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case study  Format  - write about case  - ans the questions  - conclusion link with the course material and case KE1081 August 8, 2018 ©2018 by the Kellogg School of Management at Northwestern University. This case was prepared by Professor Russell Walker and Andrew Dilts ’17. Cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Some details may have been fictionalized for pedagogical purposes. To order copies or request permission to reproduce materials, call 800-545-7685 (or 617-783-7600 outside the United States or Canada) or e-mail [email protected] No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Kellogg Case Publishing. R U S S E L L W A L K E R A N D A N D R E W D I LT S ’ 1 7 Polaris Battery Labs: Startup Risk Management Polaris Battery Labs was an Oregon-based startup that provided innovation services to companies in the lithium ion battery industry. Its operating philosophy and expertise in this fast- growing industry enabled it to provide great value to its clients, but as a startup that was seeking growth the company was subject to multiple risks. Lithium Ion Batteries From laptops to cellphones and watches to digital cameras, rechargeable lithium ion batteries powered many of the world’s portable electronic devices. As a result, the lithium ion battery market had experienced high growth (see Exhibit 1). In addition to electronics, the batteries were used in new markets such as electric vehicles, grid storage, and wearable technology. Consumers were constantly demanding batteries with longer life, greater power, and different sizes and shapes, which put pressure on the industry to develop new materials, improved battery cell structures, and more flexible form factors. The value chain for lithium ion batteries began with the companies that manufactured the chemical materials that made up the batteries (see Exhibit 2). Chemical materials were purchased by cell developers that developed the individual lithium ion battery cells (see Exhibit 3 for the components of a cylindrical cell and Exhibit 4 for the process of building a cell). For the exclusive use of B. Gaga, 2021. This document is authorized for use only by Belay Gaga in 2021. 2 P o l a r i s B a t t e r y l a B s KE1081 K e l l o g g s c h o o l o f M a n a g e M e n t Battery cells were combined into battery packs, which were sent to original equipment manufacturers (OEMs) that incorporated the battery packs into their devices (completing the chain shown in Exhibit 2). Company Background Polaris was founded in 2012 in Portland, Oregon, by Doug Morris. The company’s core team members were the CEO, senior scientist, IT manager, and scientist (see Exhibit 5). Morris had worked for Motorola for more than thirty years as an engineer and executive in telecommunications, components, batteries, and energy storage. At Polaris, he was responsible for attracting potential new clients, finding ways to meet their needs, negotiating the deals, and maintaining customer relationships. His unique combination of experience, strategic vision, and personal connections had been essential to the company’s ability to secure clients and identify new opportunities and promising new technologies. The company provided a variety of services for enterprises looking to innovate in the lithium ion battery market: • Prototyping • Research and development • Cell development • Consulting • Small-scale production • “Match-making” services that connected clients to third-party partners with expertise beyond what Polaris offered Polaris offered several selling points to its clients that distinguished it from its competitors. First, it made no claim to its clients’ intellectual property either before or after providing services. Eliminating IP concerns enabled it to reach a broader client base and collaborate more closely and openly with its clients’ in-house R&D innovation teams. Polaris also was able to quickly create prototypes and research promising areas for innovation. Many of its clients lacked the equipment, intellectual capital, or organizational nimbleness to match its speed. The company possessed valuable insight into new technologies, which enabled it to advise clients on future trends as well as improve its own processes and capabilities. For example, if an OEM was developing a new product that required a special lithium ion battery application, Polaris could propose up-and-coming technology that could meet its needs. Also, Polaris’s network enabled it to connect a client with a third party in the industry for further value. For example, if a client needed mass production of a prototype that Polaris developed, Polaris could recommend one of its factory partners with mass-production capability. For the exclusive use of B. Gaga, 2021. This document is authorized for use only by Belay Gaga in 2021. 