Project Management

Project management is the process of planning, monitoring, and controlling a unique set of tasks that have a discrete beginning, end, and outcome. The project management process is performed within the three constraints of time, costs, and scope. The goal of project management is to produce a technically acceptable product that is both on-time and within budget. To do this, project management attempts to reduce the risks associated with the project and maximize the benefits, including profit and marketability. A number of tools and techniques are available to help the project manager monitor and control projects.

A project is a unique, discrete set of tasks with a defined beginning, end, and outcome. This may be as simple as completing a paper for class or as complex as designing, developing, and testing a new destroyer for the Navy. No project is accomplished in a vacuum, however. Each task must be accomplished under the three constraints of time (e.g., the paper is due on Friday; the first destroyer must be operational and in the fleet ten years from the start of the contract), cost (e.g., research for the paper must be done in the local library rather than paying to download articles from professional sites; the destroyer must be built within the budget set by Congress), and scope (e.g., the paper can only be 5,000 words long, so needs to be limited to a narrow topic even though the background information is very interesting; the destroyer needs to be built to the specifications set at the beginning of the project even though the customer or the project team think that additional features would make it better). Project management is a process that helps the project team accomplish its goals within the three constraints of time, cost, and scope. Using the principles and tools of project management, one can plan, organize, and manage the tasks to be done within the given constraints in order to accomplish the goal of the project.

Unfortunately, not every project is run using sound project management principles. Instead, many companies manage projects by doing the organizational equivalent of putting out brush fires, paying attention to whichever problem is most pressing at the time, while letting other problems grow only to be dealt with later at the expense of other project tasks. In a well-run project, on the other hand, the project manager -- the project authority for planning, coordinating, and managing the project -- needs to be proactive rather than reactive, keeping a constant eye on all aspects of the project so that no one area is allowed to develop problems that could sabotage the overall project, and accomplishing the project goals.

Project management is essentially the art of project control, with the continuing goal of keeping the project on time and within budget. This is often the interactive process of keeping the project within technical scope (i.e., not adding work to the project outside that which was originally planned), within the budget negotiated for accomplishment of the project tasks, moving along according to the predetermined schedule, and balancing the risks associated with changes in any of these areas and how they affect the accomplishment of the overall goal of the project. To do these things, project management activities focus on three things: the project and its goals, the process of how these goals are met, and the performance of individuals and organizations to accomplish these goals. If a project is managed well, its goals can be accomplished on-time and within budget, not only giving the organization a profit in the short-term, but enhancing its reputation for good work at a reasonable cost; thereby enhancing its ability to continue to make a profit in the future.

Application

There are a number of tools available to help project managers manage their projects efficiently and effectively. Several project management software packages are available that help project managers crunch the required numbers associated with risk management and other project management activities. However, project management is not a task that can be completely automated; human experience and judgments are necessary.

To successfully manage a project, one must first understand the scope of the project (what needs to be done, what the end result should be and the limits placed on these elements by the schedule and budget). In many cases, technical specifications will have been provided by the customer. For the example of the research paper, this may be simple: The paper needs to be 4,900-5,100 words long, follow a specific broad outline, be on a given topic, and use at least three professional references cited in APA format. For the example of the destroyer, however, the task is more complicated. Although the customer undoubtedly will provide technical specifications for what they want the new ship to be able to do, such specifications are long and complex, and need to be distilled and synthesized so that they can be tracked for project management purposes. One way to do this is through the use of a work breakdown structure (WBS). A good WBS provides a solid foundation for performing the tasks of project management on a complex project. By developing a thorough WBS, project management can be better prepared to control the project proactively, rather constantly react in emergency mode to unforeseen problems.

At its most basic, a WBS is a list of all the tasks that need to be done to complete the project. This is written as a hierarchy, starting with general tasks and then breaking these general tasks into more specific steps that need to be taken. For the project of writing a paper, the general outline of the project might be to define the topic, collect data, write the paper, do quality control on the paper, and submit the paper. The initial step of defining the topic could further be broken down into substeps such as scanning the textbook and materials provided by the professor to narrow the topic into areas of interest, bounding the problem by doing preliminary research in the library or on the Internet to see what the components of the topic are, and developing an outline defining the sections of the paper that will be used both for data collection and for writing the paper itself. An example of a portion of a WBS for writing a paper is shown in Figure 1.

