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Project Management for Engineering, Business and Technology FIFTH EDITION
Project Management for Engineering, Business and Technology, 5th edition, addresses project management across all industries. First covering the essential background, from origins and philosophy to methodology, the bulk of the book is dedicated to concepts and techniques for practical application. Coverage includes project initiation and proposals, scope and task definition, scheduling, budgeting, risk analysis, control, project selection and portfolio management, program management, project organization, and all-important “people” aspects—project leadership, team building, conflict resolution and stress management.
The Systems Development Cycle is used as a framework to discuss project management in a variety of situations, making this the go-to book for managing virtually any kind of project, program or task force. The authors focus on the ultimate purpose of project management—to unify and integrate the interests, resources, and work efforts of many stakeholders, as well as the planning, scheduling, and budgeting needed to accomplish overall project goals.
This new edition features:
• Updates throughout to cover the latest developments in project management methodologies
• New examples and 18 new case studies to help students develop their understanding and put principles into practice
• A new chapter on agile project management and lean • Expanded coverage of program management, stakeholder engagement,
buffer management, and managing virtual teams and cultural differences in international projects.
• Alignment with PMBOK terms and definitions for ease of use alongside PMI certifications
• Cross-reference to IPMA, APM, and PRINCE2 methodologies • Extensive instructor support materials, including an Instructor’s Manual,
PowerPoint slides, answers to chapter review questions, problems and cases, and a test bank of questions.
Taking a technical yet accessible approach, Project Management for Business, Engineering and Technology, 5th edition, is an ideal resource and reference for all advanced undergraduate and graduate students in project management courses as well as for practicing project managers across all industry sectors.
John Nicholas, PhD, is Professor of Operations Management at Loyola University, Chicago, USA.
Herman Steyn, PhD, is a Professor in the Graduate School of Technology Management, University of Pretoria, South Africa where he specializes in project management.
“As a Professor who has taught Project Engineering for the last 14 years, I have also performed large scale Project Engineering throughout my first career (over 20 years) in Aerospace, Defense and Information Technology. When deciding on a textbook for my graduate Project Engineering class, I looked long and hard. I wasn’t finding what I was looking for and was going to write my own, until I found Project Management for Engineering, Business and Technology. This is the textbook I would have written. It is robust, complete and easy to follow. The graphics, charts and figures are all very descriptive and real. And my students like the paperback nature of the book. I highly recommend this textbook for anyone teaching Engineering, Business or Technology Project Management/Engineering. I also recommend it as a ‘keeper’ for students who will be guiding projects in the future.”
Mark Calabrese, University of Central Florida, USA
“The publication of the 5th edition of Project Management for Engineering, Business and Technology by John Nicholas and Herman Steyn is an important milestone in a continuing conversation between the authors and the current and future practitioners of project management around the world. This book has long been a comprehensive but accessible publication that provides valuable insights into the strategic and day-today management of projects both large and small. There are numerous publications in this field but Nicholas and Steyn have found the balance between the needs of experienced practitioners looking for ways to improve project outcomes, and the needs of students who are new to the project management field. The concepts are clearly and logically laid out, and the language is appropriate for a wide range of audiences. It continues to be a benchmark in a crowded field of publications offering both practical and strategic insights into the art and craft of project management.”
Barrie Todhunter, University of Southern Queensland, Australia
“I have been using the earlier editions of this book in my Project Management teaching to working executives of a major engineering company employing close to 40000 people in various types of projects. I have evaluated the current 5th edition of the book from the perspective of (a) a teaching resource (b) study material and (c) as a resource for case studies and references. I find that the 5th edition has been thoroughly revamped and incorporates several relevant resources and is presented in a very lucid and structured way. I have absolutely no hesitation in recommending this book as a standard resource for teaching students in a university set up and/or for working executives in a project environment. The book is also a good resource as a study material for certification courses.”
Krishna Moorthy, Ex-Dean, Larsen & Toubro Institute of Project Management, India
“Project Management for Engineering, Business and Technology is one of the most comprehensive textbooks in the field. Nicholas and Steyn explain the matter in a readable and easy-to-understand way, illustrated with interesting examples. The authors combine the ‘hard matter’ of project management with relevant behavioural aspects. Overall, a useful work for anyone new to the field or as reference for the more advanced project manager.”
Martijn Leijten, Delft University of Technology, The Netherlands
“Project management plays a vital role in achieving project objectives. Projects bring change and project management is recognised as the most effective way to managing such change. This book encourages readers to become interested and involved in the change towards renewed project management and management of projects.”
Benita Zulch, University of the Free State, South Africa
“A very comprehensive text. An excellent mix of materials to enable students to learn techniques and engage in discussion of scenarios.”
