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College of Administrative and Financial Sciences
Assignment 2
Project Management (MGT323)
Deadline: 04/03/2021 @ 23:59
Course Name: Project Management
Course Code:MGT323
Student’s Name:
Semester: II
Student’s ID Number:
Academic Year:2020-21, II Term
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained/Out of 5
Level of Marks: High/Middle/Low
• The Assignment must be submitted on Blackboard (WORD format only)
via allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks
may be reduced for poor presentation. This includes filling your
information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from
students or other resources without proper referencing will result in ZERO
marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, doublespaced) font. No pictures containing text will be accepted and will be
considered plagiarism).
• Submissions without this cover page will NOT be accepted.
• Need References from Peer-reviewed Journals.
Assignment Workload:
• This Assignment comprise of a Case Study.
• Assignment is to be submitted by each student individually.
Assignment Purposes/Learning Outcomes:
After completion of Assignment-2 students will able to understand the
1. Recognize the steps of planning process in the project management.
2. Estimate the project budget and cost control. (L.O-2.2)
3. Analyze to work effectively and efficiently as a team member for
project related cases. (L.O-3.1)
Assignment-2-Case Study
Assignment Question:
(Marks 5)
Please read the Case-5.2 “Post-Graduation Adventure.” from Chapter 5
“Estimating Project Times and Costs” given in your textbook – Project
Management: The Managerial Process 8th edition by Larson and Gray page
no: 164 also refer to specific concepts you have learned from the chapter to
support your answers. Answer the questions asked in case study as
deliverables where you should consider the milestones and technical
requirements. Answers to the questions should be within 500 Words limit.
Because learning changes everything. ®
Chapter Five
Estimating Project Times
and Costs
© 2021 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Where We Are Now
© McGraw-Hill Education
Learning Objectives
Understand estimating project times and costs is the foundation for
project planning and control.
Describe guidelines for estimating time, costs, and resources.
Describe the methods, uses, and advantages and disadvantages of
top-down and bottom-up estimating methods.
Distinguish different kinds of costs associated with a project.
Suggest a scheme for developing an estimating database for future
Understand the challenge of estimating mega projects and describe
steps that lead to better informed decisions.
Define a “white elephant” in project management and provide
© McGraw-Hill Education
Chapter Outline
Factors Influencing the Quality of Estimates
Estimating Guidelines for Times, Costs, and Resources
Top-Down versus Bottom-Up Estimating
Methods for Estimating Project Times and Costs
Level of Detail
Types of Costs
Refining Estimates
Creating a Database for Estimating
Mega Projects: A Special Case
© McGraw-Hill Education
Project Estimating
Estimating Defined

Is the process of forecasting or approximating the time and cost of
completing project deliverables.

Is a trade-off, balancing the benefits of better accuracy against the
costs of secured increased accuracy.
Types of Estimates

Top-down (macro) estimates—analogy, group consensus, or
mathematical relationships

Bottom-up (micro) estimates—based on estimates of elements found
in the work breakdown structure
© McGraw-Hill Education
Why Estimating Time and Cost Is Important
© McGraw-Hill Education
5.1 Factors Influencing the Quality of Estimates

Planning Horizon

Project Complexity


Project Structure and Organization

Padding Estimates

Organizational Culture

Other Factors
© McGraw-Hill Education
5.2 Estimating Guidelines for Times, Costs, and Resources
1. Responsibility
2. The use of several people to estimate
3. Normal conditions
4. Time units
5. Independence
6. Contingencies
7. Risk assessment added to the estimate to avoid surprises to
© McGraw-Hill Education
5.3 Top-Down versus Bottom-Up Estimating
Top-Down Estimates

Are usually derived from someone who uses experience and/or
information to determine the project duration and total cost.

Are sometimes made by top managers who have very little knowledge
of the component activities used to complete the project.
Bottom-Up Estimates

Can take place after the project has been defined in detail.

Can serve as a check on cost elements in the WBS by rolling up the
work packages and associated cost accounts to major deliverables.

Provide the customer with an opportunity to compare the low-cost,
efficient method approach with any imposed restrictions.
© McGraw-Hill Education
Conditions for Preferring Top-Down or Bottom-Up Time and
Cost Estimates
© McGraw-Hill Education
The Preferred Approach in Defining the Project

Make rough top-down estimates

Develop the WBS/OBS

Make bottom-up estimates

Develop schedules and budgets

Reconcile differences between top-down and bottom-up estimates
© McGraw-Hill Education
5.4 Methods for Estimating Project Times and Costs
Top-Down Approaches
Bottom-Up Approaches

Consensus Method

Template Method

Ratio Method

Parametric Procedures Applied

Apportion Method

Function Point Methods for
to Specific Tasks

Range Estimating
Software and System Projects

Learning Curves
© McGraw-Hill Education
Apportion Method of Allocating Project Costs Using the WBS
© McGraw-Hill Education
Simplified Basic Function Point Count Process for a
Prospective Project or Deliverable
© McGraw-Hill Education
Example: Function Point Count Method
© McGraw-Hill Education
Range Estimating Template
© McGraw-Hill Education
A Hybrid: Phase Estimating
© McGraw-Hill Education
Top-Down and Bottom-Up Estimates
© McGraw-Hill Education
5.5 Level of Detail
The level of detail in the WBS varies with:

The complexity of the project

The need for control

The project size, cost, and duration

Other factors
Excessive detail:

Emphasizes departmental outcomes rather than deliverable outcomes

Creates more unproductive paperwork
Inadequate detail:

Falls short of meeting the structure’s needs
© McGraw-Hill Education
5.6 Types of Costs
Direct Costs

Are clearly chargeable to a specific work package
Examples: Labor, materials, equipment, and other
Direct Project Overhead Costs

Can be tied to project deliverables or work packages
Examples: Salary of the project manager, temporary rental space
for the project team, supplies, specialized machinery
General and Administrative (G&A) Overhead Costs

Are not directly linked to a specific project
Examples: Advertising, accounting, salary of senior management
above the project level
© McGraw-Hill Education
Contract Bid Summary Costs
© McGraw-Hill Education
Three Views of Cost
© McGraw-Hill Education
5.7 Refining Estimates
Reasons for adjusting estimates

Interaction costs are hidden in estimates.

Normal conditions do not apply.

Things go wrong on projects.

Project scope and plans change.

People are overly optimistic.

People engage in strategic misrepresentation.
© McGraw-Hill Education
5.8 Creating a Database for Estimating
© McGraw-Hill Education
5.9 Mega Projects: A Special Case
Mega Projects Defined

Are large-scale, complex ventures that typically cost $1 billion or more,
take many years to complete, and involve multiple private and public
Examples: High-speed rail lines, airports, healthcare reform, the
Olympics, development of new aircraft

Often involve a double whammy.
Projects cost much more than expected and under-deliver on
benefits the projects were to provide.

Are sometimes referred to as “white elephant.”
Projects are over budget, under value and the costs of maintaining
the project exceed the benefits received.
© McGraw-Hill Education
The Reference Class Forecasting (RCF)
Three Major Steps:
Select a reference class of projects similar to your potential project.
Collect and arrange outcome data as a distribution. Create a distribution of cost
overruns as a percentage of the original project estimate (low to high).
Use the distribution data to arrive at a realistic forecast. Compare the original
cost estimate for the project with the reference class projects.

Outside empirical data mitigates human bias.

Politics, strategic, and promoter forces have difficulty ignoring outside RCF

RCF serves as a reality check for funding large projects.

RCF helps executives avoid unsound optimism.

RCF leads to improved accountability.

