Wollega University

MBA Program

Project Management
MBA 611

Instructor: Geda J. (MBA in Mgt, PhD Candidate)

Phone: 09-13-34-59-97
E-mail: [email protected]
Institutional E-mail: [email protected]
 Lesson 1
Introduction to Project Management

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 Introduction
▶ All countries have national plans, which explain a range of socio–
economic and environmental objectives and strategies meant to
enhance development.
− In this regard, projects provide an important means by which
investment and other development expenditures foreseen in the
plans can be clarified, justified, and realized.
▶ Development plans and projects are closely interlinked since sound
development plans require good projects as just good projects
require sound planning.
▶ Actually, the financial and administrative resources available to
governments are always limited.
− These resources must be allocated among many sectors and
many competing demands.
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 Introduction (Cont’d)
▶ Project analysis and management becomes handy in establishing
the optimal allocation of resources, given the objectives.
− Through project analysis, it is possible to prioritize activities.
− So that, the higher priority projects, with greater payoffs both
financially and socially, are undertaken.
▶ Many organizations today, also have a new or renewed interest in
project management.
− The world as a whole spends nearly $10 trillion of its $40.7
trillion gross product on projects of all kinds.
− More than 16 million people regard project management as
their profession.
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 PM Basics: Fundamental Concepts
▶ We begin our discussion on fundamental concepts under three
broad headings:
▶ Project Management Framework
• What is a project?
• Projects vs. Operations!
• Projects and Strategic Planning!
• What is ‗Project Management?
• What is a Program?
• What is a Portfolio?
• What is a PMO?
• Role of a Project Manager!
▶ Project Life Cycle and Organization
▶ Project Management Processes
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 What is Project
▶ Project is a temporary endeavor involving a connected sequence
of activities and a range of resources, which is designed to achieve
a specific and unique outcome, which operates within time, scope,
cost and quality constraints and which is often used to introduce
change.
▶ A project is ―a temporary endeavor undertaken to create a unique
product, service, or result‖ (PMBOK® Guide, Fifth Edition, 2012).
▶ Projects are undertaken to fulfill objectives by producing deliverables.
▶ 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.

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 Project Objectives
▶ It is an outcome toward which work is to be directed, a strategic
position to be attained, or a purpose to be achieved, a result to be
obtained, a product to be produced, or a service to be performed.
▶ Each project must have at LEAST one objective and MUST be made
known and communicated.

Specific Measurable Attainable Realistic Time-bound

Objectives have A goal It should be The objective The goal has
to be specific achievement attractive for the needs to be to set within a
and positively should be project team to achievable in time frame.
described. measurable. reach the goal. a realistic way.
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 Understanding ‘Project Characteristics’
▶ Purpose — the basic reason for the existence of a project- to solve a
problem, address a need or take the advantage of opportunity.
▶ Temporary — means that a project is something that has a specific
start date and a specific end date. The end is reached when:
− The project‘s objectives have been achieved.
− The project objectives will not or cannot be met.
− Funding is exhausted or no longer available for allocation to the project.
− The need for the project no longer exists and the project is terminated.
▶ Temporary does not necessarily mean short in duration. Many
projects last for several years. In every case, however, the duration of a
project is finite; it does not go on forever.
▶ Sequences of Activities — the works and the steps we perform and
the methods and knowledge we use to achieve the project objective.
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Understanding ‘Project Characteristics’ (Cont’d)
▶ Resources — a project utilizes a variety of resources [human,
financial, material, information,] to carry out the activities or tasks.
▶ Unique Outcome — a project brings about a unique product -
something that has not existed in the organization here-to-fore.
– Projects involve doing something that has not been done
before and which is therefore, unique.
– For example, many thousands of office buildings have been
built, but each individual facility is unique - different owner,
different design, different site, different contractors etc.
▶ Projects are unique – characteristics are progressively
elaborated.
− Progressively: proceeding in steps
− Elaborated: worked out with care and detail
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Understanding ‘Project Characteristics’ (Cont’d)

