Project Management: Achieving

Competitive Advantage
Fifth Edition

Chapter 1
Introduction: Why Project
Management?

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Topic Learning Outcomes

Define and list characteristics of project

Differentiate Portfolio, Program and Project Management
Understand and explain the project life cycle, its stages,
and the activities that typically occur at each stage in the
project.
 Understand the concept of project “success,” including
various definitions of success, as well as the alternative
models of success.

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Project

A project is a temporary
endeavor undertaken to
create a unique product,
service, or result.

PMBoK 5th edition

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 Define What Is a Project?
1. Projects are complex, one-time processes.
A project arises for a specific purpose or to meet a stated
goal. It is complex because it typically requires the
coordinated inputs of numerous members of the
organization. It exists only until its goal has been met.
2. Projects are limited by budget, schedule, and resources.
Project work requires that members work with limited
financial and human resources for a specified time period.
Once the assignment is completed, the project team
disbands.
Projects are “resource-constrained” activities.

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Define What Is a Project?
3. Projects are developed to resolve a clear goal or set of
goals.
The project’s goals, or deliverables define the nature of
the project and that of its team. Projects are designed to
yield a tangible result, either as a new product or
service and the project organized to achieve the stated
aim.
4. Projects are customer-focused.
Projects were considered successful if they attained
technical, budgetary, and scheduling goals.

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General Project Characteristics
1. Each project are unique product, service or results.
 Unique product: new or improvement / correction
 Unique service: new / improve business function
 Unique results: new solutions, new knowledge, etc.
 Similar / repetitive elements may be present in some
project deliverables and activities.
2. Projects are ad hoc endeavors with a clear life cycle.
 Each project has a definite beginning and end.
 Objectives achieved / not achieved
 Resources exhausted / No expertise
 Terminated: legal causes, change of focus, etc.
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 General Project Characteristics

3. Projects drive change in

organization
 Move organization from one state
to another state
 E.g. Telekom Malaysia
 Process improvement, new market,
4. Projects enables business value creation
 Tangible (monetary, stakeholder equity, tools,
assets, market share)
 Intangible (goodwill, brand recognition, trademark,
strategic alignment, reputation)
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General Project
Characteristics
5. Projects initiation
context
 Initiated in
response to
factors acting
upon the
organization.

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 Example of Projects
• Developing a new pharmaceutical compound for market,
• Expanding a tour guide service,
• Merging two organizations,
• Improving a business process within an organization,
• Acquiring and installing a new computer hardware system for use
in an organization,
• Exploring for oil in a region,
• Modifying a computer software program used in an organization,
• Conducting research to develop a new manufacturing process,
and
• Constructing a building.

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Portfolio, Program and Project
Management
• 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.

• A portfolio is defined as projects, programs, subsidiary portfolios, and

operations managed as a group to achieve strategic objectives.

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Portfolio, Program and Project
Management
• The portfolio components are grouped together in order to facilitate
the effective governance and management of the work that helps to
achieve organizational strategies and priorities.
• Organizational and portfolio planning impact the components by
means of prioritization based on risk, funding, and other
considerations. The portfolio view allows organizations to see how
the strategic goals are reflected in the portfolio.
• This portfolio view also enables the implementation and coordination
of appropriate portfolio, program, and project governance. This
coordinated governance allows authorized allocation of human,
financial, and physical resources based on expected performance
and benefits.

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Portfolio, Program and Project
Management
The aims for portfolio management:
• Guide organizational investment decisions.
• Select the optimal mix of programs and projects to meet strategic objectives.
• Provide decision-making transparency.
• Prioritize team and physical resource allocation.
• Increase the likelihood of realizing the desired return on investment.
• Centralize the management of the aggregate risk profile of all components.

An infrastructure organization that has the strategic objective of maximizing the return
on its investments may put together a portfolio that includes a mix of projects in oil and
gas, power, water, roads, rail, and airports. From this mix, the organization may
choose to manage related projects as one portfolio.

All of the power projects may be grouped together as a power portfolio.

All of the water projects may be grouped together as a water portfolio.

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Portfolio, Program and Project
Management Portfolio management focuses on
doing the “right” programs and
projects.

Program and project management

focus on doing programs and
projects the “right” way

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Portfolio, Program and Project
Management
• Program management is defined as the application of knowledge,
skills, and principles to a program to achieve the program objectives
and to obtain benefits and control not available by managing program
components individually.
• A program component refers to projects and other programs
within a program. Project management focuses on
interdependencies within a project to determine the optimal approach
for managing the project.
• Actions related to these program and project-level interdependencies
may include:

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Portfolio, Program and Project
Management
• Actions related to these program and project-level
interdependencies may include.
– Aligning with the organizational or strategic direction that affects program
and project goals and objectives.
– Allocating the program scope into program components.
– Managing interdependencies among the components of the program to
best serve the program.
– Managing program risks that may impact multiple projects in the program;
– Resolving budget and constraints and conflicts that affect multiple projects
within the program.

