Part I
Project Initiation
Project Management
A Managerial Approach
By J.R. Meredith and S.J. Mantel, Jr.

© 2012 John Wiley & Sons, Inc.

Project Management

Strategic Management and Project Selection
Chapter 2
Project Management
A Managerial Approach
By J.R. Meredith and S.J. Mantel, Jr.

© 2012 John Wiley & Sons, Inc.

Problems With Multiple Projects
Three basic problems for organization while managing multiple projects: •

Delays in one project delays others
•

•

common resource needs or technological dependencies

Inefficient use of resources
•

•

Results in peaks and valleys of resource utilization

Bottlenecks in resource availability
•

Result in project delays that depend in those scare resources or technology

Project Results
• 30% of all projects are canceled midstream
• Over half of completed projects came in up to 190% over budget
• Over half of completed projects came in up to 220% late

Challenges
• Making sure projects are closely tied to goals and strategy
• How to handle the growing number of projects?
• How to make these projects successful?

Overcome Challenges
• Develop project management expertise within the organization
• Initiate Project Management Office (PMO)
• Using projects to accomplish organizational goals and strategies
• PMO should promote projects that capitalize on the organization’s strengths and offer a competitive advantage
• PMO should avoid projects with resource or technology needs in areas where the organization is weak

• Determine the relationships between
• Projects
• Projects and strategic goals of organization

Project Selection Process
• Creation of Project Management Office (PMO)
• Project selection
• Risk Analysis because of uncertainty
• Strategic selection of best projects via Project Portfolio Process (PPP)
• Securing the deal by writing a project proposal

Project Management Maturity
• Project management maturity refers to the mastery of skills required to manage projects competently
• The answer is NO for many organizations

• Maturity is the standardization of project management techniques which increased project success rates by over 25%.
• Most organizations do not do well

Project Management Maturity
Level Measure
• This scores firms on five successive levels of maturity:
• Initial – there is no formal process for managing projects
• Repeatable- has procedures in place for planning, scheduling, tracking, and estimating. The data are not integrated at this level
• Defined- the firm has integrated systems for tracking and managing projects, but are not routinely understood and used for controlling projects
• Managed- systems are installed and used to manage and control projects
• Optimizing- has integrated databases used to generate information on the senior-management level as well as for managers of single projects or portfolios of several projects

Project Selection and Criteria of Choice
• Project selection…
• Evaluating
• Choosing
• Implementing

• Same process as other business decisions

Types of Companies
•

Companies considering projects fall into two broad categories:
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•

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Companies whose core business is completing projects
Companies whose core business is something else

They can also be broken down as:
•
•

Companies looking at projects to do for others
Companies looking at projects to do for themselves

Model Criteria for Project
Selection
•

Realism- organizations limitations, market-risk

•

Capability- adequately sophisticated

•

Flexibility- valid results over within the range of conditions

•

Ease of use- no expert needed to run model

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Cost- data gathering and modeling should be less than project benefit •

Easy computerization- use standard software

The Nature of Project Selection Models
• Models turn inputs into outputs
• Managers decide on the values for the inputs and evaluate the outputs • The inputs never fully describe the situation
• The outputs never fully describe the expected results
• Models are tools
• Managers are