▶ Time — any project should be time bounded-it has a start and

end time.
▶ Scope — the extent of the problem or opportunity that the project
needs to address.
− The work required to be performed to deliver a product
bearing specified functions and features.
▶ Cost — activities consume human, financial and material resources.
▶ Quality — the project needs to produce quality products to maximize
the satisfaction of the users.
▶ Introduce change — a project brings about beneficial change or
added value - change for the betterment of the society.
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 Examples of Projects
▶ Build low cost/condominium houses
▶ Build a dam for hydroelectric power/irrigation
▶ Development of a new product or service
▶ Set up a regional university/college
▶ Organizational Change management projects (work
environment, performance management, organization
structure, training, etc.)
▶ Updating Information system in an organization
▶ Construction of highways
▶ Running a political campaign
▶ Implementing a new business procedure
▶ Weddings, funerals, birthdays, etc. 11
 Classifications of Project
▶ Projects range in size, scope, cost and time from mega international
projects costing millions of dollars over many years to small
domestic projects with a low budget taking just a few hours to
complete.
▶ There are many ways to classify a project such as:
− Time (short or long-duration)
− Scope (regional, national or international)
− Type of products (project producing goods-sugar factory project;
services-telecommunication projects; knowledge and information
research projects)
− Size (large, medium and small-scale projects)
− Sectors (agriculture, education, construction etc.)
− Technology (labor intensive, capital intensive, energy, etc.)
− Ownership (private, public, joint sector))
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 Projects Vs Operations
▶ What do organizations do? — organizations perform work to
accomplish a set of defined objectives. Work can be categorized as
either Projects or Operations. Sometimes they overlap!
Feature Projects Operations
Purpose Attain objectives and terminate Sustain an organization
Time Temporary Ongoing
Non-unique product,
Outcome Unique product, service, or result
service, or result
Dynamic, temporary teams formed to Functional teams
People meet project needs. Generally not generally aligned with
aligned with organizational structure organizational structure
Varies by organizational structure
Authority Generally formal, direct
Generally minimal, if any, direct line
of Manager line of authority
authority
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 What is Project Management
▶ Project Management: the application of knowledge, skills, tools
and techniques [e.g., work breakdown structure, Gantt charts,
network diagrams, critical path analysis...] to project activities in order
to meet stakeholder‘s [e.g., the project sponsor, users, suppliers,
opponents to the project] needs and expectations from a project.
▶ Project Management is the discipline of planning, organizing,
motivating, and controlling resources to achieve specific goals
▶ Managing a project consists of 3 main items:
– Identifying what is needed or to be achieved (requirements)!
– Addressing the various Needs, Concerns, and Expectations of the
stakeholders as the project is planned and executed!
– Balancing competing project constraints, such as: scope, time
(schedule), cost (budget), quality, resources & risk.
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 The Project Management Triangle
▶ Project management is said to be successful when project
objective is achieved:
– within time, within cost,
– at the desired performance
level while utilizing the assigned
resources effectively and efficiently
– and accepted by the customer.
▶ These three constraints are
often competing constraints:
− Increased scope typically means increased time and
increased cost,
− A tight time constraint could mean increased costs and
reduced scope, and
− A tight budget could mean increased time and reduced scope
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 Project Vs Program
▶ “Project Management exists in a broader context governed by
Program and Portfolio Management!”
▶ Programs are groups of projects managed in a coordinated way to
obtain benefits not available from managing the projects individually.
− This means that in a program, you will have multiple projects, which
are either similar or related to each other, and you manage them at a
higher level.
▶ A project may or may not be part of a program but a program will
always have projects!
▶ Programs adopt new set of objectives and continue to work; projects
cease when declared objectives have been attained.
▶ Since programs comprise multiple projects, they are larger in scope
than a single project. E.g., Hydroelectric Development Program.
▶ The person responsible for managing the program is the program
manager.
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 Project Vs Program (Cont’d)
▶ Program management is defined as the centralized coordinated
management of a program to achieve the program’s strategic
objectives and benefits.
− Key Point: Projects within a program are related through the
common outcome or collective capability.
▶ Program management focuses on the project interdependencies
and helps to determine the optimal approach for managing them.
▶ Actions related to these interdependencies may include:
− Resolving resource constraints and/or conflicts that affect
multiple projects within the program;
− Aligning organizational/strategic direction that affects project
and program goals and objectives; and
− Resolving issues and change management within a shared
governance structure.
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 Project, Program and Portfolio
▶ A portfolio refers to a collection of projects or programs and other
work that are grouped together to facilitate effective management
of that work to meet strategic business objectives.
− The projects or programs of the portfolio may not necessarily
be interdependent or directly related.
▶ For example, an infrastructure firm 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 firm may choose to manage related projects as one
program. All of the power projects may be grouped together as a power
program. Similarly, all of the water projects may be grouped together
as a water program.
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 Project, Program and Portfolio (Cont’d)
▶ Portfolio management refers to the centralized management of
one or more portfolios.
− It focuses on ensuring that projects and programs are
reviewed to prioritize resource allocation, and that the
management of the portfolio is consistent with and aligned to
organizational strategies.

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Project, Program and Portfolio (Cont’d)

Organizations group and

manage projects and
programs as a portfolio
of investments that
contribute to the entire
enterprise‘s success!

