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Project
Management
EIGHTH EDITION

Dennis Lock

GOWER
O Dennis Lock 2003

All rights reserved. No part of this publication may be r e p r o d u d , stored in a retrieval system, or transmitted
in any fonn or by any means. electronic, mechanical, photocopying, recording or otherwise without the
permission of the publisher.

First puhlished in 1968

Second edition 1977
Third edition 1984
Fourth edition 1988
Fifth edition 1992
Sixth edition 1996
Seventh edition 2000

This edition published by

Gower Publishing Limited
Gower House
Cmft Road
Aldershot
Hampshire G u l l 3HR
England

Gower
Suite 420
101 Cherry Street
Burlington
Vermont 05401-4405
USA

Dennis Lock has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as the
author of this work.

British Lihrary Cataloguing in Publication Data

Lack, Dennis, 1929-
Project management. - 8th ed.
1. Project management
I. Title
658.4'04

ISBN 6566-08578-X Hardback

0-5664855 1-8 Paperback

Library of Congress Cataloging-in-Publication Data

Lock, Dennis.
Pmject managementi Dennis Lock.4th ed.
p. cm.
ISBN 6566a8578-X ISBN 0-566-0855 1-8
I. Project management. I. Title.

Typeset in Times by Bournemouth Colour Press, Poole and printed in Great Britain by MPG Books Ltd.,
Bodmin.
Contents

...
List of figures Xlll
Preface to eighth edition xix
Acknowledgements xxiii

Part I The nature and organization of project management 1

Chapter 1 The nature and purpose of project management 3

Projects 4
The primary project objectives 6
Balancing the primary objectives 8
Perceptions of project success or failure beyond the
three primary objectives 12
Customers, clients, contractors and end-users 15
Project life cycle 16
Associations representing the profession of project management 17

Chapter Project management organization

Effective organization and communications
The emergence of project management in a developing
company
Project matrix organizations
Project teams and task forces
Organization of central administration functions
Which type of organization is best?
The project manager
Project services groups
Organizations with more than one project manager
References and further reading for Part I 53
vi Pmject management

Part I1 The financial and commercial framework

Chapter 3 Defining the project

Projects which are dtfficult or impossible to define
Feasibili~studies to improve early project definition
Checklists
Defining a project forfinancial appraisal
Customer enquiries
The contractor 5. specification and questions o f strategy
Specifications for product development projects
Developing and documenting the project specification

Chapter 4 Cost estimates, Part 1: Definitions and principles

Cost definitions and principles
Estimating accuracy
Classification of estimates according to confidence
Estimating accuracy in relation to prices and profits
Version control of project cost estimates
Work breakdown structure
Cost-coding systems
Benefits of a logical coding system
Choosing a coding system
What happens when the customer says 'You shall use my
coding system!'?
Chapter 5 Cost estimates, Part 2: Estimating in practice
Top-down or bottom-up?
Compiling the task list
Level of detail in project cost estimating
Estimating formats
Estimating manufacturing costs
Collecting estimates for labour times
Personal estimating characteristics
Estimates for material and equipment costs
Below-the-line costs
Reviewing the cost estimates

Chapter 6 Commercial management

Project.feasibility analysis
Financial project appraisal
SensitiviQ analysis
Project funding
Contracts
Contract payment structures
References and further reading for Part I1
Part III Planning and scheduling 157

Chapter 7 An introduction to planning and scheduling

The planning and scheduling environment
Distinction between planning and scheduling
The planning time frame
Matrix charts
Simple tabular planning (timetables)
Bar charts (Gantt charts)
Line o f balance charts

Chapter 8 Network analysis: Logic diagrams and the critical path

Background
The different network notation systems
Critical path analysis using arrow diagrams
Critical path analysis using precedence notation
Case study: Furniture project
Case study: Gantry project
PERT
More complex network notation

Chapter 9 Network analysis in practice

Developing network logic
Level of detail in network planning
Intevface events and activities
Milestones
Estimating activity durations
I s the timescale shown too long?
A case jbr drawing networks from right to left
Network analysis as a management tool