RCF provides a basis for project contingency funds.
© McGraw-Hill Education
Key Terms
Range estimating
Bottom-up estimates
Ratio method
Delphi Method
Reference class forecasting (RCF)
Direct costs
Template method
Function points
Time and cost databases
Learning curve
Top-down estimates
Overhead costs
White elephant
Phase estimating
© McGraw-Hill Education
Because learning changes everything.
© 2021 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
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The Managerial Process
Eighth Edition
Erik W. Larson
Clifford F. Gray
Oregon State University
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Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2021 by McGraw-Hill
Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2014, and
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1 2 3 4 5 6 7 8 9 LWI 24 23 22 21 20 19
ISBN 978-1-260-23886-0 (bound edition)
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ISBN 978-1-260-73615-1 (loose-leaf edition)
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Library of Congress Cataloging-in-Publication Data
Names: Gray, Clifford F., author. | Larson, Erik W., 1952- author.
Title: Project management : the managerial process / Erik W. Larson,
Clifford F. Gray, Oregon State University.
Description: Eighth edition. | New York, NY : McGraw-Hill Education, [2021]
| Clifford F. Gray appears as the first named author in earlier
editions. | Includes bibliographical references and index. | Summary:
“Our motivation in writing this text continues to be to provide a
realistic, socio-technical view of project management. In the past,
textbooks on project management focused almost exclusively on the tools
and processes used to manage projects and not the human dimension”–
Provided by publisher.
Identifiers: LCCN 2019028390 (print) | LCCN 2019028391 (ebook) |
ISBN 9781260238860 (paperback) | ISBN 1260238865 (paperback) |
ISBN 9781260242379 (ebook)
Subjects: LCSH: Project management. | Time management. | Risk management.
Classification: LCC HD69.P75 G72 2021 (print) | LCC HD69.P75 (ebook) |
DDC 658.4/04–dc23
LC record available at https://lccn.loc.gov/2019028390
LC ebook record available at https://lccn.loc.gov/2019028391
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does
not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not
guarantee the accuracy of the information presented at these sites.
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About the Authors
Erik W. Larson
ERIK W. LARSON is professor emeritus of project management at the College of
Business, Oregon State University. He teaches executive, graduate, and undergraduate
courses on project management and leadership. His research and consulting activities
focus on project management. He has published numerous articles on matrix management, product development, and project partnering. He has been honored with teaching awards from both the Oregon State University MBA program and the University
of Oregon Executive MBA program. He has been a member of the Project Management Institute since 1984. In 1995 he worked as a Fulbright scholar with faculty at
the Krakow Academy of Economics on modernizing Polish business education. He
was a visiting professor at Chulalongkorn University in Bangkok, Thailand, and at
Baden-Wuerttemberg Cooperative State University in Bad Mergentheim, Germany.
He received a B.A. in psychology from Claremont McKenna College and a Ph.D. in
management from State University of New York at Buffalo. He is a certified Project
Management Professional (PMP) and Scrum master.
Clifford F. Gray
CLIFFORD F. GRAY is professor emeritus of management at the College of Business,
Oregon State University. He has personally taught more than 100 executive development seminars and workshops. Cliff has been a member of the Project Management
Institute since 1976 and was one of the founders of the Portland, Oregon, chapter. He
was a visiting professor at Kasetsart University in Bangkok, Thailand, in 2005. He was
the president of Project Management International, Inc. (a training and consulting firm
specializing in project management) 1977–2005. He received his B.A. in economics
and management from Millikin University, M.B.A. from Indiana University, and doctorate in operations management from the College of Business, University of Oregon.
He is a certified Scrum master.
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“Man’s mind, once stretched by a new idea, never regains
its original dimensions.”
Oliver Wendell Holmes, Jr.
To my family, who have always encircled me with
love and encouragement—my parents (Samuel and
Charlotte), my wife (Mary), my sons and their wives
(Kevin and Dawn, Robert and Sally), and their children
(Ryan, Carly, Connor and Lauren).
“The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt the
world to himself. Therefore all progress depends on the
unreasonable man.” Bernard Shaw, Man and Superman
To Ann, whose love and support have brought out the
best in me. To our girls Mary, Rachel, and Tor-Tor for
the joy and pride they give me. And to our grandkids,
Mr. B, Livvy, Jasper Jones!, Baby Ya Ya, Juniper Berry,
and Callie, whose future depends upon effective project
management. Finally, to my muse, Neil—walk on!
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Our motivation in writing this text continues to be to provide a realistic, socio-technical
view of project management. In the past, textbooks on project management focused
almost exclusively on the tools and processes used to manage projects and not the
human dimension. This baffled us, since people, not tools, complete projects! While we
firmly believe that mastering tools and processes is essential to successful project management, we also believe that the effectiveness of these tools and methods is shaped and
determined by the prevailing culture of the organization and interpersonal dynamics
of the people involved. Thus, we try to provide a holistic view that focuses on both the
technical and social dimensions and how they interact to determine the fate of projects.
This text is written for a wide audience. It covers concepts and skills that are used by
managers to propose, plan, secure resources, budget, and lead project teams to successful completions of their projects. The text should prove useful to students and prospective project managers in helping them understand why organizations have developed a
formal project management process to gain a competitive advantage. Readers will find
the concepts and techniques discussed in enough detail to be immediately useful in
new-project situations. Practicing project managers will find the text to be a valuable
guide and reference when dealing with typical problems that arise in the course of a
project. Managers will also find the text useful in understanding the role of projects
in the missions of their organizations. Analysts will find the text useful in helping to
explain the data needed for project implementation as well as the operations of inherited or purchased software.
Members of the Project Management Institute will find the text is well structured
to meet the needs of those wishing to prepare for PMP (Project Management Professional) or CAPM (Certified Associate in Project Management) certification exams.
The text has in-depth coverage of the most critical topics found in PMI’s Project
Management Body of Knowledge (PMBOK). People at all levels in the organization
assigned to work on projects will find the text useful not only in providing them with a
rationale for the use of project management processes but also because of the insights
they will gain into how to enhance their contributions to project success.
Our emphasis is not only on how the management process works but also, and more
importantly, on why it works. The concepts, principles, and techniques are universally applicable. That is, the text does not specialize by industry type or project scope.
Instead, the text is written for the individual who will be required to manage a variety
of projects in a variety of organizational settings. In the case of some small projects,
a few of the steps of the techniques can be omitted, but the conceptual framework
applies to all organizations in which projects are important to survival. The approach
can be used in pure project organizations such as construction, research organizations,
and engineering consultancy firms. At the same time, this approach will benefit organizations that carry out many small projects while the daily effort of delivering products or services continues.
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x Preface
In this and other editions we continue to try to resist the forces that engender scope
creep and focus only on essential tools and concepts that are being used in the real
world. We have been guided by feedback from reviewers, practitioners, teachers, and
students. Some changes are minor and incremental, designed to clarify and reduce confusion. Other changes are significant. They represent new developments in the field
or better ways of teaching project management principles. Below are major changes to
the eighth edition.
∙ All material has been reviewed and revised based on the latest edition of Project
Management Body of Knowledge (PMBOK), Sixth Edition, 2017.
∙ Discussion questions for most Snapshots from Practice are now at the end of each
∙ Many of the Snapshots from Practice have been expanded to more fully cover the
∙ Agile Project Management is introduced in Chapter 1 and discussed when appropriate in subsequent chapters, with Chapter 15 providing a more complete coverage of
the methodology.
∙ A new set of exercises have been developed for Chapter 5.
∙ New student exercises and cases have been added to chapters.
∙ The Snapshot from Practice boxes feature a number of new examples of project
management in action.
∙ The Instructor’s Manual contains a listing of current YouTube videos that correspond to key concepts and Snapshots from Practice.
Overall the text addresses the major questions and challenges the authors have
encountered over their 60 combined years of teaching project management and consulting with practicing project managers in domestic and foreign environments. These
questions include the following: How should projects be prioritized? What factors contribute to project failure or success? How do project managers orchestrate the complex
network of relationships involving vendors, subcontractors, project team members,
senior management, functional managers, and customers that affect project success?
What project management system can be set up to gain some measure of control? How
are projects managed when the customers are not sure what they want? How do project
managers work with people from foreign cultures?
Project managers must deal with all these concerns to be effective. All of these
issues and problems represent linkages to a socio-technical project management perspective. The chapter content of the text has been placed within an overall framework
that integrates these topics in a holistic manner. Cases and snapshots are included from
the experiences of practicing managers. The future for project managers is exciting.
Careers will be built on successfully managing projects.
Student Learning Aids
