Project Management Achieving Competitive Advantage 4th.pdf
Project ManageMent
achieving coMPetitive advantage
Jeffrey K. Pinto
Pennsylvania State University
ISBN 978-0-13-379807-4 (alk. paper)—ISBN 0-13-379807-0 (alk. paper) 1. Project management. I. Title.
HD69.P75P5498 2016
List of Cases by Chapter
Chapter 1
Development Projects in Lagos, Nigeria 2
“Throwing Good Money after Bad”: the BBC’s
Digital Media Initiative 10
MegaTech, Inc. 29
The IT Department at Hamelin Hospital 30
Disney’s Expedition Everest 31
Rescue of Chilean Miners 32
Chapter 2
Tesla’s $5 Billion Gamble 37
Electronic Arts and the Power of Strong Culture
in Design Teams 64
Rolls-Royce Corporation 67
Classic Case: Paradise Lost—The Xerox Alto 68
Project Task Estimation and the Culture of “Gotcha!” 69
Widgets ’R Us 70
Chapter 3
Project Selection Procedures: A Cross-Industry
Sampler 77
Project Selection and Screening at GE: The Tollgate
Process 97
Keflavik Paper Company 111
Project Selection at Nova Western, Inc. 112
Chapter 4
Leading by Example for the London Olympics—
Sir John Armitt 116
Dr. Elattuvalapil Sreedharan, India’s Project
Management Guru 126
The Challenge of Managing Internationally 133
In Search of Effective Project Managers 137
Finding the Emotional Intelligence to Be a Real Leader 137
Problems with John 138
Chapter 5
“We look like fools.”—Oregon’s Failed Rollout
of Its ObamacareWeb Site 145
Statements of Work: Then and Now 151
Defining a Project Work Package 163
Boeing’s Virtual Fence 172
California’s High-Speed Rail Project 173
Project Management at Dotcom.com 175
The Expeditionary Fighting Vehicle 176
Chapter 6
Engineers Without Borders: Project Teams Impacting
Lives 187
Tele-Immersion Technology Eases the Use of Virtual
Teams 203
Columbus Instruments 215
The Bean Counter and the Cowboy 216
Johnson & Rogers Software Engineering, Inc. 217
Chapter 7
The Building that Melted Cars 224
Bank of America Completely Misjudges Its Customers 230
Collapse of Shanghai Apartment Building 239
Classic Case: de Havilland’s Falling Comet 245
The Spanish Navy Pays Nearly $3 Billion for a Submarine
That Will Sink Like a Stone 248
Classic Case: Tacoma Narrows Suspension Bridge 249
Chapter 8
Sochi Olympics—What’s the Cost of National
Prestige? 257
The Hidden Costs of Infrastructure Projects—The Case
of Building Dams 286
Boston’s Central Artery/Tunnel Project 288
Chapter 9
After 20 Years and More Than $50 Billion, Oil is No Closer
to the Surface: The Caspian Kashagan Project 297
Chapter 10
Enlarging the Panama Canal 331
Project Scheduling at Blanque Cheque Construction (A) 360
Project Scheduling at Blanque Cheque Construction (B) 360
Chapter 11
Developing Projects Through Kickstarter—Do Delivery
Dates Mean Anything? 367
Eli Lilly Pharmaceuticals and Its Commitment to Critical
Chain Project Management 385
It’s an Agile World 396
Ramstein Products, Inc. 397
Chapter 12
Hong Kong Connects to the World’s Longest Natural
Gas Pipeline 401
The Problems of Multitasking 427
Chapter 13
New York City’s CityTime Project 432
Earned Value at Northrop Grumman 451
The IT Department at Kimble College 463
The Superconducting Supercollider 464
Boeing’s 787 Dreamliner: Failure to Launch 465
Chapter 14
Duke Energy and Its Cancelled Levy County Nuclear
Power Plant 478
Aftermath of a “Feeding Frenzy”: Dubai and Cancelled
Construction Projects 490
New Jersey Kills Hudson River Tunnel Project 497
The Project That Wouldn’t Die 499
The Navy Scraps Development of Its Showpiece
Warship—Until the Next Bad Idea 500
Preface xiii
Chapter 1 IntroduCtIon: Why ProjeCt ManageMent? 1
Project Profile: Development Projects in Lagos, Nigeria 2
Introduction 4
1.1 What Is a Project? 5
General Project Characteristics 6
1.2 Why Are Projects Important? 9
Project Profile: “Throwing Good Money after Bad”: the BBC’s Digital
Media Initiative 10
1.3 Project Life Cycles 13
◾ Box 1.1: Project Managers in Practice 15
1.4 Determinants of Project Success 16
◾ Box 1.2: Project Management Research in Brief 19
1.5 Developing Project Management Maturity 19
1.6 Project Elements and Text Organization 23
Summary 27 • Key Terms 29 • Discussion Questions 29
• Case Study 1.1 MegaTech, Inc. 29 • Case Study 1.2 The IT
Department at Hamelin Hospital 30 • Case Study 1.3 Disney’s Expedition
Everest 31 • Case Study 1.4 Rescue of Chilean Miners 32 • Internet
Exercises 33 • PMP Certification Sample Questions 34 • Notes 34
Chapter 2 the organIzatIonal Context: Strategy, StruCture,
and Culture 36
Project Profile: Tesla’s $5 Billion Gamble 37
Introduction 38
2.1 Projects and Organizational Strategy 39
2.2 Stakeholder Management 41
Identifying Project Stakeholders 42