Chapter 10 Scheduling resources, Part 1: Principles

What are resources and which of them can he scheduled?
The role of network analysis in resource scheduling
Case study: Garage project
Float
Two fundamental priority rules for resource scheduling
Summary: The elements of a practicable schedule

Chapter 11 Scheduling resources, Part 2: In practice

Choice of labour resources to be scheduled
Choice of resource units
Rate-constant and nun-rate-constant use of resources
Specifying resource availability levels
Using different calendars for resource scheduling
 ...
vrrr Project management

Scheduling labour costs 263

Scheduling costs for materials and other purchases 263
Scheduling cash flow 266
The seven steps of project resource scheduling 270
Project scheduling in the corporate context 272
References and further reading for Part I11 275

Part IV Computer applications 277

Chapter 12 Project management computer systems, Part 1: Preparation 279

Scheduling with or without a computer 279
Facilities required 282
System requirements 284
Choosing a suitable computer program 286
Special network logic requirements for computer applications 293
Preparing for the first computer schedule 293

Chapter 13 Project management computer systems, Part 2: Typical

applications
The welcoming screen
Case study project
Data entry errors
Network plotting
Time analysis of the garage project network
Resource scheduling: The general process
Resource scheduling for the garage project
Output reports
Updating

Chapter 14 Project management computer systems, Part 3: Specialized

applications 329
Dealing with large networks 329
Multi-project resource scheduling 332
Standard networks 341
Templates (standard network modules) 343
Programs for probability and risk analysis 352
SofnYare sources 357

Part V Purchasing and materials management 359

Chapter 15 Scheduling parts for manufacturing projects 361

Parts scheduling compared with project scheduling 361
 Identifying and quantlfling common parts
Filing cabinet project
Line of balance
Computer solutions

Chapter 16 Purchasing, Part 1: Principles and initial ordering

The importance of purchasing and materials control
The purchasing cycle
The purchase order
Commercial conditions of purchase
Terms of trade used in international business (Incoterms 2000)
Speczfying the goods
Timing of orders and deliveries
Purchase quantities

Chapter 17 Purchasing, Part 2: Post-order activities and wider aspects

of materials control
Purchase order amendments
Expediting
Shortages
The Pareto principle and stock management
Project or stock purchasing?
Project purchasing as a condition of contract
Stores administration
Materials management as a shared or common service

Chapter 18 hrchasing, Part 3: Procedures for capital projects

The purchasing organization
Purchase control schedules
Purchase specifications
Purchase enquiries
Bid evaluation
Purchase requisitions and orders
Correlation between specification, enquiry and order numbers
Assuring quality and progress
Vendors' documents
Shipping, port and customs formalities
Purchase order status reports
References and further reading for Part V
x Project management

Part VI Managing work and costs

Chapter 19 Managing project start-up

Project authorization
Authorizing work without a contract or customer S order
Preliminary organization of the project
Correspondence and other documents
Project engineering standards and procedures
Physical preparations and organization
Getting work started
Issuing detailed planning and work instructions

Chapter 20 Managing progress

Project progressing as a closed-loop control system
Routine collection of progress data
The non-routine approach to progressing
Managing subcontractors and agency employees
Routine priority allocation in manufacturing projects
When the news is had
Corrective measures
Immediate action orders
Haste versus good management
Construction site organization and management
Conduct of project meetings
Progress meetings
Progress meetings abandoned
Project progress reports

Chapter 21 Managing Costs

Objectives of project cost management
A checklist of cost management,factors
The total cost approach
Budgets
Cost-collection methods
Audits
Comparing actual costs with planned costs

Chapter 22 Earned-value analysis

Milestone analysis
Earned-value analysis
Earned-value analysi.~prediction reliability and implications
Evaluating cost performance for materials and bought-out
equipment
Eflect of project changes on earned-value analysis
The project ledger concept
 Predicting profitability for the whole project
Post mortem

Chapter 23 Managing project changes

Classification o f changes
~uthoiizationarrangements
General administration
Estimating the true cost of a change
Forms and procedures
Version conrol for modified drawings and specifications
Emergency modifications

Chapter 24 Managing project risk

Identifiing and assessing risks
Methods,for dealing with risks
Insurance
Planning for a crisis