WBS Number Task Description 1.0 Project initiation 1.1 Define topic 1.1.1 Scan textbook and other materials 1.1.2 Preliminary library research 1.1.3 Develop preliminary outline 1.2 Perform research 1.2.1 Gather library books on topic 1.2.2 Search professional database for articles

In addition to developing a WBS, for more complex projects it is often helpful to determine the critical path that defines which activities are critical to accomplishing the project in a timely manner. Critical path management (CPM) is a tool that helps project managers analyze the activities that need to be performed to accomplish the project and when each needs to be accomplished so that the rest of the project can proceed in a timely manner. This includes determining the order in which the tasks need to be accomplished, what tasks feed into them, and how long each task will take to accomplish. In the example of writing a paper, the critical path might include a target date for finishing the library research that allows sufficient time to synthesize the material before actually writing the paper. For example, a target date for finishing the first draft of the paper should be in place to leave sufficient time to do quality control on the paper, checking it for coherence and flow, grammar and spelling errors, and inclusion of all needed data. In the more complicated example of ship design and development, the development of the critical path would allow the project manager to determine that the training component could not be started until it was determined what tasks needed to be performed both in normal operations and in battle. An example of a portion of a critical path diagram for writing a paper is given in Figure 2. Note that there are two tasks that cannot be performed until the previous task is accomplished.

Another technique that may be of help in project management is resource loading, the process of examining the project to determine which resources are most critical to the success of the project, and proportioning them among the various activities. In the example of the paper, most students find that their most critical resource is time. Resource allocation for writing the paper might include determining how much time can be devoted to the paper from start to finish while still getting other necessary activities accomplished (e.g., eating, sleeping, doing homework for other classes), then allocating that limited time appropriately within the project to each of the activities. For the development of the ship, of course, resources are not limited to time, but also to personnel available to work on the project, materials necessary to perform the activities associated with the project (e.g., computer workstations, software licenses; steel, fiberglass, and other building materials), and the money to acquire both. So, for example, if the budget only allows for the hiring of ten programmers, it must be determined which programming tasks are the most critical and how much of the programmers' time should be allocated to each to best keep the project on time and within budget.

Another widely used project management tool is the program evaluation review technique (PERT). PERT is a variation on the critical path method, and estimates not only the expected length of time to complete each activity in the project, but also the shortest and longest times that each activity could take. This gives project managers a window for each activity and helps them better predict future impact on the project if schedule estimates are not met. This system also helps project managers determine the exact status of the project and predict any potential trouble areas that might negatively impact either the schedule or budget of the project. To do this, PERT divides the project into separate, detailed tasks on a schedule. These tasks are then put together as part of an integrated network that shows how each task impacts the others as well as the overall critical path for the system. Each task is also associated with the appropriate resources -- including time, manpower, and capital -- that it has been allocated. After the system has been put into place, PERT implements a reporting system so that project managers can compare actual performance and planned progress, and can continually check the status of the project.

Another popular scheduling tool for projects is the Gantt chart. On the vertical axis, the Gantt chart lists all the tasks to be accomplished for the project. On the horizontal axis, the chart lists the time for the accomplishment of these tasks, usually broken down into some pre-defined unit such as days, weeks, or months. Within the body of the chart, the various tasks to be performed are placed on the time line with an indication of the projected start and end dates for each activity. An example of a simplified Gantt chart for part of the paper writing task is shown in Figure 3.

Tasks Week 1 S M T W Th F S 1.0 Define the topic 1.1 Scan available material 1.2 Perform library research 1.3 Outline paper

When managing a project, cost and schedule often interact, affecting project performance. For example, budget constraints that prevent the organization from hiring additional programmers mean that there is less programming work that can be done on the project. Alternative solutions could include asking programmers to work overtime, hiring temporary or part-time workers for the short-term, or using only the current programmers and letting them finish their tasks as they can. Each alternative, however, has risks associated with it. The overtime option might require additional money or reduce the effectiveness of overworked human beings, impacting both budget and schedule. The temporary employee option would also require additional funds for personnel, but would minimize these by using the additional personnel on an as-needed status. The option of working only with the current employees without overtime could run the risk of missed deadlines while still requiring additional funds as the programmers work not longer hours in the day, but more hours in the project. Risk management is a generic term applied to considering such alternatives and balancing the impacts on the cost, schedule, and design in order to determine which alternative has the least impact on the overall performance of the contract.