3 P o l a r i s B a t t e r y l a B sKE1081 K e l l o g g s c h o o l o f M a n a g e M e n t Clients Polaris had four types of clients: startups, OEMs, universities and national laboratories, and large chemical companies, each of which played different roles in the industry value chain (see Table 1). Table 1: Polaris Clients and Value Chain Roles Material Providers Cell Developers Battery Pack Makers Device Manufacturers Startups  OEMs  Universities and national laboratories     Large chemical companies  When evaluating potential clients, Morris and his team assessed the value Polaris could create versus the cost—financial, equipment, and human resources—of providing its services. Qualitatively, Morris did not like clients that “negotiated every penny”; he turned down potential deals if the prospective client approached the engagement with this mindset. The company charged a fixed fee for many of its main services regardless of the client’s unique requirements. Startups Startup clients operated throughout the value chain, but most commonly they were trying to bring new technologies to market as cell developers. However, because of their scale they lacked the infrastructure and production/process capabilities to build prototypes and prove the benefits of their new technologies. They often also lacked cell design skills and funding to invest in equipment and other capital projects. These limitations were magnified by the very long go-to-market time frame for lithium ion battery startups. Polaris created immense value for these clients by filling all of those gaps. As a startup itself, the company understood the challenges of raising money and valued “helping the little guy” who might just have the next breakthrough technology. One way it did this was occasionally accepting an equity position in a startup client in lieu of monetary payment. Of course, startups posed a greater risk of going out of business (which was especially true in the lithium ion battery market), so Morris and his team tried to maintain a balanced client portfolio. For the exclusive use of B. Gaga, 2021. This document is authorized for use only by Belay Gaga in 2021. 4 P o l a r i s B a t t e r y l a B s KE1081 K e l l o g g s c h o o l o f M a n a g e M e n t OEMs The main challenge faced by the industry’s OEMs—manufacturers of devices requiring batteries—was procuring the precise type of battery they needed for each product. Different products required different cell sizes, energy density, volume, sourcing, or other performance characteristics, such as high heat resistance or malleability (see Exhibit 6 for examples). OEM clients were desirable because they were well-capitalized and provided stable cash flow. However, sometimes they demanded mass production of the cells developed by Polaris, which it was unable to deliver. As a result, the company not only missed out on potentially profitable projects but also risked losing those clients’ business in the future. With OEMs and other large corporate clients, Polaris tactically lowered its prices as needed to enable client engineers to commit to a project without having to get additional levels of approval. In return for this small revenue sacrifice, Polaris built client loyalty and reduced the time required to get a project approved. Universities and National Laboratories Universities and national laboratories subcontracted their cell development activities to Polaris as part of their research grants. These clients’ expertise was broad and deep in their areas of specialization, but they lacked rapid iteration and cell testing capabilities. When universities and labs spun off startup companies to commercialize technologies they developed, Polaris assisted with their early-stage activities as well. Working with universities and national laboratories gave Polaris early knowledge of and access to new technologies and research advancements. However, because it made no claim to its clients’ intellectual property, the company could be integrally involved in early-stage development of a new technology and not receive any financial benefit. When working with early-stage spinoff companies, Polaris incurred the same risks as with its other startup clients. Large Chemical Companies Large chemical clients viewed batteries as a secondary market for their products, which meant they lacked the capabilities or data to fully exploit the opportunity. These companies used Polaris to outsource their R&D and prototype development. Polaris also collected the data necessary to get the attention of cell developers and provided consulting on strategic opportunities. Chemical clients had ample funding available for projects, including ongoing research and prototyping engagements, but some preferred to pay a lump sum at the end of their projects. For the exclusive use of B. Gaga, 2021. This document is authorized for use only by Belay Gaga in 2021. 