Student resources include study outlines, online quizzes, PowerPoint slides, videos,
Microsoft Project Video Tutorials, and web links. These can be found in Connect.
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Preface xi
We would like to thank Scott Bailey for building the end-of-chapter exercises for Connect; Pinyarat Sirisomboonsuk for revising the PowerPoint slides; Ronny Richardson
for updating the Instructor’s Manual; Angelo Serra for updating the Test Bank; and
Pinyarat Sirisomboonsuk for providing new Snapshot from Practice questions.
Next, it is important to note that the text includes contributions from numerous
students, colleagues, friends, and managers gleaned from professional conversations.
We want them to know we sincerely appreciate their counsel and suggestions. Almost
every exercise, case, and example in the text is drawn from a real-world project. Special thanks to managers who graciously shared their current project as ideas for exercises, subjects for cases, and examples for the text. John A. Drexler, Jim Moran, John
Sloan, Pat Taylor, and John Wold, whose work is printed, are gratefully acknowledged.
Special gratitude is due Robert Breitbarth of Interact Management, who shared invaluable insights on prioritizing projects. University students and managers deserve special accolades for identifying problems with earlier drafts of the text and exercises.
We are indebted to the reviewers of past editions who shared our commitment to
elevating the instruction of project management. We thank you for your many thoughtful suggestions and for making our book better. Of course, we accept responsibility for
the final version of the text.
Paul S. Allen, Rice University
Victor Allen, Lawrence Technological University
Kwasi Amoako-Gyampah, University of North
Gregory Anderson, Weber State University
Mark Angolia, East Carolina University
Brian M. Ashford, North Carolina State University
Dana Bachman, Colorado Christian University
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Scott Bailey, Troy University
Nabil Bedewi, Georgetown University
Anandhi Bharadwaj, Emory University
James Blair, Washington University–St. Louis
Mary Jean Blink, Mount St. Joseph University
S. Narayan Bodapati, Southern Illinois University at
Warren J. Boe, University of Iowa
Thomas Calderon, University of Akron
Alan Cannon, University of Texas–Arlington
Susan Cholette, San Francisco State
Denis F. Cioffi, George Washington University
Robert Cope, Southeastern Louisiana University
lar38865_fm_i-xxiii.indd xi
Kenneth DaRin, Clarkson University
Ron Darnell, Amberton University
Burton Dean, San Jose State University
Joseph D. DeVoss, DeVry University
David Duby, Liberty University
Michael Ensby, Clarkson University
Charles Franz, University of Missouri, Columbia
Larry Frazier, City University of Seattle
Raouf Ghattas, DeVry University
Edward J. Glantz, Pennsylvania State University
Michael Godfrey, University of Wisconsin–Oshkosh
Jay Goldberg, Marquette University
Robert Groff, Westwood College
Raffael Guidone, New York City College of
Brian Gurney, Montana State University–Billings
Owen P. Hall, Pepperdine University
Chaodong Han, Towson University
Bruce C. Hartman, University of Arizona
Mark Huber, University of Georgia
Richard Irving, York University
Marshall Issen, Clarkson University
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xii Preface
Robert T. Jones, DePaul University
Susan Kendall, Arapahoe Community College
George Kenyon, Lamar University
Robert Key, University of Phoenix
Elias Konwufine, Keiser University
Dennis Krumwiede, Idaho State University
Rafael Landaeta, Old Dominion University
Eldon Larsen, Marshall University
Eric T. Larson, Rutgers University
Philip Lee, Lone Star College–University Park
Charles Lesko, East Carolina University
Richard L. Luebbe, Miami University of Ohio
Linh Luong, City University of Seattle
Steve Machon, DeVry University–Tinley Park
Andrew Manikas, University of Louisville
William Matthews, William Patterson University
Lacey McNeely, Oregon State University
Carol Miller, Community College of Denver
William Moylan, Lawrence Technological College
of Business
Ravi Narayanaswamy, University of South
Muhammad Obeidat, Southern Polytechnic
State University
Edward Pascal, University of Ottawa
James H. Patterson, Indiana University
Steve Peng, California State University–East Bay
Nicholas C. Petruzzi, University of Illinois–Urbana/
Abirami Radhakrishnan, Morgan State
Emad Rahim, Bellevue University
Tom Robbins, East Carolina University
Art Rogers, City University
Linda Rose, Westwood College
Pauline Schilpzand, Oregon State University
Teresa Shaft, University of Oklahoma
Russell T. Shaver, Kennesaw State University
William R. Sherrard, San Diego State University
Erin Sims, DeVry University–Pomona
Donald Smith, Texas A&M University
Kenneth Solheim, DeVry University–Federal Way
Christy Strbiak, U.S. Air Force Academy
Peter Sutanto, Prairie View A&M University
Jon Tomlinson, University of Northwestern Ohio
Oya Tukel, Cleveland State University
David A. Vaughan, City University
Mahmoud Watad, William Paterson University
Fen Wang, Central Washington University
Cynthia Wessel, Lindenwood University
Larry R. White, Eastern Illinois University
Ronald W. Witzel, Keller Graduate School of
G. Peter Zhang, Georgia State University
In addition, we would like to thank our colleagues in the College of Business at
Oregon State University for their support and help in completing this project. In particular, we recognize Lacey McNeely, Prem Mathew, and Jeewon Chou for their helpful advice and suggestions. We also wish to thank the many students who helped us
at different stages of this project, most notably Neil Young, Saajan Patel, Katherine
Knox, Dat Nguyen, and David Dempsey. Mary Gray deserves special credit for editing
and working under tight deadlines on earlier editions. Special thanks go to Pinyarat
(“Minkster”) Sirisomboonsuk for her help in preparing the last five editions.
Finally, we want to extend our thanks to all the people at McGraw-Hill Education
for their efforts and support. First, we would like to thank Noelle Bathurst and Sarah
Wood, for providing editorial direction, guidance, and management of the book’s
development for the eighth edition. And we would also like to thank Sandy Wille,
Sandy Ludovissy, Egzon Shaqiri, Beth Cray, and Angela Norris for managing the final
production, design, supplement, and media phases of the eighth edition.
Erik W. Larson
Clifford F. Gray
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First Pages
Guided Tour
Chapter 2
First Pages
Organization Strategy and Project Selection
global competition, and financial uncertainty. These conditions make strategy/project
alignment even more essential for success.
The larger and more diverse an organization, the more difficult it is to create
and maintain a strong link between strategy and projects. How can an organization
ensure this link? The answer requires integration of projects with the strategic plan.
Integration assumes the existence of a strategic plan and a process for prioritizing
projects by their contribution to the plan. A key factor to ensure the success of integrating the plan with projects is an open and transparent selection process for all
participants to review.
This chapter presents an overview of the importance of strategic planning and the
process for developing a strategic plan. Typical problems encountered when strategy
and projects are not linked are noted. A generic methodology that ensures integration
by creating strong linkages of project selection and priority to the strategic plan is
then discussed. The intended outcomes are clear organization focus, best use of scarce
organization resources (people, equipment, capital), and improved communication
across projects and departments.
Established Learning Objectives
Learning objectives are listed both at the beginning of each
chapter and are called out as marginal elements throughout the
narrative in each chapter.
2.1 Why Project Managers Need to Understand Strategy
LO 2-1
Explain why it is important for project managers to understand their
organization’s strategy.
Organization Strategy
and Project Selection
After reading this chapter you should be able to:
2.1 Why Project Managers Need to Understand
2-1 Explain why it is important for project managers to
understand their organization’s strategy.
Project management historically has been preoccupied solely with the planning and
execution of projects. Strategy was considered to be under the purview of senior
management. This is old-school thinking. New-school thinking recognizes that project management is at the apex of strategy and operations. Shenhar speaks to this
issue when he states, “It is time to expand the traditional role of the project manager
from an operational to a more strategic perspective. In the modern evolving organization, project managers will be focused on business aspects, and their role will
expand from getting the job done to achieving the business results and winning in
the marketplace.”1
There are two main reasons project managers need to understand their organization’s mission and strategy. The first reason is so they can make appropriate decisions and adjustments. For example, how a project manager would respond to a
suggestion to modify the design of a product to enhance performance will vary
depending upon whether his company strives to be a product leader through innovation or to achieve operational excellence through low-cost solutions. Similarly,
how a project manager would respond to delays may vary depending upon strategic
concerns. A project manager will authorize overtime if her firm places a premium
on getting to the market first. Another project manager will accept the delay if
speed is not essential.
The second reason project managers need to understand their organization’s strategy is so they can be effective project advocates. Project managers have to be able
to demonstrate to senior management how their project contributes to their firm’s
mission in order to garner their continued support. Project managers need to be able
to explain to stakeholders why certain project objectives and priorities are critical in
order to secure buy-in on contentious trade-off decisions. Finally, project managers
need to explain why the project is important to motivate and empower the project team
(Brown, Hyer, & Ettenson, 2013).
2-2 Identify the significant role projects contribute to
the strategic direction of the organization.
2.2 The Strategic Management Process:
An Overview
2.3 The Need for a Project Priority System
2-3 Understand the need for a project priority system.
2.4 Project Classification
2-4 Distinguish among three kinds of projects.
2.5 Phase Gate Model
2-5 Describe how the phase gate model applies to
project management.
2.6 Selection Criteria
2-6 Apply financial and nonfinancial criteria to assess
the value of projects.
2-7 Understand how multi-criteria models can be
used to select projects.
2.7 Applying a Selection Model
2.8 Managing the Portfolio System
2-8 Apply an objective priority system to project
2-9 Understand the need to manage the project
End-of-Chapter Content
First Pages
Both static and algorithmic end-of-chapter content, including Review Questions and Exercises, are assignable
in Connect.
Chapter 3 Organization: Structure and Culture