Richard Kamm, University of Bath, UK
Project Management for Engineering, Business and Technology
John M. Nicholas Loyola University Chicago
Herman Steyn University of Pretoria
Fifth edition published 2017
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Fourth edition published by Routledge 2012
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PART I: PHILOSOPHY AND CONCEPTS 1 What Is Project Management? 2 Systems Approach
PART II: PROJECT LIFE CYCLE 3 Project Life Cycle and Project Conception 4 Project Definition and System Definition
PART III: SYSTEMS AND PROCEDURES FOR PLANNING AND CONTROL 5 Basic Project Planning Techniques 6 Project Schedule Planning and Networks 7 Advanced Project Network Analysis and Scheduling 8 Cost Estimating and Budgeting 9 Project Quality Management 10 Project Risk Management 11 Project Execution, Monitoring, and Control 12 Project Evaluation, Communication, Implementation, and Closeout 13 Agile Project Management and Lean
PART IV: ORGANIZATION BEHAVIOR 14 Project Organization Structure and Integration 15 Project Roles and Stakeholders 16 Managing Participation, Teamwork, and Conflict
PART V: PROJECT MANAGEMENT IN THE CORPORATE CONTEXT 17 Meta-Management of Projects and Program Management
18 Project Selection and Portfolio Management 19 International Project Management
Appendix A: RFP for Midwest Parcel Distribution Company Appendix B: Proposal for Logistical Online System Project (LOGON) Appendix C: Project Evaluation Plan for Logistical Online System
Cover Title Copyright Dedication Brief Contents Contents Preface Acknowledgements About the Authors Introduction
I.1 In the Beginning… I.2 What Is a Project? I.3 All Projects are Not the Same I.4 Project Management: The Need I.5 Project Goal: Time, Cost, and Performance I.6 Project Management: The Person, The Team, The Methodology I.7 Project Management Standards of Knowledge and Competencies I.8 About This Book I.9 Study Project Appendix: Relation Between Professional Standards and Chapters of This Book Review Questions Case I.1 The Denver Airport Questions About the Case
PART I: PHILOSOPHY AND CONCEPTS
1 What Is Project Management?
1.1 Functions of Management 1.2 Features of Project Management 1.3 Evolution of Project Management 1.4 Where is Project Management Appropriate? 1.5 Management by Project: A Common Approach 1.6 Different Forms of Project-Related Management 1.7 Project Environments 1.8 New Product and Systems Development Projects 1.9 Construction Projects 1.10 Service-Sector Projects 1.11 Public-Sector and Governmental Projects and Programs 1.12 Miscellaneous Projects 1.13 Summary Review Questions Questions About the Study Project Case 1.1 Disaster Recovery at Marshall Field’s Case 1.2 Flexible Benefits System Implementation at Shah Alam Medical Center Endnotes
2 Systems Approach
2.1 Systems and Systems Thinking 2.2 Systems Concepts and Principles 2.3 Systems Approach 2.4 Systems Engineering 2.5 Project Management: A Systems Approach 2.6 Summary
Review Questions Questions About the Study Project Case 2.1 Glades County Sanitary District Case 2.2 Life and Death of an Aircraft Development Project Case 2.3 Jubilee Line Extension Project Case 2.4 Santa Clara County Traffic Operations System and Signal Coordination Project Endnotes
PART II: PROJECT LIFE CYCLE
3 Project Life Cycle and Project Conception
3.1 Project Life Cycle 3.2 Systems Development Cycle 3.3 Phase A: Conception 3.4 Project Feasibility 3.5 The Project Proposal 3.6 Project Contracting 3.7 Summary Appendix: Kinds of Contracts Review Questions Questions About the Study Project Case 3.1 West Coast University Medical Center Case 3.2 X-Philes Data Management Corporation: RFP Matters Case 3.3 Proposal Evaluation for Apollo Spacecraft Case 3.4 Contract Mess-Up at Polanski Developers Endnotes
4 Project Definition and System Definition
4.1 Phase B: Definition 4.2 Project Definition
4.3 Phased (Rolling Wave) Project Planning 4.4 System Definition 4.5 Summary Appendix A: Stages of Systems Engineering Appendix B: Quality Function Deployment Review Questions Questions About the Study Project Case 4.1 Star-Board Construction and Santaro Associates: Requirements Snafu Case 4.2 Revcon Products and Welbar, Inc.: Client– Contractor Communication Case 4.3 Lavasoft.com: Interpreting Customer Requirements Case 4.4 Proposed Gold Mine in Canada: Phased Project Planning Endnotes
PART III: SYSTEMS AND PROCEDURES FOR PLANNING AND CONTROL
5 Basic Project Planning Techniques
5.1 Planning Steps 5.2 The Project Execution Plan 5.3 Scope and Statement of Work 5.4 Work Definition 5.5 Project Organization and Responsibilities 5.6 Scheduling 5.7 Planning and Scheduling Charts 5.8 Line of Balance (Linear Scheduling Method) 5.9 Procurement Management 5.10 Summary Review Questions Questions About the Study Project Case 5.1 Barrage Construction Company: Sean’s WBS
Case 5.2 Startrek Enterprises, Inc.: Deva’s Project Plan Case 5.3 Walter’s Project Plan Case 5.4 Planning the Boca Implementation at Kulczyński Products Endnotes
6 Project Schedule Planning and Networks