5 P o l a r i s B a t t e r y l a B sKE1081 K e l l o g g s c h o o l o f M a n a g e M e n t Plans for the Future Polaris planned to continue serving clients with a broad range of technology needs, but it made a strategic decision to focus more on wearable technology (“wearables”). In addition, it planned to add people and equipment to increase its capacity to execute projects and to expand its manufacturing capabilities. While this growth could eventually be accomplished via internal resources, it would be greatly accelerated with external financing. Morris’s plan was ultimately to sell the company; in fact, he had actively entertained potential offers during the past two years. However, he had not yet identified an attractive buyer. For the exclusive use of B. Gaga, 2021. This document is authorized for use only by Belay Gaga in 2021. 6 P o l a r i s B a t t e r y l a B s KE1081 K e l l o g g s c h o o l o f M a n a g e M e n t Exhibit 1: Worldwide Battery Market, 1990–2015 Source: Christophe Pillot (Director, Avicenne Energy), “The Rechargeable Battery Market and Main Trends 2014–2025,” 32nd International Battery Seminar & Exhibit, March 9, 2015. Exhibit 2: Lithium Ion Battery Value Chain Material providers Cell developers Battery pack makers Device manufacturers For the exclusive use of B. Gaga, 2021. This document is authorized for use only by Belay Gaga in 2021. 7 P o l a r i s B a t t e r y l a B sKE1081 K e l l o g g s c h o o l o f M a n a g e M e n t Exhibit 3: Components of a Cylindrical Cell Source: Polaris Battery Labs, citing “What’s the Best Battery?” Battery University, October 2013, http://batteryuniversity.com/ learn/archive/whats_the_best_battery. Exhibit 4: Cylindrical Cell Manufacturing Process Source: Polaris Battery Labs, citing “What’s the Best Battery?” Battery University, October 2013, http://batteryuniversity.com/ learn/archive/whats_the_best_battery. For the exclusive use of B. Gaga, 2021. This document is authorized for use only by Belay Gaga in 2021. 8 P o l a r i s B a t t e r y l a B s KE1081 K e l l o g g s c h o o l o f M a n a g e M e n t Exhibit 5: Polaris Core Team Members Doug Morris Founder & CEO Dr. Curtiss Rem Senior Scientist Kellye Just IT Manager Nick Gurnon Scientist Exhibit 6: Freeform Lithium Ion Batteries for Wearable Technology Source: Polaris Battery Labs, 2016. For the exclusive use of B. Gaga, 2021. This document is authorized for use only by Belay Gaga in 2021. MGMT 640 Summer 2021 section 07 Questions on the case study. 1. How should Polaris balance its pursuit of new technologies with its scaling of capabilities to work with existing technologies? 2. How should the company balance its client portfolio? 3. If Morris were to leave Polaris, what would be the impact on revenue? Can he be replaced? How does Polaris cultivate talent with such a small and specialized operation? 4. Should Polaris ask clients for payment up front to reduce credit risk? 5. With such a complex offering, how can Polaris mitigate quality risk? 6. How does Polaris mitigate the risk of hazardous waste and its disposal (both for workplace safety and also public perception)? 7. How does Polaris mitigate the risk that one of its suppliers fails to deliver a critical material in a timely or quality manner? End page i page ii FOR INSTRUCTORS You’re in the driver’s seat. Want to build your own course? No problem. Prefer to use our turnkey, prebuilt course? Easy. Want to make changes throughout the semester? Sure. And you’ll save time with Connect’s auto-grading too. 65% Less Time Grading They’ll thank you for it. Adaptive study resources like SmartBook® 2.0 help your students be better prepared in less time. You can transform your class time from dull definitions to dynamic debates. 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Top: Jenner Images/Getty Images, Left: Hero Images/Getty Images, Right: Hero Images/Getty Images mailto:[email protected] http://www.mheducation.com/about/accessibility page iv The McGraw-Hill Series Operations and Decision Sciences SUPPLY CHAIN MANAGEMENT Benton Purchasing and Supply Chain Management Third Edition Bowersox, Closs, Cooper, and Bowersox Supply Chain Logistics Management Fifth Edition Burt, Petcavage, and Pinkerton Supply Management Eighth Edition Johnson Purchasing and Supply Management Sixteenth Edition Simchi-Levi, Kaminsky, and Simchi-Levi Designing and Managing the Supply Chain: Concepts, Strategies, Case Studies Third Edition Stock and Manrodt Fundamentals of Supply Chain Management PROJECT MANAGEMENT Brown and Hyer Managing Projects: A Team-Based Approach Larson Project Management: The Managerial Process Eighth Edition SERVICE OPERATIONS MANAGEMENT Bordoloi, Fitzsimmons, and Fitzsimmons Service Management: