam 816 Problems 820 Case Studies The Bathtub Period 838 Franklin Electronics 839 Trouble in Paradise 841 16 TRADE-OFF ANALYSIS IN A PROJECT ENVIRONMENT 16.0 16.1 16.2 16.3 16.4 16.5 17 Introduction 845 Methodology for Trade-Off Analysis 848 Contracts: Their Influence on Projects 865 Industry Trade-Off Preferences 866 Conclusion 869 Studying Tips for the PMI® Project Management Certification Exam 869 RISK MANAGEMENT 17.0 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 17.9 17.10 17.11 17.12 845 871 Introduction 872 Definition of Risk 873 Tolerance for Risk 875 Definition of Risk Management 876 Certainty, Risk, and Uncertainty 877 Risk Management Process 883 Plan Risk Management (11.1) 884 Risk Identification (11.2) 885 Risk Analysis (11.3, 11.4) 892 Qualitative Risk Analysis (11.3) 897 Quantitative Risk Analysis (11.4) 903 Probability Distributions and the Monte Carlo Process 904 Plan Risk Response (11.5) 913 xvii Contents 17.13 17.14 17.15 17.16 17.17 17.18 17.19 Monitor and Control Risks (11.6) 919 Some Implementation Considerations 920 The Use of Lessons Learned 921 Dependencies Between Risks 925 The Impact of Risk Handling Measures 930 Risk and Concurrent Engineering 933 Studying Tips for the PMI® Project Management Certification Exam 936 Problems 940 Case Studies Teloxy Engineering (A) 948 Teloxy Engineering (B) 948 The Risk Management Department 949 18 LEARNING CURVES 18.0 18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 18.12 18.13 18.14 18.15 953 Introduction 953 General Theory 954 The Learning Curve Concept 954 Graphic Representation 956 Key Words Associated with Learning Curves 958 The Cumulative Average Curve 958 Sources of Experience 960 Developing Slope Measures 963 Unit Costs and Use of Midpoints 964 Selection of Learning Curves 965 Follow-On Orders 966 Manufacturing Breaks 966 Learning Curve Limitations 968 Prices and Experience 968 Competitive Weapon 970 Studying Tips for the PMI® Project Management Certification Exam 971 Problems 972 19 CONTRACT MANAGEMENT 19.0 19.1 19.2 19.3 19.4 19.5 19.6 19.7 19.8 975 Introduction 975 Procurement 976 Plan Procurements 978 Conducting the Procurements 981 Conduct Procurements: Request Seller Responses 983 Conduct Procurements: Select Sellers 983 Types of Contracts 987 Incentive Contracts 991 Contract Type versus Risk 994 xviii CONTENTS 19.9 19.10 19.11 19.12 19.13 19.14 Contract Administration 995 Contract Closure 998 Using a Checklist 999 Proposal-Contractual Interaction 1000 Summary 1003 Studying Tips for the PMI® Project Management Certification Exam 1004 Case Studies Th ... 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