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The document discusses project management, using the BBC's Digital Media Initiative (DMI) as a case study to illustrate key challenges in IT project execution. Originally launched with high expectations, the DMI project faced significant setbacks, including unclear requirements, poor user testing, and a lack of integration management which ultimately led to its cancellation in 2013 after considerable cost overruns. It emphasizes the importance of effective project management practices and outlines essential project parameters such as scope, cost, time, quality, and user expectations.

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CHAPTER 3 PROJECT MANAGEMENT THE ESSENCE OF PROJECT MANAGEMENT “First, have a definite, clear practical ideal; a goal, an objective. Second, have the necessary means to achieve your ends; wisdom, money, materials, and methods. Third, adjust all your means to that end.” —Aristotle, ancient Greek philosopher and scientist THE BBC DIGITAL MEDIA INITIATIVE In 2007, the British Broadcasting Corporation (BBC) launched the Digital Media Initiative, an IT project meant to digitize media production and media asset management across the organization. Originally estimated at a cost of £80 million ($128 million), DMI was intended to introduce a tape- less
workflow—from raw footage to finished programs—and give BBC staff immediate desktop access to the entire BBC archive. It was predicted that the DMI would save the company 2.5 percent in media production costs per hour, bringing a return of £100 million ($160 million) by 2015. In 2008, the BBC awarded the contract to Siemens, its long-time technology partner; however, that partnership broke down in 2009, with neither company taking direct responsibility for the failure. Rather, the two companies issued a statement saying, “The media environment has changed a great deal since the DMI project began, and both organizations have been in discussions about the way forward. The BBC and Siemens have reached an agreement that allows the BBC to complete the Chapter 3 project in-house.” DMI was dubbed the “Don’t Mention It” project and delegated to the BBC’s chief 62 technical architect and executive producer. Once in-house, however, DMI ran into a series of obstacles. Behind schedule, the IT team struggled to get end users to commit to firm project requirements and priorities. “Throughout the project, the team informed me that the biggest single challenge facing the project was the changes to requirements requested by the business,” said the former chief technology officer John Linwood. The result was a constantly fluctuating project scope. In addition, the technology team sought to adopt an agile development approach, so that the software would be produced
bit-by-bit, with the business units exploring each incremental release as it was developed. Linwood claims, however, that the business units did not want to take the time to test the releases. Eventually, the IT team simply developed major system components with minimal business unit testing. Meanwhile, the project was falling further and further behind sched- ule. In addition, the BBC did not assign anyone the responsibility or the authority to oversee the adoption of the program by the business units, depriving the DMI of effective project integration management. Because the transition from tape-based production and asset management to digital production and asset management necessitated a significant shift in work processes, management of the adoption and integration of the DMI into business units was essential. In May 2013, the BBC announced that it was scrapping the entire DMI project and firing its chief technology officer. In January 2014, the National Audit Office (NAO) of the United Kingdom released an in-depth report on the project, which was originally intended to include seven parts: an archive database, a virtual warehouse for storing audio and video content, production tools, pro- duction reporting, a music reporting system, a media infrastructure that would allow the files to Project Management move freely among the BBC staff, and enterprise services. Of these seven parts, only the music reporting system had been successfully built and deployed. According to the NAO report, DMI cost £98.4 million ($157 million), took six years, and left the BBC relying on its original tape-based production and asset managing system. 63
L E A R N I N G O B J E C T I V E S As you read this chapter, ask yourself: What is project management, and what are the key elements of an effective project management process? How can an effective project management process improve the likelihood of project success? This chapter clarifies the importance of project management and outlines a tried and proven process for successful project management. WHY MANAGERS MUST UNDERSTAND PROJECT MANAGEMENT Projects are the way that much of an organization’s work gets done. No matter what the industry and no matter whether the organization is a for-profit company or a nonprofit organization—large or small, multinational or local—good project management is a positive force that enables your organization to get results from its efforts. Unfortunately, IT-related projects are not always successful. The Standish Group has been tracking the success rate of IT projects for over 20 years, and although the success rate has improved over time due to improved methods, training, and tools, roughly 61 percent of all IT projects failed or faced major challenges such as lateness, budget overruns, and lack of required features.1 The Project Management Institute also found a gap between what organizations should be doing—aligning projects to the organization’s strategy—and what they are able to accomplish. The result is that 44 percent of strategic initiatives are unsuccessful.2 This chapter provides information and guidance that will help you avoid failed and challenged
information technology projects. Researchers Gary Hamel and C.K. Prahalad defined the term core competency to mean something that a firm can do well and that provides customer benefits, is hard for competitors to imitate, and can be leveraged widely to many products and markets.3 Today, many organizations recognize project management as one of their core compe- tencies and see their ability to manage projects better as a way to achieve an edge over Chapter 3 64 competitors and deliver greater value to shareholders and customers. As a result, they spend considerable effort identifying potential project managers and then training and developing them. For many managers, their ability to manage projects effectively is a key to their success within an organization. WHAT IS A PROJECT? A project is a temporary endeavor undertaken to create a unique product, service, or result. Each project attempts to achieve specific business objectives and is subject to certain constraints, such as total cost and completion date. As previously discussed, organizations must always make clear connections among business objectives, goals, and projects; also, projects must be consistent with business strategies. For example, an organization may have a business
objective to improve customer service by offering a consistently high level of service that exceeds custo- mers’ expectations. Initiating a project to reduce costs in the customer service area by eliminating all but essential services would be inconsistent with this business objective. At any point in time, an organization may have dozens or even hundreds of active projects aimed at accomplishing a wide range of results. Projects are different from operational activities, which are repetitive activities performed over and over again. Projects are not repetitive; they come to a definite end once the project objectives are met or the project is cancelled. Projects come in all sizes and levels of complexity, as you can see from the following examples: A senior executive led a project to integrate two organizations following a corporate merger. A consumer goods company executed a project to launch a new product. An operations manager led a project to outsource part of a firm’s operations to a contract manufacturer. A hospital executed a project to load an app on physicians’ smartphones that would enable them to access patient data anywhere. A computer software manufacturer completed a project to improve the scheduling of help desk technicians and reduce the time on hold for callers to its telephone support services. A staff assistant led a project to plan the annual sales meeting. A manager completed a project to enter her departmental budget into a pre- formatted spreadsheet template. Project Variables Five highly interrelated parameters define a project—scope, cost, time, quality, and user expectations. If any one of these parameters changes for a project, there must be a corresponding change in one or more of the other parameters. A brief discussion of these parameters follows.
