Chapter 1 Project Management Book of Knowledge Part 1

1 I N TRO D U CTI O N 1.1 OVERVIEW AND PURPOSE OF THIS GUIDE Project management is not new. It has been in use for hundreds of years. Examples of project outcomes include: uPyramids u of Giza, uOlympic u games, uGreat u Wall of China, uTaju Mahal, uPublication u of a children’s book, uPanama u Canal, uDevelopment u of commercial jet airplanes, uPolio u vaccine, uHuman u beings landing on the moon, uCommercial u software applications, uPortable u devices to use the global positioning system (GPS), and uPlacement u of the International Space Station into Earth’s orbit. The outcomes of these projects were the result of leaders and managers applying project management practices, principles, processes, tools, and techniques to their work. The managers of these projects used a set of key skills and applied knowledge to satisfy their customers and other people involved in and affected by the project. By the mid-20th century, project managers began the work of seeking recognition for project management as a profession. One aspect of this work involved obtaining agreement on the content of the body of knowledge (BOK) called project management. This BOK became known as the Project Management Body of Knowledge (PMBOK). The Project Management Institute (PMI) produced a baseline of charts and glossaries for the PMBOK. Project managers soon realized that no single book could contain the entire PMBOK. Therefore, PMI developed and published A Guide to the Project Management Body of Knowledge (PMBOK® Guide). PMI defines the project management body of knowledge (PMBOK) as a term that describes the knowledge within the profession of project management. The project management body of knowledge includes proven traditional practices that are widely applied as well as innovative practices that are emerging in the profession. The body of knowledge (BOK) includes both published and unpublished materials. This body of knowledge is identifies a subset of the project management body of knowledge that is constantly evolving. This PMBOK® Guide generally recognized as good practice. u uGenerally recognized means the knowledge and practices described are applicable to most projects most of the time, and there is consensus about their value and usefulness. u uGood practicemeans there is general agreement that the application of the knowledge, skills, tools, and techniques to project management processes can enhance the chance of success over many projects in delivering the expected business values and results. The project manager works with the project team and other stakeholders to determine and use the appropriate generally recognized good practices for each project. Determining the appropriate combination of processes, inputs, tools, techniques, outputs and life cycle phases to manage a project is referred to as “tailoring” the application of the knowledge described in this guide. is different from a methodology. A methodology is a system of practices, techniques, This PMBOK® Guide is a foundation upon which procedures, and rules used by those who work in a discipline. This PMBOK® Guide organizations can build methodologies, policies, procedures, rules, tools and techniques, and life cycle phases needed to practice project management. 1.1.1 THE STANDARD FOR PROJECT MANAGEMENT [1]. A standard is a document established by an authority, This guide is based on The Standard for Project Management custom, or general consent as a model or example. As an American National Standards Institute (ANSI) standard, The was developed using a process based on the concepts of consensus, openness, due Standard for Project Management is a foundational reference for PMI’s project management process, and balance.The Standard for Project Management professional development programs and the practice of project management. Because project management needs to practices, rather be tailored to fit the needs of the project, the standard and the guide are both based on descriptive than prescriptivepractices. Therefore, the standard identifies the processes that are considered good practices on most projects, most of the time. The standard also identifies the inputs and outputs that are usually associated with those processes. The standard does not require that any particular process or practice be performed. The Standard for Project Managementis included as Part 2 ofA Guide to the Project Management Body of Knowledge (PMBOK® Guide). ThePMBOK® Guide provides more detail about key concepts, emerging trends, considerations for tailoring the project management processes, and information on how tools and techniques are applied to projects. Project managers may use one or more methodologies to implement the project management processes outlined in the standard. The scope of this guide is limited to the discipline of project management, rather than the full spectrum of portfolios, programs, and projects. Portfolios and programs will be addressed only to the degree they interact with projects. PMI publishes two other standards that address the management of portfolios and programs: u uThe Standard for Portfolio Management [2], and u uThe Standard for Program Management [3]. 1.1.2 COMMON VOCABULARY The PMI Lexicon of Project Management A common vocabulary is an essential element of a professional discipline. Terms [4] provides the foundational professional vocabulary that can be consistently used by organizations, portfolio, Lexiconwill continue to evolve over time. The program, and project managers and other project stakeholders. The along with additional definitions. There may be other glossary to this guide includes the vocabulary in Lexicon the industry-specific terms used in projects that are defined by that industry’s literature. 1.1.3 CODE OF ETHICS AND PROFESSIONAL CONDUCT [5] to instill confidence in the project management PMI publishes theCode of Ethics and Professional Conduct profession and to help an individual in making wise decisions, particularly when faced with difficult situations where the individual may be asked to compromise his or her integrity or values. The values that the global project management community defined as most important were responsibility, respect, fairness, and honesty.Code The of Ethics and affirms these four values as its foundation. Professional Conduct includes both aspirational standards and mandatory standards. The The Code of Ethics and Professional Conduct aspirational standards describe the conduct that practitioners, who are also PMI members, certification holders, or volunteers, strive to uphold. Although adherence to the aspirational standards is not easily measured, conduct in accordance with these is an expectation for those who consider themselves to be professionals—it is not optional. The mandatory standards establish firm requirements and, in some cases, limit or prohibit practitioner behavior. Practitioners who are also PMI members, certification holders, or volunteers and who do not conduct themselves in accordance with these standards will be subject to disciplinary procedures before PMI’s Ethics Review Committee. 