Operations, Strategy, Information Technology Ninth Edition MANAGEMENT SCIENCE Hillier and Hillier Introduction to Management Science: A Modeling and Case Studies Approach with Spreadsheets Sixth Edition BUSINESS RESEARCH METHODS Schindler Business Research Methods Thirteenth Edition BUSINESS FORECASTING Keating and Wilson Forecasting and Predictive Analytics Seventh Edition LINEAR STATISTICS AND REGRESSION Kutner, Nachtsheim, and Neter Applied Linear Regression Models Fourth Edition BUSINESS SYSTEMS DYNAMICS Sterman Business Dynamics: Systems Thinking and Modeling for a Complex World OPERATIONS MANAGEMENT Cachon and Terwiesch Operations Management Second Edition Cachon and Terwiesch Matching Supply with Demand: An Introduction to Operations Management Fourth Edition Jacobs and Chase Operations and Supply Chain Management Sixteenth Edition Jacobs and Chase Operations and Supply Chain Management: The Core Fifth Edition Schroeder and Goldstein Operations Management in the Supply Chain: Decisions and Cases Eighth Edition Stevenson Operations Management Fourteenth Edition Swink, Melnyk, and Hartley Managing Operations Across the Supply Chain Fourth Edition BUSINESS MATH Slater and Wittry Practical Business Math Procedures Thirteenth Edition Slater and Wittry Math for Business and Finance: An Algebraic Approach Second Edition BUSINESS STATISTICS Bowerman, Drougas, Duckworth, Froelich, Hummel, Moninger, and Schur Business Statistics in Practice Ninth Edition Doane and Seward Applied Statistics in Business and Economics Sixth Edition Doane and Seward Essential Statistics in Business and Economics Third Edition Lind, Marchal, and Wathen Basic Statistics for Business and Economics Ninth Edition Lind, Marchal, and Wathen Statistical Techniques in Business and Economics Eighteenth Edition Jaggia and Kelly Business Statistics: Communicating with Numbers Third Edition Jaggia and Kelly Essentials of Business Statistics: Communicating with Numbers Second Edition McGuckian Connect Master: Business Statistics page v Project Management The Managerial Process Eighth Edition Eri k W. Lar so n Clif for d F. Gr ay O r e g o n S t a t e U n i v e r s i t y page vi PROJECT MANAGEMENT: THE MANAGERIAL PROCESS, EIGHTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2021 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2014, and 2011. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 LWI 24 23 22 21 20 19 ISBN 978-1-260-23886-0 (bound edition) MHID 1-260-23886-5 (bound edition) ISBN 978-1-260-73615-1 (loose-leaf edition) MHID 1-260-73615-6 (loose-leaf edition) Portfolio Manager: Noelle Bathurst Product Developer Manager: Michele Janicek Executive Marketing Manager: Harper Christopher Lead Content Project Manager: Sandy Wille Senior Content Project Manager: Angela Norris Senior Buyer: Sandy Ludovissy Design: Egzon Shaqiri Content Licensing Specialist: Beth Cray Cover Image: Gina Pricope/Getty Images Compositor: SPi Global All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Names: Gray, Clifford F., author. | Larson, Erik W., 1952- author. Title: Project management : the managerial process / Erik W. Larson,  Clifford F. Gray, Oregon State University. Description: Eighth edition. | New York, NY : McGraw-Hill Education, [2021]  | Clifford F. Gray appears as the first named author in earlier  editions. | Includes bibliographical references and index. | Summary:  “Our motivation in writing this text continues to be to provide a  realistic, socio-technical view of project management. In the past,  textbooks on project management focused almost exclusively on the tools  and processes used to manage projects and not the human dimension”–  Provided by publisher. Identifiers: LCCN 2019028390 (print) | LCCN 2019028391 (ebook) |  ISBN 9781260238860 (paperback) | ISBN 1260238865 (paperback) |  ISBN 9781260242379 (ebook) Subjects: LCSH: Project management. | Time management. | Risk management. Classification: LCC HD69.P75 G72 2021 (print) | LCC HD69.P75 (ebook) |  DDC 658.4/04–dc23 LC record available at https://lccn.loc.gov/2019028390 LC ebook record available at https://lccn.loc.gov/2019028391 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw- Hill Education does not guarantee the accuracy of the information presented at these sites. mheducation.com/highered https://lccn.loc.gov/2019028390 https://lccn.loc.gov/2019028391 http://mheducation.com/highered page vii About the Authors Erik W. Larson ERIK W. LARSON is professor emeritus of project management at the College of Business, Oregon State University. He teaches executive, graduate, and undergraduate courses on project management and leadership. His research and consulting activities focus on project management. He has published numerous articles on matrix management, product development, and project partnering. He has been honored with teaching