Managing Stakeholders 45
2.3 Organizational Structure 47
2.4 Forms of Organizational Structure 48
Functional Organizations 48
Project Organizations 50
Matrix Organizations 53
Moving to Heavyweight Project Organizations 55
◾ Box 2.1: Project Management Research in Brief 56
2.5 Project Management Offices 57
2.6 Organizational Culture 59
How Do Cultures Form? 61
Organizational Culture and Project Management 63
Project Profile: Electronic Arts and the Power of Strong Culture in Design Teams 64
Summary 65 • Key Terms 67 • Discussion Questions 67 • Case
Study 2.1 Rolls-Royce Corporation 67 • Case Study 2.2 Classic Case:
Paradise Lost—The Xerox Alto 68 • Case Study 2.3 Project Task Estimation
and the Culture of “Gotcha!” 69 • Case Study 2.4 Widgets ’R Us 70
• Internet Exercises 70 • PMP Certification Sample Questions 70
• Integrated Project—Building Your Project Plan 72 • Notes 74
Contents v
Chapter 3 ProjeCt SeleCtIon and PortfolIo ManageMent 76
Project Profile: Project Selection Procedures: A Cross-Industry Sampler 77
Introduction 78
3.1 Project Selection 78
3.2 Approaches to Project Screening and Selection 80
Method One: Checklist Model 80
Method Two: Simplified Scoring Models 82
Limitations of Scoring Models 84
Method Three: The Analytical Hierarchy Process 84
Method Four: Profile Models 88
3.3 Financial Models 90
Payback Period 90
Net Present Value 92
Discounted Payback 94
Internal Rate of Return 94
Choosing a Project Selection Approach 96
Project Profile: Project Selection and Screening at GE: The Tollgate Process 97
3.4 Project Portfolio Management 98
Objectives and Initiatives 99
Developing a Proactive Portfolio 100
Keys to Successful Project Portfolio Management 103
Problems in Implementing Portfolio Management 104
Summary 105 • Key Terms 106 • Solved Problems 107
• Discussion Questions 108 • Problems 108 • Case Study 3.1
Keflavik Paper Company 111 • Case Study 3.2 Project Selection at Nova
Western, Inc. 112 • Internet Exercises 113 • Notes 113
Chapter 4 leaderShIP and the ProjeCt Manager 115
Project Profile: Leading by Example for the London Olympics—Sir John Armitt 116
Introduction 117
4.1 Leaders Versus Managers 118
4.2 How the Project Manager Leads 119
Acquiring Project Resources 119
Motivating and Building Teams 120
Having a Vision and Fighting Fires 121
Communicating 121
◾ Box 4.1: Project Management Research in Brief 124
4.3 Traits of Effective Project Leaders 125
Conclusions about Project Leaders 126
Project Profile: Dr. Elattuvalapil Sreedharan, India’s Project Management Guru 126
4.4 Project Champions 127
Champions—Who Are They? 128
What Do Champions Do? 129
How to Make a Champion 130
4.5 The New Project Leadership 131
◾ Box 4.2: Project Managers in Practice 132
Project Profile: The Challenge of Managing Internationally 133
4.6 Project Management Professionalism 134
vi Contents
Summary 135 • Key Terms 136 • Discussion Questions 136
• Case Study 4.1 In Search of Effective Project Managers 137
• Case Study 4.2 Finding the Emotional Intelligence to Be a Real Leader 137
• Case Study 4.3 Problems with John 138 • Internet Exercises 141
• PMP Certification Sample Questions 141 • Notes 142
Chapter 5 SCoPe ManageMent 144
Project Profile: “We look like fools.”—Oregon’s Failed Rollout of Its Obamacare
Web Site 145
Introduction 146
5.1 Conceptual Development 148
The Statement of Work 150
The Project Charter 151
Project Profile: Statements of Work: Then and Now 151
5.2 The Scope Statement 153
The Work Breakdown Structure 153
Purposes of the Work Breakdown Structure 154
The Organization Breakdown Structure 159
The Responsibility Assignment Matrix 160
5.3 Work Authorization 161
Project Profile: Defining a Project Work Package 163
5.4 Scope Reporting 164
◾ Box 5.1: Project Management Research in Brief 165
5.5 Control Systems 167
Configuration Management 167
5.6 Project Closeout 169
Summary 170 • Key Terms 171 • Discussion Questions 171
• Problems 172 • Case Study 5.1 Boeing’s Virtual Fence 172
• Case Study 5.2 California’s High-Speed Rail Project 173 • Case
Study 5.3 Project Management at Dotcom.com 175 • Case Study 5.4
The Expeditionary Fighting Vehicle 176 • Internet Exercises 178
• PMP Certification Sample Questions 178 • MS Project Exercises 179
• Appendix 5.1: Sample Project Charter 180 • Integrated Project—
Developing the Work Breakdown Structure 182 • Notes 184
Chapter 6 ProjeCt teaM BuIldIng, ConflICt, and negotIatIon 186
Project Profile: Engineers Without Borders: Project Teams Impacting Lives 187
Introduction 188
6.1 Building the Project Team 189
Identify Necessary Skill Sets 189
Identify People Who Match the Skills 189
