Learning Objectives. Outline. Managing Operations: A Focus on Excellence Cox, Blackstone, and Schleier, 2003

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1 Inputs Transformation Process Throughput Managing Operations: A Focus on Excellence Cox, Blackstone, and Schleier, 2003 Chapter 18 The Tools of Project Management: Finishing to Specifications, On-Time, and Within Budget Part I: Work Content Areas, Life Cycle, & Project Failure Learning Objectives Discuss how project work products are developed. Understand the ways project work products are validated. Discuss how to avoid the typical causes of project failure. Understand the role of the project manager. Understand the interlock of commitments between company management, the user of the project work product, and the project manager. Explain the role of documentation in project success. Understand the importance of breaking project work down into small tasks for estimating, scheduling, and tracking. (Part II) Discuss the notion of the Critical Chain in project schedules. (Part II) Know how to apply buffer time to project networks. (Part II) Understand the implications of multitasking. (Part II) CBS Chapter 18 Part I 18-2 Outline Introduction: A status report What is a project? What do projects do? What is the life cycle of a project? What is the role of the project manager? What is success for a project? Why do projects fail? Project schedule networks (Part II) Risk management (Part II) CBS Chapter 18 Part I 18-3

2 CBS Chapter 18 Part I 18-4 Introduction It is imperative for every student of business to understand project management. Projects are the primary way companies have of organizing efforts to develop and implement major improvements new products, business processes, technology, and the like. Despite their importance, significant numbers of projects do not meet cost and schedule commitments, and fail to deliver the work results originally planned and expected. What is a Project? A project is a complex, non-routine, one-time effort limited by time, budget, resources, and performance specifications designed to meet customer needs. The major characteristics of projects: An established objective. A defined life span with a beginning and an end. Usually, the involvement of several departments and professionals. Typically, doing something that has never been done before. Specific time, cost, and performance requirements. CBS Chapter 18 Part I 18-5 What do Projects do? Project activity is concerned with four major areas: I. Project s Work II. Work Validation III. Change Management IV. Project Process Control CBS Chapter 18 Part I 18-6

3 CBS Chapter 18 Part I 18-7 Goals & Strategy Area I Initiate Projects Project Work Operational Need Definition Execution Objectives Requirements Design Construction /System Test Implementation Measurement Work Area I: Work So, we have the company goals, and strategy as the source of many of its project efforts, and shown in the figure, the source of the objectives for the project. The initial business case for the project is developed in Area I. This case will include the estimated resource requirements, costs, and both tangible and intangible benefits to the company. CBS Chapter 18 Part I 18-8 Phase 1: Objectives The purpose of Phase 1 of a project is to document the objectives, determine initial feasibility and make the decision to proceed or not. Do costs vs. benefits appear favorable? Is the project technically feasible? Does the company have the resources to complete the project? Are the project risks reasonable? In Phase 1, it must be clearly established who the project manager is, and who the owner(s) of the end product of the project is(are). The owner is the primary customer of the work being done. The Project Manager is usually not the owner. Can you think of some negative consequences of not having an owner designated? CBS Chapter 18 Part I 18-9

4 CBS Chapter 18 Part I Phase 2: Requirements The project objectives have been spelled out in Phase 1. The purpose of Phase 2 is to determine in detail all of the specific requirements the product must address in order to meet the project objectives, and to prepare a plan and schedule for Phase 3. The requirements must be documented, reviewed and approved by the owner and all other parties affected. The owner s approval indicates his/her agreement that if the product is built to perform to the requirements specified, then the project business objectives will be attained, and the company benefits outlined in the financial justification will be realized. Phase 3: Design External We can look at the externals of the product, in effect saying: What if the new product worked this way? (even though it doesn t exist yet). What if it s outputs contained this, and looked like that? In other words we can lay out the way the product will do things without having done the detailed internal design. What do you think happens when important requirements are missed early in a development process? You probably got it right! Retro-fitting missed requirements into a design already completed can be very expensive and time consuming. It can cost many times more than if the same requirement was recognized and incorporated at the outset. CBS Chapter 18 Part I Phase 3: Design Internal It is time for the people competent in designing the internal workings of the new product to do their work. What will the specific architecture of the product be? What sub-elements, modules, sub-assemblies, etc. will it include? What staffing resources will be needed for construction, testing and implementation? What are the requirements for capital equipment and facilities? There should be a standard for the level of task detail required. A good standard for a software project is that no task will be defined to exceed 40 person hours. This assures that work can be assigned and tracked in small enough increments to assure schedule integrity. CBS Chapter 18 Part I 18-12