6.1 Network Diagrams 6.2 The Critical Path 6.3 Converting to Gantt Calendar Schedules 6.4 Management Schedule Reserve 6.5 Alternative Relationships 6.6 Scheduling with Resource Constraints 6.7 Criticisms of Network Methods 6.8 Summary Appendix A: AOA Diagrams Appendix B: Alternate Scheduling Method: Project Starts at Day 1 Review Questions and Problems Questions About the Study Project Case 6.1 Network Diagram for a Large Construction Project Case 6.2 Melbourne Construction Company, A Case 6.3 Melbourne Construction Company, B Case 6.4 Melbourne Construction Company, C Endnotes
7 Advanced Project Network Analysis and Scheduling
7.1 CPM and Time-Cost Tradeoff 7.2 Variability of Activity Duration 7.3 PERT 7.4 Allocating Resources and Multiple Project Scheduling
7.5 Theory of Constraints and Critical Chain Method 7.6 TOC Method for Allocating Resources to Multiple Projects 7.7 Discussion and Summary Summary List of Symbols Review Questions and Problems Questions About the Study Project Case 7.1 Bridgecon Contractors Case 7.2 LOGON Project Case 7.3 Papua Petera Village Project Endnotes
8 Cost Estimating and Budgeting
8.1 Cost Estimates 8.2 Cost Escalation 8.3 Cost Estimating and the Systems Development Cycle 8.4 Cost Estimating Process 8.5 Elements of Estimates and Budgets 8.6 Project Cost Accounting Systems 8.7 Budgeting Using Control (or Cost) Accounts 8.8 Cost Summaries 8.9 Cost Schedules and Forecasts 8.10 Life Cycle Costs 8.11 Summary Review Questions and Problems Questions About the Study Project Case 8.1 Life Cycle Costs for Fleet of Tourist Spaceships Case 8.2 Estimated Costs for the Chunnel Project Case 8.3 Fiona’s Estimate for the Gorgy Project Case 8.4 Melbourne Construction Company, D Endnotes
9 Project Quality Management
9.1 The Concept of Quality 9.2 Project Quality Management Processes 9.3 Techniques for Quality Assurance in System Development 9.4 Techniques for Quality Control 9.5 Summary Review Questions Questions About the Study Project Case 9.1 Ceiling Panel Collapse in the Big Dig Project Case 9.2 FIFA 2010 World Cup South Africa Case 9.3 Airbag Adversity Endnotes
10 Project Risk Management
10.1 Risk Concepts 10.2 Risk Identification 10.3 Risk Assessment 10.4 Risk Response Planning 10.5 Risk Monitoring and Response 10.6 Project Management Is Risk Management 10.7 Summary Appendix: Risk Analysis Methods Review Questions and Problems Questions About the Study Project Case 10.1 The Sydney Opera House Case 10.2 Infinity & Beyond, Inc. Case 10.3 The Nelson Mandela Bridge Endnotes
11 Project Execution, Monitoring, and Control
11.1 Phase C: Execution
11.2 Detail Design Stage 11.3 Production/Build Stage 11.4 Monitoring and Control Process 11.5 Work Packages and Control Accounts 11.6 Project Monitoring and Control Emphasis 11.7 Performance Analysis and Earned Value Management 11.8 Issue Management 11.9 Change Control 11.10 Contract Administration 11.11 Problems with Monitoring and Controlling Projects 11.12 Summary Summary of Variables Review Questions and Problems Questions About the Study Project Case 11.1 Cybersonic Project Case 11.2 SA Gold Mine: Earned Value After a Scope Change Case 11.3 Change Control Process at Dynacom Company Endnotes
12 Project Evaluation, Communication, Implementation, and Closeout
12.1 Project Evaluation 12.2 Project Communication Management 12.3 Project Management Information Systems 12.4 Informal Communication 12.5 Implementation Stage 12.6 Project Termination and Closeout 12.7 Project Summary Evaluation 12.8 After the Project—Phase D: Operation 12.9 Summary
Review Questions Questions About the Study Project Case 12.1 Status Report for the LOGON Project Case 12.2 SLU Information Central Building Case 12.3 Formal and Informal Communication Endnotes
13 Agile Project Management and Lean
13.1 Traditional Project Management 13.2 Agile Project Management, APM 13.3 Scrum 13.4 APM Controversy 13.5 Lean Production and Project Management 13.6 Summary Review Questions Questions about the Study Project Case 13.1 Grand Entry for Accent, Inc. Case 13.2 Technology to Track Stolen Vehicles Endnotes
PART IV: ORGANIZATION BEHAVIOR
14 Project Organization Structure and Integration
14.1 Formal Organization Structure 14.2 Organizational Design by Differentiation and Integration 14.3 Requirements of Project Organizations 14.4 Integration of Subunits in Projects 14.5 Liaison Roles, Task Forces, and Teams 14.6 Project Expeditors and Coordinators 14.7 Pure Project Organizations 14.8 Matrix Organizations 14.9 Selecting an Organization Form for Projects
14.10 Project Office and PMO 14.11 Integration in Large-Scale Projects 14.12 Integration in Systems Development Projects 14.13 Concurrent Engineering 14.14 Summary Review Questions Questions about the Study Project Case 14.1 Organization for the LOGON Project Case 14.2 Pinhole Camera and Optics, Inc.: Why Do We Need a Project Manager? Case 14.3 Implementing a Matrix Structure in an R&D Laboratory Endnotes
15 Project Roles and Stakeholders
15.1 The Project Manager 15.2 Project Management Authority 15.3 Project Manager Qualifications 15.4 Filling the Project Management Role 15.5 Roles in the Project Team 15.6 Roles Outside the Project Team 15.7 Project Stakeholder Engagement 15.8 Summary Review Questions Questions About the Study Project Case 15.1 The LOGON Project Case 15.2 Selecting a Project Manager at Nuwave Products Company Case 15.3 Stakeholders in Boston’s Big Dig Endnotes