Scope Project Management Project scope is a definition of which tasks are and which tasks are not included in a project. Project scope is a key determinant of the other project factors and must carefully be defined to ensure that a project meets its essential objectives. In general, the larger the 65 scope of the project, the more difficult it is to meet cost, schedule, quality, and stake- holder expectations. For example, the California Case Management System was a major IT project intended to automate court operations for the state of California with a common system across the state that would replace 70 different legacy systems. At the start of the project, planners expected the system to cost $260 million. Court officials terminated the project after spending $500 million on the effort. Today, it is estimated that the project would have cost nearly $2 billion if it had run to completion. While a variety of factors contrib- uted to this waste of resources, one primary cause was inadequate control of the project scope, with some 102 changes in requirements and scope approved over the life of the project.4 Cost The cost of a project includes all the capital, expenses, and internal cross-charges associ- ated with the project’s buildings, operation, maintenance, and support. Capital is money spent to purchase assets that appear on the organization’s balance sheet and are depreci- ated over the life of the asset. Capital items typically have a useful life of at least several years. A building,
office equipment, computer hardware, and network equipment are examples of capital assets. Computer software also can be classified as a capital item if it costs more than $1000 per unit, has a useful life exceeding one year, and is not used for research and development. Expense items are nondepreciable items that are consumed shortly after they are purchased. Typical expenses associated with an IT-related project include the use of out- side labor or consultants, travel, and training. Software that does not meet the criteria to be classified as a capital item is classified as an expense item. Many organizations use a system of internal cross-charges to account for the cost of employees assigned to a project. For example, the fully loaded cost (salary, benefits, and overhead) of a manager might be set at $120,000 per year. The sponsoring organization’s budget is cross-charged this amount for each manager who works full time on the project. (The sponsoring business unit is the business unit most affected by the project and the one whose budget will cover the project costs.) So, if a manager works at a 75 percent level of effort on a project for five months, the cross-charge is $120,000 0.75 5/12 $37,500. The rationale behind cross-charging is to enable sound economic decisions about whether employees should be assigned to project work or to operational activities. If employees are assigned to a project, cross-charging helps organizations determine which project makes the most economic sense. Organizations have different processes and mechanisms for budgeting and controlling each of the three types of costs: capital, expense, and internal cross-charge. Money from the budget for one type of cost cannot be used to pay for an item associated with another type of cost. Thus, a project with a large amount of capital remaining in its budget cannot Chapter 3
66 use the available dollars to pay for an expense item even if the expense budget is overspent. Table 3-1 summarizes and classifies various types of common costs associated with an IT-related project. Time The timing of a project is frequently a critical constraint. For example, in most organiza- tions, projects that involve finance and accounting must be scheduled to avoid any conflict with operations associated with the closing of end-of-quarter books. Often, projects must be completed by a certain date to meet an important business goal or a government mandate. CGI, a Canadian consulting, systems integration, outsourcing, and solutions company was awarded a $36 million contract in December 2012 to build the Vermont Health Con- nect state health exchange.5 Work on the project quickly fell behind schedule—with CGI failing to meet more than half of Vermont’s 21 performance deadlines—so the state and CGI entered into an amended $84 million contract in August 2013 to complete the proj- ect.6 The Vermont Health Connect site launched in October 2013 as required to meet American Affordable Care Act mandates, but with serious deficiencies. Users were unable to edit their information, and the site did not work for small businesses. Despite calls to dump CGI after the flawed launch, state officials decided to continue working with CGI to complete the site. In April 2014, the state and CGI signed off on yet another agreement TABLE 3-1 Typical IT-related project costs
Development Costs Capital Internal Cross-Charge Expense Employee-related expenses Employees’ effort X Travel-related expenses X Training-related expenses X Contractor and consultant charges X IT-related capital and expenses Software licenses (software purchases that qualify as a capital expense) X Software licenses (software that does not qualify as a capital expense)
X Computing hardware devices X Network hardware devices X Data entry equipment X Total development costs X X X Project Management that set a new schedule for delivering missing functionality and included financial penal- ties for missed deadlines.7 When CGI failed to meet a May deadline for enabling users to edit their information, the state extended the deadline again—without assessing any pen- alties.8 CGI failed to meet the revised deadline, and in August 2014, the state fired CGI and announced it would transition the remaining work to a new contractor. In the end, Vermont paid CGI $66.7 million for completed work on the $84 million contract.9, 10 CGI was replaced by Optum, a healthcare technology company based in Minnesota that is owned by UnitedHealth Group, the nation’s largest health insurer.11 67
W H A T W O U L D Y O U D O ? You are the Optum project leader taking over responsibility for implementing the Vermont Health Connect state health exchange. Your manager has just sent you a text asking you if you think it necessary to debrief Vermont state officials on what caused the project with CGI to spiral out of control. How do you reply? Quality The quality of a project can be defined as the degree to which the project meets the needs of its users. The quality of a project that delivers an IT-related system may be defined in terms of the system’s functionality, features, system outputs, performance, reliability, and maintainability. For example, Apple sold an astounding 10 million of its new iPhone 6 and iPhone 6 Plus models in the first few days they were available. Unfortunately, the new iPhones had both hardware and software problems that caused the devices to fail to meet users’ functionality and performance expectations. Apple’s new mobile operating system iOS 8 for the devices came without promised apps that used a health and fitness feature called HealthKit. In addition, it turned out that the iPhone 6 Plus was too pliable, with some users complaining that the phone bent when sitting in their pockets for extended periods. Then when Apple released an iOS 8 update aimed at fixing the HealthKit problem, some users complained the update had caused their iPhones to lose the ability to make phone calls.12 Failure to meet users’ functionality and performance needs detracted from the initial introduction of the new iPhone 6. User Expectations As a project begins, stakeholders will form expectations—or will already have expectations— about how the project will be conducted and how it will affect them. For example, based on
previous project experience, the end users of a new IT system may expect that they will have no involvement with the system until it is time for them to be trained. However, the project manager may follow a more interactive development process that requires users to help define system requirements, evaluate system options, try out system prototypes, develop user docu- mentation, and define and conduct the user acceptance test. As another example, end users may expect to participate in weekly project status meetings to hear progress reports firsthand. However, the project manager may not have Chapter 3 68 considered involving them in the status meetings or may not even be planning weekly meetings. Both examples illustrate the significant differences in expectations that can exist between stakeholders and project members. It is critical to a project’s success to identify expectations of key stakeholders and team members; if there are differences, they must be resolved to avoid future problems and misunderstandings. The five project parameters—scope, cost, time, quality, and user expectations—are all closely interrelated, as shown in Figure 3-1. For example, if the time allowed to complete the project is decreased, it may require an increase in project costs, a reduction in project quality and scope, and a change of expectations among the project stakeholders, as shown in Figure 3-2.
FIGURE 3-1 The five parameters that define a project © Thorir Aron Stefansson/Shutterstock.com FIGURE 3-2 Revised project definition © Andrey_Popov/Shutterstock.com Project Management WHAT IS PROJECT MANAGEMENT? Project management is the application of knowledge, skills, and techniques to project activities to meet project requirements. Project managers must deliver a solution that meets specific scope, cost, time, and quality goals while managing the expectations of the 69 project stakeholders—the people involved in the project or those affected by its outcome. The essence of artistic activity is that it involves high levels of creativity and freedom to do whatever the artist feels.
Scientific activity, on the other hand, involves following defined routines and exacting adherence to laws. Under these definitions, part of project management can be considered an art, because project managers must apply intuitive skills that vary from project to project and even from team member to team member. The “art” of project management also involves salesmanship and psychology in convincing others of the need to change and that this project is right to do. Project management is also part science because it uses time- proven, repeatable processes and techniques to achieve project goals. Thus, one challenge to successful project management is recognizing when to act as an artist and rely on one’s own instinct, versus when to act as a scientist and apply fundamental project management principles and practices. The following section covers the nine areas associated with the science of project management. PROJECT MANAGEMENT KNOWLEDGE AREAS According to the Project Management Institute, project managers must coordinate nine areas of expertise: scope, time, cost, quality, human resources, communications, risk, procurement, and integration as shown in Figure 3-3.