5 CBS Chapter 18 Part I Phase 4: Construction This is by far the largest phase of the project. Generally, the construction phase includes the unit testing of modules of the product. Without doing this, it may not be possible to determine if construction tasks are really completed. In the next phase, collections of modules are brought together for integrated testing of the overall product as a system. Phase 5: /System Test Now, with all sub elements of the product developed and unit tested, we can bring everything together in a staged and orderly way, to assure that the entire product performs all of the functions as it should. It is usually important to have users/customers of the product participate in this testing along with the developers. It should be recognized that the testing will reveal problems and shortcomings in the design or construction, and necessitate changes that will have to be retrofitted into the product. CBS Chapter 18 Part I Phase 6: Implementation Now that the product is built and tested, with corrections made for any deficiencies, it is ready to deliver and/or install. The implementation plan is executed. Users and customers are educated, final facilities and equipment are put in place, and the old environment is phased out. CBS Chapter 18 Part I 18-15

6 CBS Chapter 18 Part I Phase 7: Measurement Maintenance and Service It should be clear by now that in a well run project, there is a plan for everything. This phase is no exception. The Maintenance and Service Plan is produced not later than the end of Phase 7. This plan is complete with customer support access plans, hot lines, etc., the skill and staffing required for response to problems, necessary updates and changes, etc. Phase 7: Measurement Post Implementation Measurement After the project has been completed, it is important to understand if objectives were met. It should have been anticipated in the early project phases that basic data from the old environment should be saved to correlate with results in the new environment. CBS Chapter 18 Part I Goals & Strategy Initiate Projects Operational Need Area I Project Work Objectives Requirements Design Construction /System Test Implementation Measurement Work Validation Area II Business Case & Funding User sign-off Design walk-though & user sign-off Unit & sub-system testing Integration, function, & performance testing Operational acceptance Monitor performance & validate results Work CBS Chapter 18 Part I 18-18

7 CBS Chapter 18 Part I Goals & Strategy Initiate Projects Operational Need Area I Project Work Area II Work Validation Change Management Area III Objectives Requirements Design Construction /System Test Implementation Measurement Business Case & Funding User sign-off Design walk-through & user sign-off Unit & sub-system testing Integration, function & performance testing Operational acceptance Monitor performance & validate results Work Dilbert and Change Management CBS Chapter 18 Part I Goals & Strategy Area I Change Management Area III Initiate Projects Project Work Objectives Requirements Design Construction /System Test Implementation Measurement Operational Need Area II Work Work Validation Business Case & Funding User sign-off Design walk-through & user sign-off Unit & sub-system testing Integration, Function & performance testing Operational acceptance Monitor performance & validate results Project Process Control Area IV Plan for next phase(s) Phase reviews User input & sign-off Estimating discipline Sound testing practices Critical chain scheduling & buffer management Risk Assessment CBS Chapter 18 Part I 18-21