Talk to Potential Team Members and Negotiate with Functional Heads 189
Build in Fallback Positions 191
Assemble the Team 191
6.2 Characteristics of Effective Project Teams 192
A Clear Sense of Mission 192
A Productive Interdependency 192
Cohesiveness 193
Trust 193
Enthusiasm 193
Results Orientation 194
Contents vii
6.3 Reasons Why Teams Fail 194
Poorly Developed or Unclear Goals 194
Poorly Defined Project Team Roles and Interdependencies 194
Lack of Project Team Motivation 195
Poor Communication 195
Poor Leadership 195
Turnover Among Project Team Members 196
Dysfunctional Behavior 196
6.4 Stages in Group Development 196
Stage One: Forming 197
Stage Two: Storming 197
Stage Three: Norming 198
Stage Four: Performing 198
Stage Five: Adjourning 198
Punctuated Equilibrium 198
6.5 Achieving Cross-Functional Cooperation 199
Superordinate Goals 199
Rules and Procedures 200
Physical Proximity 201
Accessibility 201
Outcomes of Cooperation: Task and Psychosocial Results 201
6.6 Virtual Project Teams 202
Project Profile: Tele-Immersion Technology Eases the Use
of Virtual Teams 203
6.7 Conflict Management 204
What Is Conflict? 205
Sources of Conflict 206
Methods for Resolving Conflict 208
6.8 Negotiation 209
Questions to Ask Prior to the Negotiation 209
Principled Negotiation 210
Invent Options for Mutual Gain 212
Insist on Using Objective Criteria 213
Summary 214 • Key Terms 214 • Discussion Questions 215 • Case
Study 6.1 Columbus Instruments 215 • Case Study 6.2 The Bean Counter
and the Cowboy 216 • Case Study 6.3 Johnson & Rogers Software
Engineering, Inc. 217 • Exercise in Negotiation 219 • Internet
Exercises 220 • PMP Certification Sample Questions 220 • Notes 221
Chapter 7 rISk ManageMent 223
Project Profile: The Building that Melted Cars 224
Introduction 225
◾ Box 7.1: Project Managers in Practice 227
7.1 Risk Management: A Four-Stage Process 228
Risk Identification 228
Project Profile: Bank of America Completely Misjudges Its Customers 230
Risk Breakdown Structures 231
Analysis of Probability and Consequences 231
Risk Mitigation Strategies 234
viii Contents
Use of Contingency Reserves 236
Other Mitigation Strategies 237
Control and Documentation 237
Project Profile: Collapse of Shanghai Apartment Building 239
7.2 Project Risk Management: An Integrated Approach 241
Summary 243 • Key Terms 244 • Solved Problem 244 • Discussion
Questions 244 • Problems 244 • Case Study 7.1 Classic Case: de
Havilland’s Falling Comet 245 • Case Study 7.2 The Spanish Navy Pays
Nearly $3 Billion for a Submarine That Will Sink Like a Stone 248 • Case
Study 7.3 Classic Case: Tacoma Narrows Suspension Bridge 249 • Internet
Exercises 251 • PMP Certification Sample Questions 251 • Integrated
Project—Project Risk Assessment 253 • Notes 255
Chapter 8 CoSt eStIMatIon and BudgetIng 256
Project Profile: Sochi Olympics—What’s the Cost of National Prestige? 257
8.1 Cost Management 259
Direct Versus Indirect Costs 260
Recurring Versus Nonrecurring Costs 261
Fixed Versus Variable Costs 261
Normal Versus Expedited Costs 262
8.2 Cost Estimation 262
Learning Curves in Cost Estimation 266
◾ Box 8.1: Project Management Research in Brief 270
Problems with Cost Estimation 272
◾ Box 8.2: Project Management Research in Brief 274
8.3 Creating a Project Budget 275
Top-Down Budgeting 275
Bottom-Up Budgeting 276
Activity-Based Costing 276
8.4 Developing Budget Contingencies 278
Summary 280 • Key Terms 281 • Solved Problems 282
• Discussion Questions 283 • Problems 284 • Case Study 8.1 The
Hidden Costs of Infrastructure Projects—The Case of Building Dams 286
• Case Study 8.2 Boston’s Central Artery/Tunnel Project 288 • Internet
Exercises 290 • PMP Certification Sample Questions 290 • Integrated
Project—Developing the Cost Estimates and Budget 292 • Notes 294
Chapter 9 ProjeCt SChedulIng: netWorkS, duratIon eStIMatIon,
and CrItICal Path 296
Project Profile: After 20 Years and More Than $50 Billion, Oil is No Closer to the Surface:
The Caspian Kashagan Project 297
Introduction 298
9.1 Project Scheduling 299
9.2 Key Scheduling Terminology 300
9.3 Developing a Network 302
Labeling Nodes 303
Serial Activities 303
Concurrent Activities 303
Merge Activities 304
Burst Activities 305
9.4 Duration Estimation 307
Contents ix
9.5 Constructing the Critical Path 311
Calculating the Network 311
The Forward Pass 312
The Backward Pass 314
Probability of Project Completion 316
Laddering Activities 318
Hammock Activities 319
Options for Reducing the Critical Path 320
◾ Box 9.1: Project Management Research in Brief 321
Summary 322 • Key Terms 323 • Solved Problems 323 •
Discussion Questions 325 • Problems 325 • Internet
Exercises 327 • MS Project Exercises 328 • PMP Certification