FIGURE 3-3 The nine project management knowledge areas © Cengage Learning 70 Chapter 3 Scope Management Scope management includes defining the work that must be done as part of the project and then controlling the work to stay within the agreed-upon scope. Key activities include initiation, scope planning, scope definition, scope verification, and scope change control. Functional decomposition is a frequently used technique to define the scope of an information system by identifying the business processes it will affect. Figure 3-4 shows an example of a functional decomposition chart for a stock management system. A process is a set of logically related tasks performed to achieve a defined outcome. A process is usu- ally initiated in response to a specific event and requires input, which it
processes to cre- ate output. Often the process generates feedback that is used to monitor and refine the process. To create the functional decomposition chart, begin with the name of the system and then identify the highest-level processes to be performed. Each process should be given a two-word “verb-subject” name that clearly defines the process. Next, break those high- level processes down into lower-level subprocesses. Typically, three or four levels of decomposition are sufficient to define the scope of the system. To avoid problems associated with a change in project scope, a formal scope change process should be defined before the project begins. The project manager and key business managers should decide whether they will allow scope changes at any time during the project, only in the early stages of the project, or not at all. The trade-off is that the more flexibility you allow for scope changes, the more likely the project will meet user needs for features and performance. However, the project will be more difficult to complete within changing time and budget constraints as it is harder to hit a moving target. The change process should capture a clear definition of the change that is being requested, who is requesting it, and why. If the project team has decided not to allow any scope changes during the project, then each new requested scope change is filed with other requested changes. Once the original project is complete, the entire set of requested FIGURE 3-4 Functional decomposition is used to define the scope of the system © Cengage Learning Project Management
scope changes can be reviewed and the project team can decide which, if any, of the changes will be implemented and when. Often, it is cheaper to initiate one project to implement numerous related changes than to start several independent projects. A follow- on project can then be considered to implement the recommended changes. The scope, 71 cost, schedule, and benefits of the project must be determined to ensure that it is well defined and worth doing. If the project team has decided to allow scope changes during the project, then time and effort must be allowed to assess how the scope change will affect the interrelated project variables of cost, schedule, quality, and expectations. This impact on the project must be weighed against the benefits of implementing the scope change, and the team must decide whether to implement the scope change. Of course, there may be alternatives for implementing a particular scope change, and the pros and cons must be weighed for each. The time required just to research scope changes can add considerable cost and time to the original project. Each scope change should be approved formally or rejected by the project manager and key stakeholders. Time Management Time management includes defining an achievable completion date that is acceptable to the project stakeholders, developing a workable project schedule, and ensuring the timely completion of the project. Successful project time management requires identifying spe- cific tasks that project team members and/or other resources must complete; sequencing these tasks, taking into account any task dependencies or firm deadlines; estimating the amount of resources required to complete each task, including people, material, and equipment; estimating the
elapsed time to complete each task; analyzing all this data to create a project schedule; and controlling and managing changes to the project schedule. The bigger the project, the more likely that poor planning will lead to significant problems. Well-managed projects use effective planning tools and techniques, including schedules, milestones, and deadlines. A project schedule identifies the project activities that must be completed, the expected start and end dates, and what resources are assigned to each task. A project schedule is needed to complete a project by a defined deadline, avoid rework, and ensure that people know what to do and when to do it. A project milestone is a critical date for completing a major part of the project, such as program design, coding, testing, and release (for a programming project). The project deadline is the date the entire project should be completed and operational—when the organization can expect to begin to reap the benefits of the project. In a systems development project, each activity is assigned an earliest start time and an earliest finish time. Each activity is also allocated slack time, which is the amount of time an activity can be delayed without delaying the entire project. The critical path of a project consists of all activities that, if delayed, would delay the entire project. These activities have zero slack time. Any problems with critical path activities will cause pro- blems for the entire project. To ensure that critical path activities are completed on time, project managers use certain approaches and tools such as GanttProject, Microsoft Project, ProjectLibre, or Webplanner to help compute these critical project attributes. Although the steps of systems development seem straightforward, larger projects can become complex, requiring hundreds or thousands of separate activities. For these systems Chapter 3
72 development efforts, formal project management methods and tools are essential. A formal- ized approach called Program Evaluation and Review Technique (PERT) creates three time estimates for an activity: shortest possible time, most likely time, and longest possible time. A formula is then applied to determine a single PERT time estimate. A Gantt chart is a graphical tool used for planning, monitoring, and coordinating projects; it is essentially a grid that lists activities and deadlines. Each time a task is completed, a marker such as a darkened line is placed in the proper grid cell to indicate the completion of a task. The development of a work breakdown structure is a critical activity needed for effective time management. A work breakdown structure (WBS) is an outline of the work to be done to complete the project. You start by breaking the project into various stages or groups of activities that need to be performed. Then, you identify the tasks associated with each project stage. A task typically requires a week or less to complete and produces a specific deliverable—tangible output like a flowchart or end-user training plan. Then the tasks within each stage are sequenced. Finally, any predecessor tasks are identified—these are tasks that must be completed before a later task can begin. For example, the testing of a unit of program code cannot begin until the program has been coded, compiled, and debugged. Next you must determine how long each task in the WBS will take. Thus, building a WBS allows you to look at the project in great detail to get a complete picture of all the work that must be performed. Development of a WBS is another approach to defining the scope of a project—work not included in the WBS
is outside the scope of the project. Table 3-2 shows a sample WBS for a project whose goal is to establish a wireless network in a warehouse and install RFID scanning equipment on forklift trucks for the tracking of inventory. The three phases of the project in Table 3-2 are “Define Ware- house Network,” “Configure Forklift Trucks,” and “Test Warehouse Network.” Figure 3-5 shows the associated schedule in the form of a Gantt chart, with each bar in the chart indicating the start and end dates of each major activity (heavy black lines) and task (lighter lines). Cost Management Cost management includes developing and managing the project budget. This area involves resource planning, cost estimating, cost budgeting, and cost control. As previously discussed, a separate budget must be established for each of the three types of costs— capital, expense, and internal cross-charge—and money in one budget cannot be spent to pay for another type of cost. One approach to cost estimating uses the WBS to estimate all costs (capital, expense, and cross-charge) associated with the completion of each task. This approach can require a fair amount of detailed work, such as determining the hourly rate of each resource assigned to the task and multiplying by the hours the resource will work on the task, estimating the cost per unit for supplies and multiplying that by the number of units required, and so on. If possible, the people who will complete the tasks should be allowed to estimate the time duration and associated costs. This approach helps them to better understand the tasks they are expected to complete, gives them some degree of control Project Management TABLE 3-2 Work breakdown structure Predecessor
Task Duration Start End Tasks 1 Implement warehouse network 28d 5/06/16 6/14/16 2 Define warehouse network 25d 5/06/16 6/09/16 3 Conduct survey 3d 5/06/16 5/10/16 4 Order RF equipment 14d 5/11/16 5/30/16 3 5 Install RF equipment 6d 5/31/16 6/07/16 4 6 Test RF equipment 2d 6/06/16 6/07/16