16 Managing Participation, Teamwork, and Conflict
16.1 Leadership in Project Management
16.2 Participative Management 16.3 Teams in Project Management 16.4 The Team-Building Approach 16.5 Improving Ongoing Work Teams 16.6 Building New Teams 16.7 Intergroup Problem Solving 16.8 Virtual Teams 16.9 Conflict 16.10 Managing Group Conflict 16.11 Managing Emotional Stress 16.12 Summary Review Questions Questions About the Study Project Case 16.1 Wilma Keith Case 16.2 Mars Climate Orbiter Spacecraft Endnotes
PART V: PROJECT MANAGEMENT IN THE CORPORATE CONTEXT
17 Meta-Management of Projects and Program Management
17.1 Project Management Maturity and Maturity Models 17.2 Project Management Methodology 17.3 Managing Project Knowledge 17.4 Project Management Office 17.5 Program Management 17.6 Program Phases 17.7 Program Management Themes 17.8 Program Organization 17.9 Special Considerations 17.10 Summary Review Questions Questions About the Study Project
Case 17.1 Maxim Corporation America (MCA) Case 17.2 Motorola’s M-Gate Methodology and the RAZR Project Case 17.3 Tecknokrat Company Case 17.4 Mercury Exploration Program Endnotes
18 Project Selection and Portfolio Management
18.1 Project Portfolio Management 18.2 Framework for Project Selection and Portfolio Management 18.3 Methods for Assessing Individual Projects 18.4 Methods for Comparing and Selecting Projects 18.5 Integrating the Gating Process and Portfolio Management 18.6 Summary and Discussion Review Questions and Problems Question About the Study Project Case 18.1 Consolidated Energy Company Case 18.2 Proposed Cement Factory for PCS Company Endnotes
19 International Project Management
19.1 International Projects 19.2 Problems Managing International Projects 19.3 Local Institutions and Culture 19.4 Local Stakeholders 19.5 Geo-National Issues 19.6 Project Manager 19.7 Local Representative 19.8 Top Management, Steering Committee, and PMO 19.9 Team and Relationship Building 19.10 Project Definition
19.11 Project Monitoring 19.12 Communication 19.13 Risks and Contingencies 19.14 Summary Review Questions Questions About the Study Project Case 19.1 Mozal Project—International Investment in an Undeveloped Country Case 19.2 Spirit Electronics’ Puerto Rico Office Endnotes
APPENDIX A RFP for Midwest Parcel Distribution Company APPENDIX B Proposal for Logistical Online System Project (LOGON) APPENDIX C Project Execution Plan for Logistical Online System Index
When people see or use something impressive—a bridge arching high over a canyon, a space probe touching down on a distant planet, an animated game so realistic you think you’re there, or a nifty phone/camera/computer the size of your hand—they sometimes wonder, “How did they do that?” By they, of course, they are referring to the creators, designers, and builders, the people who created —thought up and made—those things. Seldom do they wonder about the leaders and managers, the people who organized and led the efforts that brought those astounding things from concept to reality and without whom most neat ideas would never have been achieved. This book is about them—the managers of project managers, the mostly unsung heroes of engineering, business, and technology who stand outside the public eye but ultimately are responsible for practically everything that requires collective human effort.
The project manager is but one of many people involved in the creation of society’s products, systems, and artifacts, yet it is he or she who gets the others involved and organizes and directs their efforts so everything comes out right. Occasionally, the manager and the creator happen to be the same: Burt Rutan, Woody Allen, and Gutzon Borglum are examples; their life work—in aerospace, motion pictures, and monumental sculptures, respectively—represent not only creative or technological genius, but leadership and managerial talent as well.
In the last several decades businesses have expanded from domestic, nationalistic enterprises and markets into multinational, global enterprises and markets. As a result, from a business perspective there is more of everything to contend with—more ideas, competitors, resources, constraints, and, certainly, more people doing and wanting things. Technology is advancing and products and processes evolving at a more rapid pace; as a result, the life cycles of most things in society are getting shorter. This “more of everything” has had a direct impact on the conduct of projects—including projects to develop products,
systems, or processes that compete in local, domestic, and international markets; projects to create and implement new ways of meeting demand for energy, recreation, housing, communication, transportation, and food; and projects to answer basic questions in science and resolve grave problems such as disease, pollution, global warming, and the aftermath of natural disasters. All of this project activity has spurred a growing interest in improved ways to plan, organize, and guide projects to better meet the needs of customers, markets, and society within the bounds of limited time and resources.