awards from both the Oregon State University MBA program and the University of Oregon Executive MBA program. He has been a member of the Project Management Institute since 1984. In 1995 he worked as a Fulbright scholar with faculty at the Krakow Academy of Economics on modernizing Polish business education. He was a visiting professor at Chulalongkorn University in Bangkok, Thailand, and at Baden-Wuerttemberg Cooperative State University in Bad Mergentheim, Germany. He received a B.A. in psychology from Claremont McKenna College and a Ph.D. in management from State University of New York at Buffalo. He is a certified Project Management Professional (PMP) and Scrum master. Clifford F. Gray CLIFFORD F. GRAY is professor emeritus of management at the College of Business, Oregon State University. He has personally taught more than 100 executive development seminars and workshops. Cliff has been a member of the Project Management Institute since 1976 and was one of the founders of the Portland, Oregon, chapter. He was a visiting professor at Kasetsart University in Bangkok, Thailand, in 2005. He was the president of Project Management International, Inc. (a training and consulting firm specializing in project management) 1977–2005. He received his B.A. in economics and management from Millikin University, M.B.A. from Indiana University, and doctorate in operations management from the College of Business, University of Oregon. He is a certified Scrum master. page viii “Man’s mind, once stretched by a new idea, never regains its original dimensions.” Oliver Wendell Holmes, Jr. To my family, who have always encircled me with love and encouragement—my parents (Samuel and Charlotte), my wife (Mary), my sons and their wives (Kevin and Dawn, Robert and Sally), and their children (Ryan, Carly, Connor and Lauren). C.F.G. “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” Bernard Shaw, Man and Superman To Ann, whose love and support have brought out the best in me. To our girls Mary, Rachel, and Tor-Tor for the joy and pride they give me. And to our grandkids, Mr. B, Livvy, Jasper Jones!, Baby Ya Ya, Juniper Berry, and Callie, whose future depends upon effective project management. Finally, to my muse, Neil—walk on! E.W.L page ix Preface Our motivation in writing this text continues to be to provide a realistic, socio-technical view of project management. In the past, textbooks on project management focused almost exclusively on the tools and processes used to manage projects and not the human dimension. This baffled us, since people, not tools, complete projects! While we firmly believe that mastering tools and processes is essential to successful project management, we also believe that the effectiveness of these tools and methods is shaped and determined by the prevailing culture of the organization and interpersonal dynamics of the people involved. Thus, we try to provide a holistic view that focuses on both the technical and social dimensions and how they interact to determine the fate of projects. Audience This text is written for a wide audience. It covers concepts and skills that are used by managers to propose, plan, secure resources, budget, and lead project teams to successful completions of their projects. The text should prove useful to students and prospective project managers in helping them understand why organizations have developed a formal project management process to gain a competitive advantage. Readers will find the concepts and techniques discussed in enough detail to be immediately useful in new- project situations. Practicing project managers will find the text to be a valuable guide and reference when dealing with typical problems that arise in the course of a project. Managers will also find the text useful in understanding the role of projects in the missions of their organizations. Analysts will find the text useful in helping to explain the data needed for page x project implementation as well as the operations of inherited or purchased software. Members of the Project Management Institute will find the text is well structured to meet the needs of those wishing to prepare for PMP (Project Management Professional) or CAPM (Certified Associate in Project Management) certification exams. The text has in-depth coverage of the most critical topics found in PMI’s Project Management Body of Knowledge (PMBOK). People at all levels in the organization assigned to work on projects will find the text useful not only in providing them with a rationale for the use of project management processes but also because of the insights they will gain into how to enhance their contributions to project success. Our emphasis is not only on how the management process works but also, and more importantly, on why it works. The concepts, principles, and techniques are