1.2 FOUNDATIONAL ELEMENTS This section describes foundational elements necessary for working in and understanding the discipline of project management. 1.2.1 PROJECTS uUnique u product, service, or result. Projects are undertaken to fulfill objectives by producing deliverables. An objective is defined as an outcome toward which work is to be directed, a strategic position to be attained, a purpose to be achieved, a result to be obtained, a product to be produced, or a service to be performed. A deliverable is defined as any unique and verifiable product, result, or capability to perform a service that is required to be produced to complete a process, phase, or project. Deliverables may be tangible or intangible. Fulfillment of project objectives may produce one or more of the following deliverables: n Au unique product that can be either a component of another item, an enhancement or correction to an item, or a new end item in itself (e.g., the correction of a defect in an end item); n Au unique service or a capability to perform a service (e.g., a business function that supports production or distribution); n Au unique result, such as an outcome or document (e.g., a research project that develops knowledge that can be used to determine whether a trend exists or a new process will benefit society); and n Au unique combination of one or more products, services, or results (e.g., a software application, its associated documentation, and help desk services). Repetitive elements may be present in some project deliverables and activities. This repetition does not change the fundamental and unique characteristics of the project work. For example, office buildings can be constructed with the same or similar materials and by the same or different teams. However, each building project remains unique in key characteristics (e.g., location, design, environment, situation, people involved). Projects are undertaken at all organizational levels. A project can involve a single individual or a group. A project can involve a single organizational unit or multiple organizational units from multiple organizations. Examples of projects include but are not limited to: n Developing u n Expanding u n Merging u a new pharmaceutical compound for market, a tour guide service, two organizations, n Improving u a business process within an organization, n Acquiring u and installing a new computer hardware system for use in an organization, n Exploring u for oil in a region, n Modifying u a computer software program used in an organization, n Conducting u research to develop a new manufacturing process, and n Constructing u a building. uTemporary u endeavor. The temporary nature of projects indicates that a project has a definite beginning and end. Temporary does not necessarily mean a project has a short duration. The end of the project is reached when one or more of the following is true: n The u project’s objectives have been achieved; n The u objectives will not or cannot be met; n Funding u is exhausted or no longer available for allocation to the project; n The u need for the project no longer exists (e.g., the customer no longer wants the project completed, a change in strategy or priority ends the project, the organizational management provides direction to end the project); n The u human or physical resources are no longer available; or n The u project is terminated for legal cause or convenience. Projects are temporary, but their deliverables may exist beyond the end of the project. Projects may produce deliverables of a social, economic, material, or environmental nature. For example, a project to build a national monument will create a deliverable expected to last for centuries. uProjects u drive change. Projects drive change in organizations. From a business perspective, a project is aimed at moving an organization from one state to another state in order to achieve a specific objective (see Figure 1-1). Before the project begins, the organization is commonly referred to as being in the current state. The desired result of the change driven by the project is described as the future state. For some projects, this may involve creating a transition state where multiple steps are made along a continuum to achieve the future state. The successful completion of a project results in the organization moving to the future state and achieving the specific objective. For more information on project management and change, see [6]. Managing Change in Organizations: A Practice Guide Organization Business Value Future State Pro Current State jec t Project Activities Time Figure 1-1. Organizational State Transition via a Project uProjects u enable business value creation. PMI defines business value as the net quantifiable benefit derived from a business endeavor. The benefit may be tangible, intangible, or both. In business analysis, business value is considered the return, in the form of elements such as time, money, goods, or intangibles in return for something , p. 185 [7]). exchanged (seeBusiness Analysis for Practitioners: A Practice Guide Business value in projects refers to the benefit that the results of a specific project provide to its stakeholders. The benefit from projects may be tangible, intangible, or both. Examples of tangible elements include: n Monetary u assets, n Stockholder u equity, n Utility, u n Fixtures, u n Tools, u and n Market u share. Examples of intangible elements include: n Goodwill, u n Brand u recognition, n Public u benefit, n Trademarks, u n Strategic u alignment, and n Reputation. u uProject u Initiation Context. Organizational leaders initiate projects in response to factors acting upon their organizations. There are four fundamental categories for these factors, which illustrate the context of a project (see Figure 1-2): n Meet u regulatory, legal, or social requirements; n Satisfy u stakeholder requests or needs; n Implement u or change business or technological strategies; and n Create, u improve, or fix products, processes, or services. Meet Regulatory, Legal, or Social Requirements Satisfy Stakeholder Requests or Needs Project Create, Improve, or Fix Products, Processes, or Services Implement or Change Business