5 7 Configure forklift trucks 19d 5/06/16 6/01/16 8 Order RFID scanners for trucks 12d 5/06/16 5/23/16 9 Install RFID scanners on trucks 5d 5/24/16 5/30/16 8 10 Test RFID scanners 2d 5/31/16 6/01/16 9 11 Test warehouse network 28d 5/06/16 6/14/16 12 Develop test plan 2d 5/06/16 5/09/16
13 Conduct test 3d 6/10/16 6/14/16 6,10,12 73 FIGURE 3-5 Gantt chart depicting the start and finish of project tasks
© Cengage Learning in defining how the work will be done, and obtains their “buy- in” to the project schedule and budget. You can develop a project duration based on the sequence in which the tasks must be performed and the duration of each task. You can also sum the cost of each task to develop an estimate of the total project budget. This entire process is outlined in Figure 3- 6, and the resulting budget is depicted in Table 3-3. 74 Chapter 3 FIGURE 3-6 Development of a WBS leads to creation of a schedule and budget TABLE 3-3 Project budget © Cengage Learning Task Capital Expense Cross-Charges 1 Implement warehouse network 2
Define warehouse network 3 Conduct survey $2400 4 Order RF equipment $9000 5 Install RF equipment $7800 6 Test RF equipment $ 960 7 Configure forklift trucks 8 Order RFID scanners for trucks $12,500 9 Install RFID scanners on trucks
$2400 10 Test RFID scanners $1200 11 Test warehouse network $ 960 12 Develop test plan 13 Conduct test $1440 TOTAL Costs $21,500 $10,200 $6960 Project Management As an example, suppose that a company plans to implement a new software package for its accounts payable process. The company must spend $150,000 on computer hard- ware (capital) and pay the software vendor $20,000 for its time and effort to implement
the software (expense). The vendor must also be paid $125,000 for the software package 75 license (capital). In addition, one business manager will spend six months full time leading the implementation effort. Six months’ worth of the fully loaded cost of the manager (say, $120,000 per year) must be charged to the cross-charge budget of the accounting organi- zation. The cross-charge is a total of $60,000. W H A T W O U L D Y O U D O ? The new warehouse inventory control system will use the recently installed wireless net- work and RFID scanning equipment mounted on forklift trucks to track inventory in the warehouse. You have been holding off meeting with the project team to develop a sched- ule and cost estimate because three key members of the five-person project team are not available to meet until late next week. The CFO is on the phone with you. She needs dates, effort estimates, and dollar estimates to complete the capital and staffing forecast for next year and ensure there will be a budget for this project. What do you say? Quality Management Quality management ensures that the project will meet the needs for which it was undertaken. This process involves quality planning, quality assurance, and quality control. Quality planning involves determining which quality standards are relevant to the project and determining how they will be met. Quality assurance involves evaluating the progress of the project on an ongoing basis to ensure that it meets the identified quality standards. Quality control involves checking project results to ensure that they meet identified qual- ity standards. When it comes to developing IT-related systems, the source of
the majority of defects uncovered in system testing can be traced back to an error in specifying requirements. Thus, most organizations put a heavy emphasis on accurately capturing and documenting system requirements and carefully managing changes in user requirements over the course of the project. A useful checklist for assessing the validity of system requirements includes the following questions:13 Does the requirement describe something actually needed by the customer? Is the requirement correctly defined? Is the requirement consistent with other requirements? Is the requirement defined completely? Is the requirement verifiable (testable)? Is the requirement traceable back to a user need? Hewlett Packard’s Quality Center, Jama from Jama Software, and Innoslate from Sys- tems and Proposal Engineering Company are three examples of requirements management software. 76 Chapter 3 Human Resource Management Human resource management is about making the most effective use of the people involved with the project. It includes organizational planning, staff acquisition, and team development. The project manager must be able to build a project team staffed with peo- ple with the right mix of skills and experience and then train, develop, coach, and moti- vate them to perform effectively on the project.
The project manager may be assigned all members of the team, or may have the lux- ury of selecting all or some team members. Team members should be selected based on their skills in the technology needed for the project, their understanding of the business area affected by the project, their expertise in a specific area of the project, and their ability to work well on a team. Often, compromises must be made. For example, the best available subject matter expert may not work well with others, which becomes an addi- tional challenge for the project manager. Experienced project managers have learned that forming an effective team to accom- plish a difficult goal is a challenge in itself. For the team to reach high levels of perfor- mance, it takes considerable effort and a willingness to change on the part of the entire team. A useful model to describe how teams develop and evolve is the forming- storming-norming-performing model, which was first proposed by Bruce Tuckman (see Figure 3-7).14 During the forming stage, the team meets to learn about the project, agrees on basic goals, and begins to work on project tasks. Team members are on their best behavior and try to be pleasant to one another while avoiding any conflict or disagreement. Team members work independently of one another and focus on their role or tasks without understanding what others are attempting to do. The team’s project manager in the for- mation stage tends to be highly directive and tells members what needs to be done. If the team remains in this stage, it is unlikely to perform well, and it will never develop break- through solutions to problems or effectively solve a conflicting set of priorities and constraints. The team has moved into the storming stage when it recognizes that differences of opinion exist among team members and allows these ideas to compete for consideration.
FIGURE 3-7 Tuckman’s forming-storming-norming- performing model © Cengage Learning Project Management Team members will raise such important questions as “What problems are we really supposed to solve?” “How can we work well together?” “What sort of project leadership will we accept?” The team might argue and struggle, so it can be an unpleasant time for everyone. An inexperienced project manager, not recognizing 77 what is happening, may give up, feeling that the team will never work together effectively. The project manager and team members must be tolerant of one another as they explore their differences. The project manager may need to continue to be highly directive. If the team survives the storming stage, it may enter the norming stage. During this stage, individual team members give up their preconceived judgments and opinions. Mem- bers who felt a need to take control of the team give up this impulse. Team members adjust their behavior toward one another and begin to trust one another. The team may decide to document a set of team rules or norms to guide how they will work together. Teamwork actually begins. The project manager can be less directive and can expect team members to take more responsibility for decision making. Some teams advance beyond the norming stage into the performing stage. At this point, the team is performing at a high level. Team members are competent, highly moti- vated, and knowledgeable about all aspects of the project. They have
become interdepen- dent on one another and have developed an effective decision-making process that does not require the project manager. Dissent is expected, and the team has developed an effective process to ensure that everyone’s ideas and opinions are heard. Work is done quickly and with high quality. Problems that once seemed unsolvable now have “obvious” solutions. The team’s effectiveness is much more than the sum of the individual members’ contributions. The project manager encourages participative decision making, with the team members making most of the decisions. No matter what stage a team is operating in, it commonly will revert to less advanced stages in the model when confronted with major changes in the work to be done, a change in project leadership, or substantial changes in the team’s makeup. The project manager and business managers must recognize and consider this important dynamic when con- templating project changes. Another key aspect of human resource management is getting the project team and the sponsoring business unit to take equal responsibility for making the project a success. The project team members must realize that on their own they cannot possibly make the project a success. They must ensure that the business managers and end users become deeply involved in the project and take an active role. The project team must actively involve the end users, provide information for them to make wise choices, and insist on their participation in major decisions. The business unit must remain engaged in the proj- ect, challenge recommendations, ask questions, and weigh options. It cannot simply sit back and “let the project happen to them.” Key users need to be identified as part of the project team with responsibility for developing and reviewing deliverables. Indeed, some organizations require that the project manager come from the sponsoring business unit. Other organizations assign co-project managers to IT-related projects—one from the IT organization and one from the business unit.