Associated with this interest is the growing need to educate and train project managers. In the past—and still today—project managers were chosen for some demonstrated exceptional capability, although not necessarily managerial. If you were a good engineer, systems analyst, researcher, architect, or accountant, eventually you would become a project manager. Somewhere along the way, presumably, you would pick up the “other” necessary skills. The flaw in this reasoning is that project management encompasses a broad range of skills— managerial, leadership, interpersonal—that are much different from and independent of skills associated with technical competency. And there is no reason to presume that the project environment alone will provide the opportunity for someone to “pick up” these other necessary skills.
As a text and handbook, this book is about the “right” way to manage projects. It is intended for advanced undergraduate and graduate university students and practicing managers in engineering, business, and technology. As the title says, it is a book about principles and practice, meaning that the topics in it are practical and meant to be applied. It covers the big picture of project management— origins, applications, and philosophy, as well as the nitty-gritty, how-to steps. It describes the usual project management topics of schedules, budgets, and controls, but also the human side of project management, including leadership and conflict.
Why a book on project management in engineering and business and technology? In our experience, technology specialists such as engineers, programmers, architects, chemists, and so on, involved in “engineering/technology projects” often have little or no management or leadership training. This book, which includes many engineering and technology examples, provides somewhat broad exposure to business concepts and
management specifics to help these specialists get started as managers and leaders.
What about those people involved in product development, marketing, process improvement, and related projects commonly thought of as “business projects”? Just as technology specialists seldom receive formal management training, students and practitioners of business rarely get formal exposure to practices common in technology projects. For them, this book describes not only how “business” projects are conducted, but also the necessary steps in the conception and execution of engineering, system development, construction, and other “technology” projects. Of course, every technology project is also a business project: it is conducted in a business context and involves business issues such as customer satisfaction, resource utilization, deadlines, costs, and profits.
Virtually all projects—engineering, technology, and business—originate and are conducted in a similar way, in this book conceptualized using a methodology called the Systems Development Cycle (SDC). The SDC serves as a general framework for discussing the principles and practices of project management, and illustrating commonalities and differences among a wide variety of projects.
This book is an outgrowth of the authors’ combined several decades of experience teaching project management at Loyola University Chicago and University of Pretoria to business and engineering students, preceded by several years’ experience in business and technology projects, including for aircraft design and flight test, large-scale process facility construction, and software applications development and process improvement. This practical experience gave us an appreciation not only for the business-management side of project management, but also for the human-interpersonal side as well. We have seen the benefits of good communication, trust, and teamwork, as well as the costs of poor leadership, emotional stress, and group conflict. In our experience, the most successful projects are those where leadership, trust, communication, and teamwork flourished, regardless of the formal planning and control methods and systems in place. This book largely reflects these personal experiences. Of course, comprehensive coverage of project management required that we look much beyond our own experience and draw upon the published works of many others and the wisdom and suggestions of colleagues and reviewers.
In this fifth edition we have revised and added material to incorporate new
topics of interest, current examples, and the growing body of literature in project management. Among significant new additions are a chapter on agile project management and lean production, extended coverage of program management, as well as 18 new end-of-chapter case studies. The Introduction includes tables that relate sections of the book to the most-common project management knowledge areas and methodologies: PMI PMBOK, IPMA, APM, and PRINCE2. Books tend to grow in size with each new edition; to combat that all chapters have been rewritten to make everything more readable and concise. Despite the inclusion of new material, we’ve held the page count to roughly what it was in the previous edition.
Our goal in writing this book is to provide students and practicing managers the most practical, current, and interesting text possible. We appreciate hearing your comments and suggestions. Please send them to us at firstname.lastname@example.org and email@example.com.
Like most projects, writing a book reflects the contributions of many people. We want to acknowledge and give special thanks to those who contributed the most. First, thanks to our research assistants. Research assistants in general do a lot of work—academic as well as gofer, and without their toiling efforts most professors would accomplish far less. We were fortunate to have had the assistance of several such bright and capable people, particularly Elisa Denney, Hollyce James, Diane Petrozzo, Miguel Velasco, Gaurav Monga, Cary Morgan, Louis Schwartzman, and Brian Whelan.
Special thanks to current and former colleagues at Loyola University Chicago and the University of Pretoria. In Chicago, thanks to Dr. Gezinus Hidding for his enthusiasm and contributions to the field of project management; and to Drs. Enrique Venta, Harold Dyck, Samuel Ramenofsky, and Donald Meyer, and Elaine Strnad, Paul Flugel, John Edison, Sharon Tylus, and Debbie Gillespie for their suggestions and support for this and earlier editions. In Pretoria, thanks to Dr. Tinus Pretorius for encouraging education and research in project management at the Graduate School of Technology Management and for supporting the work on this book. I (Herman) also want to express appreciation to Dr. Giel Bekker, Philip Viljoen, Dr. Taryn Bond-Barnard, Dr. Pieter Pretorius, Dr. Krige Visser, Corro van Waveren, Dr. Michael Carruthers and Dr. Marie-Louise Barry for their direct and indirect contributions to this book and for all I have learned from them. I (John) want to acknowledge the influence of three of my professors, Dr. Charles Thompson and Dr. Gustave Rath at Northwestern University, and Dr. Dick Evans at the University of Illinois, whose philosophies and teachings helped shaped this book. I also want to thank Chris Phares and Bob Zimmerman, dear friends and project managers extraordinaire, for ongoing sharing of their wisdom on the meaning and significance of project leadership.