Chapter 25 Managing project closure

Reasons,for closing a project
Formal project closure
Final project cost records
Disposal of surplus material stocks
Final project definition: The end of a continuous process
As-built condition of a manufacturing or capital engineering
project
As-built condition of a multiple manufacturing project
As-built condition of a project that is interrupted
before completion
Managing files and archives
References and further reading for Part VI

A general project management bibliography 609

Index 613
Figures

Triangle of objectives: Version 1

Triangle of objectives: Version 2
Example of a stakeholders' objectives matrix
Examples of project relationships
Typical project life history
Example of a manufacturing company organization
A manufacturing project cycle
A functional matrix for a single project in
a manufacturing company
Matrix organization for several simultaneous
manufacturing projects
Matrix organization for a company engineering
mining, petrochemical or large construction projects
Project team organization
Project team versus a balanced matrix
A hybrid organization
A project with more than one project manager
The project definition process
Part of a definition checklist for a new project
A screening and action plan for new sales enquiries
Cost and price structure for a simple manufacturing project
Example of labour grades for standard costing in
a project engineering company
Part of the work breakdown for a large mining project
Work breakdown for a project to build a new railway
Work breakdown and cost-coding structure for a
small radiocommunications project
Detail from the work breakdown for the
radiocommunications project
Project coding system used by a heavy engineering company
xiv Pr oject munagement

Project coding system used by a mining engineering company 101

A general-purpose cost estimating format 112
Cost estimating format for purchased
materials on large projects 114
A format for indicating project price 116
Boiler replacement project: Payback calculation 132
Boiler replacement project: Payback graphs 133
Table of discount factors for calculating net present values 135
Boiler replacement project: Net present value calculation 136
Tollbridge project: net present value calculation 138
Relationship between the basis of payment and
project control emphasis 151
The planning and scheduling environment 160
Simple matrix chart for planning and controlling a book editing
project 166
Four possible matrix chart arrangements 167
A simple bar chart 170
Furniture project task list 173
Furniture project: Bar chart 175
Furniture project: Linked bar chart 176
Five-house project: Bar chart 178
Five-house project: Line of balance chart 179
Eighty-house project: Line of balance chart 180
The main elements of arrow logic 185
Tree project network using arrow notation 186
An example of arrow network time analysis 188
Three methods for showing times on arrow networks 191
An activity in precedence notation 192
Tree project using precedence notation 194
An example of precedence network time analysis 195
Furniture project: Task list 197
Furniture project: Activity-on-arrow network diagram 198
Furniture project: Precedence network diagram 199
Furniture project: T i e analysis 200
Gantry project 202
Gantry project: Network diagram 203
Gantry project: Time analysis 204
Gantry project: Possible crash actions to shorten
the project duration 207
Methods for showing overlapping activities in
arrow and precedence networks 210
Constraint options in precedence networks 212
Using dummies to clarify cluttered logic 213
A common logic error in arrow networks 218
Level of detail in a purchasing sequence 222
 Network interfaces
Garage project: Network diagram
Garage project: Task list and time analysis
Garage project: Bar chart and resource histogram - aggregation
Garage project: Bat chart and resource histogram - resource-limite
Garage project: Bar chart and resource histogram - time-limited
Garage project: Float analysis of activity GO913 (09-13)
Garage project: Float analysis of activity G1016 (10-16)
Time-limited versus resource-limited priority
rules for resource scheduling
Cash outflow schedule
Net cash flow schedule
Essential elements of a project net cash flow schedule
The complexity of project resource scheduling
Seven logical steps towards a project resource schedule
Suggested procedure for buying project management software
Checklist for use when buying project management software
Suggested procedure for implementing new
project management software
Garage project: Precedence network diagram
Garage project: Cost estimates
Garage project: Data errors
Garage project: Summary network plotted by 4c
Garage project: Time analysis from
Microsoft Project 2000
Garage project: Time-limited resource
histograms by Pnmavera
Garage project: Resource-limited resource
histograms by Pnmavera
Garage project: Cost report by Primavera
Garage project: A useful resource and cost summary
Rolling wave planning
Breaking down a large project plan into sub-networks
Managing a multi-project model
Transfer line machine project: An early example
of a standard network module (template)
Transfer line machine project: Procurement
-
and machining tem~late
14.6 Ternplating case study: The template library principle
14.7 Temulatine case study: The standard start template
TCSAA and template A
14.8 Ternplating case study: Template D and the
standard finish template TCSFF
14.9 Templating case st;dy: The template Library browser
14.10 Templating case study: Network diagram
mi Project management