In addition to the development team, each project should have a project steering team, made up of senior managers representing the business and IT organizations, to provide guid- ance and support to the project. The number of members on the steering team should be Chapter 3 78 limited (three to five) to simplify the decision-making process and ease the effort to schedule a quorum of these busy executives. The project manager and select members of the development team should meet with the steering team on an as- needed basis, typically at the end of each project phase or every few months. The three key members of the steering team include the project champion who is a well-respected manager with a passion to see the project succeed and who removes barriers to the project success; the project sponsor who is a senior manager from the business unit most affected by the project and who ensures the project will indeed meet the needs of his or her organization; and the IT manager who ensures proper IT staffing for the project and ensures the project uses approved technology and vendors. These roles are further explained in Figure 3-8 and outlined in Table 3-4. Many projects also draw on key resources who are not assigned to the project team but who provide valuable input and advice. A subject matter expert is someone who pro- vides knowledge and expertise in a particular aspect important to the project. For exam- ple, an accounting system project may seek advice from a member of the internal auditing group in defining the mandatory
control features of a new system. A technical resource is essentially a subject matter expert in an IT topic of value to the project. For example, the accounting system project may seek advice from a database management system guru (either inside or outside the company) to minimize the processing time for certain key business transactions. Communications Management Communications management involves the generation, collection, dissemination, and storage of project information in a timely and effective manner. It includes communica- tions planning, information distribution, performance reporting, and managing communi- cations to meet the needs of project shareholders. The key stakeholders include the project steering team, the team itself, end users, and others who may be affected by the project (potentially customers or suppliers). FIGURE 3-8 The project steering team © Cengage Learning Project Management TABLE 3-4 Responsibilities of project steering team Project Champion Project Sponsor IT Manager Well-respected senior manager with a passion to see project succeed Senior manager of business unit most affected by the project Well-respected IT manager Assures that project goals and objectives are aligned with organizational goals and objectives Ensures that the business unit’s expectations and needs are clearly communicated and understood
Ensures project is staffed with appropriate IT staff Convinces other senior man- agers of the project’s merits to gain their approval to fund and staff it Ensures that the project solution is truly workable and consistent with business and end-user requirements Ensures technology and vendors suggested for inclusion in the project are consistent with IT strategy Acts as a vocal and visible champion for the project to gain the support of others Works to overcome resistance to change and prepare the organi- zation to embrace the new system and way of doing things Identifies and removes barriers to project success Identifies workers from business unit to be assigned on a full- or part-time basis to project Resolves any issues outside the control of the project manager Provides advice and counsel to the project team Keeps informed of major project activities and developments Has final approval of all requests for changes in project scope, budget, and schedule Signs off on approvals to proceed to each succeeding project phase
79 In preparing a communications plan, the project manager should recognize that the various stakeholders have different information needs in the project. A useful tool for identifying and documenting these needs is the stakeholder analysis matrix
shown in Table 3-5. This matrix identifies the interests of the stakeholders, their information needs, and important facts for managing communications with the champion, sponsor, project team members, and key end users who are associated with the project. The project manager should include his or her manager in this analysis. Based on analysis of this data, the preferred form and frequency of communication is identified for each stakeholder. Chapter 3 80 TABLE 3-5 Sample stakeholder analysis matrix Key Stakeholders Ray Boaz Klem Kiddlehopper John Smith Forklift Drivers Organization Project champion and VP of supply chain Project sponsor and warehouse manager Experienced forklift driver 15 different drivers Useful facts Very persuasive Trusted by CEO Risk taker, very aggressive
Will push this through, no matter what Has driven fork- lift truck for five years Well respected by peers Not highly moti- vated to make project a success Level of interest High High Medium Low Level of influence High Medium High Low Suggestions on managing relationship Demands respect, somewhat formal Speak in business terms, never get technical; no surprises! Poor listener, forgets details Put it in writing Must keep John enthusiastic about project Don’t ignore Attend occa- sional shift change-over meeting Information needs ROI, budget, and schedule Schedule and potential opera- tional conflicts Schedule, especially timing of training Schedule, especially tim- ing of training Safety and pro- ductivity issues Safety issues Information medium, format, and timing Biweekly face- to-face meeting Weekly email newsletter Biweekly face- to-face
Newsletter Catch-as-catch can Brief updates at weekly depart- ment meeting If the project team is unable to recruit either a project champion or sponsor, the problem may be that management does not see clearly that the benefits of the project outweigh its costs, or that the project appears to run counter to organizational goals and strategies. A potential project without either a champion or a sponsor is highly unlikely to get the needed resources, and for good reason. No project should be started without both a champion and a sponsor. Risk Management “Things will go wrong, and at the worst possible time,” according to a variation of Murphy’s Law, a popular adage. Project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project objective. Known risks are risks that can be identified and analyzed. For example, in creating a new IT-related system that includes the acquisition of new computing and/or networking hardware, a known risk might be that the hardware will take longer than expected to arrive at the installation site. If the hardware is delayed by several weeks, it could have a negative effect on the project completion date. Countermeasures can be defined to avoid some known risks entirely, and Project Management contingency plans can be developed to address unavoidable known risks if they occur. Of course, some risks simply cannot be anticipated. A hallmark of experienced project managers is that they follow a deliberate and sys- tematic process of risk management to identify, analyze, and
manage project risks. Having 81 identified potential risks, they make plans to avoid them entirely. When an unavoidable risk occurs and becomes an issue, the project team has already defined an alternative course of action to minimize the impact on the project. They waste no time executing the backup plan. Unknown risks cannot be managed directly; however, an experienced project manager will build some contingency into the project budget and schedule to allow for their occurrence. While inexperienced project managers realize that things may go wrong, they fail to identify and address known risks and do not build in contingencies for unknown risks. Thus, they are often unsure of what to do, at least temporarily, when a project setback occurs. In their haste to react to a risk, they may not implement the best course of action. The project manager needs to lead a rigorous effort to identify all risks associated with the project. The project team, business managers, and end users should participate in the effort. These resources can include seasoned project managers and members of the orga- nization’s risk management department. After each risk is identified and defined, as shown in Table 3-6, the group should attempt to classify the risk by the probability that it will occur and the impact on the project if the risk does occur. Both the probability and the impact can be classified as high, medium, or low, as shown in the example in Table 3-7. TABLE 3-6 Identification of project risks Risk Example R1 The required new servers arrive at the installation site more than two weeks late. R2 Business pressures make key end users unavailable to develop the user acceptance test by the date it is needed.