universally applicable. That is, the text does not specialize by industry type or project scope. Instead, the text is written for the individual who will be required to manage a variety of projects in a variety of organizational settings. In the case of some small projects, a few of the steps of the techniques can be omitted, but the conceptual framework applies to all organizations in which projects are important to survival. The approach can be used in pure project organizations such as construction, research organizations, and engineering consultancy firms. At the same time, this approach will benefit organizations that carry out many small projects while the daily effort of delivering products or services continues. Content In this and other editions we continue to try to resist the forces that engender scope creep and focus only on essential tools and concepts that are being used in the real world. We have been guided by feedback from reviewers, practitioners, teachers, and students. Some changes are minor and incremental, designed to clarify and reduce confusion. Other changes are significant. They represent new developments in the field or better ways of teaching project management principles. Below are major changes to the eighth edition. All material has been reviewed and revised based on the latest edition of Project Management Body of Knowledge (PMBOK), Sixth Edition, 2017. Discussion questions for most Snapshots from Practice are now at the end of each chapter. Many of the Snapshots from Practice have been expanded to more fully cover the examples. Agile Project Management is introduced in Chapter 1 and discussed when appropriate in subsequent chapters, with Chapter 15 providing a more complete coverage of the methodology. A new set of exercises have been developed for Chapter 5. New student exercises and cases have been added to chapters. The Snapshot from Practice boxes feature a number of new examples of project management in action. The Instructor’s Manual contains a listing of current YouTube videos that correspond to key concepts and Snapshots from Practice. Overall the text addresses the major questions and challenges the authors have encountered over their 60 combined years of teaching project management and consulting with practicing project managers in domestic and foreign environments. These questions include the following: How should projects be prioritized? What factors contribute to project failure or success? How do project managers orchestrate the complex network of relationships involving vendors, subcontractors, project team members, senior management, functional managers, and customers that affect project success? What project management system can be set up to gain some measure of control? How are projects managed when the customers are not sure what they want? How do project managers work with people from foreign cultures? Project managers must deal with all these concerns to be effective. All of these issues and problems represent linkages to a socio-technical project management perspective. The chapter content of the text has been placed within an overall framework that integrates these topics in a holistic manner. Cases and snapshots are included from the experiences of page xi practicing managers. The future for project managers is exciting. Careers will be built on successfully managing projects. Student Learning Aids Student resources include study outlines, online quizzes, PowerPoint slides, videos, Microsoft Project Video Tutorials, and web links. These can be found in Connect. Acknowledgments We would like to thank Scott Bailey for building the end-of-chapter exercises for Connect; Pinyarat Sirisomboonsuk for revising the PowerPoint slides; Ronny Richardson for updating the Instructor’s Manual; Angelo Serra for updating the Test Bank; and Pinyarat Sirisomboonsuk for providing new Snapshot from Practice questions. Next, it is important to note that the text includes contributions from numerous students, colleagues, friends, and managers gleaned from professional conversations. We want them to know we sincerely appreciate their counsel and suggestions. Almost every exercise, case, and example in the text is drawn from a real-world project. Special thanks to managers who graciously shared their current project as ideas for exercises, subjects for cases, and examples for the text. John A. Drexler, Jim Moran, John Sloan, Pat Taylor, and John Wold, whose work is printed, are gratefully acknowledged. Special gratitude is due Robert Breitbarth of Interact Management, who shared invaluable insights on prioritizing projects. University students and managers deserve special accolades for identifying problems with earlier drafts of the text and exercises. We are indebted to the reviewers of past editions who shared our commitment to elevating the