14.11 Templating case study: A network fragment 351

14.12 Templating case study: Bar chart produced by 4c 353
14.13 Garage project: Duration estimates for
PERT or Monte Carlo analysis 355
14.14 Garage project: Monte Carlo analysis 356
15.1 Filing cabinet project: Exploded view 364
15.2 Filing cabinet project: Simple parts list 365
15.3 Filing cabinet project: Family tree 367
15.4 Filing cabinet project: Parts list arranged in sub-assemblies 368
15.5 Filing cabinet project: Delivery data 369
15.6 Filing cabinet project: Family tree redrawn for line of balance 370
15.7 Filing cabinet project: Calculation of lead times for parts 371
15.8 Filing cabinet project: Delivery commitment graph 372
15.9 Filing cabinet project: Calculation for line of balance at day 4 373
15.10 Filing cabinet project: The line of balance at day 4 375
15.11 Filing cabinet project: The line of balance chart completed for day 4 376
16.1 Value of purchasing in project management 380
16.2 The purchasing cycle 381
16.3 Elements of a typical purchase order form 385
17.1 A shortage list format 399
17.2 Three methods for recording the costs of project materials 403
18.1 Elements of a purchasing organization for a large international
project 412
18.2 Stages in the purchase of equipment for a large international project 414
18.3 Page heading for sheet 1 of a purchase control schedule 417
18.4 A complete purchase control schedule 418
18.5 A purchase specification: Front sheet 421
18.6 A purchase specification: Second sheet 422
18.7 A purchase specification: Continuation sheet 423
18.8 A purchase enquiry request 425
18.9 A bid summary example 428
18.10 A purchase requisition 431
18.11 An inspection and expediting report 434
19.1 A project register page 447
19.2 Works order 450
19.3 Project authorization 451
19.4 Typical cost-time relationship 452
19.5 Linear responsibility matrix 455
19.6 Document distribution matrix 456
19.7 A standard start-up network for a manufacturing project 464
20.1 A familiar sign 469
20.2 A control loop 47 1
20.3 A combined work-to list and progress questionnaire 473
20.4 Immediate action order 486
20.5 A construction site organization 492
A combined meeting agenda and action sheet
A weekly timesheet
Comparison of actual costs against a time-scaled budget
Project cost and achievement comparison using milestones
Data for a milestone chart
Earned-value analysis for an engineering department
A cost-profit prediction graph
A tabulated project cost report
Some origins of project changes
Decision tree for change requests
A general-purpose change register
Car project: Estimated modification cost
Project variation order
Engineering change request
Production permit or concession
Engineering query note
Inspection report format
An Ishikawa fishbone diagram
Part of a simple failure mode and effect matrix (FMEA)
A very simple risk classification matrix
A simple qualitative risk assessment matrix
Part of a failure mode effect and criticality
analysis matrix (FMECA)
Risk and insurance in project management
Project closure notice with checklist
Column headings for a drawing schedule
A build schedule sheet
Preface to the eighth edition