or Technological Strategies Figure 1-2. Project Initiation Context These factors influence an organization’s ongoing operations and business strategies. Leaders respond to these factors in order to keep the organization viable. Projects provide the means for organizations to successfully make the changes necessary to deal with these factors. These factors ultimately should link to the strategic objectives of the organization and the business value of each project. Table 1-1 illustrates how example factors could align with one or more of the fundamental factor categories. Create, Improve, or Fix Products, Processes, or Services Implement or Change Business or Technological Strategies Examples of Specific Factors Satisfy Stakeholder Requests or Needs Specific Factor Meet Regulatory, Legal, or Social Requirements Table 1-1. Examples of Factors that Lead to the Creation of a Project X X New technology An electronics firm authorizes a new project to develop a faster, cheaper, and smaller laptop based on advances in computer memory and electronics technology Competitive forces Lower pricing on products by a competitor results in the need to lower production costs to remain competitive Material issues A municipal bridge developed cracks in some support members resulting in a X project to fix the problems Political changes A newly elected official instigating project funding changes to a current project Market demand A car company authorizes a project to build more fuel-efficient cars in response to gasoline shortages Economic changes An economic downturn results in a change in the priorities for a current project Customer request An electric utility authorizes a project to build a substation to serve a new industrial park Stakeholder demands A stakeholder requires that a new output be produced by the organization Legal requirement A chemical manufacturer authorizes a project to establish guidelines for the proper handling of a new toxic material Business process improvements An organization implements a project resulting from a Lean Six Sigma value stream mapping exercise X Strategic opportunity or business need A training company authorizes a project to create a new course to increase its revenues X Social need A nongovernmental organization in a developing country authorizes a project to provide potable water systems, latrines, and sanitation education to communities suffering from high rates of infectious diseases Environmental considerations A public company authorizes a project to create a new service for electric car sharing to reduce pollution X X X X X X X X X X X X X X X 1.2.2 THE IMPORTANCE OF PROJECT MANAGEMENT Project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. Project management is accomplished through the appropriate application and integration of the project management processes identified for the project. Project management enables organizations to execute projects effectively and efficiently. Effective project management helps individuals, groups, and public and private organizations to: uMeet u business objectives; uSatisfy u stakeholder expectations; uBeumore predictable; uIncrease u chances of success; uDeliver u the right products at the right time; uResolve u problems and issues; uRespond u to risks in a timely manner; uOptimize u the use of organizational resources; uIdentify, u recover, or terminate failing projects; uManage u constraints (e.g., scope, quality, schedule, costs, resources); uBalance u the influence of constraints on the project (e.g., increased scope may increase cost or schedule); and uManage u change in a better manner. Poorly managed projects or the absence of project management may result in: uMissed u deadlines, uCost u overruns, uPoor u quality, uRework, u uUncontrolled u expansion of the project, uLoss u of reputation for the organization, uUnsatisfied u stakeholders, and uFailure u in achieving the objectives for which the project was undertaken. Projects are a key way to create value and benefits in organizations. In today’s business environment, organizational leaders need to be able to manage with tighter budgets, shorter timelines, scarcity of resources, and rapidly changing technology. The business environment is dynamic with an accelerating rate of change. To remain competitive in the world economy, companies are embracing project management to consistently deliver business value. Effective and efficient project management should be considered a strategic competency within organizations. It enables organizations to: uTieu project results to business goals, uCompete u more effectively in their markets, uSustain u the organization, and uRespond u to the impact of business environment changes on projects by appropriately adjusting project management plans (see Section 4.2). 1.2.3 RELATIONSHIP OF PROJECT, PROGRAM, PORTFOLIO, AND OPERATIONS MANAGEMENT 1.2.3.1 OVERVIEW Using project management processes, tools, and techniques puts in place a sound foundation for organizations to achieve their goals and objectives. A project may be managed in three separate scenarios: as a stand-alone project (outside of a portfolio or program), within a program, or within a portfolio. Project managers interact with portfolio and program managers when a project is within a program or portfolio. For example, multiple projects may be needed to accomplish a set of goals and objectives for an organization. In those situations, projects may be grouped together into a program. A program is defined as a group of related projects, subsidiary programs, and program activities managed in a coordinated manner to obtain benefits not available from managing them individually. Programs are not large projects. A very large project may be referred to as a megaproject. As a guideline, megaprojects cost US$1billion or more, affect 1 million or more people, and run for years. Some organizations may employ the use of a project portfolio to effectively manage multiple programs and projects that are underway at any given time. A portfolio is defined as projects, programs, subsidiary portfolios, and operations managed as a group to achieve strategic objectives. Figure 1-3 illustrates an example of how portfolios, programs, projects, and operations are related in a specific situation. However, portfolios, programs, projects, and operations often engage with the same stakeholders and may need to use the same resources (see Figure 1-3), which may result in a conflict in the organization. This type of a situation increases the need for coordination within the organization through the use of portfolio, program, and project management to achieve a workable balance in the organization.