The SmartBook has been updated with new
A., and Dov Dvie, Reinventing Project Management (Boston: Harvard Business School, 2007), p. 5.
highlights and Shenhar,
for optimal student
The Snapshot from Practice boxes have been
updated to include a number of new examples of project management in action. New
discussion questions based on the Snapshots
have been added to the end-of-chapter material and are assignable in Connect.
lar38865_ch02_028-067.indd 30
New and Updated Cases
On entering the 24-hour Googleplex
located in Mountain View, California,
you feel that you are walking through
a new-age college campus rather than
the corporate office
of a billion-dollar
business. The interconnected low-rise buildings with
colorful, glass-encased offices feature upscale trappings—free gourmet meals three times a day, free use
of an outdoor wave pool, indoor gym and large child
08:01 PM
care facility, private shuttle bus service to and from
San Francisco and other residential areas—that are
the envy of workers across the Bay area. These perks Jade/Blend Images
and others reflect Google’s culture of keeping people
Because Google co-founder Sergey Brin once estimated
happy and thinking in unconventional ways.
The importance of corporate culture is no more evi- that it took seven minutes to walk across the Google
dent than in the fact that the head of Human Resources, campus. Everybody stands to make sure no one gets too
Stacy Savides Sullivan, also has the title of chief culture comfortable and no time is wasted during the rapid-fire
officer. Her task is to try to preserve the innovative cul- update. As one manager noted, “The whole concept of
ture of a start-up as Google quickly evolves into a mam- the stand-up is to talk through what everyone’s doing, so
moth international corporation. Sullivan characterizes if someone is working on what you’re working on, you
Google culture as “team-oriented, very collaborative can discover and collaborate not duplicate.”
Another custom is “dogfooding.” This is when a
and encouraging people to think nontraditionally, different from where they ever worked before—work with project team releases the functional prototype of a
integrity and for the good of the company and for the future product to Google employees for them to test
good of the world, which is tied to our overall mission drive. There is a strong norm within Google to test
of making information accessible to the world.” Google new products and provide feedback to the developers.
goes to great lengths to screen new employees to make The project team receives feedback from thousands
sure not only that they have outstanding technical capa- of Google-ys. The internal focus group can log bugs
bilities but also that they are going to fit Google’s cul- or simply comment on design or functionality. Fellow
ture. Sullivan goes on to define a Google-y employee as Google-ys do not hold back on their feedback and are
somebody who is “flexible, adaptable, and not focusing quick to point out things they don’t like. This often
leads to significant product improvements.
on titles and hierarchy, and just gets stuff done.”
Google’s culture is rich with customs and traditions
*“Building a ‘Googley’ Workforce,” Washington Post, October
not found in corporate America. For example, project 21, 2006; E. Mills, “Meet Google’s Culture Czar,” CNET News.
teams typically have daily “stand-up” meetings seven com, April 27, 2007; H. Walters, “How Google Got Its New
minutes after the hour. Why seven minutes after the hour? Look,” BusinessWeek, May 10, 2010.
Included at the end of each chapter are between one and five cases that demonstrate key ideas from the text
and help students understand how project management comes into play in the real world. Cases have been
reviewed and updated across the eighth edition.
Instructor and Student Resources
Instructors and students can access all of the supplementary resources for the eighth edition within Connect
or directly at www.mhhe.com/larson8e.
espoused by top management. How pervasive these subcultures and countercultures
are affects the strength of the culture of the organization and the extent to which
culture influences members’ actions and responses.
Identifying Cultural Characteristics
lar38865_fm_i-xxiii.indd xiii
Deciphering an organization’s culture is a highly interpretative, subjective process that
requires assessment of both current and past history. The student of culture cannot
simply rely on what people report about their culture. The physical environment in
which people work, as well as how people act and respond to different events that
occur, must be examined. Figure 3.6 contains a worksheet
for diagnosing
02:39 PMthe culture
of an organization. Although by no means exhaustive, the checklist often yields clues
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Note to Student
You will find the content of this text highly practical, relevant, and current. The concepts discussed are relatively simple and intuitive. As you study each chapter we suggest you try to grasp not only how things work but also why things work. You are
encouraged to use the text as a handbook as you move through the three levels of
I know.
I can do.
I can adapt to new situations.
The field of project management is growing in importance and at an exponential rate. It is nearly impossible to imagine a future management career that does
not include management of projects. Resumes of managers will soon be primarily a
description of their participation in and contributions to projects.
Good luck on your journey through the text and on your future projects.
Chapter-by-Chapter Revisions for the Eighth Edition
Chapter 1: Modern Project Management
New Snapshot: Project Management in Action 2019.
New Snapshot: London Calling: Seattle Seahawks versus Oakland Raiders.
New case: A Day in the Life—2019.
New section on Agile Project Management.
Chapter 2: Organization Strategy and Project Selection
∙ Chapter text refined and streamlined.
∙ New section describing the phase gate model for selecting projects.
Chapter 3: Organization: Structure and Culture
∙ New section on project management offices (PMOs).
∙ New Snapshot: 2018 PMO of the Year.
Chapter 4: Defining the Project
∙ Consistent with PMBOK 6th edition, the scope checklist includes product scope
description, justification/business case, and acceptance criteria.
∙ Discussion of scope creep expanded.
∙ New case: Celebration of Color 5K.
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Note to Student xv
Chapter 5: Estimating Project Times and Costs
∙ Snapshot from Practice on reducing estimating errors incorporated in the text.
∙ Snapshot from Practice: London 2012 Olympics expanded.
∙ A new set of six exercises.
Chapter 6: Developing a Project Schedule
∙ Chapter 6 retitled Developing a Project Schedule to better reflect content.
∙ New case: Ventura Baseball Stadium.
Chapter 7: Managing Risk
∙ New Snapshot: Terminal Five—London Heathrow Airport.
∙ Consistent with PMBOK 6e, “escalate” added to risk and opportunity responses
and “budget” reserves replaced by “contingency” reserves.
Chapter 8 Scheduling Resources and Costs
∙ Two new exercises.
∙ New case: Tham Luang Cave Rescue.
Chapter 9: Reducing Project Duration
∙ Snapshot 9.1: Smartphone Wars updated.
∙ New case: Ventura Baseball Stadium (B).
Chapter 10: Being an Effective Project Manager
∙ Effective Communicator has replaced Skillful Politician as one of the 8 traits associated with being an effective project manager.
∙ Research Highlight 10.1: Give and Take expanded.
Chapter 11: Managing Project Teams
∙ A new review question and exercises added.
Chapter 12: Outsourcing: Managing Interorganizational Relations
∙ Snapshot 12.4: U.S. Department of Defense Value Engineering Awards updated.
∙ New exercise added.
Chapter 13 Progress and Performance Measurement and Evaluation
∙ Expanded discussion of the need for earned value management.
∙ New case: Ventura Stadium Status Report.
Chapter 14: Project Closure
∙ New case: Halo for Heroes II.
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xvi Note to Student
Chapter 15: Agile Project Management
∙ Chapter revised to include discussions of Extreme programming, Kanban, and
hybrid models.
∙ New Snapshot: League of Legends.
∙ New case: Graham Nash.
Chapter 16: International Projects
∙ Snapshots from Practice: The Filming of Apocalypse Now and River of Doubt
∙ New case: Mr. Wui Goes to America.
At McGraw-Hill, we understand that getting the most from new technology can be
challenging. That’s why our services don’t stop after you purchase our products.
You can e-mail our Product Specialists 24 hours a day to get product-training online.
Or you can search our knowledge bank of Frequently Asked Questions on our support website. For Customer Support, call 800-331-5094 or visit www.mhhe.com/
support. One of our Technical Support Analysts will be able to assist you in a
timely fashion.
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Brief Contents
1. Modern Project Management 2
2. Organization Strategy and Project
Selection 28
3. Organization: Structure and Culture 68
4. Defining the Project 104
5. Estimating Project Times and Costs 134
6. Developing a Project Schedule 168
7. Managing Risk 212
8. Scheduling Resources and Costs 258
9. Reducing Project Duration 318
10. Being an Effective Project Manager 354
11. Managing Project Teams 390
12. Outsourcing: Managing
Interorganizational Relations 434
13. Progress and Performance Measurement
and Evaluation 474
14. Project Closure 532
15. Agile Project Management 562
16. International Projects 590
One Solutions to Selected Exercises 626
Two Computer Project Exercises 639
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Preface ix
2.8 Managing the Portfolio System
Chapter 1
Modern Project Management
1.1 What Is a Project?
What a Project Is Not 7
Program versus Project 7
The Project Life Cycle 9
The Project Manager 10
Being Part of a Project Team
Senior Management Input 52
Governance Team Responsibilities 52
Balancing the Portfolio for Risks and Types
of Projects 52
Chapter 3
Organization: Structure and Culture 68
1.2 Agile Project Management 12
1.3 Current Drivers of Project Management
3.1 Project Management Structures
Compression of the Product Life Cycle 15
Knowledge Explosion 15
Triple Bottom Line (Planet, People, Profit) 15
Increased Customer Focus 15
Small Projects Represent Big Problems 16
1.4 Project Management Today: A Socio-Technical
Approach 17
Summary 18
rganizing Projects within the Functional
Organization 70
Organizing Projects as Dedicated Teams 73
Organizing Projects within a Matrix
Arrangement 77
Different Matrix Forms 78
3.2 Project Management Office (PMO) 81
3.3 What Is the Right Project Management
Structure? 83
Organization Considerations
Project Considerations 83
Chapter 2
Organization Strategy and Project
Selection 28
3.4 Organizational Culture
2.1 Why Project Managers Need to
Understand Strategy 30
2.2 The Strategic Management Process:
An Overview 31
3.5 Implications of Organizational Culture for
Organizing Projects 89
Summary 92
our Activities of the Strategic Management
Process 31
2.3 The Need for a Project Priority System
Problem 1: The Implementation Gap 36
Problem 2: Organization Politics 37
Problem 3: Resource Conflicts and Multitasking 38
2.4 Project Classification 38
2.5 Phase Gate Model 39
2.6 Selection Criteria 41