8 CBS Chapter 18 Part I Area IV: Project Process Control We have discussed the work product of a project, how it gets developed, built and installed, ways of validating the work product, and the need to manage changes. The activities in these areas have to be made to happen within the project management process. Reviews need to be held at logical points in the work to assure agreement and commitment by all stakeholders. We call them phase reviews. For each major phase, there must be a clear understanding of the work product of that phase. For example, when requirements are being defined, what level of detail is needed? The exact work to be accomplished for this phase must be clear, and then the tasks must be identified with time estimates established as a basis for scheduling. Goals & Strategy Area I Initiate Projects Project Work Operational Need Area II Work Validation Project Process Control Area IV Objectives Business Case & Funding Plan for next phase(s) Requirements User sign-off Phase reviews Change Management Design Construction Design walk-through & user sign-off Unit & sub-system testing User input & sign-off Estimating discipline Area III /System Test Integration, Function & performance testing Sound testing practices Implementation Measurement Operational acceptance Monitor performance & validate results Critical chain scheduling & buffer management Risk Assessment Work CBS Chapter 18 Part I Phase Reviews At the end of each Phase, a Phase Review is held. The purpose of the Phase Review is to establish agreement that all required work for that Phase has been done properly, and that the organization supports a decision for the project to proceed to the next phase, or conversely, to terminate the project. CBS Chapter 18 Part I 18-24

9 CBS Chapter 18 Part I What Is the Life Cycle of a Project? RESOURCES PROJECT DEFINITION IMPLEMENTATION DESIGN REQUIREMENTS OBJECTIVES DEFINITION EXT INT CONSTRUCTION SYSTEM IMPLEMENTATION TEST & MAINTENANCE TIME Life Cycle Summary 1. For each phase, there should be a work plan with a scheduled completion date. 2. The work plan for a given phase is established in one of the preceding phases, and published as one of that phase s work products. 3. In phases 1 and 2, the project objectives and requirements are determined. 4. By the end of the Design phase (3), when the design of the project s work product is determined, plans for the remaining phases can be constructed to a level where a final project completion date can be committed. 5. Strong organization buy-in must be developed throughout the life of the project by getting the participation, input, and agreement of the people and departments affected. 6. As work is completed, thorough output testing should be performed to validate product quality and completeness. 7. Project results should be determined and verified to determine if objectives were met. 8. At this point a review is usually held with key stake holders and top management to confirm that the product of the project as it is being defined and built will meet project objectives and that the project is on schedule and within budget. CBS Chapter 18 Part I Life Cycle: Work Patterns Work Days To Complete 200 and more and fewer Work Pattern Size Large project Medium project Small project CBS Chapter 18 Part I 18-27

10 CBS Chapter 18 Part I Life Cycle: Work Patterns Large Project Objectives (R) Medium Project Objectives Objectives Small Project Requirements (R) Design (R) Specification (R) (Combines requirements, design, and construction.) Construction (R) Installation/delivery (R) Post installation (R) Installation/delivery (R) Post installation (R) Installation/delivery Post installation (R) What Is The Role Of The Project Manager? The Project Manager must plan, organize, schedule, manage and control the full scope of effort needed to successfully complete it. Because companies are so dependent on the good performance of the project manager, the position is usually highly visible within the organization. CBS Chapter 18 Part I What Is Success For A Project? Success is defined as completing the project work and meeting the defined requirements, on-time and within budget. Success is putting it all together: completed product content and function, on time delivery, expenditures within budget, business value validated, and all legitimate constituents satisfied. These constituents include customers, internal users, management, legal department, company auditors, and government agencies. For a project well done, the following questions can all be answered with a resounding Yes! This applies to both quantitative and qualitative objectives. CBS Chapter 18 Part I 18-30

11 CBS Chapter 18 Part I What Is Success For A Project? Quantitative View 1. Did the end product meet the design specifications set forth? 2. Does it perform well? 3. Were all project objectives achieved? 4. Can the financial benefits be quantified? Was the necessary basic data saved from the old environment to be compared to results in the new environment? 5. Do these results measure up to the commitments made in the financial business case used to justify the project? 6. Is the design of the product thoroughly documented and maintainable? 7. Have project requirements for all constituencies been satisfied? What Is Success For A Project? Qualitative View 1. Was the performance of the project team viewed as effective by the organization? 2. Was the project team cooperative and actively seeking to satisfy the needs of the customers and other constituents who will use or be affected by the work product of the project? 3. Do users/customers of the project output feel they were adequately consulted throughout the effort? 4. Were vital changes accommodated? 5. Is there strong organizational buy in for project results? 6. Is there a perception that the work done in the project is of high quality? CBS Chapter 18 Part I Why Do Projects Fail? Some Statistics: The Standish Group reports that $250 billion are spent each year on approximately 175,000 Information Technology projects in the US. The average cost of a development project for a large company is $2,300,000. The report shows that 31.1% of projects are canceled before they ever get implemented. 52.7% of projects will cost 189% of their original estimates. Furthermore, projects completed by the largest companies have only 42% of the originally-proposed features and functions. On the success side, only 16.2% of software projects are completed on-time and within budget. CBS Chapter 18 Part I 18-33