An example of a program is a new communications satellite

system with projects for the design and construction of the
satellite and the ground stations, the launch of the satellite, and
the integration of the system.

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Portfolio, Program and Project
Management

1. Portfolio management aligns portfolios with

organizational strategies by selecting the right programs
or projects, prioritizing the work, and providing the
needed resources.
2. Program management harmonizes its program
components and controls interdependencies in order to
realize specified benefits.
3. Project management enables the achievement of
organizational goals and objectives.

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Operations Management and Project
Management
• Operations management is concerned with the ongoing production of goods
and/or services. It ensures that business operations continue efficiently by using
the optimal resources needed to meet customer demands.

• Changes in business or organizational operations may be the focus of a project

—especially when there are substantial changes to business operations as a
result of a new product or service delivery.

• Ongoing operations are outside of the scope of a project; however, there are
intersecting points where the two areas cross.

• Project intersect with OM

1. When developing a new product, upgrading a product, or expanding
outputs;
2. While improving operations or the product development process;
3. At the end of the product life cycle; and
4. At each closeout phase.

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 Operations (Process) and Project
Management
Differences Between Process and Project Management

Process Project
Repeat process or product New process or product
Several objectives One objective
Ongoing One-shot-limited life
People are homogenous More heterogeneous
Well-established systems Integrated system efforts
Greater certainty Greater uncertainty
Part of line organization Outside of line organization
Established practices Violates established practice
Supports status quo Upsets status quo
Source: R. J. Graham. (1992). “A Survival Guide for the Accidental Project Manager,” Proceedings of the Annual Project
Management Institute Symposium. Drexel Hill, PA: Project Management Institute, pp. 355–61. Copyright and all rights
reserved. Material from this publication has been reproduced with the permission of PMI.

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Organizational Project Management

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Project Success Rates
• Software and hardware projects fail at a 65% rate.
• Over half of all IT projects become runaways.
• Only 30% of technology-based projects and programs are a
success.
• Ten major government contracts have over $16 billion in cost
overruns and are a combined 38 years behind schedule.
• One out of six IT projects has an average cost overrun of 200% and
a schedule overrun of 70%.
• More than one-third of the $110 billion in costs spent on the post-
war reconstruction projects in Afghanistan, total $110 billion was lost
due to fraud, waste, and abuse.

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Why Are Projects Important?
1. Shortened product life cycles
2. Narrow product launch windows: optimum time
to launch new product
3. Increasingly complex and technical products:
integration of various experts
4. Emergence of global markets: quick interaction
with customers and suppliers
5. An economic period marked by low inflation:
streamline for more efficient process / product
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Project Life Cycle Stages (S – Curve)

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 Project Life Cycle (PLC)
A project life cycle refers to the stages in a project’s
development and are divided into four distinct phases:
1. Conceptualization—development of the initial goal and
technical specifications (scope) and resources. of the
project. Key stakeholders are identified and signed on at
this phase.
2. Planning—all detailed specifications, schedules,
schematics, and plans are developed.
3. Execution—the actual “work” of the project is performed.
4. Termination—project is transferred to the customer,
resources reassigned, project is closed out.
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Major components in Project Life Cycle
1. Client interest: The level of enthusiasm or concern expressed by the
project’s intended customer. clients can be either internal to the
organization or external.

2. Project stake: The amount of corporate investment in the project. The

longer the life of the project, the greater the investment.

3. Resources: The commitment of financial, human, and technical resources

over the life of the project.

4. Creativity: The degree of innovation required by the project,

especially during certain development phases.

5. Uncertainty: The degree of risk associated with the project. Riskiness here
reflects the number of unknowns, including technical challenges that the
project is likely to face. Uncertainty is highest at the beginning because
many challenges have yet to be identified, let alone addressed.