Financial Criteria 41
Nonfinancial Criteria 43
Two Multi-Criteria Selection Models 43
2.7 Applying a Selection Model
What Is Organizational Culture? 85
Identifying Cultural Characteristics 87
Project Classification 46
Sources and Solicitation of Project Proposals 47
Ranking Proposals and Selection of Projects 49
Chapter 4
Defining the Project
4.1 Step 1: Defining the Project Scope
Employing a Project Scope Checklist
4.2 Step 2: Establishing Project Priorities 111
4.3 Step 3: Creating the Work Breakdown
Structure 113
Major Groupings in a WBS 113
How a WBS Helps the Project Manager
A Simple WBS Development 114
4.4 Step 4: Integrating the WBS with the
Organization 118
4.5 Step 5: Coding the WBS for the Information
System 118
4.6 Process Breakdown Structure 121
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Contents xix
4.7 Responsibility Matrices 122
4.8 Project Communication Plan 124
Summary 126
6.5 Network Computation Process
Chapter 5
Estimating Project Times and Costs
6.6 Using the Forward and Backward Pass
Information 183
6.7 Level of Detail for Activities 184
6.8 Practical Considerations 184
5.1 Factors Influencing the Quality of
Estimates 136
Planning Horizon 136
Project Complexity 136
People 136
Project Structure and Organization
Padding Estimates 137
Organizational Culture 137
Other Factors 137
Network Logic Errors 184
Activity Numbering 184
Use of Computers to Develop Networks 185
Calendar Dates 185
Multiple Starts and Multiple Projects 185
6.9 Extended Network Techniques to Come
Closer to Reality 188
5.2 Estimating Guidelines for Times, Costs, and
Resources 138
5.3 Top-Down versus Bottom-Up
Estimating 139
5.4 Methods for Estimating Project Times
and Costs 142
op-Down Approaches for Estimating
Project Times and Costs 142
Bottom-Up Approaches for Estimating
Project Times and Costs 146
A Hybrid: Phase Estimating 147
Probability Analysis
7.4 Step 3: Risk Response Development
Mitigating Risk 223
Avoiding Risk 225
Transferring Risk 225
Escalating Risk 225
Retaining Risk 225
5.7 Refining Estimates 152
5.8 Creating a Database for Estimating 154
5.9 Mega Prosjects: A Special Case 155
Summary 158
Appendix 5.1: Learning Curves for
Estimating 164
7.5 Contingency Planning
Technical Risks 227
Schedule Risks 229
Cost Risks 229
Funding Risks 229
7.6 Opportunity Management 230
7.7 Contingency Funding and Time Buffers
6.1 Developing the Project Network 169
6.2 From Work Package to Network 170
6.3 Constructing a Project Network 172
Contingency Reserves 231
Management Reserves 232
Time Buffers 232
Terminology 172
Basic Rules to Follow in Developing Project
Networks 172
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7.1 Risk Management Process 214
7.2 Step 1: Risk Identification 216
7.3 Step 2: Risk Assessment 219
Direct Costs 151
Direct Project Overhead Costs 151
General and Administrative (G&A)
Overhead Costs 151
6.4 Activity-on-Node (AON) Fundamentals
Laddering 188
Use of Lags to Reduce Schedule Detail and
Project Duration 188
An Example Using Lag Relationships—the
Forward and Backward Pass 192
Hammock Activities 193
Chapter 7
Managing Risk 212
5.5 Level of Detail 149
5.6 Types of Costs 150
Chapter 6
Developing a Project Schedule
Forward Pass—Earliest Times 177
Backward Pass—Latest Times 179
Determining Slack (or Float) 180
7.8 Step 4: Risk Response Control 233
7.9 Change Control Management 234
Summary 237
Appendix 7.1: PERT and PERT Simulation
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xx Contents
Chapter 8
Scheduling Resources and Costs 258
Chapter 10
Being an Effective Project Manager
10.1 Managing versus Leading a Project 356
10.2 Engaging Project Stakeholders 357
10.3 Influence as Exchange 361
Overview of the Resource Scheduling
Problem 260
Types of Resource Constraints 262
Classification of a Scheduling Problem
Resource Allocation Methods 263
Assumptions 263
Time-Constrained Projects: Smoothing
Resource Demand 264
Resource-Constrained Projects 265
The Impacts of Resource-Constrained
Scheduling 274
Splitting Activities 277
Benefits of Scheduling Resources 278
Assigning Project Work 279
Multiproject Resource Schedules 280
Using the Resource Schedule to Develop a
Project Cost Baseline 281
Why a Time-Phased Budget Baseline Is Needed 281
Creating a Time-Phased Budget 282
Summary 287
Appendix 8.1: The Critical-Chain Approach
Chapter 9
Reducing Project Duration
9.1 Rationale for Reducing Project Duration 320
9.2 Options for Accelerating Project Completion 321
Options When Resources Are Not Constrained 322
Options When Resources Are Constrained 324
9.3 Project Cost-Duration Graph
Explanation of Project Costs
9.4 Constructing a Project Cost-Duration Graph 328
Determining the Activities to Shorten
A Simplified Example 330
9.5 Practical Considerations
Using the Project Cost-Duration Graph 332
Crash Times 333
Linearity Assumption 333
Choice of Activities to Crash Revisited 333
Time Reduction Decisions and Sensitivity 334
9.6 What If Cost, Not Time, Is the Issue?
Reduce Project Scope 336
Have Owner Take on More Responsibility
Outsource Project Activities or Even the
Entire Project 336
Brainstorm Cost Savings Options 336
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Task-Related Currencies 362
Position-Related Currencies 363
Inspiration-Related Currencies 363
Relationship-Related Currencies 363
Personal-Related Currencies 364
10.4 Social Network Building
Computer Demonstration of ResourceConstrained Scheduling 270
Mapping Stakeholder Dependencies
Management by Wandering Around
(MBWA) 366
Managing Upward Relations 367
Leading by Example 369
10.5 Ethics and Project Management 372
10.6 Building Trust: The Key to Exercising
Influence 373
10.7 Qualities of an Effective Project Manager
Summary 378
Chapter 11
Managing Project Teams 390
11.1 The Five-Stage Team Development Model 393
11.2 Situational Factors Affecting Team
Development 395
11.3 Building High-Performance Project Teams 397
Recruiting Project Members 397
Conducting Project Meetings 399
Establishing Team Norms 401
Establishing a Team Identity 403
Creating a Shared Vision 404
Managing Project Reward Systems 406
Orchestrating the Decision-Making Process
Managing Conflict within the Project 410
Rejuvenating the Project Team 413
11.4 Managing Virtual Project Teams
11.5 Project Team Pitfalls 419
Groupthink 419
Bureaucratic Bypass Syndrome 419
Team Spirit Becomes Team Infatuation
Going Native 420
Chapter 12
Outsourcing: Managing
Interorganizational Relations
12.1 Outsourcing Project Work
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Contents xxi
12.2 Request for Proposal (RFP)
13.6 Indexes to Monitor Progress
Selection of Contractor from Bid Proposals
12.3 Best Practices in Outsourcing Project
Work 442
Well-Defined Requirements and Procedures 442
Extensive Training and Team-Building
Activities 444
Well-Established Conflict Management Processes
in Place 445
Frequent Review and Status Updates 447
Co-location When Needed 448
Fair and Incentive-Laden Contracts 449
Long-Term Outsourcing Relationships 449
12.4 The Art of Negotiating
1. Separate the People from the Problem 451
2. Focus on Interests, Not Positions 452
3. Invent Options for Mutual Gain 453
4. When Possible, Use Objective Criteria 454
Dealing with Unreasonable People 454
12.5 A Note on Managing Customer Relations
Summary 458
Appendix 12.1: Contract Management 467
What Data Are Collected? 476
Collecting Data and Analysis 476
Reports and Reporting 476
13.3 Monitoring Time Performance
Tracking Gantt Chart 478
Control Chart 479
Milestone Schedules 479
The Need for Earned Value Management 480
Percent Complete Rule 484
What Costs Are Included in Baselines? 484
Methods of Variance Analysis 485
13.5 Developing a Status Report: A Hypothetical
Example 487
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Technical Performance Measurement 498
Scope Creep 500
Baseline Changes 500
The Costs and Problems of Data Acquisition
Summary 503
Appendix 13.1: The Application of Additional Earned
Value Rules 522
Appendix 13.2: Obtaining Project Performance
Information from MS Project 2010 or 2016 528
Chapter 14
Project Closure
14.1 Types of Project Closure 534
14.2 Wrap-up Closure Activities 536
14.3 Project Audits 539
Level 1: Ad Hoc Project Management 546
Level 2: Formal Application of Project
Management 546
Level 3: Institutionalization of Project
Management 547
Level 4: Management of Project Management
System 547
Level 5: Optimization of Project Management
System 548
14.5 Post-implementation Evaluation
Team Evaluation 548
Individual, Team Member, and Project Manager
Performance Reviews 550
Summary 552
Appendix 14.1: Project Closeout Checklist
13.4 Earned Value Management (EVM)
Assumptions 487
Baseline Development 487
Development of the Status Report
14.4 Project Audits: The Big Picture
13.1 Structure of a Project Monitoring Information
System 476
Step 1: Setting a Baseline Plan 477
Step 2: Measuring Progress and Performance
Step 3: Comparing Plan against Actual 477
Step 4: Taking Action 478
13.7 Forecasting Final Project Cost
13.8 Other Control Issues 498
The Project Audit Process 540
Project Retrospectives 543
Chapter 13
Progress and Performance Measurement
and Evaluation 474
13.2 The Project Control Process
Performance Indexes 493
Project Percent Complete Indexes 494
Software for Project Cost/Schedule Systems
Additional Earned Value Rules 495
Chapter 15
Agile Project Management
15.1 Traditional versus Agile Methods 564
15.2 Agile PM 566
15.3 Agile PM in Action: Scrum 569
Roles and Responsibilities 570
Scrum Meetings 572
Product and Sprint Backlogs 573
Sprint and Release Burndown Charts
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xxii Contents
15.4 Extreme Programming and Kanban
15.5 Applying Agile PM to Large Projects
15.6 Limitations and Concerns 580
15.7 Hybrid Models 580
Summary 581
Chapter 16
International Projects
16.1 Environmental Factors
Legal/Political Factors 593
Security 593
Geography 594
Economic Factors 594
Infrastructure 596
Culture 597
16.2 Project Site Selection 599
16.3 Cross-Cultural Considerations:
A Closer Look 600
Adjustments 601
Working in Mexico 602
Working in France 605
Working in Saudi Arabia 606
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Working in China 608
Working in the United States 609
Summary Comments about Working in Different
Cultures 611
Culture Shock 611
16.4 Selection and Training for International
Projects 614
Summary 617
Appendix One: Solutions to Selected
Exercises 626
Appendix Two: Computer Project
Exercises 639
Glossary 656
Acronyms 663
Project Management Equations 664
Cross Reference of Project
Management 665
Socio-Technical Approach to Project
Management 666
Index 667
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The Managerial Process
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Modern Project Management
After reading this chapter you should be able to:
1.1 What Is a Project?
1-1 Understand why project management (PM) is
crucial in today’s world.
1.2 Agile Project Management
1-2 Distinguish a project from routine operations.
1-3 Identify the different stages of a project life cycle.
1-4 Describe how Agile PM is different from
traditional PM.
1.3 Current Drivers of Project Management
1.4 Project Management Today: A Socio-Technical
Text Overview
1-5 Understand that managing projects involves
balancing the technical and sociocultural
dimensions of the project.
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resources & costs
