Summary of Chapter 1

8/3/2019 Summary of Chapter 1

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1.0 Introduction, project management overview

1.1 General view of a project

The Project Management Institut e defines a project as A temporary endeavor undertakento create a unique product or service.

Projects vary widely in size and type. One characteristic that project have in common is multidisciplinary, which is complex, and

composed of many interconnected elements and requiring input from groups outside theproject.

Using multidisciplinary teams involves dealing with conflict. Project does not exist in isolation and they are usually parts of larger entity or program.

Project is actually subdivisions of programs, and can be further divided into subtask,allowing it to be viewed at various level of detail.

In conclusion, projects are formed to fix the responsibility and authority for the achievementof an organization goal on an individual or small group when the job does not clearly fallwithin the definition of routine work.

1.2 Project management vs general management

General management Project management Based on good

planning Based on more

carefully detailed andproject successdependent on suchplanning.

Based onmodifications of previous budgets

Budget Newly created foreach project andoften cover severalbudget periods inthe future

Various things aredone is set when theproduction line isdesigned

Not altered whennew modelsproduced

Sequence Has schedule of itsown

Previous projectmight be used asrough template butspecific schedule willbe determined by thetime required toachieve goal

Take place within Characteristic Need technical


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well-definedstructure of divisions,departments, etc.

Rarely crossingboundary

knowledge of infoand special skillalmost alwaysrequiresdepartmental linesbe crossed.

On site Management Might be across theglobe

Have authority touse resources

Resources Little legitimateauthority requiresthe project managerto be skilled at win-win negotiation.

1.3 Project performance target and goals of a project

Projects are measured by three criteria, which are time, budget and satisfaction of client. Client is the one who will decide what capabilities are required of the projects deliverables. Every project will face uncertainty. Thus, PM spends great deal of time adopting unpredicted

change, which consists of to trade off one objective for another. Projects must also have some flexibility to tackle the uncertainty.

1.3.1 The life cycles of projects

A project life cycle measures project completion as a function of either time and resources Life cycle is essential due to the PMs managerial focus subtly shifts at different stages of the

cycle. During early stage, PM ensure that the project plan really reflects the wishes of the client as well

as the abilities of the team and aligned with goal. During at implementation stage, PM ensure that the project are on budget and more

importantly, on schedule. There are two life cycles, which is S-shaped and J-shaped. This will helps the PM to focus

attention on appropriate matters to ensure successful project completion.

1.4 Selecting projects

Project selection is the process evaluating individual projects of groups of projects and thenchoosing to implement a set of them so that the objectives of the parent organization areachieved.


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Before the project begins, it will be selected by a few criteria:o Profitability of the project o Mandate or law, o Ability to carry out the project o Competency which consistent with firms strategic plan o Capacity to deliver project on time o In case of RnD projects, is the project economically successful or not.

There are two method on selecting projects: o Nonnumeric Selection Methods

The sacred cow- involves the senior executive casually suggests potentialproduct that the organization might offer to its customers.

The operating/competitive necessity- selects any project that is necessary forcontinued operation of a group, facility or the firm itself

Comparative benefits- arranging a set of potential projects into a rank order set. o Numeric Selection Methods

Financial assessment methods- select projects on the basis of their expectedeconomic value to the firm. The annual cash inflows and outflows are collectedand discounted to their net present value using the organizations required rateof return

Financial options and opportunity costs- Based on the financial optionsapproach to valuing prospective capital investment opportunities. Occasionally,organization will approve project that forecast to lose money for the sake of competency, acquire knowledge and opportunity in a long term.

Scoring methods- developed to overcome the disadvantages of simple financialprofitability methods by using unweighted 0 -1 factor method .

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Summary of Chapter 1