Sample Questions 328 • Notes 329
Chapter 10 ProjeCt SChedulIng: laggIng, CraShIng, and aCtIvIty
netWorkS 330
Project Profile: Enlarging the Panama Canal 331
Introduction 333
10.1 Lags in Precedence Relationships 333
Finish to Start 333
Finish to Finish 334
Start to Start 334
Start to Finish 335
10.2 Gantt Charts 335
Adding Resources to Gantt Charts 337
Incorporating Lags in Gantt Charts 338
◾ Box 10.1: Project Managers in Practice 338
10.3 Crashing Projects 340
Options for Accelerating Projects 340
Crashing the Project: Budget Effects 346
10.4 Activity-on-Arrow Networks 348
How Are They Different? 348
Dummy Activities 351
Forward and Backward Passes with AOA Networks 352
AOA Versus AON 353
10.5 Controversies in the Use of Networks 354
Conclusions 356
Summary 356 • Key Terms 357 • Solved Problems 357 • Discussion
Questions 358 • Problems 358 • Case Study 10.1 Project Scheduling
at Blanque Cheque Construction (A) 360 • Case Study 10.2 Project
Scheduling at Blanque Cheque Construction (B) 360 • MS Project
Exercises 361 • PMP Certification Sample Questions 361 • Integrated
Project—Developing the Project Schedule 363 • Notes 365
Chapter 11 advanCed toPICS In PlannIng and SChedulIng: agIle
and CrItICal ChaIn 366
Project Profile: Developing Projects Through Kickstarter—Do Delivery Dates Mean
Anything? 367
Introduction 368
11.1 Agile Project Management 369
What Is Unique About Agile PM? 370
x Contents
Tasks Versus Stories 371
Key Terms in Agile PM 372
Steps in Agile 373
Sprint Planning 374
Daily Scrums 374
The Development Work 374
Sprint Reviews 375
Sprint Retrospective 376
Problems with Agile 376
◾ Box 11.1: Project Management Research in Brief 376
11.2 Extreme Programming (XP) 377
11.3 The Theory of Constraints and Critical Chain Project Scheduling 377
Theory of Constraints 378
11.4 The Critical Chain Solution to Project Scheduling 379
Developing the Critical Chain Activity Network 381
Critical Chain Solutions Versus Critical Path Solutions 383
Project Profile: Eli Lilly Pharmaceuticals and Its Commitment to Critical Chain Project
Management 385
11.5 Critical Chain Solutions to Resource Conflicts 386
11.6 Critical Chain Project Portfolio Management 387
◾ Box 11.2: Project Management Research in Brief 390
11.7 Critiques of CCPM 391
Summary 391 • Key Terms 393 • Solved Problem 393
• Discussion Questions 394 • Problems 394 • Case Study 11.1 It’s an
Agile World 396 • Case Study 11.2 Ramstein Products, Inc. 397
• Internet Exercises 398 • Notes 398
Chapter 12 reSourCe ManageMent 400
Project Profile: Hong Kong Connects to the World’s Longest Natural
Gas Pipeline 401
Introduction 402
12.1 The Basics of Resource Constraints 402
Time and Resource Scarcity 403
12.2 Resource Loading 405
12.3 Resource Leveling 407
Step One: Develop the Resource-Loading Table 411
Step Two: Determine Activity Late Finish Dates 412
Step Three: Identify Resource Overallocation 412
Step Four: Level the Resource-Loading Table 412
12.4 Resource-Loading Charts 416
◾ Box 12.1: Project Managers in Practice 418
12.5 Managing Resources in Multiproject Environments 420
Schedule Slippage 420
Resource Utilization 420
In-Process Inventory 421
Resolving Resource Decisions in Multiproject Environments 421
Summary 423 • Key Terms 424 • Solved Problem 424 •
Discussion Questions 425 • Problems 425 • Case Study 12.1 The
Problems of Multitasking 427 • Internet Exercises 428 • MS Project
Exercises 428 • PMP Certification Sample Questions 429 • Integrated
Project—Managing Your Project’s Resources 430 • Notes 430
Contents xi
Chapter 13 ProjeCt evaluatIon and Control 431
Project Profile: New York City’s CityTime Project 432
Introduction 433
13.1 Control Cycles—A General Model 434
13.2 Monitoring Project Performance 435
The Project S-Curve: A Basic Tool 435
S-Curve Drawbacks 436
Milestone Analysis 437
Problems with Milestones 438
The Tracking Gantt Chart 439
Benefits and Drawbacks of Tracking Gantt Charts 440
13.3 Earned Value Management 440
Terminology for Earned Value 441
Creating Project Baselines 442
Why Use Earned Value? 443
Steps in Earned Value Management 444
Assessing a Project’s Earned Value 445
13.4 Using Earned Value to Manage a Portfolio of Projects 450
Project Profile: Earned Value at Northrop Grumman 451
13.5 Issues in the Effective Use of Earned Value Management 452
13.6 Human Factors in Project Evaluation and Control 454
Critical Success Factor Definitions 456
Conclusions 458
Summary 458 • Key Terms 459 • Solved Problem 459 •
Discussion Questions 460 • Problems 461 • Case Study 13.1 The
IT Department at Kimble College 463 • Case Study 13.2 The Superconducting