Special thanks also to our wives Sharry and Karen. Sharry provided numerous
suggestions to the first edition and helped reduce the amount of “techno-jargon” in the book; she managed the home front and freed up time so that I (John) could pursue and complete this project. Karen provided wifely support and encouragement; as in the case of so many other projects I (Herman) have been involved in, my contribution to this project would never have materialized had not it been for her support.
Thanks also to Amy Laurens and the folks at Routledge and Taylor and Francis, and special thanks to Holly Davis for her ongoing support throughout preparation of this fifth edition.
Other colleagues, students, and friends, some mentioned in the endnotes throughout the book, provided support, encouragement, and reference materials; to them also we say thank you. Despite the assistance of so many people and our own best efforts, there are still likely to be omissions or errors. We had final say and accept responsibility for them.
John M. Nicholas
About the Authors
JOHN NICHOLAS is Professor Operations Management and Project Management in the Quinlan School of Business at Loyola University Chicago. He is an active teacher, writer, and researcher in project management and production management, and conducts executive seminars and consults on project management and process improvement. John is the author of numerous academic and technical publications, and five books including Lean Production for Competitive Advantage (2011) and The Portal to Lean Production (2006). He has held the positions of team lead and engineer on aircraft development projects at Lockheed-Martin Corporation, team lead and business systems analyst on operations projects at Bank America, and researcher on energy-environmental research projects at Argonne National Laboratory. He has a BS in aeronautical and astronautical engineering and an MBA in operations research from the University of Illinois, Urbana-Champaign, and a PhD in industrial engineering and applied behavioral science from Northwestern University.
HERMAN STEYN is Professor of Project Management in the Graduate School of Technology Management, University of Pretoria, South Africa. He has been involved in projects in industry since 1975, has managed a variety of large and small engineering projects (system, product, and process development) in the minerals, defense and nuclear industries, and has also managed programs and project portfolios. In 1996 he was appointed to his current position at the University of Pretoria where he initiated a masters’ program in project management. Besides supervising project management research and teaching graduate project management courses, Herman has conducted more than 200 seminars and workshops on project management. He has a bachelor’s degree and graduate diploma in metallurgical engineering, an MBA, and a PhD in engineering management.
I.1 In The Beginning…
Sometime during the third millennium BC, workers on the Great Pyramid of Cheops set the last stone in place. They must have felt jubilant, for this event represented a milestone of sorts in one of humanity’s grandest undertakings. Although much of the ancient Egyptians’ technology is still a mystery, the enormity and quality of the finished product remains a marvel. Despite the lack of sophisticated machinery, they were able to raise and fit some 2,300,000 stone blocks, weighing 2 to 70 tons apiece, into a structure the height of a modern 40- story building. Each facing stone was set against the next with an accuracy of 0.04 inch (1 mm), and the base, which covers 13 acres (52,600 m2), deviates less than 1 inch (25 mm) from level (Figure I.1).1
Equally as staggering was the number of workers involved. To quarry the stones and transport them down the Nile, about 100,000 laborers were levied. In addition, 40,000 skilled masons and attendants were employed in preparing and laying the blocks and erecting or dismantling the ramps. Public works were essential to keep the working population employed and fed, and it is estimated that no less than 150,000 women and children also had to be housed and fed.2 But just as mind-boggling was the managerial ability exercised by the Egyptians throughout the 20-year duration of the pyramid construction. Francis Barber, a nineteenth-century pyramid scholar, concluded that:
It must have taken the organizational capacity of a genius to plan all the work, to lay it out, to provide for emergencies and accidents, to see that the men in the quarries, on the boats and sleds, and in the mason’s and smithies shops were all continuously and usefully employed, that the means of
transportation was ample … that the water supply was ample … and that the sick reliefs were on hand.3
Building the Great Pyramid is what we today would call a large-scale project. It stands among numerous projects from early recorded history that required massive human works and managerial competency. Worthy of note are the managerial and leadership accomplishments of Moses. The Biblical account of the exodus of the Hebrews from the bondage of the Egyptians gives some perspective on the preparation, organization, and execution of this tremendous undertaking.
Supposedly Moses did a magnificent job of personnel selection, training, organization, and delegation of authority.4 The famed ruler Solomon also was the “manager” of great projects. He transformed the battered ruins of many ancient cities and crude shantytowns into powerful fortifications. With his wealth and the help of Phoenician artisans, Solomon built the Temple in Jerusalem. Seven years went into the construction of the Temple, after which Solomon took 13 years more to build a palace for himself. He employed a workforce of 30,000 Israelites to fell trees and import timber from the forests of Lebanon.5 That was almost 3,000 years ago.
Figure I.1 The Great Pyramid of Cheops, an early (circa 2500BC) large-scale project.
Photo courtesy of iStock.
With later civilizations, notably the Greeks and Romans, projects requiring
extensive planning and organizing escalated. To facilitate their military campaigns and commercial interests, the Romans constructed networks of highways and roads throughout Europe, Asia Minor, Palestine, and northern Africa so that all roads would “lead to Rome.” The civilizations of Renaissance Europe and the Middle and Far East undertook river engineering, construction of aqueducts, canals, dams, locks, and port and harbor facilities. With the spread of modern religions, construction of temples, monasteries, mosques, and massive urban cathedrals was added to the list of projects.