The risks associated with not meeting the schedule or budget of a project can affect not only the organization in the short term, but also its long-term viability as well as the career of the project manager. Business risks are the risks that could damage the organization in either the short term or long term if the project fails. Short-term risks might include such things as incurring unexpected expenses on a fixed price contract or not earning an expected incentive if a delivery schedule is not met. In addition, not meeting deadlines or technical requirements could have long-term impact on the organization's reputation and ability to obtain future business. For the project manager, there are also the personal and career risks incurred if the project fails. For all involved, therefore, it is important that risks be honestly recognized before hand and plans put into place so that their negative impact can be minimized if a task or activity runs into trouble.

Some of the risks associated with a contract depend in part on the type of contract that is in place for the project. The two basic types of contracts are the fixed price contract and the cost-reimbursable contract. In the fixed price contract, all project costs are built into the contract and the contractor must pay for any costs incurred over and above the contract amount. This type of contract is generally used where the contract requirements are well-defined in advance and the associated costs can be predetermined. The cost-reimbursable contract, on the other hand, is typically used in situations where the costs associated with the project cannot be adequately and accurately estimated beforehand. In this type of contract, the contractor is reimbursed for costs allowable under the terms of the contract and, therefore, incurs less risk. Contract type is actually a continuum from contracts where the risk is incurred by the contractor (e.g., firm fixed price contracts, fixed price with redetermination contracts, and fixed price incentive contracts in decreasing order of risk) or on the customer (e.g., cost plus fixed fee, cost plus incentive fee, and time and material, in order of increased risk for the customer). Contracts with high risk for the contractor require better risk management.

There are two aspects to risk management. Risk analysis is a planning activity to determine the possibility of risk and ways to reduce its impact. As part of this process, the project manager and key personnel determine three things: what factors could cause the project to fail, what the consequences of such failure might be, and how likely failure is to occur. Various formulas are available to then determine the comparative severity and importance of each risk. For example, an activity that is likely to go wrong but that has little impact on the overall completion of the project is probably less important than an activity that has a smaller chance of failing but that would prevent successful completion of the project. After such determinations are made, a plan can be developed and implemented to handle the possibility of failure at any one of these points.

It is not enough to know what to do if a task or activity on a project fails. Good risk management also requires risk control. This project management responsibility includes such activities as monitoring the project risks so that they can be caught earlier rather than later in the process so that the contingency plan can be put into effect as soon as possible. To maximize the effectiveness of the risk monitoring process, particularly on larger projects, also requires having a risk reporting structure in place so that those working closely on the at-risk activities can report problems to management in a timely manner.

There are a number of tools and techniques available for project risk management including software programs and risk calculation formulas. Computer simulations alone, however, are not adequate to predicting the impact of risk or for preventing it. Large projects typically build in periodic formal reviews held between both the contractor and the customer to jointly determine the status of the project and whether or not mid-course corrections are needed. Two major reviews that are often built into the schedule are the preliminary design review (PDR) and the critical design review (CDR). The PDR is conducted after the preliminary design is complete but before the detail design is begun. During the PDR, the contract describes any changes made to the original design along with the rationale for these changes. At PDR, the contractor may also provide a hands-on demonstration or proof-of-concept for the product. The CDR is conducted before the design is released for manufacturing. Progressive or incremental CDRs may occur for subsystems of the project, followed by a system-level CDR to determine the completeness and feasibility of the design as a whole.

Terms & Concepts

Cost-Plus Fixed-Fee Contract: A type of cost-reimbursement contract in which the contractor receives a negotiated fee at the beginning of the contract. This fee may be adjusted if the work to be performed under the contract changes. This type of contract is often used to lessen the contractor's risk on projects that might otherwise be too risky.

Cost-Plus Incentive Fee Contract: A type of cost-reimbursement contract in which the fee negotiated before the start of the contract is later adjust by a formula that considers the relationship of total allowable costs to total target costs.

Critical Path Method (CPM): A method for project management that defines a set of tasks -- each of which is dependent on the performance of the previous task -- that together takes the longest time to complete.

Design Review: Any of a number of reviews of the product design, usually held between the customer and the contractor to determine the completeness and feasibility of the design at a given time in the contract. Two of the most common design reviews are the preliminary design review (PDR) -- held after the completion of the preliminary design but before the start of the detail design -- and the critical design review -- held before the design is released for production.