e PM
proje nal
All of mankind’s greatest accomplishments—from building the great
pyramids to discovering a cure for polio to putting a man on the moon—
began as a project.
LO 1-1
Understand why project
management (PM) is
crucial in today’s world.
This is a good time to be reading a book about project management. Business leaders
and experts have recognized that project management is critical to sustainable
economic growth. New jobs and competitive advantage are achieved by constant innovation, developing new products and services, and improving both productivity and
quality of work. This is the world of project management. Project management provides people with a powerful set of tools that improves their ability to plan, implement,
and manage activities to accomplish specific objectives. But project management is
more than just a set of tools; it is a results-oriented management style that places a
premium on building collaborative relationships among a diverse cast of characters.
Exciting opportunities await people skilled in project management.
The project approach has long been the style of doing business in the construction industry, U.S. Department of Defense contracts, and Hollywood, as well as
big consulting firms. Now project management has spread to all avenues of work.
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Chapter 1 Modern Project Management
Today, project teams carry out everything from port expansions to hospital restructuring to upgrading information systems. They are creating next-generation fuel-efficient
vehicles, developing sustainable sources of energy, and exploring the farthest reaches
of outer space. The impact of project management is most profound in high-tech
industries, where the new folk heroes are young professionals whose Herculean efforts
lead to the constant flow of new hardware and software products.
Project management is not limited to the private sector. Project management is also
a vehicle for doing good deeds and solving social problems. Endeavors such as providing emergency aid to areas hit by natural disasters, devising a strategy for reducing
crime and drug abuse within a city, or organizing a community effort to renovate a
public playground would and do benefit from the application of modern project
management techniques.
Perhaps the best indicator of demand for project management can be seen in the
rapid expansion of the Project Management Institute (PMI), a professional organization for project managers. PMI membership has grown from 93,000 in 2002 to more
than 565,000 in 2019. See Snapshot from Practice 1.1: The Project Management Institute for information regarding professional certification in project management.
It’s nearly impossible to pick up a newspaper or business periodical and not find
something about projects. This is no surprise! Approximately $2.5 trillion (about
25 percent of the U.S. gross national product) is spent on projects each year in the United
States alone. Other countries are increasingly spending more on projects. Millions of
people around the world consider project management the major task in their profession.
S N A P S H O T F R O M P R A C T I C E 1 .1
The Project Management Institute
(PMI) was founded in 1969 as an international society for project managers.
Today PMI has members from more
than 180 countries and more than
565,000 members. PMI professionals come from virtually every major industry, including aerospace, automotive, business management, construction, engineering,
financial services, information technology, pharmaceuticals, healthcare, and telecommunications.
PMI provides certification as a Project Management Professional (PMP)—someone who has documented sufficient project experience, agreed to follow
the PMI code of professional conduct, and demonstrated mastery of the field of project management by
passing a comprehensive examination based on the
Project Management Body of Knowledge (PMBOK),
which is in its 6th edition. The number of people
earning PMP status has grown dramatically in recent
years. In 1996 there were fewer than 3,000 certified
Project Management Professionals. By 2019 there
were more than 910,000 PMPs.
Just as the CPA exam is a standard for accountants,
passing the PMP exam may become the standard for
lar38865_ch01_002-027.indd 4
The Project Management Institute*
project managers. Some companies are requiring that
all their project managers be PMP certified. Moreover,
many job postings are restricted to PMPs. Job seekers,
in general, are finding that being PMP certified is an
advantage in the marketplace.
PMI added a certification as a Certified Associate
in Project Management (CAPM). CAPM is designed for
project team members and entry-level project managers, as well as qualified undergraduate and graduate
students who want a credential to recognize their
mastery of the project management body of knowledge. CAPM does not require the extensive project
management experience associated with the PMP.
In fact, students often qualify for taking the CAPM
exam by taking a course on project management. For
more details on PMP and CAPM, google PMI to find the
current website for the Project Management Institute.
This text provides a solid foundation for passing
either exam. However, we personally found it necessary to study a good PMP/CAPM exam “prep book” to
pass the exam. This is recommended, given the format
and nature of the exam.
*PMI Today, March 2019, p. 4.
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Chapter 1 Modern Project Management 5
Most of the people who excel at managing projects never have the title of project
manager. They include accountants, lawyers, administrators, scientists, contractors,
coaches, public health officials, teachers, and community advocates whose success depends upon being able to lead and manage project work. For some, the very
nature of their work is project driven. Projects may be cases for lawyers, audits for
accountants, events for artists, and renovations for contractors. For others, projects
may be a small but critical part of their work. For example, a high school teacher who
teaches four classes a day is responsible for coaching a group of students to compete
in a national debate competition. A store manager who oversees daily operations is
charged with developing an employee retention program. A sales account executive
is given the additional assignment of team lead to launch daily deals into a new city.
A public health official who manages a clinic is also responsible for organizing a
Homeless Youth Connect event. For these and others, project management is not a title
but a critical job requirement. It is hard to think of a profession or a career path that
would not benefit from being good at managing projects.
Not only is project management critical to most careers, but also the skill set is transferable across most businesses and professions. Project management fundamentals are
universal. The same project management methodology that is used to develop a new
product can be adapted to create new services, organize events, refurbish aging operations, and so forth. In a world where it is estimated that each person is likely to experience three to four career changes, managing projects is a talent worthy of development.
The significance of project management can also be seen in the classroom.
Twenty years ago major universities offered one or two classes in project management, primarily for engineers. Today most universities offer multiple sections of
Business information: Join a
project team charged with installing a new data security system.
Physical education: Design and
develop a new fitness program for
senior citizens that combines principles of yoga
and aerobics.
3. Marketing: Execute a sales program for a new
home air purifier.
A Dozen Examples of Projects
Given to Recent College Graduates
9. Systems engineer: Become a project team
member of a project to develop data mining of medical papers and studies related to drug efficacy.
10. Accounting: Work on an audit of a major client.
11. Public health: Research and design a medical
marijuana educational program.
12. English: Create a web-based user manual for a
new electronics product.
4. Industrial engineering: Manage a team to create a value chain report for every aspect of a key
product from design to customer delivery.
5. Chemistry: Develop a quality control program for
an organization’s drug production facilities.
6. Management: Implement a new store layout design.
7. Pre-med neurology student: Join a project team
linking mind mapping to an imbedded prosthetic
that will allow blind people to function near normally.
8. Sports communication: Join the athletics staff
at Montana State University to promote women’s
John Fedele/Blend Images LLC
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Chapter 1 Modern Project Management
project management classes, with the core group of engineers being supplemented
by business students majoring in marketing, management information systems (MIS),
and finance, as well as students from other disciplines such as oceanography, health
sciences, computer sciences, and liberal arts. These students are finding that their
exposure to project management is providing them with distinct advantages when it
comes time to look for jobs. More and more employers are looking for graduates with
project management skills. See Snapshot from Practice 1.2: A Dozen Examples of
Projects Given to Recent College Graduates for examples of projects given to recent
college graduates. The logical starting point for developing these skills is understanding the uniqueness of a project and of project managers.
1.1 What Is a Project?
LO 1-2
Distinguish a project
from routine operations.
What do the following headlines have in common?
Millions Watch World Cup Finals
Citywide WiFi System Set to Go Live
Hospitals Respond to New Healthcare Reforms
Apple’s New iPhone Hits the Market
City Receives Stimulus Funds to Expand Light Rail System
All of these events are projects.
The Project Management Institute provides the following definition of a project:
A project is a temporary endeavor undertaken to create a unique product, service, or result.
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Chapter 1 Modern Project Management 7
Like most organizational efforts, the major goal of a project is to satisfy a
customer’s need. Beyond this fundamental similarity, the characteristics of a project
help differentiate it from other endeavors of the organization. The major characteristics of a project are as follows:
An established objective.
A defined lifespan with a beginning and an end.
Usually, the involvement of several departments and professionals.
Typically, doing something that has never been done before.
Specific time, cost, and performance requirements.
First, projects have a defined objective—whether it is constructing a 12-story apartment complex by January 1 or releasing version 2.0 of a specific software package as
quickly as possible. This singular purpose is often lacking in daily organizational life
in which workers perform repetitive operations each day.
Second, because there is a specified objective, projects have a defined endpoint,
which is contrary to the ongoing duties and responsibilities of traditional jobs. Instead