Supercollider 464 • Case Study 13.3 Boeing’s 787 Dreamliner:
Failure to Launch 465 • Internet Exercises 468 • MS Project
Exercises 468 • PMP Certification Sample Questions 469
• Appendix 13.1: Earned Schedule* 470 • Notes 475
Chapter 14 ProjeCt CloSeout and terMInatIon 477
Project Profile: Duke Energy and Its Cancelled Levy County Nuclear
Power Plant 478
Introduction 479
14.1 Types of Project Termination 480
◾ Box 14.1: Project Managers in Practice 480
14.2 Natural Termination—The Closeout Process 482
Finishing the Work 482
Handing Over the Project 482
Gaining Acceptance for the Project 483
Harvesting the Benefits 483
Reviewing How It All Went 483
Putting It All to Bed 485
Disbanding the Team 486
What Prevents Effective Project Closeouts? 486
14.3 Early Termination for Projects 487
Making the Early Termination Decision 489
Project Profile: Aftermath of a “Feeding Frenzy”: Dubai and Cancelled
Construction Projects 490
xii Contents
Shutting Down the Project 490
◾ Box 14.2: Project Management Research in Brief 492
Allowing for Claims and Disputes 493
14.4 Preparing the Final Project Report 494
Conclusion 496
Summary 496 • Key Terms 497 • Discussion Questions 497
• Case Study 14.1 New Jersey Kills Hudson River Tunnel Project 497
• Case Study 14.2 The Project That Wouldn’t Die 499 • Case Study 14.3
The Navy Scraps Development of Its Showpiece Warship—Until the Next
Bad Idea 500 • Internet Exercises 501 • PMP Certification Sample
Questions 502 • Appendix 14.1: Sample Pages from Project Sign-off
Document 503 • Notes 507
Appendix A The Cumulative Standard Normal Distribution 509
Appendix B Tutorial for MS Project 2013 510
Appendix C Project Plan Template 520
Glossary 524
Company Index 534
Name Index 535
Subject Index 538
xiii
PrEFACE
Project management has become central to operations in industries as diverse as construction
and information technology, architecture and hospitality, and engineering and new product
development; therefore, this text simultaneously embraces the general principles of project
management while addressing specific examples across the wide assortment of its applications.
This text approaches each chapter from the perspective of both the material that is general to
all disciplines and project types and that which is more specific to alternative forms of projects.
One way this is accomplished is through the use of specific, discipline-based examples to illustrate
general principles as well as the inclusion of cases and Project Profiles that focus on more
specific topics (e.g., Chapter 5’s treatment of IT “death march” projects).
Students in project management classes come from a wide and diverse cross section of university
majors and career tracks. Schools of health, business, architecture, engineering, information
systems, and hospitality are all adding project management courses to their catalogs in response to
the demands from organizations and professional groups that see their value for students’ future
careers. Why has project management become a discipline of such tremendous interest and application?
The simple truth is that we live in a “projectized” world. Everywhere we look we see people
engaged in project management. In fact, project management has become an integral part of practically
every firm’s business model.
This text takes a holistic, integrated approach to managing projects, exploring both technical
and managerial challenges. It not only emphasizes individual project execution, but also provides a
strategic perspective, demonstrating the means with which to manage projects at both the program
and portfolio levels.
At one time, project management was almost exclusively the property of civil and construction
engineering programs where it was taught in a highly quantitative, technical manner.
“Master the science of project management,” we once argued, “and the ‘art’ of project
management will be equally clear to you.” Project management today is a complex, “management”
challenge requiring not only technical skills but a broad-based set of people skills as
well. Project management has become the management of technology, people, culture, stakeholders,
and other diverse elements necessary to successfully complete a project. It requires
knowledge of leadership, team building, conflict resolution, negotiation, and influence in equal
measure with the traditional, technical skill set. Thus, this textbook broadens our focus beyond
the traditional project management activities of planning and scheduling, project control, and
termination, to a more general, inclusive, and, hence, more valuable perspective of the project
management process.