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 Projects and Strategic Planning
▶ Projects are are a means to achieve “Strategic Plan” of an organization!
▶ Projects are typically authorized as a result of one or more of the
following strategic considerations:
1) Market demand (e.g. Requirements of big size car for family)
2) Customer request (e.g. Develop sports car for car racing company)
3) Strategic opportunity/Business Need (e.g. Launch new Android
app for existing E-commerce sites)
4) Technological advance (e.g. Upgrade of existing server capability
to provide high speed internet)
5) Legal requirements (e.g. Aligned with new roles of emission system
of car)
▶ ―Hence, Projects (within programs or portfolios) are a means by which
we achieve organizational goals and objectives within the context of
strategic plan!” 21
 Project Management Office (PMO)
▶ PMO is an organizational body or entity assigned various responsibilities
related to the centralized and coordinated management of those projects
under its domain.
− The responsibilities of a PMO can range from providing project
management support functions to actually being responsible for
the direct management of a project.
▶ Key Point: The projects supported or administered by the PMO
may not be related, other than by being managed together.
▶ The specific form, function, and structure of a PMO is dependent upon
the needs of the organization that it supports.
▶ At minimum, PMO provides Project Management Support Functions:
1. Training
2. Software
3. Provide Standardized policies, methodologies and procedures
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10 Project Management Knowledge Areas
▶ Knowledge areas describe the key competencies that project
managers must develop:
1) Project Scope Management
2) Project Schedule Management
3) Project Cost Management
4) Project Quality Management
5) Project Resource Management
6) Project Communications Management
7) Project Risk Management
8) Project Procurement Management
9) Project Stakeholder Management
10) Project Integration Management
▶ All knowledge areas are important! 23
 The Project Life Cycle and Project Phases
▶ A project life cycle is a collection of generally sequential and
sometimes overleaping project phases that defines:
– What work will be performed in each phase;
– What deliverables will be produced and when;
– Who is involved in each phase;
– How management will control and approve work produced in
each phase.
Project
▶ Projects are unique undertakings.
▶ Involves a degree of uncertainty.
Phase 1 Phase 2 Phase 3
▶ Hence, each project is divided into several phases for better
management control and providing for links to the ongoing operations.
▶ Together, the project phases are called the ‘Project Life Cycle’.
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The Project Life Cycle and Project Phases (Cont’d)
▶ A standard project has five major phases: initiation, planning,
implementation, and closure.
▶ Initiation/conceptualization– During the initiation phase,
− the project objective or need is identified [i.e., the business
problem or opportunity].
− response to the need is documented in a business case with
recommended solution options.
− A feasibility study is conducted to investigate whether each option
addresses the project objective and a final recommended solution
is determined.
▶ Once the recommended solution is approved, a project is initiated
and a project manager is appointed. Major deliverables and
participating work groups are identified.
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The Project Life Cycle and Project Phases (Cont’d)
▶ Planning phase– The project solution is further developed in detail.
− Project‘s tasks and resource requirements are identified,
− A project plan is created outlining the activities, tasks,
dependencies, and time-frames.
− Project manager coordinates preparation of a project budget by
providing cost estimates for the labor, equipment, and materials.
− Anything that might pose a threat to the successful completion of
the project [e.g., risk management] identified and dealt.
− Planning phase is also a good time to identify all project
stakeholders and establish a communication plan describing the info
needed and delivery method used to keep stakeholders informed.
▶ Also document a quality plan, providing quality targets, assurance,
and control measures, along with an acceptance plan, listing the
criteria to be met to gain customer acceptance. 26
The Project Life Cycle and Project Phases (Cont’d)
▶ Execution/implementation–the actual ―work‖ of the project is
performed.
− The project plan is put into motion and the work of the project is
performed.
− It is important to maintain control and communicate as needed
during implementation.
− Progress is continuously monitored and appropriate adjustments
are made and recorded as variances from the original plan.
− Once all of the deliverables have been produced and the customer
has accepted the final solution, the project is ready for closure.
▶ Controlling – monitoring and measuring progress and taking
corrective actions when necessary. This could broadly undertaken
in implementation phase.
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The Project Life Cycle and Project Phases (Cont’d)

▶ Termination/closing phase – project is transferred to the

customer, resources reassigned, project is closed out.
▶ The emphasis is on;
− releasing the final deliverables to the customer,
− handing over project documentation to the business,
− terminating supplier contracts,
− releasing project resources, and
− communicating the closure of the project to all stakeholders.
− conduct lessons-learned studies to examine what went well
and what didn‘t.