of staying in one job, individuals often move from project to project, working with
different groups of people. For example, after helping to install a security system,
an IT engineer may be assigned to develop a database for a different client.
Third, unlike much organizational work that is segmented according to functional
specialty, projects typically require the combined efforts of a variety of specialists.
Instead of working in separate offices under separate managers, project participants,
whether they be engineers, financial analysts, marketing professionals, or quality control
specialists, work together under the guidance of a project manager to complete a project.
The fourth characteristic of a project is that it is nonroutine and has some unique
elements. This is not an either/or issue but a matter of degree. Obviously, accomplishing something that has never been done before, such as building an electric automobile
or landing two mechanical rovers on Mars, requires solving previously unsolved problems and using breakthrough technology. On the other hand, even basic construction
projects that involve established sets of routines and procedures require some degree
of customization that makes them unique. See Snapshot from Practice 1.3: London
Calling: Seattle Seahawks versus Oakland Raiders for an unusual change in routine.
Finally, specific time, cost, and performance requirements bind projects. Projects are
evaluated according to accomplishment, cost, and time spent. These triple constraints
impose a higher degree of accountability than typically found in most jobs. These three
also highlight one of the primary functions of project management, which is balancing the
trade-offs among time, cost, and performance while ultimately satisfying the customer.
What a Project Is Not
Projects should not be confused with everyday work. A project is not routine, repetitive
work! Ordinary daily work typically requires doing the same or similar work over and
over, while a project is done only once; a new product or service exists when the project is completed. Examine the list in Table 1.1 that compares routine, repetitive work
and projects. Recognizing the difference is important because too often resources can
be used up on daily operations, which may not contribute to longer-range organization
strategies that require innovative new products.
Program versus Project
In practice the terms project and program cause confusion. They are often used synonymously. A program is a group of related projects designed to accomplish a common
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Chapter 1 Modern Project Management
On October 7, 2018, the National Football League (NFL) Seattle Seahawks
walked off the field having played their
best game of the season, only to fall
short to the undefeated Los Angeles
Rams, 33–31. Next on the schedule was an away game
with the Oakland Raiders. Instead of heading about
670 miles south to Oakland, California, however, the
Seahawks flew nearly 5,000 miles to London, England,
eight time zones away, to spread the gospel of the NFL.
Sending an NFL team overseas during the season is
no easy task. Advanced planning is critical. Players need
passports. Accommodations have to be found and transportation arranged. The equipment staff sends supplies
months in advance. All total, the Seahawks ended up
shipping 21,000 pounds of gear and products, including
1,150 rolls of athletic tape, 2 tons of medical supplies,
350 power adapters, and 500 pairs of shoes!
Two of the biggest challenges the “Hawks” faced
were jet lag and distractions. Many of the players and
staff had never been overseas. London would be a
strange, exciting experience. With this in mind, head
coach Pete Carroll decided to fly early to London on
Wednesday, October 10. This would allow players to
better adjust their sleep patterns while providing some
free time to explore London.
The Seahawks boarded a chartered jet that included 45
sleeping pods in first class for the veteran players. Coach
Carroll and his staff sat in the first row of business class.
Rookies and members of the practice squad sat behind
them. Regardless of class, everyone got the same menu:
beef filet, Cajun chicken, or herb-roasted salmon.
Typically, on flights to the east, Sam Ramsden, the
team’s director of health and player performance, tells
players to stay awake so they will be tired and sleep
well when they arrive. For the London trip, though,
Ramsden reversed the program: he told players to
sleep as much as possible on the flight so when they
arrived in London on Thursday afternoon, they would
have enough energy to stay up until 9 or 10 p.m. and
then get a full night’s rest. “We try to protect their
circadian rhythms as much as possible,” Ramsden said.
Circadian rhythm (also known as body clock) is a natural, internal system that’s designed to regulate feelings
of sleepiness and wakefulness over a 24-hour period.
Ramsden’s staff gave each player special sleep kits
that included blackout eye masks. Some players took
melatonin or Ambien, while others used headphones
that played the sounds of wind and rushing water to
induce sleep.
lar38865_ch01_002-027.indd 8
London Calling: Seattle Seahawks
versus Oakland Raiders*
The Seahawks landed on Thursday about 1:30 p.m.
(5:30 a.m. Seattle time). Buses took them to a golf
course resort north of London.
At night, the players let off some steam at a Topgolf
facility. Here organized into groups of four, they tried to
hit golf balls into giant holes to score points. Jeers rang
out every time they were wildly off target.
After several hours of meetings and a practice, players were free to explore London. They scattered to the
various corners of London. On returning to the resort
before the 11:00 p.m. curfew, a few of the players
complained about the warm English beer.
The Oakland Raiders arrived in London at 1:00 p.m.,
53 hours before game time.
Coach Carroll likes to take his players to the stadium
the day before a road game so they can visualize
conditions ahead of time. At 1:30 p.m., the Seahawks
drove to Wembley, where they saw their fully Seahawkequipped locker room and the field, the most famous
soccer pitch in England. The field appeared slick, so
the equipment manager had longer screw-in cleats
available for the players. The Hawks returned to their
resort for their normal pregame evening routine.
During the course of the game, the TV announcers
commented several times that the Raiders seemed
sluggish, while the Seahawks were sharp and focused.
The Seahawks dominated the game, winning 27–3.
David Lee/Shutterstock
*Bell, G., “Seahawks Arrive in London. Why Twins Shaquill and
Shaquem Griffin Did Not Travel Here Equally,” thenewstribune
.com, October 11, 2018. Belson, K., “Four Thousand Miles for
the W,” nytimes.com, October 20, 2018; Accessed 10/22/18.
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Chapter 1 Modern Project Management 9
TABLE 1.1 Comparison of Routine Work with Projects
Routine, Repetitive Work
Taking class notes
Daily entering sales receipts into the
accounting ledger
Responding to a supply-chain request
Practicing scales on the piano
Routine manufacture of an Apple iPod
Writing a term paper
Setting up a sales kiosk for a professional accounting
Developing a supply-chain information system
Writing a new piano piece
Designing an iPod that is approximately 2 × 4 inches,
interfaces with PC, and stores 10,000 songs
Wire-tag projects for GE and Walmart
Attaching tags on a manufactured product
goal over an extended period of time. Each project within a program has a project
manager. The major differences lie in scale and time span.
Program management is the process of managing a group of ongoing, interdependent, related projects in a coordinated way to achieve strategic objectives. For example, a pharmaceutical organization could have a program for curing cancer. The cancer
program includes and coordinates all cancer projects that continue over an extended
time horizon (Gray, 2011). Coordinating all cancer projects under the oversight of a
cancer team provides benefits not available from managing them individually.
This cancer team also oversees the selection and prioritizing of cancer projects that
are included in their special “Cancer” portfolio. Although each project retains its
own goals and scope, the project manager and team are also motivated by the higher
program goal. Program goals are closely related to broad strategic organization goals.
The Project Life Cycle
Another way of illustrating the unique nature of project work is in terms of the project
life cycle. The life cycle recognizes that projects have a limited lifespan and that
there are predictable changes in level of effort and focus over the life of the project.
There are a number of different life-cycle models in project management literature.
Many are unique to a specific industry or type of project. For example, a new-software
development project may consist of five phases: definition, design, code, integration/
test, and maintenance. A generic cycle is depicted in Figure 1.1.
The project life cycle typically passes sequentially through four stages: defining,
planning, executing, and closing. The starting point begins the moment the project is
given the go-ahead. Project effort starts slowly, builds to a peak, and then declines to
delivery of the project to the customer.
LO 1-3
Identify the different
stages of a project life
1. Defining stage. Specifications of the project are defined; project objectives are
established; teams are formed; major responsibilities are assigned.
2. Planning stage. The level of effort increases, and plans are developed to determine what the project will entail, when it will be scheduled, whom it will benefit,
what quality level should be maintained, and what the budget will be.
3. Executing stage. A major portion of the project work takes place—both physical
and mental. The physical product is produced (e.g., a bridge, a report, a software
program). Time, cost, and specification measures are used for control. Is the project
on schedule, on budget, and meeting specifications? What are the forecasts of each
of these measures? What revisions/changes are necessary?
4. Closing stage. Closing includes three activities: delivering the project product to
the customer, redeploying project resources, and conducting a post-project review.
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Chapter 1 Modern Project Management
Project Life Cycle
Level of effort
1. Goals
2. Specifications
3. Tasks
4. Responsibilities
1. Schedules
2. Budgets
3. Resources
4. Risks
5. Staffing
1. Status reports
2. Changes
3. Quality
4. Forecasts
1. Train customer
2. Transfer documents
3. Release resources
4. Evaluation
5. Lessons learned
Delivery of the project might include customer training and transferring documents.
Redeployment usually involves releasing project equipment/materials to other projects and finding new assignments for team members. Post-project reviews include
not only assessing performance but also capturing lessons learned.
In practice, the project life cycle is used by some project groups to depict the
timing of major tasks over the life of the project. For example, the design team
might plan a major commitment of resources in the defining stage, while the quality
team would expect their major effort to increase in the latter stages of the project life