R3 Business pressures make end users unavailable during time scheduled for training. R4 One or more end-user computers have insufficient memory or CPU capacity to run the new software efficiently (or at all). Rn …. TABLE 3-7 Example of an assessment of project risks Impact on Project Low Medium High Probability risk occurs High Medium Low R10 R5, R6 R2, R3 Rn R1 R8, R11 R7, R9 R4
Dark High risk/high impact; risk management plan is needed Lightest Medium or high risk and impact; risk management plan recommended Lighter Low or medium risk and impact; risk management plan not needed Chapter 3 82 The project team then needs to consider which risks need to be addressed with some sort of risk management plan. Generally, the team can ignore risks with a low probability of occur- rence and low potential impact. Risks with a high probability of occurrence and a high poten- tial impact need to have a risk owner assigned. The risk owner is responsible for developing a risk management strategy and monitoring the project to determine if the risk is about to occur or has occurred. One strategy is to take steps to avoid the risk altogether, while another is to develop a backup plan. The risk management plan can be documented as shown in Table 3-8. One of the biggest risks associated with a project is that considerable time, energy, and resources might be consumed with little value to show in return. To avoid this poten- tial risk, an organization must ensure that a strong rationale exists for completing a proj- ect. The project must have a direct link to an organizational strategy and goal, as shown in Figure 3-9. In this example, assume that an organization has been losing sales because of customer dissatisfaction. It has set an objective of improving customer service, with a goal of increasing the retention rate of existing customers. The organization has
defined one of its key strategies as improving customer service to world-class levels. A project that is consistent with this strategy and that can deliver results to achieve this goal is clearly aligned with the organization’s objectives. Objective—Improve customer service. Goal—Reduce customer turnover from 25 percent per year to 10 percent by June 2017 by responding to 95 percent of customers’ inquiries within 90 seconds, with less than 5 percent callbacks about the same problem. Strategy—Improve customer service to world-class levels. Project—Implement a state-of-the-art customer call center with “24/7” availability and a well-trained staff. TABLE 3-8 Risk management plan Risk Description Risk Owner Risk Strategy Current Status R2 Business pressures Jon Andersen, Try to avoid this Key users have been make key end users manager of end problem by starting identified and have unavailable to users in the busi- development of the started developing the
develop the user ness area user acceptance test test. acceptance test by three weeks earlier the deadline. than originally planned. Monitor progress carefully. R3 Business pressures Jon Andersen, Try to avoid this pro- Three of four temporary make end users manager of end blem by hiring and workers have been
unavailable during users in the busi- training four tempor- hired. Their training is the time scheduled ness area ary workers to fill in scheduled to begin next for training. for end users as they week. participate in training. R1 The required new Alice Fields, team Set a firm delivery The contract with the servers arrive at the member responsi- deadline with the penalty clause has been installation site ble for hardware vendor, with a sub- signed by the vendor, who more than two
acquisition stantial dollar penalty agrees to provide a ship- weeks late. for each day that the ment status update each equipment is late. Tuesday and Friday. Project Management 83
FIGURE 3-9 Projects must be well linked to an organizational goal and strategy © Cengage Learning Risk management software—such as Risk Management from Intelex, Full Monte from Barbecana, and @Risk from Intaver Institute—integrates with project scheduling soft- ware and can reflect the potential impact of various risks on the project schedule and cost. Use of such software can lead to more realistic estimates for project milestones and budgets. Procurement Management Procurement management involves acquiring goods and/or services for the project from sources outside the performing organization. This activity is divided into the following processes: Plan purchase and acquisition—This process determines what is needed and when. Plan contracting—This process documents requirements for products and services and identifies potential providers. Request seller responses—This process obtains bids, information, proposals, or quotations from potential providers. Select seller—During this process, offers are reviewed, the preferred provider is identified, and negotiations are started. Contract administration—This process manages all aspects of the contract and the relationship between the buyer and the provider. The process Chapter 3
84 includes tracking and documenting the provider’s performance, managing contract changes, and taking any necessary corrective actions. Contract closure—This process completes and settles terms of any contracts, including resolving any open items. The make-or-buy decision is a key decision made during the plan purchase and acquisition process. The make-or-buy decision involves comparing the pros and cons of in-house production versus outsourcing of a given product or service. In addition to cost, two key factors to consider in this decision are (1) “Do we have a sufficient number of employees with the skills and experience required to deliver the product or service at an acceptable level of quality and within the required deadlines?” (2) “Are we willing to invest the management time, energy, and money required to identify, recruit, train, develop, and manage people with the skills to do this kind of work?” Outsourcing is discussed further in Chapter 4. A contract is a legally binding agreement that defines the terms and conditions of the buyer–provider relationship, including who is authorized to do what, who holds what responsibilities, costs and terms of payment, remedies in case of breach of contract, and the process for revising the contract. Contract types fall into three main categories: Fixed-price contract—With this type of contract, the buyer and provider agree to a total fixed price for a well-defined product or service. For example, the purchase of a large number of laptop computers with specified capabili- ties and features frequently involves a fixed-price contract. Cost-reimbursable contract—This type of contract requires paying the pro- vider an amount that covers the provider’s actual costs plus an additional amount or percentage for profit. Three common types of cost-reimbursable contracts exist. In a
cost-plus-fee or cost-plus-percentage of cost contract, the provider is reimbursed for all allowable costs and receives a percentage of the costs as a fee. In a cost-plus-fixed-fee contract, the provider is reim- bursed for all allowable costs and receives a fixed fee. In a cost- plus-incentive-fee contract, the provider is reimbursed for all allowable costs. In addition, a predetermined fee is paid if the provider achieves specified performance objectives—for example, the provider’s hardware must be received, installed, and operational by a specific date. In such con- tracts, buyers run the risk of paying more for the work but are rewarded by having their objectives met or exceeded. Providers run the risk of reduced profits if they fail to deliver, but can be rewarded for superior performance. Time and material contract—Under this type of contract, the buyer pays the pro- vider for both the time and materials required to complete the contract. The con- tract includes an agreed-upon hourly rate and unit price for the various materials to be used. The exact number of hours and precise quantity of each material are not known, however. Thus, the true value of the contract is not defined when the contract is approved. If not managed carefully, time and material contracts actu- ally can motivate suppliers to extend projects to maximize their fees. Poor procurement management can result in serious project problems and even a project’s outright cancellation. Project Integration Management Project Management Project integration management is perhaps the most important knowledge area because it requires the assimilation of all eight other project management knowledge areas. Project integration management requires the coordination of all
appropriate people, resources, 85 plans, and efforts to complete a project successfully. Project integration management comprises seven project management processes: 1. Developing the project charter that formally recognizes the existence of the project, outlines the project objectives and how they will be met, lists key assumptions, and identifies major roles and responsibilities. 2. Developing a preliminary project scope statement to define and gain consen- sus about the work to be done. Over the life of the project, the scope state- ment will become fuller and more detailed. 3. Developing the project management plan that describes the overall scope, schedule, and budget for the project. This plan coordinates all subsequent project planning efforts and is used in the execution and control of the project. 4. Directing and managing project execution by following the project management plan. 5. Monitoring and controlling the project work to meet the project’s perfor- mance objectives. This process requires regularly measuring effort and expenditures against the project tasks, recognizing when significant devia- tions occur from the schedule or budget, and taking corrective action to regain alignment with the plan. 6. Performing integrated change control by managing changes over the course of the project that can affect its scope, schedule, and/or cost. 7. Closing the project successfully by gaining stakeholder and customer accep- tance of the final product, closing all budgets and purchase orders after con- firming that final disbursements have been made, and capturing knowledge from the project that may prove useful for future projects. As an example of a firm that excels in project integration management, consider Atos, an international IT services
company that employs 76,300 workers in more than 52 countries, with 2013 annual revenue of €8.6 billion ($11.0 billion). The firm successfully delivered the information technology systems that enabled the smooth running of the Sochi 2014 Olympic Games in Russia. Atos had the primary responsibility for project integration, consulting, sys- tems integration, operations management, information security, and software applications development for the games. Through its experience with previous Olympics (Atos has been the Worldwide IT partner for the Olympic Games, both winter and summer, since Salt Lake City in 2002), Atos has developed an effective project management process. The firm spent over four years configuring, testing, and retesting some 10,000 pieces of equipment deployed to 30 different venues. Atos coordinated the work of hundreds of subcontractors to deliver a reliable IT infrastructure and IT services in support of one of the world’s widely viewed sporting events. The Sochi project was coordinated so that custom software, thousands of workstations and laptops, tens of thousands of phones, hundreds of servers, and multiple operations centers and data centers all operated together effectively and efficiently.15 The manager’s checklist in Table 3-9 provides a set of recommended actions for business managers to improve the success rate of their organization’s projects. The appropriate answer to each question is yes. Chapter 3 TABLE 3-9 A manager’s checklist Recommended Action Yes No
Are project scope, cost, time, quality, and user expectations treated as highly interrelated variables—in other words, changing one affects the others? Is an internal cross-charge system used to account for the cost of employees assigned to a project? Is the project scope well defined and managed? Is a detailed work breakdown structure prepared to define the project schedule and cost? Is the project’s estimated cost well defined and controlled? Is the project team performing quality planning, quality assur- ance, and quality control? Is there a heavy emphasis on defining user requirements? Does the project manager take action to form and maintain an effective working team?
Do the project team and sponsoring organization take equal responsibility for the success of the project? Have a project champion and project sponsor been identified for the project? Has a communications plan for all key stakeholders been defined for the project? Has the project manager followed a deliberate and systematic process of risk management to identify, analyze, and manage project risks? Is it clear that a strong rationale exists for doing the project? Does the project have a direct link to an organizational strategy and goal? Is a process in place to manage project procurement? Has responsibility for the seven project integration management processes been defined?