12 CBS Chapter 18 Part I Key Reasons for Failure Uninvolved Users/Customers Poorly Defined End s Scope and the Multiplication of Interfaces Uncontrolled Changes Undisciplined Management System Inappropriate Focus on Technology Assuming 100% Availability of Committed Resources Poor Scheduling Uninvolved Users/Customers This can be a dilemma for the Project Manager, especially in the early project phases where the product requirements must be determined. The cause of this dilemma often stems from the unwillingness of key organizations to make their best people available. CBS Chapter 18 Part I Poorly Defined End s An IBM study determined that some software requirements undiscovered until the Implementation Phase can cost up to one thousand (1000) times more than if the same requirement had been determined in the Requirements Phase as it should have been. CBS Chapter 18 Part I 18-36

13 CBS Chapter 18 Part I Premature Commitment of Project Schedules and Costs Managers sometimes establish schedules for their projects when only a conceptual understanding of the end product exists. In fact, they more likely can see less than half of the work on a complex project before the work product design has been done in detail. This phenomenon is one of the major reasons why projects are late. Early in the life of a project, when it is still only an exciting concept, there is often heavy management pressure to know when the project can be finished. Scope and the Multiplication of Interfaces Many efforts to build new products fail because the organization attempts to develop and implement too much scope and complexity all at once. Project work scope is made so big that it becomes unmanageable. The organizations management may not recognize that as the size and scope of complex products increase on a linear scale, the interfaces among its elements can increase exponentially. CBS Chapter 18 Part I Scope and the Multiplication of Interfaces Time SCOPE, COMPLEXITY & TIME TO IMPLEMENT PROJECT SCOPE Complexity CBS Chapter 18 Part I 18-39

14 CBS Chapter 18 Part I Scope and the Multiplication of Interfaces NODES INTERFACES 1 2 i = n (n -1) Uncontrolled Changes Changes to the end product, especially after construction begins can be devastating to schedules and costs of a project. The key to avoiding these changes is to have defined the requirements and design correctly and completely as possible up front in the early life cycle Phases. CBS Chapter 18 Part I Undisciplined Management System The Project Manager and Project Team must know the project life cycle structure and exactly what must be done in each segment of the cycle. CBS Chapter 18 Part I 18-42

15 CBS Chapter 18 Part I Inappropriate Focus on Technology The name of the game is to add value to the business, not to showcase the latest computers, robotics or other technology. The goal must always be clear: to increase profit, now and in the future. Assuming 100% Availability of Committed Resources People never work 100% of their available time on a project. It is more likely a maximum of 75% when you account for education time, breaks, vacations, absenteeism, meetings and the like. CBS Chapter 18 Part I Poor Scheduling This concept will be more fully developed in Part II. For now, let it suffice to say that even when all other aspects have been addressed, poor scheduling can doom the project to failure. CBS Chapter 18 Part I 18-45

16 CBS Chapter 18 Part I Business System Model The Environment, Global Competitors and Suppliers, Governments, Economies, Consumer Tastes, Unions, etc. Management Philosophy Management Planning and Control Measurements Design Implementation Strategy Organization Organization Information Systems Goals Physical Physical Resources Resources People People Management Policy Suppliers Business Processes Customers Resources 1) 2) 3) 4) Project Definition Implementation Design Requirements Objectives Definition External Internal Construction System Implementation maintenance Test and maimtenance Time