Once, some time ago, my fellow day-release management students and I were
invited to write a 5000-word assignment as part of our fist-year course work.
Most of my colleagues spent many hours and late nights diligently researching this
or that aspect of industry, marketing or economics for their material. Always keen
to save time and effort, however, I chose to describe my own job. I think the result
received an 'A-minus' but, more importantly, it seeded the first (1968) edition of
this book. Now, after many subsequent years as a manager, I teach project
management to MBA and MSc students. So a book originally written by a
management student has been developed and improved through my management
years and is now written very much with the needs of students in mind.
Project management is well supported in the literature. Excellent texts appear
regularly in new editions that combine comprehensive theory with practical advice
and case studies. Sometimes one or more of these admirable works are used
alongside this book as recommended course texts. I am always pleased when
students tell me that they prefer my book because they find it particularly
approachable and easy to read. Of course, when the warm glow of satisfaction has
subsided, I try to analyse the reasons and build on them. My abhorrence of
unnecessary jargon and 'management speak' must be one reason. A writer must
always seek to inform using plain language rather than set out to impress with
words that compel the reader to have the book in one hand and a dictionary in
other. So writing style is obviously important. But the text must also be easy to
navigate. Readers, especially time-starved students on intensive courses, must be
able to find or revisit any topic quickly. Some otherwise excellent books fall down
in this respect. The chapters have to be organized in a logical sequence and, most
important, everything must be comprehensively indexed.
My sequence of chapters has always been intended to track the logical
progression of a project through its active life cycle from concept to closedown.
There might be one or two anomalies in this respect because I have generally held
back from significant restructuring that could cause inconvenience and rework for
universities and other academic establishments where this book forms part of the
recommended reading and where their course notes refer to particular chapters. It
u Project mnnagement

was necessary, however, to rearrange the chapters in Part VI to some extent to

accommodate a new chapter on risk management. The total number of chapters
has increased from 24 to 25.
Reproduction of very complex illustrations (large network diagrams, for
instance) is not very practicable on a book page so, once again, I have reviewed
every figure to ensure that it is designed and drawn for optimum clarity. The
seventh edition introduced a few images captured from my computer screen that
lost some definition in the printing process. All computer screen images have
therefore been replaced in this edition by faithful simulations, prepared using a
drawing program.
Text revisions are too numerous to list in detail, so I shall outline just a few of
the more significant changes. These begin in Chapter 1, which has been extended
to give more emphasis to the views of stakeholders beyond the project owner and
project manager. The more mature view recognizes that the perceived success or
failure of a project often depends on more than the three primary factors of time,
money and quality.
Chapter 3 has been restructured to present its material in a more logical
sequence.
The section on insurance that was previously placed in Chapter 6 has been
updated (for which I am indebted once again to Robert Pow) and transferred to
become part of Chapter 24, the completely new chapter dealing with project risk
management. A new financial appraisal example, improved treatment of
feasibility analysis and a short section on sensitivity analysis now strengthen the
remainder of Chapter 6.
Some manual procedures, especially in the planning and resource scheduling
chapters, have been removed because they are now well out of date and almost
always performed using computers. While arrow networks can still play a
valuable part in preliminary planning sessions and are therefore retained in Part
111, the last computer program known to me that could process these networks has
recently been changed to a precedence-only capability. I have therefore updated
all the examples in Part IV accordingly.
Following the format of previous editions, each part of this book ends with a
short list of references and further reading. These have all been checked and,
where appropriate, revised. For this eighth edition I have decided to add a general
bibliography of books on project management.
 Preface to the eighth edition xxi

Although an author might write with a particular readership in mind, he or she

has no control over who buys and uses their work. Early editions of this book were
intended for students and fellow industrial managers who might appreciate a
practical and holistic guide to project management. Experience has since revealed
a readership that extends to professional people with no apparent connection to
industry or projects, demonstrating that project management has grown into a core
management skill, to be practised in any organization and by any professional
person undertaking a programme of change.

Dennis Lock
St Albans
2002
Acknowledgements

I am grateful to the following people and organizations who have helped in

different but valuable ways in the preparation of this edition.

4c Systems Limited
Association for Project Management
Microsoft Corporation
Primavera
Robert Pow
Martin Stevens
Welcom Software

Artemis Kews is a registered trademark.

Microsoft Project, Microsoft Project 98, Microsoft Project 2000 and Microsoft
Project 2002 are registered trademarks and Windows is a trademark of
Microsoft Corporation.
Open Plan, Open Plan Professional, COBRA and OPERA are registered
trademarks of Welcom Software Corporation.
PMI and the PMI logo are service and trademarks registered in the United States
and other nations.
PMBOK, PM Network and PMI Today are trademarks registered in the United
States and other nations.
Project Management Journal and 'Building professionalism in project
management' are trademarks of the Project Management Institute, Inc.
Primavera Project Planner is a registered trademark.
4c is a trademark of 4c Systems Limited.
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