What’s NeW iN the foUrth editioN?
New features
• Agile Project Management
• Project Charters
• MS Project 2013 Step-by-Step Tutorials
• Appendix—Project Execution Plan Template
• New Project Managers in Practice Profiles
• Risk Breakdown Structures
• Extreme Programming
• Updated Problems in Chapters
• New Project Management Research in Brief: “Does Agile Work?”
• All MS Project Examples and Screen Captures Updated to MS Project 2013
• All Project Management Body of Knowledge (PMBOK) Referencing Updated to
5th Edition
• Quarterly Updates for All Book Adopters on Latest Cases and Examples in Project
Management
Updated Project Profiles
Chapter 1 Introduction: Why Project Management?
• Development Projects in Lagos, Nigeria
• “Throwing Good Money after Bad”: The BBC’s Digital Media Initiative
Chapter 2 The Organizational Context: Strategy, Structure, and Culture
• Tesla’s $5 Billion Gamble
• Electronic Arts and the Power of Strong Culture in Design Teams
Chapter 3 Project Selection and Portfolio Management
• Project Selection Procedures: A Cross-Industry Sampler
Chapter 4 Leadership and the Project Manager
• Leading by Example for the London Olympics—Sir John Armitt
• Dr. E. Sreedharan, India’s Project Management Guru
Chapter 5 Scope Management
• “We look like fools.” Oregon’s Failed Rollout of Their Obamacare Website
• Boeing’s Virtual Fence
• California’s High-Speed Rail Project—What’s the Latest News?
• The Expeditionary Fighting Vehicle
Chapter 6 Project Team Building, Conflict, and Negotiation
• Engineers without Borders: Project Teams Impacting Lives
Chapter 7 Risk Management
• The Building That Melted Cars
• Bank of America Completely Misjudges Its Customers
• Collapse of Shanghai Apartment Building
• The Spanish Navy Pays Nearly $3 Billion for a Submarine That Will Sink Like a Stone
Chapter 8 Cost Estimation and Budgeting
• Sochi Olympics—What’s the Cost of National Prestige?
• The Hidden Costs of Infrastructure ProjectsThe Case of Building Dams
Chapter 9 Project Scheduling: Networks, Duration Estimation, and Critical Path
• After 20 Years and More than $50 Billion, Oil Is No Closer to the Surface: The Caspian
Kashagan Project
Chapter 10 Project Scheduling: Lagging, Crashing, and Activity Networks
• Enlarging the Panama Canal
Chapter 11 Critical Chain Project Scheduling
• Developing Projects through Kickstarter—Do Delivery Dates Mean Anything?
• Eli Lilly Pharmaceutical’s Commitment to Critical Chain Project Scheduling
Chapter 12 Resource Management
• Hong Kong Connects to the World’s Longest Natural Gas Pipeline
Chapter 13 Project Evaluation and Control
• New York City’s CityTime Project
• Boeing’s 787 Dreamliner: Failure to Launch (with update)
• Earned Value Management at Northrop Grumman
Chapter 14 Project Closeout and Termination
• Duke Energy and Its Cancelled Levy County Nuclear Power Plant
• Aftermath of a “Feeding Frenzy”—Dubai and Cancelled Construction Projects
• New Jersey Kills Hudson River Tunnel Project
• The Navy Scraps Development of Its Showpiece Warship—Until the Next Bad Idea
oUr focUs
This textbook employs a managerial, business-oriented approach to the management of projects.
Thus we have integrated Project Profiles into the text.
• Project Profiles—Each chapter contains one or more Project Profiles that highlight current
examples of project management in action. Some of the profiles reflect on significant
xiv Preface
Preface xv
achievements; others detail famous (and not-so-famous) examples of project failures.
Because they cover diverse ground (IT projects, construction, new product development,
and so forth), there should be at least one profile per chapter that is meaningful to the
class’s focus. There is a deliberate effort made to offer a combination of project success
stories and project failures. While successful projects can be instructive, we often learn far
more from examining the variety of reasons why projects fail. As much as possible, these
stories of success and failure are intended to match up with the chapters to which they are
attached. For example, as we study the uses of projects to implement corporate strategy, it
is useful to consider Elon Musk’s $5 billion dollar decision to develop a “gigafactory” to
produce batteries for his Tesla automobiles.
The book blends project management within the context of the operations of any successful organization,
whether publicly held, private, or not-for-profit. We illustrate this through the use of
end-of-chapter cases.
• Cases—At the end of each chapter are some final cases that take specific examples of the
material covered in the chapter and apply them in the alternate format of case studies.
Some of the cases are fictitious, but the majority of them are based on real situations, even
where aliases mask the real names of organizations. These cases include discussion questions
that can be used either for homework or to facilitate classroom discussions. There are
several “classic” project cases as well, highlighting some famous (and infamous) examples
of projects whose experiences have shaped our understanding of the discipline and its
best practices.