instruction of project management. We thank you for your many thoughtful suggestions and for making our book better. Of course, we accept responsibility for the final version of the text. Paul S. Allen, Rice University Victor Allen, Lawrence Technological University Kwasi Amoako-Gyampah, University of North Carolina–Greensboro Gregory Anderson, Weber State University Mark Angolia, East Carolina University Brian M. Ashford, North Carolina State University Dana Bachman, Colorado Christian University Robin Bagent, College of Southern Idaho Scott Bailey, Troy University Nabil Bedewi, Georgetown University Anandhi Bharadwaj, Emory University James Blair, Washington University–St. Louis Mary Jean Blink, Mount St. Joseph University S. Narayan Bodapati, Southern Illinois University at Edwardsville Warren J. Boe, University of Iowa Thomas Calderon, University of Akron Alan Cannon, University of Texas–Arlington Susan Cholette, San Francisco State Denis F. Cioffi, George Washington University Robert Cope, Southeastern Louisiana University Kenneth DaRin, Clarkson University Ron Darnell, Amberton University Burton Dean, San Jose State University Joseph D. DeVoss, DeVry University David Duby, Liberty University Michael Ensby, Clarkson University Charles Franz, University of Missouri, Columbia Larry Frazier, City University of Seattle Raouf Ghattas, DeVry University Edward J. Glantz, Pennsylvania State University Michael Godfrey, University of Wisconsin–Oshkosh Jay Goldberg, Marquette University page xii Robert Groff, Westwood College Raffael Guidone, New York City College of Technology Brian Gurney, Montana State University–Billings Owen P. Hall, Pepperdine University Chaodong Han, Towson University Bruce C. Hartman, University of Arizona Mark Huber, University of Georgia Richard Irving, York University Marshall Issen, Clarkson University Robert T. Jones, DePaul University Susan Kendall, Arapahoe Community College George Kenyon, Lamar University Robert Key, University of Phoenix Elias Konwufine, Keiser University Dennis Krumwiede, Idaho State University Rafael Landaeta, Old Dominion University Eldon Larsen, Marshall University Eric T. Larson, Rutgers University Philip Lee, Lone Star College–University Park Charles Lesko, East Carolina University Richard L. Luebbe, Miami University of Ohio Linh Luong, City University of Seattle Steve Machon, DeVry University–Tinley Park Andrew Manikas, University of Louisville William Matthews, William Patterson University Lacey McNeely, Oregon State University Carol Miller, Community College of Denver William Moylan, Lawrence Technological College of Business Ravi Narayanaswamy, University of South Carolina–Aiken Muhammad Obeidat, Southern Polytechnic State University Edward Pascal, University of Ottawa James H. Patterson, Indiana University Steve Peng, California State University–East Bay Nicholas C. Petruzzi, University of Illinois–Urbana/Champaign Abirami Radhakrishnan, Morgan State University Emad Rahim, Bellevue University Tom Robbins, East Carolina University Art Rogers, City University Linda Rose, Westwood College Pauline Schilpzand, Oregon State University Teresa Shaft, University of Oklahoma Russell T. Shaver, Kennesaw State University William R. Sherrard, San Diego State University Erin Sims, DeVry University–Pomona Donald Smith, Texas A&M University Kenneth Solheim, DeVry University–Federal Way Christy Strbiak, U.S. Air Force Academy Peter Sutanto, Prairie View A&M University Jon Tomlinson, University of Northwestern Ohio Oya Tukel, Cleveland State University David A. Vaughan, City University Mahmoud Watad, William Paterson University Fen Wang, Central Washington University Cynthia Wessel, Lindenwood University Larry R. White, Eastern Illinois University Ronald W. Witzel, Keller Graduate School of Management G. Peter Zhang, Georgia State University In addition, we would like to thank our colleagues in the College of Business at Oregon State University for their support and help in completing this project. In particular, we recognize Lacey McNeely, Prem Mathew, and Jeewon Chou for their helpful advice and suggestions. We also wish to thank the many students who helped us at different stages of this project, most notably Neil Young, Saajan Patel, Katherine Knox, Dat Nguyen, and David Dempsey. Mary Gray deserves special credit for editing and working under tight deadlines on earlier editions. Special thanks go to Pinyarat (“Minkster”) Sirisomboonsuk for her help in preparing the last five editions. Finally, we want to extend our thanks to all the people at McGraw-Hill Education for their efforts and support. First, we would like to thank Noelle Bathurst and Sarah Wood, for providing editorial direction, guidance, and management of the book’s development for the eighth edition. And we would also like to thank Sandy Wille, Sandy Ludovissy, Egzon