With the advent of industrialization and electricity, projects for the construction of railroads, electrical and hydro-electrical power facilities and infrastructures, subways, and factories became commonplace. In recent times, development of large systems for communications, defense, transportation, research, and information technology have spurred different, more complex kinds of project activity.
As long as people do things, there will be projects. Many projects of the future will be similar to those in the past. Others will be different either in terms of increased scale of effort or more advanced technology. Representative of the latter are two recent projects, the English Channel tunnel (Chunnel) and the International Space Station. The Chunnel required tremendous resources and took a decade to complete. The International Space Station (Figure I.2) required development of new technologies and the efforts of the US, Russian, European, Canadian, and Japanese space agencies.
Figure I.2 The International Space Station, a modern large-scale project.
Photo courtesy of NASA.
I.2 What Is a Project?
From these examples it is clear that humankind has been involved in project activities for a long time. But why are these considered “projects” while other human activities, such as planting and harvesting a crop, stocking a warehouse, issuing payroll checks, or manufacturing a product, are not?
What is a project? This is a question we will cover in much detail later. As an introduction though, below are listed some characteristics that warrant classifying an activity as a project.6
1. A project has a defined goal—a purpose with well-defined end-items, deliverables, results, or products to achieve specific benefits.
2. It is unique; it requires doing something different than was done previously. It is a one-time activity, never to be exactly repeated again.
3. It is a temporary organization that seeks to accomplish the goal within a scheduled time frame.
4. It utilizes people and other resources from different organizations and functions.
5. Given that each project is unique, it carries unfamiliarity and risk.
The examples described earlier are for familiar kinds of projects such as construction (pyramids) and technology development (space station). In general, the list of activities that qualify as projects is long and includes many that are commonplace. Weddings, remodeling a home, and moving to another house are projects; so are company audits, major litigations, corporate relocations, and projects; and so are efforts to develop new products and implement new systems. Military campaigns also qualify as projects; they are temporary, unique efforts directed toward a specific goal. The Normandy Invasion in World War II on June 6, 1944 is an example:
The technical ingenuity and organizational skill that made the landings possible was staggering. The invasion armada included nearly 5,000 ships of all descriptions protected by another 900 warships. The
plan called for landing 150,000 troops and 1500 tanks on the Normandy coast in the first 48 hours.7
Most artistic endeavors are projects, too. Composing a song or symphony, writing a novel, or making a sculpture are one-person projects. Some artistic projects also require the skills of engineers and builders, for example Mount Rushmore, the Statue of Liberty, and the Eiffel Tower.
Many efforts at saving human life and recovering from man-made or natural disasters become projects. Examples are the massive cleanup following the Soviet nuclear accident at Chernobyl, and rescue and recovery operations following disastrous earthquakes in Chile, Haiti, China, Pakistan, Mexico, Turkey, and elsewhere, the Indian Ocean tsunami of 2004, and the Ebola outbreak in western Africa in 2014.
Figure I.3 shows diverse project endeavors and examples of well-known projects, and where the projects fall with respect to complexity and uncertainty. Complexity is measured by the magnitude of the effort—the number of groups and organizations involved and the diversity of skills or expertise needed to accomplish the work. Time and resource commitments tend to increase with complexity.
Uncertainty is measured roughly by the difficulty in predicting the final outcome in terms of the dimensions of time, cost, and technical performance. In most projects there is some uncertainty in one or two dimensions (e.g. weddings); in complex projects there is uncertainty in all three dimensions (e.g. the space station).
Generally, the more often something is done, the less uncertainty there is in doing it. This is simply because people learn by doing and so improve their efforts—the “learning curve” concept. Projects that are very similar to previous ones and about which there is abundant knowledge have lower uncertainty. These are found in the lower portion of Figure I.3 (e.g. weddings, highways, dams, system implementation). Projects with high uncertainty are in the upper portion of the figure.
When the uncertainty of a project drops to nearly zero, and when the project effort is repeated a large number of times, then the work is usually no longer considered a project. For example, building a skyscraper is definitely a project, but mass construction of prefabricated homes more closely resembles a scheduled, repetitive operation than a project. The first flight to the South Pole by Admiral Byrd was a project, but modern daily supply flights to bases there are
not. When in the future tourists begin taking chartered excursions to Mars, trips there will not be considered projects either. They will just be ordinary scheduled operations.
The cost curve in Figure I.3 indicates that a project’s expense tends to increase roughly in proportion to its complexity and uncertainty. Cost, represented in terms of time or economic value, is at the level of tens or hundreds of labor hours for projects with low complexity and uncertainty, but increases to millions and billions of hours for projects with the greatest complexity and uncertainty.
In all cases, projects are conducted by organizations that after the project is completed go on to do something else (construction companies) or are disbanded (Admiral Byrd’s crew, the Mars exploration team). In contrast, repetitive, high- certainty activities (prefabricated housing, supply flights, and tourist trips to Antarctica or Mars) are performed by permanent organizations that do the same thing repeatedly, with little changes in operations other than scheduling. Because projects are not repetitive is the reason they must be managed differently.