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The Project Life Cycle and Project Phases (Cont’d)
▶ In early phases of a project life cycle:
− Resource needs are usually lowest
− The level of uncertainty (risk) is highest
− Project stakeholders have the greatest opportunity to
influence the project
▶ In middle phases of a project life cycle:
− The certainty of completing a project improves
− More resources are needed
▶ The final phase of a project life cycle focuses on:
− Ensuring that project requirements were met
− The sponsor approves completion of the project
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The Asian Development Bank Project Cycle Model

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World Bank Model of the Project Cycle

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 Organization Structure
▶ Projects are impacted by, and have impact on, the cultural norms,
management policies, and procedures of the organizations of which
they are a part.
▶ The best project managers look for these influences and manage
them for the benefit of the project and the organization.
▶ One of the main forms of influence is how the company is organized.
▶ Project organizations can be as strong as the processes that have
been put in place, but in the end―success is measured by the
quality of the leadership and the members of the project team
▶ Project manager‘s authority varies based on the type of
organizational structure.
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 Functional Organization Structure
▶ Functional organizations are made up of units or division based on
the types of business and their associated responsibility.

Top Manager Project Coordination

Sales Support Finance

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

(Gray boxes represent staff engaged in project activities) 33
 Functional Structure (Cont’d)

Advantages Disadvantages
Easier management of functional People place more emphasis on
specialists. functional specialty to detriment of
the project.
Team members report to only one No career in project management.
supervisor.
Similar resources are centralized, Project Manager has no or little
as companies are grouped by authority. Power with FMs.
functions/specialties.
Clearly defined career path in the Scope of the project limited to
functional area. functional boundary.
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 Projectized Organization Structure
▶ Project staff work under the guidance of the Project Management
only (full time) for the project.
Project Coordination Top Manager

Project A Project B Project C

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

(Gray boxes represent staffs engaged in project activities) 35

 Projectized Organization (Cont’d)

Advantages Disadvantages
Project manager has ultimate No ―home‖ for project team members
authority over the project when the project is completed

Less efficient use of resources,

Loyalty to the project.
though efficient project organization
More effective communication Lack of professionalism in disciplines
than functional
Duplication of facilities and job
Team members are co-located
functions

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 Matrix Organization Structure
▶ Matrix organizations are a blend of functional and projectized
characteristics.
▶ Employees in a matrix organization report to one FM and at least
one PM.
▶ PM and FM together conduct performance review of the employees.

Matrix Organizations are of 3 types

Weak Matrix Balanced Matrix Strong Matrix

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 Weak Matrix Organization Structure
▶ Maintain many of the characteristics of a functional organization.
− Here, the balance of power rests with the FM and PM is
merely an expeditor or coordinator.
▶ Project expeditor acts mainly as a staff assistant and coordinates
communication.
− Project expeditor can not make or enforce any decisions.
▶ Project coordinator has some power to make decisions and
reports to higher level manager than expeditor.
▶ In general, Project Manager‘s role is more of a coordinator or
expediter than that of a true project manager.

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Weak Matrix Organization Structure (Cont’d)

Top Manager

Functional Functional Functional

Manager A Manager B Manager C

Staff Staff Staff

Staff Staff Staff Project Coordination

Staff Staff Staff

(Gray boxes represent staffs engaged in project activities) 39

 Balanced Matrix Organization Structure
▶ A balanced matrix structure has many of the same attributes as a
weak matrix, but the project manager has more time and power
regarding the project.
▶ The power is balanced between project manager and functional
manager.
− Each manager has responsibility for his/her part of the project
or organization, and people get assigned to projects based on
the needs of the project, not strengths or weakness of the
manager‘s position.
▶ Most organizations are Balanced Matrix these days!
▶ A balanced matrix has time-accountability issues for all the project
team members since their functional managers will want reports
on their time spent on the object. 40
Balanced Matrix Organization Structure (Cont’d)

Top Manager

Functional Functional Functional

Manager A Manager B Manager C

Staff Staff Staff

Staff Staff Staff Project

Coordination

Project Manager Staff Staff

(Gray boxes represent staffs engaged in project activities) 41

 Strong Matrix Organization Structure
▶ Have many of the characteristics of the projectized organization.
▶ The balance of power rests with the project manager, not the
functional manager. Project
Top Manager Coordination

Functional Functional Functional Manager of

Manager A Manager B Manager C P. Managers
Project
Staff Staff Staff
Manager
Project
Staff Staff Staff
Manager

Staff Staff Staff Project

Manager 42
(Gray boxes represent staffs engaged in project activities)
Organizational Structure Influences on Project

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