cycle. Because most organizations have a portfolio of projects going on concurrently,
each at a different stage of each project’s life cycle, careful planning and management
at the organization and project levels are imperative.
The Project Manager
At first glance project managers perform the same functions as other managers.
That is, they plan, schedule, motivate, and control. However, what makes them unique
is that they manage temporary, nonrepetitive activities to complete a fixed-life project. Unlike functional managers, who take over existing operations, project managers
create a project team and organization where none existed before. They must decide
what and how things should be done instead of simply managing set processes.
They must meet the challenges of each phase of the project life cycle and even oversee
the dissolution of their operation when the project is completed.
Project managers must work with a diverse troupe of characters to complete
projects. They are typically the direct link to the customer and must manage the tension
between customer expectations and what is feasible and reasonable. Project managers
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Chapter 1 Modern Project Management 11
provide direction, coordination, and integration to the project team, which is often
made up of part-time participants loyal to their functional departments. They often
must work with a cadre of outsiders—vendors, suppliers, and subcontractors—who do
not necessarily share their project allegience.
Project managers are ultimately responsible for performance (frequently with too
little authority). They must ensure that appropriate trade-offs are made among the
time, cost, and performance requirements of the project. At the same time, unlike their
functional counterparts, project managers often possess only rudimentary technical
knowledge to make such decisions. Instead, they must orchestrate the completion of
the project by inducing the right people, at the right time, to address the right issues
and make the right decisions.
While project management is not for the timid, working on projects can be an
extremely rewarding experience. Life on projects is rarely boring; each day is different from the last. Since most projects are directed at solving some tangible problem or
pursuing some useful opportunity, project managers find their work personally
meaningful and satisfying. They enjoy the act of creating something new and
innovative. Project managers and team members can feel immense pride in their
accomplishment, whether it is a new bridge, a new product, or a needed service.
Project managers are often stars in their organization and well compensated.
Good project managers are always in demand. Every industry is looking for
effective people who can get the right things done on time. See Snapshot from
Practice 1.4: Ron Parker for an example of someone who leveraged his ability
to manage projects to build a successful career in the glass products industry.
Clearly project management is a challenging and exciting profession. This text
is intended to provide the necessary knowledge, perspective, and tools to enable
students to accept the challenge.
Being Part of a Project Team
Most people’s first exposure to project management occurs while working as part
of a team assigned to complete a specific project. Sometimes this work is full time,
but in most cases people work part time on one or more projects. They must learn
how to juggle their day-to-day commitments with additional project responsibilities.
They may join a team with a long history of working together, in which case roles
and norms are firmly established. Alternatively their team may consist of strangers
from different departments and organizations. As such, they endure the growing pains
of a group evolving into a team. They need to be a positive force in helping the team
coalesce into an effective project team.
Not only are there people issues, but project members are also expected to use
project management tools and concepts. They develop or are given a project charter or scope statement that defines the objectives and parameters of the project.
They work with others to create a project schedule and budget that will guide
project execution. They need to understand project priorities so they can make
independent decisions. They must know how to monitor and report project
progress. Although much of this book is written from the perspective of a project
manager, the tools, concepts, and methods are critical to everyone working on a
project. Project members need to know how to avoid the dangers of scope creep,
manage the critical path, engage in timely risk management, negotiate, and utilize
virtual tools to communicate.
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Chapter 1 Modern Project Management
1986 BS Business
Oregon State University
1986–1990 Food Products
Wood Products Manufacturing
Glass Products Manufacturing
Upon completion of my business degree at Oregon
State University, I was recruited by a Fortune 100 food
products company for a first-line production supervisor position. In that role, an opportunity came up for
me to manage a project that involved rolling out a new
statistical package-weight-control program throughout
the factory. Successfully completing that project was
instrumental in accelerating my career within the company, advancing from supervisor to product manager in
less than three years.
After four years in food products I accepted an offer
to join a wood products manufacturing company. Initially
my role in this company was human resource manager.
My HR responsibilities included managing several projects to improve safety and employee retention. Successful completion of these projects led to a promotion to
plant manager. In the plant manager role, I was tasked
with building and managing a new wood door manufacturing factory. After successfully taking that factory to
full production, I was promoted again, to corporate manager of continuous improvement. This “culture change”
Ron Parker
project involved implementing total quality management throughout 13 different manufacturing factories as
well as all the indirect and support functions within the
corporation. Shortly after we successfully ingrained this
new culture in the company, the owner passed away,
leading me to look for other employment.
I was able to leverage my previous experience and
success to convince the owner of a struggling glass
fabrication company to hire me. In this new role as
general manager, I was tasked with turning the company around. This was my largest project yet. Turning a
company around involves a myriad of smaller improvement projects spanning from facilities and equipment
improvements to product line additions and deletions
to sales and marketing strategy and everything in
between. In four years we successfully turned the company around to the extent that the owner was able to
sell the company and comfortably retire.
Successfully turning that glass company around
got the attention of a much larger competitor of
ours, resulting in an offer of employment. This new
offer involved the start-up of a $30M high-tech glass
manufacturing facility in another state. We were
able to take that facility from a dirt field to the highestvolume manufacturing facility of its kind in the world
in just three years. After building and operating this
factory at a world-class benchmark level for eight
years, I came across a new and exciting opportunity to help expand a strong glass fabrication
1.2 Agile Project Management
LO 1-4
Describe how Agile PM
is different from traditional PM.
lar38865_ch01_002-027.indd 12
Traditional project management focuses on thorough planning up front. Planning
requires predictability. For plans to be effective, managers have to have a good understanding of what is to be accomplished and how to do it. For example, when it comes
to building a bridge, engineers can draw upon proven technology and design principles to plan and build the bridge. Not all projects enjoy such predictability. Figure 1.2
speaks to this issue.
Project uncertainty varies according to the extent the project scope is known and
stable and the technology to be used is known and proven. Many projects, like the
bridge project, product extensions, events, marketing campaigns, and so forth have
well-established scopes and use proven technology, which provide the predictability for effective planning. However, when the project scope and/or technology is not
fully known, things become much less predictable and plan-driven methods suffer.
Such was the case for software development projects where it was estimated that in
1995 American firms and agencies spent $81 billion for canceled software projects
(The Standish Group, 1995).
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Chapter 1 Modern Project Management 13
company in Canada. I spent four years successfully
transitioning this Canadian company from a mediumsized glass fabrication facility to one of the largest
and most successful of its kind in North America.
After tiring of the “Great White North,” I found an
opportunity to tackle the largest and most impactful
project of my career. I’m currently VP of operations
in a venture-funded, high-tech, start-up company. In
this role, I’m overseeing the construction and startup of the first full-scale, high-volume electrochromic
glass fabrication factory in the world. This new project
©Ron Parker
involves building a company from the ground up and
taking an exciting new technology from the lab to
full-scale commercialization. Success in this role,
although still far from being certain, will eventually
revolutionize the glass industry through the introduction of a product that dramatically improves the
energy efficiency and occupant comfort of buildings
around the world.
Looking back on my career, it is apparent that my
degree of success has largely been the result of taking
on and successfully completing successively larger and
increasingly impactful projects.
There’s a saying that’s always resonated with me:
“If your only tool is a hammer, all your problems look
like nails.” Good tools are hard to come by and heavy
to carry around. I like my tool bag filled with generalist tools: things like communication skills, leadership, common sense, judgment, reasoning, logic, and
a strong sense of urgency. I often wonder how much
more I could have accomplished, had I actually studied
project management and had more of that toolset in
my bag. With a bag full of strong generalist tools, you
can tackle any problem in any business. Project management is clearly one of those skills where the better
you are at it, the higher your chances of success in any
business environment. Having the tools is only part
of the equation, though. To be successful, you must
also be willing to run at problems/opportunities when
everyone else is running away from them.
Enter Agile project management (Agile PM). Agile methodologies emerged
out of frustration with using traditional project management processes to
develop software. Software projects are notorious for having unstable scopes in
which end user requirements are discovered not defined up front. Agile PM is
now being used acr…
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