I.3 All Projects are Not the Same8
Besides Figure I.3, another way to illustrate the diversity in projects is with the so-called NTCP model, which classifies projects and their end-results or products into four dimensions, each with three or four possible levels. The dimensions and levels are:
• Novelty: This represents how new the project end-item or product is to customers and potential users and how well defined are its initial product requirements. It includes three levels:
Figure I.3 A typology of projects.
• Derivative—the project end-item or product is an extension or improvement of an existing product or system; e.g. new features to an existing car model;
• Platform—the end-item or product is a new generation of an existing product line in a well-established market; e.g. a new car model;
• Breakthrough—the end-item or product is new to the world; e.g. the first mobile telephone, the first 3M Post-it notes.
• Technology: This represents the project’s technological uncertainty and whether it is new or mature. It addresses the question of how much new technology is required to create, build, manufacture and enable the use of the product and how much technical competency is needed by the project manager and the team. It has four levels:
• Low-tech—involves only well-established technologies; • Medium-tech—uses mainly existing technologies, but also limited
use of some new technology or new features; e.g. automotive and appliances industries;
• High-tech—uses technologies that are mostly new to the firm but already exist and are available at project initiation; typical of many defense and computer projects; is synonymous with “high- risk”;
• Super-high-tech—relies on new technologies that do not exist at project initiation. The project goal is well defined, but the solution is not; e.g. landing a man on the moon; is often synonymous with “very high-risk.”
• Complexity: This measures the complexity of the product and the project organization. There are three levels:
• Assembly—the project involves combining a collection of elements, components, and modules into a single unit or entity that performs a single function; e.g. developing a new coffee machine or creating a department to manage a single function (such as
payroll); • System—involves a complex collection of interactive elements and
subsystems that jointly perform multiple functions to meet specific operational needs; e.g. a new car, new computer, entirely new business;
• Array—the project involves a large variety of dispersed systems (a system of systems, or “super system”) that function together to achieve a common purpose; e.g. national communications network, mass transit infrastructure, regional power generation and distribution network, an entire corporation.
• Pace: This refers to time available for the project—the urgency or criticality of meeting the project’s time goals. There are four levels:
• Regular—no urgency; time is not critical to immediate success; • Fast/competitive—complete project in adequate time to address
market opportunities, create a strategic positioning, or form a new business unit; e.g. launching a new drug, introducing a new product line;
• Time-critical—complete project by a specific deadline; missing the deadline means project failure; e.g. Y2K projects; construction of facilities for the Olympic Games; launch of space probe to a comet;
• Blitz—a crisis project; the criterion for success is solving a problem as fast as possible; e.g. save people from a sinking ship.
All projects can be characterized according to the four dimensions. In Figure I.4, each of the dimensions is represented by a quadrant on the graph. The diamond- shaped profiles show the four dimensions for two examples, the Apollo lunar program and the space shuttle program.
Figure I.4 Shenhar and Dvir’s NTCP Diamond model contrasting the Apollo and space shuttle programs.
Source: Shenhar A. and Dvir D. Reinventing Project Management: The Diamond Approach to Successful
Growth and Innovation. Cambridge, MA: Harvard Business School Press; 2007.
I.4 Project Management: The Need
Although mankind has been involved in projects since the beginning of recorded history, obviously the nature of projects and the environment have changed. Many modern projects involve technical complexity and challenges in terms of assembling and directing large temporary organizations while subject to constrained resources, limited time schedules, and environmental uncertainty. An example is the NASA Pathfinder Mission to land and operate a rover vehicle on the surface of Mars. Such a project is unparalleled not only in terms of technical difficulty and organizational complexity, but also in terms of the requirements imposed on it. In ancient times, the requirements were flexible. If the Pharaohs needed more workers, then more slaves or more of the general population were conscripted. If Renaissance builders ran out of funding during construction of a cathedral, the work was stopped until more funds could be raised (one reason why cathedrals took decades or centuries to complete). If a king ran out of money while building a palace, he simply raised taxes. In cases where additional money or workers could not be found or the project delayed, then the scale of effort or quality of workmanship was reduced to accommodate the constraints.
In the Pathfinder project, many of the requirements were inflexible: the mission team was challenged with developing and landing a vehicle on Mars in less than 3 years’ time and on a $150 million budget, which was less than half the time and 1/20th the cost of the last probe NASA had landed on Mars. The project involved advanced research and development and explored new areas of science and engineering. Technical performance requirements could not be compromised; to do so would increase the risk to undertakings that were already very risky.
Constraints and uncertainty in project work are not restricted to large-scale governmental science programs. They are common in everyday business and technology where organizations continually strive to develop and implement new products, processes, and systems, and to adapt to changing requirements in a changing world. Consider Dalian Company’s development of “Product J,” a product development project that exemplifies what companies everywhere must do to be competitive and survive. Product J is a promising but radically new idea.
To move the idea from a concept to a real product will require the involvement of engineers and technicians from several Dalian divisions and suppliers. Product J will require meeting tough technical challenges, launching the product well ahead of the competition, and doing it for a cost the company can afford.