Are the seven project integration management processes being performed? 86 KEY TERMS communications management core competency cost management cost-reimbursable contract critical path fixed-price contract forming-storming- norming-performing model functional decomposition Gantt Chart human resource management make-or-buy decision predecessor tasks process procurement management CHAPTER SUMMARY
Program Evaluation and Review Technique (PERT) project project champion project deadline project integration management project management project milestone project risk project schedule project scope project sponsor project stakeholders project steering team quality Project Management quality assurance quality control quality management quality planning 87 risk management risk owner scope management slack time sponsoring business unit subject matter expert technical resource time and material contract time management work breakdown structure (WBS) Roughly 61 percent of all IT projects are challenged or failed. About 44 percent of all strategic initiatives are unsuccessful. Today, many organizations have recognized project management as one of their core competencies. Organizations must always make clear connections among business objectives, goals, strategies, and projects. A project is a temporary endeavor undertaken to create a unique product, service, or result. Five highly interrelated parameters define a project—scope, cost, time, quality, and user expectations. If any one of these project parameters is changed, there must be a corre- sponding change in one or more of the other parameters.
Project scope is the definition of which work is and which work is not included in a project. The cost of a project includes all the capital, expenses, and internal cross-charges associ- ated with the project’s buildings, operation, maintenance, and support. The timing of a project is frequently a critical constraint. Quality of a project can be defined as the degree to which the project meets the needs of its users. Project management is the application of knowledge, skills, and techniques to project activ- ities to meet project requirements. Project managers must attempt to deliver a solution that meets specific scope, cost, time, and quality goals while managing the expectations of the project stakeholders—the people involved in the project or those affected by its outcome. 88 Chapter 3 According to the Project Management Institute, project managers must coordinate nine areas of expertise, including scope, time, cost, quality, human resources, communica- tions, risk, procurement, and integration. Scope management includes defining the work that must be done as part of the project and then controlling the work to stay within the agreed-upon scope. Functional decomposition is a technique frequently used to define the scope of an infor- mation system by identifying the business processes it will affect. Time management includes defining an achievable completion
date that is acceptable to the project stakeholders, developing a workable project schedule, and ensuring the timely completion of the project. Cost management includes developing and managing the project budget. Quality management ensures that the project will meet the needs for which it was undertaken. Human resource management is about making the most effective use of the people involved in the project. The forming-storming-norming-performing model describes how teams form and evolve. Each project should have a project steering team—made up of senior managers representing the business and IT organizations—to provide guidance and support to the project. Three key members of the steering team are the project champion, project sponsor, and IT manager. Communications management involves the generation, collection, dissemination, and storage of project information in a timely and effective manner. Risk management is a process that attempts to identify, analyze, and manage project risks. Experienced project managers follow a deliberate and systematic process of risk management to avoid risks or minimize their negative impact on a project. Procurement management involves acquiring goods and/or services for the project from sources outside the organization. Project integration management is a critical knowledge area of project management that involves chartering, scoping, planning, executing, monitoring and controlling, change control, and project closing. DISCUSSION QUESTIONS 1. Do research online to find the success rate of IT projects compared to all types of organiza- tional projects. Which has the higher success rate? Why do you think that this is so?
2. What is meant by the scope of a project? How can the scope of a project be defined? 3. Distinguish between the role of the project champion and the role of the project sponsor. Is one more important to the success of a project than the other? 4. Present an argument of why organizations should not include internal cross-charges in evalu- ating the economic desirability of projects. Now present an argument of why they should. What is your final position on the use of cross-charges? 5. What is the difference between quality assurance and quality control? Project Management 6. Describe three specific actions that the ideal project sponsor should take to ensure the success of a project. 7. Is there a difference between project time management and personal time management? Can someone be “good” at one but not the other? Explain your answer. 89 8. Discuss the team dynamics for a highly effective (or ineffective) team of which you were a member. Can you explain why the team performed so well (or poorly) using the forming- storming-norming-performing model? 9. What sort of behaviors would indicate that the business organization is not fully engaged in a project and instead is looking to the project team to make the project a success? What is the danger with this attitude? 10. Identify some of the challenges of performing project integration management on a project in which team members are distributed globally and cannot physically meet in one location. How might these challenges be overcome? 11. Imagine that you are hiring a firm to complete a large but
undetermined amount of project work for your firm. Which form of contract would you prefer and why? 12. How would you respond to a project team member who feels that risk management is a waste of time because the future cannot be predicted? Instead, this person prefers to react to pro- blems as they occur. ACTION NEEDED 1. You are on the phone with the project sponsor of a project you are managing. He informs you that he accepted the role reluctantly and now, two months into this eight-month project, he is considering withdrawing as project sponsor. He does not see the need for this role and is extremely busy with his other responsibilities. How do you respond? 2. You and a small group of managers from the sponsoring organization have just completed defining the scope, schedule, and cost for an important project in your firm. You estimate that the project will take 12 people about 10 months and cost just over $2.5 million. You just received an email from your manager insisting that the project schedule be shortened by three months because senior management is impatient for the improvements this project is expected to deliver. He promises to “free up” four additional resources within the next month or so to be assigned to your project. How do you respond? 3. You are surprised when your project team “pushes back” on your request for them to schedule a full-day offsite to work with you to develop a risk management plan. They state that they are simply too busy to afford time for this activity. And besides, they feel that if something unfore- seen occurs, it is your responsibility to react to it. How do you respond to your team? WEB-BASED CASE BBC Digital Media Initiative Revisited The National Audit Office (NAO) scrutinizes public spending in the United Kingdom. Its memoran- dum on the BBC’s DMI project reported on several key findings. First, the in-house
team was 90 Chapter 3 severely challenged by the fact that the project was already 18 months behind schedule when they began work on the project. Second, the technology team issued releases throughout the project that did not meet end-user expectations and eroded confidence in the project. Third, the BBC focused more on the technological development rather than on encouraging organization-wide changes in workflow that would encourage adoption. Finally, the NAO concluded, the DMI lacked governance arrangements for the scale, risk, and complexity of the project. Do research online to identify the capabilities of digital asset management software. What are the top rated digital asset management software products? Who uses this software? Given the NAO’s findings and what you discover about available off-the-shelf products, would it have been wiser for the BBC to adopt a collection of these existing products? What actions would be necessary to gain the cooperation of the business units to incorporate this collection of products into their work processes? CASE STUDY Webcor: Building Buy-In in the Brick-and-Mortar Business
Founded in 1971, Webcor Builders is one of the largest construction companies in California and one of the largest green construction companies in the United States. Committed to innovative practices, Webcor has gained considerable attention due to its award-winning construction, historic restoration, and seismic renovation work. As Webcor expanded from multifamily residences to com- mercial offices, interiors, retail, public works, parking structures, and federal, education, and health- care facilities, the company opened offices first in San Francisco, and then in San Diego, Los Angeles, and Alameda. Its merger with the large Japanese construction firm Obayashi positioned the company to reach customers along the Pacific Rim, with a new office in Honolulu. Along with developing innovations in building materials and methods, Webcor has leveraged cutting-edge information technologies—in an industry that is often slow to consider, accept, and adopt IT advances. As early as 1984, Webcor integrated the Apple desktop into its work process. In 2011, Webcor made a significant commitment to virtual design and construction in its public sector building projects. Adopting Vico Software’s 5D Virtual Construction application allowed Webcor to estimate costs, schedule projects, and manage projects with increased efficiency. With this software, Webcor can take its customers through a series of what-if scenarios that allow them to make key design decisions from the start. Frank Haase, Director of Virtual Building at Webcor, explains, “We have amassed a knowledge base of real data—from past projects and from our subcontractors—that when combined with the integrated 5D approach gives us an unprecedented planning and management capability on all projects. The precise information derived from this approach, both in preconstruction planning and in ongoing construction operations, helps us to resolve issues early and to make prompt fact-based decisions.” Using the software, Webcor can also predict the scheduling and cost impact of changes that occur throughout building design and construction.