Further, we explore both the challenges in the management of individual projects as well as broadening
out this context to include strategic, portfolio-level concepts. To do this, we ask students to
develop a project plan using MS Project 2013.
• Integrated Project Exercises—Many of the chapters include an end-of-chapter feature that
is unique to this text: the opportunity to develop a detailed project plan. A very beneficial
exercise in project management classes is to require students, either in teams or individually,
to learn the mechanics of developing a detailed and comprehensive project plan, including
scope, scheduling, risk assessment, budgeting, and cost estimation. The Integrated
Project exercises afford students the opportunity to develop such a plan by assigning these
activities and illustrating a completed project (ABCups, Inc.) in each chapter. Thus, students
are assigned their project planning activities and have a template that helps them complete
these exercises.
And finally, we have integrated the standards set forth by the world’s largest governing body for
project management. The Project Management Institute (PMI) created the Project Management
Body of Knowledge (PMBOK), which is generally regarded as one of the most comprehensive
frameworks for identifying the critical knowledge areas that project managers must understand if
they are to master their discipline. The PMBOK has become the basis for the Project Management
Professional (PMP) certification offered by PMI for professional project managers.
• Integration with the PMBOK—As a means to demonstrate the coverage of the critical
PMBOK elements, readers will find that the chapters in this text identify and cross-list
the corresponding knowledge areas from the latest, fifth edition of PMBOK. Further,
all terms (including the Glossary) are taken directly from the most recent edition of the
PMBOK.
• Inclusion of Sample PMP Certification Exam Questions—The Project Management
Professional (PMP) certification represents the highest standard of professional qualification
for a practicing project manager and is administered by the Project Management
Institute. As of 2014, there were more than 600,000 PMPs worldwide. In order to attain
PMP certification, it is necessary for candidates to undergo a comprehensive exam that
tests their knowledge of all components of the PMBOK. This text includes a set of sample
PMP certification exam questions at the end of most of the chapters, in order to give readers
an idea of the types of questions typically asked on the exam and how those topics are
treated in this book.
xvi Preface
other PoiNts of distiNctioN
The textbook places special emphasis on blending current theory, practice, research, and case
studies in such a manner that readers are given a multiple-perspective exposure to the project
management process. A number of in-chapter features are designed to enhance student learning,
including:
• MS Project Exercises—An additional feature of the text is the inclusion at the end of several
chapters of some sample problems or activities that require students to generate MS Project
output files. For example, in Chapter 9 on scheduling, students must create an MS Project
network diagram. Likewise, other reports can be assigned to help students become minimally
adept at interacting with this program. It is not the purpose of this text to fully develop
these skills but rather to plant the seeds for future application.
• Research in Brief—A unique feature of this text is to include short (usually one-page) text
boxes that highlight the results of current research on the topics of interest. Students often find
it useful to read about actual studies that highlight the text material and provide additional
information that expands their learning. Although not every chapter includes a “Research in
Brief” box, most have one and, in some cases, two examples of this feature.
• Project Managers in Practice—An addition to this text is the inclusion of several short profiles
of real, practicing project managers from a variety of corporate and project settings. These
profiles have been added to give students a sense of the types of real-world challenges project
managers routinely face, the wide range of projects they are called to manage, and the satisfactions
and career opportunities available to students interested in pursuing project management
as a career.
• Internet Exercises—Each chapter contains a set of Internet exercises that require students to
search the Web for key information and perform other activities that lead to student learning
through outside-of-class, hands-on activities. Internet exercises are a useful supplement,
particularly in the area of project management, because so much is available on the World
Wide Web relating to projects, including cases, news releases, and Internet-based tools for
analyzing project activities.
• MS Project 2013 Tutorials—Appendix B at the end of the text features two in-depth tutorials
that instruct students in the rudiments of developing a project schedule, resource leveling,
and critical path development. A second tutorial instructs students in methods for updating
the project plan, generating output files such as earned value metrics, and tracking ongoing
project activities. These tutorials are not intended to substitute for fuller instruction in this
valuable software, but they do provide a critical means for initial familiarization with the
package.
• Project Execution Plan Template—Appendix C provides a template for developing
a fully evolved project execution plan. Instructors using previous versions of this text
noted the value in requiring that students be able to create a project plan and requested
a more comprehensive template that could be employed. This template addresses the
critical elements of project scope, as well as offers a method for putting these details in a
logical sequence.
instructor resources
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to gain access to a variety of instructor resources available with this text in downloadable format. If
assistance is needed, our dedicated technical support team is ready to help with the media supplements
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questions and toll-free user support phone numbers.
The following supplements are available with this text:
• Instructor’s Solutions Manual
• Test Bank
• TestGen® Computerized Test Bank
• PowerPoint Presentation
Preface xvii
ackNoWledgmeNts
In acknowledging the contributions of past and present colleagues to the creation of this text,
I must first convey my deepest thanks and appreciation for the 30-year association with my original
mentor, Dr. Dennis Slevin of the University of Pittsburgh’s Katz Graduate School of Business.
