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PM theory
Program management vs portfolio mng vs project mng
Project Program Portfolio
Vision Short/middle term operation Long term vision Corporate vision
Organization Ad-hoc org Matrix org
Structure May have sub-projs Group of multiple relatedprojs
Collection of projs &programs
Scope Progressively elaboratedthroughout the proj life cycle
Larger scope Business scope thatchanges with the strategicgoals of the organization
Change PM expects change &implements processes tokeep change managed &controlled
PrM expects change fromboth inside & outside theprogram & be prepared tomanage it
PoM continually monitor changes in the broadenvironment
Planning PM progressively elaboratehigh-level information intodetailed plans throughoutthe proj life cycle
PrM develops the overallprog plan & create high-level plans to guidedetailed planning at the
component level
PoM create & maintainnecessary processes &communication relative tothe aggregate portfolio
Management Manage proj team, provideproj leadership to meet proj’sobjs
Manage prog staff & PM,provide vision & overallleadership
Coordinate portfoliomanagement staff
Success Measured by product & projquality, timeline, budget &cust satisfaction
Measured by the degree towhich the prog satisfiesthe needs & benefitsundertaken
Measured in terms of aggregate performance of portfolio components
Monitoring PM monitor & control thework of producing products& services & results of theproj
PrM monitor the progressof prog to ensure overallgoals, budget, schedules& benefits of the prog
PoM monitor aggregateperformance & valueindicators
Project characteristics1. Temporary2. Uncertainty3. New vs. routine process4. Inter dependant activities5. Negative cash-flow6. Open process7. Instrument of change8. Technical Complexity
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9 areas of project management
Proj integraT Plan dev/Plan execution/Change control
Scope Planning/definiT/verificaT/Change control
Time Acvt definiT/Acvt sequencing/DuraT estimating/Scheduling developM/Schedule controlCost Resource planning/Cost estimating/Cost budgeting/Cost control
Quality Quality planning/Quality assurance/Quality control
HR Organizational planning/Staff acquisition/Team develop
Comm Comm planning/InformaT distribuT/Performance reporting/AdministraT closure
Risk Risk mng planning/Risk identificaT/Risk analysis/Response planning/Monitoring & control
ProcureM ProcureM planning/SolicitaT planning/Source select/Contract administraT/Contract control
Project life cycle
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Project stakeholders
What to put in a business case1. Obj, scope2. Existing solutions limits
3. (General) Requirements4. Client5. Strategy compliancy6. Value creaT & financial evaluaT (NPV, IRR)7. Possible solutions8. DuraT, Risk, constraint
Project IntegraT
Develop project charter –document of initial requirements that satisfy the stakelholders’ needs &expectationsDev proj mng plan – actions necessary to define, prepare, integrate & coordinate all subsidiaryplans
Direct & manage proj execuT - Perform work defined in Proj planMonitor & control proj work – Tracking, reviewing, regulating the progress to meet the objsdefined in proj mng planPerform integrated change control – review all changes request, approve changes, managechanges to the deliverables, assets, proj docs, proj mng planClose project / phase – finalize all activities to formally complete the proj or phase
Proj scope/time/costScope: the work that needs to be done to deliver a product, service or result with the specifiedfeatures & functions
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Tools: WBSLowest level: work package (can be scheduled, cost estimated, monitored & controlled)
Time Actvt definiT => Actvt sequencing (actvt resources estimaT) => Actvt duration estimaT =>Schedule dev => Schedule control => Critical path with critical tasks
Cost Resource planning => Cost estimating => Cost budgeting => Cost controlCost estimate = Total (chargeable time x variable cost rate + fixed cost)Initial budget = cost estimate / actvtRevised budget = initial budget + authorized change costEstimate cost at terminaT = cost of ended actvt + cost of to do actvt
S curve
However, as Global estimate is usually difficult to get, we use Earned Value approach.Time variance TG = EV – PVCost variance CG = EV – RVTime progress = EV/PVCost progress = EV/RV
Project team org chart & Operating difference
Crisis process (*early warnings)Pbm analysis process:
Identify pbm -> find the cause -> set solution requireM -> generate alternatives -> select analternative -> cost-benefit-risk analysis ->make decision & action planCrisis process
PV = budgetEV = budget of work at dateRV = actual cost for task done
Tribal: Strong relationship, Challenged oriented, Oral
comm., quality 1st => Consultancy
Holomorphic: Shared vision, goals & methods,
individual initiaves, customer oriented => Start up
Mecanisthic: centralized power, process, control,
written comm., effectiveness => manufacturer
Individualistic: Mercenaries, high turnover, tailored
prod, individual procedure & tools => Consultancy
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Change managementChange management life cycle
Frequent approaches: pressure, persuasion, recogniT, regulaT, motivaT
3 key actors: Target to change/Sponsor to justify/ Allies to support
7 forces levers
Target diversity
Vision: communicaT about target & roadmapNecessity: comm. about risks of “non-doing” + influential’s
involveM
Success: quick wins + comm.