Shaqiri, Beth Cray, and Angela Norris for managing the final production, design, supplement, and media phases of the eighth edition. Erik W. Larson Clifford F. Gray page xiii Guided Tour Established Learning Objectives Learning objectives are listed both at the beginning of each chapter and are called out as marginal elements throughout the narrative in each chapter. End-of-Chapter Content Both static and algorithmic end-of-chapter content, including Review Questions and Exercises, are assignable in Connect. SmartBook The SmartBook has been updated with new highlights and probes for optimal student learning. Snapshots The Snapshot from Practice boxes have been updated to include a number of new examples of project management in action. New discussion questions based on the Snapshots have been added to the end-of-chapter material and are assignable in Connect. New and Updated Cases Included at the end of each chapter are between one and five cases that demonstrate key ideas from the text and help students understand how project management comes into play in the real world. Cases have been reviewed and updated across the eighth edition. Instructor and Student Resources Instructors and students can access all of the supplementary resources for the eighth edition within Connect or directly at www.mhhe.com/larson8e. http://www.mhhe.com/larson8e page xiv Note to Student You will find the content of this text highly practical, relevant, and current. The concepts discussed are relatively simple and intuitive. As you study each chapter we suggest you try to grasp not only how things work but also why things work. You are encouraged to use the text as a handbook as you move through the three levels of competency: I know. I can do. I can adapt to new situations. The field of project management is growing in importance and at an exponential rate. It is nearly impossible to imagine a future management career that does not include management of projects. Resumes of managers will soon be primarily a description of their participation in and contributions to projects. Good luck on your journey through the text and on your future projects. Chapter-by-Chapter Revisions for the Eighth Edition Chapter 1: Modern Project Management New Snapshot: Project Management in Action 2019. New Snapshot: London Calling: Seattle Seahawks versus Oakland Raiders. New case: A Day in the Life—2019. page xv New section on Agile Project Management. Chapter 2: Organization Strategy and Project Selection Chapter text refined and streamlined. New section describing the phase gate model for selecting projects. Chapter 3: Organization: Structure and Culture New section on project management offices (PMOs). New Snapshot: 2018 PMO of the Year. Chapter 4: Defining the Project Consistent with PMBOK 6th edition, the scope checklist includes product scope description, justification/business case, and acceptance criteria. Discussion of scope creep expanded. New case: Celebration of Color 5K. Chapter 5: Estimating Project Times and Costs Snapshot from Practice on reducing estimating errors incorporated in the text. Snapshot from Practice: London 2012 Olympics expanded. A new set of six exercises. Chapter 6: Developing a Project Schedule Chapter 6 retitled Developing a Project Schedule to better reflect content. New case: Ventura Baseball Stadium. Chapter 7: Managing Risk New Snapshot: Terminal Five—London Heathrow Airport. Consistent with PMBOK 6e, “escalate” added to risk and opportunity responses and “budget” reserves replaced by “contingency” reserves. page xvi Chapter 8 Scheduling Resources and Costs Two new exercises. New case: Tham Luang Cave Rescue. Chapter 9: Reducing Project Duration Snapshot 9.1: Smartphone Wars updated. New case: Ventura Baseball Stadium (B). Chapter 10: Being an Effective Project Manager Effective Communicator has replaced Skillful Politician as one of the 8 traits associated with being an effective project manager. Research Highlight 10.1: Give and Take expanded. Chapter 11: Managing Project Teams A new review question and exercises added. Chapter 12: Outsourcing: Managing Interorganizational Relations Snapshot 12.4: U.S. Department of Defense Value Engineering Awards updated. New exercise added. Chapter 13 Progress and Performance Measurement and Evaluation Expanded discussion of the need for earned value management. New case: Ventura Stadium Status Report. Chapter 14: Project Closure New case: Halo for Heroes II. Chapter 15: Agile Project Management Chapter revised to include discussions of Extreme programming, Kanban, and hybrid models. New Snapshot: League of Legends. New case: Graham Nash. Chapter 16: International Projects Snapshots from Practice: The Filming of Apocalypse Now and River of Doubt expanded. New case: Mr. Wui Goes to America. MCGRAW-HILL CUSTOMER CARE CONTACT INFORMATION At …