My collaboration with Denny on numerous projects has been fruitful and extremely gratifying,
both professionally and personally. In addition, Dr. David Cleland’s friendship and partnership in
several ventures has been a great source of satisfaction through the years. A frequent collaborator
who has had a massive influence on my thinking and approach to understanding project management
is Professor Peter W.G. Morris, lately of University College London. Working with him has
been a genuine joy and constant source of inspiration. Additional mentors and colleagues who
have strongly influenced my thinking include Samuel Mantel, Jr., Rodney Turner, Erik Larson,
David Frame, Francis Hartman, Jonas Soderlund, Young Kwak, Rolf Lundin, Lynn Crawford,
Graham Winch, Terry Williams, Francis Webster, Terry Cooke-Davies, Hans Thamhain, and Karlos
Artto. Each of these individuals has had a profound impact on the manner in which I view, study,
and write about project management. Sadly, 2014 saw the passing of three of these outstanding
project management scholars—Hans Thamhain, Sam Mantel and Francis Hartman. I hope that my
efforts help, in some small part, to keep their vision and contributions alive.
Over the years, I have also been fortunate to develop friendships with some professional project
managers whose work I admire enormously. They are genuine examples of the best type of project
manager: one who makes it all seem effortless while consistently performing minor miracles. In particular,
I wish to thank Mike Brown of Rolls-Royce for his friendship and example. I would also like
to thank friends and colleagues from the Project Management Institute, including Lew Gedansky,
Harry Stephanou, and Eva Goldman, for their support for and impact on this work.
I am indebted to the reviewers of this text whose numerous suggestions and critiques have been
an invaluable aid in shaping its content. Among them, I would like to especially thank the following:
Kwasi Amoako-Gyampah— University of North Carolina, Greensboro
Ravi Behara—George Mason University
Jeffrey L. Brewer—Purdue University
Dennis Cioffi—George Washington University
David Clapp—Florida Institute of Technology
Bruce DeRuntz—Southern Illinois University at Carbondale
Ike Ehie—Kansas State University
Michael H. Ensby—Clarkson University
Lynn Fish—Canisius College
Linda Fried—University of Colorado, Denver
Mario Guimaraes—Kennesaw State University
Richard Gunther—California State University, Northridge
Brian Gurney—Montana State University, Billings
Gary Hackbarth—Iowa State University
Mamoon M. Hammad—George Washington University
Scott Robert Homan—Purdue University
John Hoxmeier—Colorado State University
Alex Hutchins—ITT Technical Institute
Richard Jensen—Hofstra University
Robert Key—University of Phoenix
Homayoun Khamooshi—George Washington University
Dennis Krumwiede—Idaho State University
George Mechling—Western Carolina University
Julia Miyaoka—San Francisco State University
xviii Preface
LaWanda Morant—ITT Technical Institute
Robert Morris—Florida State College at Jacksonville
James Muller—Cleveland State University
Kenneth E. Murphy—Willamette University
John Nazemetz—Oklahoma State University
Patrick Penfield—Syracuse University
Ronald Price—ITT Techincal Institute
Ronny Richardson—Southern Polytechnic State University
John Sherlock—Iona College
Gregory Shreve—Kent State University
Randall G. Sleeth—Virginia Commonwealth University
Kimberlee Snyder—Winona State University
Jeff Trailer—California State University, Chico
Leo Trudel—University of Maine
Oya Tukel—Cleveland State University
Darien Unger—Howard University
Amy Valente—Cayuga Community College
Stephen Whitehead—Hilbert College
I would also like to thank my colleagues in the Samuel Black School of Business at Penn State, the
Behrend College. Additionally, my thanks goes to Dana Johnson of Michigan Technological University
for preparing the PowerPoints for this edition, and Geoff Willis of University of Central Oklahoma
for preparing the Test Bank. Extra-special thanks go to Kerri Tomasso for her help in preparing
the final manuscript and for her integral role in permissions research and acquisitions. I am especially
indebted to Khurrum Bhutta, who accuracy checked this edition. I am very grateful for his time
and effort, and any errors that may remain are entirely my own.
In developing the cases for this edition of the textbook, I was truly fortunate to develop
wonderful professional relationships with a number of individuals. Andrea Finger and Kathleen
Prihoda of Disney were wonderfully helpful and made time in their busy schedules to assist me in
developing the Expedition Everest case for this text. Stephanie Smith, Mohammed Al-Sadiq, Bill
Mowery, Mike Brown, Julia Sweet, and Kevin O’Donnell provided me with invaluable information
on their job responsibilities and what it takes to be a successful project manager.
Finally, I wish to extend my sincere thanks to the people at Pearson for their support for
the text during its development, including Dan Tylman, editor, and Claudia Fernandes, program
manager. I also would like to thank the Pearson editorial, production, and marketing staffs.
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Finally, it is important to reflect on an additional salient issue as you begin your study of
project management: Most of you will be running a project long before you are given wider management
responsibilities in your organizations. Successful project managers are