Ability: training progr
RecogniT: Empowerment + comm. + support
Systems: Method + tools
Structures: Procedures (migraT, operaT, change, control)
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Risk: future event that might affect your achieving goals (either opp or threath)Issues use to have risk: critical tasks, new tech, third party, component based on assumpT,
indirect controlled resources, change in external environM
Risk analysis:Cause/effectQualitative
quantitative (EMV)
Aligned: RecogniT, system, structure
Influential: vision, ability
Undecided: necessity
Opponents: success
Heart torn: success , recogniT
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Control tools*7s: Strategy, Systems, Style,Staff,Skills,Structure,Shared values
*Review check-list
*DICE framework score: 7-14/>17: risky
D (duration)
I (integrity of performance)
C (commitment)
E (effort)
Fixed price vs Ad-cost contract
Ad-cost contract or Cost plus contract refer to a contract where the price is based upon the actual cost of production and any agreed upon rates of profit or fees.
Fixed price is a price that has been set and in most circumstances no bargaining is permitted over that
price. The price is held constant regardless of the cost of production.
• Advantages of Fixed Price
The most significant benefit of a fixed price model is that it allows the buyer to set in advance an exact
budget. The buyer is aware of the total cost before the project even begins. The fixed price model
typically limits the number of changes that occur during the implementation phase of the project.
Contractors know their budget confines and therefore usually deliver detailed plans at the start. The seller
is able to charge a high upfront cost under the fixed price model. Once the price has been agreed upon,the buyer does not experience sticker shock or contest the amount owed.
• Advantages of Cost Plus
The primary benefit of cost plus pricing is the ease of calculation. Although there are a couple of
calculation methods, the common thread is including the cost of the product and a profit amount. Very
little information is necessary to use this model. Cost plus pricing lets the business owner know
immediately if the product will be profitable. A business that uses cost plus pricing can justify price
increases when costs rise. This method provides an easy and convenient way for businesses to set
product pricing. Cost plus pricing ensures the business, the seller, against unexpected costs. The seller
has the flexibility to increase prices, at the consumer's expense, to cover cost increases.
• Disadvantages of Fixed Price
Fixed price contracts tend to be less flexible for managing changes or requests. Any new requirements
that arise during implementation may lead to price re-negotiation and changes to the project's schedule.
Excessive focus on maintaining a fixed price may come at the expense of quality, creativity and
timeliness. The value of the work often becomes less important than the price. A fixed price model may
cost the buyer more than anticipated, if the job is completed early or if materials cost less than estimated.
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• Disadvantages of Cost Plus/ Ad-cost
Cost plus pricing ignores the role of consumers. If consumers place a higher value on a product than the
set price, then business loses out on profits. In addition, consumer demand and competitive pricing do not
factor into cost plus pricing. Accuracy is a critical component in cost plus pricing. This model relies on
variable cost and sales estimates. If either of these estimates is inaccurate, then the entire cost structure
is also incorrect. Cost plus pricing also requires that business overhead be estimated. The allocationprocess, of overhead against products, is always arbitrary. Businesses have little incentive to reduce or
control prices because as prices rise, profits increase. Customers may pay a potentially inflated rate for a
product.
When to use fixed price & when to use ad-hoc price?
Balanced scorecard (BSC):
A scorecard is a way of tracking a firm’s performance. To recap, the BSC looks at the following 4
perspectives of a business:
1> The Financial Perspective or the traditional perspective which focuses on the financial measure suchas ROI, profitability, growth, D/E etc. These are the measures that a shareholder would be interested and
are available via the financial statements released by the company ( if it is a publicly held company).
2> The Process Perspective that looks at the processes of the company, their efficiency and more
importantly their effectiveness.
3> The Development (or Learning) perspective that looks at learning new skills. knowledge enhancement
and improvement of employee morale as a by-product.
4> The Customer Perspective that looks at how the customer perceives the organization: customer
satisfaction, the no. of new clients, customer loyalty et al.
The scorecard is “Balanced” because it combines both external and internal aspects of the business.
So why would Project Management need a scorecard?
As mentioned earlier, scorecards indicate performance & are also a vehicle for communicating
performance, while a project is a temporary organization or endeavor to achieve a defined result or goal
within a specified time.
Therefore, a scorecard that project management would require would need to tackle the following 4
perspectives:
1> Financial: What is the expected ROI from the project? Tangible and intangible benefits. What kind of
measures would be used?
2> Processes: Are the project management processes in place both efficient & effective?
3> Learning: What are the lessons taken from the project? What are the benefits to the project manager &
team members? Can these be quantified? Are lessons learnt incorporated to assist other projects? What
is the effect on morale of the project team members? What is the effect on attrition? Does employee
churn reduce?
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4> Customer: What is the customer reaction to the project? How is our organization perceived by our
customer? Is there repeat business? Is customer loyalty inspired?
So yes, a scorecard could be applied to a project and especially a projectized organization.
Book: The Project Management Scorecard: Measuring The Success of Project Management
Solutions by Jack J. Philips, Timothy W. Bothell & G. Lynne Snead .
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