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Project Life Cycles and Their Effects

Balancing the requirements of these

elements across the project life cycle.
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Project Life Cycle

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Project Life Cycle (Project Phase)
• A project phase is a collection of logically related project activities
that culminates in the completion of one or more deliverables.
• The phases in a life cycle can be described by a variety of attributes.
Attributes may be measurable and unique to a specific phase.
• Example attributes:

• Name (e.g., Phase A, Phase B, • Entrance criteria for a project to

Phase 1, Phase 2, proposal move into that phase (e.g.,
phase), specified approvals documented,
• Number (e.g., three phases in the specified documents completed),
project, five phases in the project),• Exit criteria for a project to
• Duration (e.g., 1 week, 1 month, 1 complete a phase (e.g.,
quarter), documented approvals,
• Resource requirements (e.g., completed documents, completed
people, buildings, equipment), deliverables).
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Project Life Cycle (Phase Gate)
• A phase gate, is held at the end of a phase.
• The project’s performance and progress are compared to project
• A decision is made as a result of this comparison to
– Continue to next phase (with modification)
– End the project
– Remain in the phase
– Repeat the phase or elements of it
• Depending on the organization, industry, or type of work, phase gates
may be referred to by other terms such as, phase review, stage gate,
kill point, and phase entrance or phase exit.
• Organizations may use these reviews to examine other pertinent items
which are beyond the scope of this guide, such as product-related
documents or models.
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Pre-project Work

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Pre-project Work
• The needs assessment involves understanding business goals and objectives,
issues, and opportunities and recommending proposals to address them. The
results of the needs assessment may be summarized in the business case
document.

• The project business case is a documented economic feasibility study used to

establish the validity of the benefits of a selected component lacking sufficient
definition and that is used as a basis for the authorization of further project
management activities.
– The business case lists the objectives and reasons for project initiation. It
helps measure the project success at the end of the project against the
project objectives.
– The business case is a project business document that is used throughout
the project life cycle. The business case may be used before the project
initiation and may result in a go/no-go decision for the project.

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Pre-project Work
• The project benefits management plan is the document that describes how and
when the benefits of the project will be delivered, and describes the mechanisms that
should be in place to measure those benefits.

• Development of the benefits management plan begins early in the project life cycle
with the definition of the target benefits to be realized.

• A project benefit is defined as an outcome of actions, behaviours, products, services,

or results that provide value to the sponsoring organization as well as to the project’s
intended beneficiaries.

• Key element of benefits:

• Target benefits (e.g., the expected tangible and intangible value to be gained by the
implementation of the project; financial value is expressed as net present value);
• Strategic alignment (e.g., how well the project benefits align to the business
strategies of the organization);
• Timeframe for realizing benefits (e.g., benefits by phase, short-term, long-term,
and ongoing);
• Benefits owner (e.g., the accountable person to monitor, record, and report realized
benefits throughout the timeframe established in the plan);
• Metrics (e.g., the measures to be used to show benefits realized, direct measures,
and indirect measures);
• Assumptions (e.g., factors expected to be in place or to be in evidence); and
• Risks (e.g., risks for realization of 2019,
Copyright © benefits).
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Project Charter
• The project charter is defined as a document issued by the project
sponsor that formally authorizes the existence of a project and
provides the project manager with the authority to apply
organizational resources to project activities.

• The project management plan is defined as the document that

describes how the project will be executed, monitored, and
controlled.

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The IRON TRIANGLE
(Triple Constraint) A project is a temporary
endeavor undertaken to
• Project success must take into create a unique product,
service, or result.
consideration the elements that define
the very nature of a project: that is, time
(schedule adherence), budget,
functionality/quality, and customer
satisfaction.

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Quadruple Constraint of Project Success
Client acceptance.
• The principle of client acceptance argues that projects are developed
with customers, or clients, in mind, and their purpose is to satisfy
customers’ needs.
• Companies that evaluate project success The New Quadruple
strictly according to the original “triple Constraint
constraint” may fail to apply the most
important test of all: the client’s satisfaction
with the completed project.

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Understanding Success Criteria
(Triple Constraints) Atkinson Model

Iron Triangle Information Benefits Benefits

System (Organization) (Stakeholders)
Cost Maintainability Improved efficiency Satisfied users
Quality Reliability Improved effectiveness Social and
environmental impact
Time Validity Increased profits Personal development
Blank Information quality Strategic goals Professional learning,
contractors’ profits
Blank Use Organization learning Capital suppliers,
content
Blank Blank Reduced waste Project team,
economic impact to
surrounding
community

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Four Dimensions of Project Success
Importance

Source: A. J. Shenhar, O. Levy, and D. Dvir. (1997). “Mapping the Dimensions of

Project Success,” Project Management Journal, 28(2): 12.
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Project Management Maturity

• Project management maturity (PMM) models are used

to allow organizations to benchmark the best practices of
successful project management firms.
• Project management maturity models recognize that
different organizations are currently at different levels of
sophistication in their best practices for managing
projects.
• Benchmarking is the practice of systematically
managing the process improvements of project delivery
by a single organization of a period of time.

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Spider Web Diagram for
Measuring Project Maturity

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