Firm Fixed-Price Contract: A contract in which the price is not subject to adjustment on the basis of the contractor's expenses in performing the contract. Firm fixed-price contracts maximize the contractors' risk and give them full responsibility for all costs and resultant profit or loss.

Fixed-Price Incentive Contract: A type of fixed-price contract that allows profit and final contract price to be adjusted on the basis of a pre-established formula calculating the relationship of total negotiated cost to total target cost. This final price is subject to a ceiling negotiated at the beginning of the contract.

Fixed-Price with Redetermination Contract: A contract that provides a firm fixed-price for the initial delivery or contract period with prospective redetermination of price for later periods of performance.

Program Evaluation and Review Technique (PERT): A form of the critical path method that organizes project task and activity information in a way that allows project managers and other team members to understand which tasks are critical to keeping the project on track and how the other tasks feed into these.

Resource Loading: The process of examining the project to determine which resources are most critical to the success of the project, and proportioning them among the various activities.

Risk Management: The project management process of analyzing the tasks and activities of a project, planning ways to reduce the impact if the predicted normal course of events does not occur, and implementing reporting procedures so that project problems are discovered earlier in the process rather than later.

Schedule: A planning and tracking document that specifies the project tasks, how long each takes, and the order in which they must be accomplished in order to meet the project goals. Tools for scheduling include the PERT technique, Gantt chart, and CPM.

Time and Materials Contract: A type of contract in which the customer pays for actual direct labor at fixed hourly rates (including wages, overhead, general and administrative expenses, and profit) and the actual cost of materials used in the project. This type of contract places the least risk on the contractor and the most risk on the customer.

Work Breakdown Structure (WBS): A hierarchical outline of tasks and activities necessary to complete a project. In addition to the major tasks to be accomplished, the WBS specifies the substeps necessary for each task. See Figure 1.

Bibliography

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Human, W. J., & Steyn, H. H. (2013). Establishing project management guidelines for successfully managing resettlement projects. South African Journal of Business Management, 44(3), 1-14. Retrieved November 25, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=89665393

Kumar, P. P. (2005, Jul). Effective use of Gantt chart for managing large scale projects. Cost Engineering, 47 (7), 14-21. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=17721066&site=ehost-live

LaBrosse, M. (2004). Project management in the real world. Plant Engineering, 58 (11), 29-32. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=15089841&site=ehost-live

Lehman, Bill. (2007). Project risk management. Mortgage Banking, 67 (5), 99-100. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=24083165&site=ehost-live

Linton, Jonathan. (2006). Managing the project. Circuits Assembly, 17 (6), 12-14. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=21059488&site=ehost-live

Parker, D., Charlton, J., Ribeiro, A., & Pathak, R. D. (2013). Integration of project-based management and change management intervention methodology. International Journal of Productivity & Performance Management, 62(5), 534-544. Retrieved November 25, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=88053523

Ward, J., & Daniel, E. M. (2013). The role of project management offices (PMOs) in IS project success and management satisfaction. Journal of Enterprise Information Management, 26(3), 316-336. Retrieved November 25, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=88176684

Suggested Reading

Besner, C., & Hobbs, B. (2012). An empirical identification of project management toolsets and a comparison among project types. Project Management Journal, 43(5), 24-46. Retrieved November 25, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=80202137

Grant, K. P., Cashman, W. M. & Christensen, D. S. (2006). Delivering projects on time. Research Technology Management, 49 (6), 52-58. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=23119319&site=ehost-live

Griffith, A. F. (2006). Scheduling practices and project success. Cost Engineering, 48 (9), 24-30. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22743467&site=ehost-live

Krane, H., Olsson, N. E., & Rolstadås, A. (2012). How project manager-project owner interaction can work within and influence project risk management. Project Management Journal, 43(2), 54-67. Retrieved November 25, 2013 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=73320897

Madlin, N. (1986). Streamlining the PERT chart. Management Review, 75 (9), 67-68. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=6026402&site=ehost-live

Spencer, G. R. & Lewis, R. M. (2006). Schedule analysis indices. AACE International Transactions, 4.1-4.5. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22646750&site=ehost-live

Uppal, K. B. (2004). Project management process and action plans. AACE International Transactions, 3.1-3.10. Retrieved March 19, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=14705182&site=ehost-live