The big question many observers asked was, “How did Webcor Builders manage to persuade its workforce to adopt the new technologies?” The decision to adopt the system involved fairly high risks, given the potential resistance of its end users. As Vince Sarrubi, Webcor CIO, explained the complexity of the challenge, “Blue collar industries tend to focus on completing tasks, meeting deadlines, and doing what they know how to do best to minimize time loss. New technologies Project Management mean changes to physical work practices, which could mean missing a deadline. These workers live in the physical world and have been manually practicing their art for years. There’s a mentality of ‘head down and nose to the grindstone gets the work done’ and ‘if it ain’t broke, don’t fix it.’ ” So, how did Webcor achieve this success? First, Sarrubi is not alone in leading the call for 91 innovative IT utilization within the company. Webcor cites innovation as one of its strengths, and its top management has been firmly committed to technological innovation. Company CEO Andy Ball spearheaded the virtual construction project. He insists, “Change is never easy, and it has an emotional toll and it has a financial toll. Initially, it has a reduction in productivity in order to have a significant gain in productivity. So all of these things sort of work against change, but if you don’t embrace it and you don’t move forward, you’re just going to move backward and fall off the back because it occurs every day.” The management of Webcor understands the risks and advan- tage of innovation and is fully invested in seeing it through. With the firm backing of the top management team, Sarrubi has used two tactics to persuade his blue-collar workforce to adopt
technological innovation. First, Sarrubi searches for and hires what he calls technology “cheerleaders,” young college graduates who are more collaborative and who have embraced technology from their early years as a means of producing higher quality work in less time. “Once older workers see a ‘greenhorn’—a new construction worker—using tech- nology to manage a job, the older, senior superintendents begin to see the benefits of the technol- ogy and start to hop on the wagon,” Sarrubi confides. This strategy successfully persuaded older employees to adopt Box, a cloud-based storage platform for the company’s architectural drawings and financial documents. Cloud technology has facilitated low-cost collaboration and electronic document management for both Webcor and its subcontractors. For a small fee, workers can use the Box application and an iPad to access drawings and 3-D models, report problems, submit inspections, and notify all stakeholders of issues or changes. Sarrubi recalls how Webcor adopted Box technology: “Our enterprise adoption of Box grew out of a trial at one job site and just took off, caught fire, adoption-wise…. All of a sudden, what started as a small group test project grew into almost one hundred Box users within a few weeks. The match that lit the Box fuse was word-of-mouth employee testimonials within the company.” In addition to his cheerleader approach, Sarrubi also makes sure that working with the new technology is “as easy as using Amazon.” Cost, scalability, and return-on-investment are important factors the company considers when making IT decisions, but end-user preference is also a big factor in what technologies the company adopts. When deciding between different technology solutions, Sarrubi tells Webcor’s top management to “slip on the user’s boots and walk a mile.” That he feels will lead to the best IT choice. Discussion Questions 1. How has Webcor used technology to support project management in the construction field?
2. List the main lessons IT managers can learn from Webcor Builders about the successful adop- tion of new technologies. 3. Webcor bought an application called PlanGrid to mark up construction blueprints on iPads. PlanGrid can be used when the workers are offline and later syncs up with files on the Box platform. Webcor frequently follows this approach of buying applications and then building application programming interfaces (APIs) to connect these programs to its main enterprise systems. What are the advantages and disadvantages of this IT development process? 92 Chapter 3 4. How might developing whole IT systems themselves, rather than adopting already developed solutions and integrating them using APIs, change Webcor’s ability to encourage IT adoption? 5. What obstacles do companies face when developing customized IT systems themselves? Under what circumstances does it make sense? Sources: Webcor Builders, www.webcor.com, accessed October 5, 2014; “Webcor Builders Standardizes on Vico Office for Virtual Construction,” Vico Software, June 9, 2011, www .vicosoftware.com/0/webcor-builders-standardizes-on-vico- office-for-virtual-construction/tabid/250240 /Default.aspx; Florentine, Sharon, “Construction Company CIO Builds a Better Business with the Cloud,” CIO, August 1, 2014, www.cio.com/article/2459507/leadership-
management/construction -company-cio-builds-a-better-business-with-the-cloud.html; “Webcore Builders Named as 2014 Contractor of the Year,” Market Watch—PR Newswire, August 6, 2014, www.marketwatch.com /story/webcor-builders-named-as-2014-contractor-of-the-year- 2014-08-06; Geron, Tomio, “Webcor Moves Construction Industry to the Cloud,” Forbes, August 21, 2013, www.forbes.com/sites /tomiogeron/2013/08/21/webcor-moves-construction-industry- to-the-cloud/; Green, Laura, “Andy Ball Leads Webcor Builders into a New Age of Construction,” Smart Business, September 1, 2011, www.sbnonline.com/article/andy-ball-leads-webcor- builders-into-a-new-age-of-construction/. NOTES Sources for the opening vignette: Rushton, Katherine, “BBC Ditches Siemens from £80m DMI Scheme,” BBC, December 10, 2009, www .broadcastnow.co.uk/news/broadcasters/bbc-ditches-siemens- from-80m-dmi-scheme/5008953. article; Glick, Bryan, “The BBC DMI Project—What Went Wrong?” ComputerWeekly.com, February 5, 2014, www.computerweekly.com/news/2240213773/The-BBC-DMI- project-what-went-wrong; Glick, Bryan, “Lack of Business and IT Engagement Led to BBC DMI Failure, Say MPs,” ComputerWeekly.com, April 10, 2014, www.computerweekly.com/news/2240217918/Lack-of -business-and-IT-engagement-led-to-BBC-DMI-project-being-a- complete-failure-say-MPs; “Digital Media Initiative, Memorandum prepared by the Comptroller and Auditor General presented to the BBC Trust, National Audit Office, British Broadcasting Corporation—Digital Media Initiative,” January 2014, www.nao.org.uk/wp-content/uploads/2015/01/BBC-
Digital-Media-Initiative.pdf. 1 “CHAOS Manifesto 2013; Think Big, Act Small,” The Standish Group, www.versionone.com /assets/img/files/CHAOSManifesto2013.pdf, accessed June 11, 2014. 2 “PMI’s Pulse of the Profession,” Project Management Institute, www.pmi.org/Learning/Pulse .aspx, accessed September 20, 2014. 3 Hamel, Gary and Prahalad, C.K., “The Core Competence of the Corporation,” Harvard Business Review, Volume 68, no. 3, pages 79–93, May–June 1990. 4 Krigsman, Michael, “California Abandons $2 Billion Court Management System,” Zdnet, April 2, 2012, www.zdnet.com/blog/projectfailures/california- abandons-2-billion-court-management -system/15363. 5 Brino, Anthony, “CGI to Build Vermont’s HIX,” Government Health IT, December 20, 2012, www.govhealthit.com/news/vermont-sign-hix-it-contract-cgi. 6 Stein, Andrew, “Builder of State’s Health Care Exchange Misses Key Deadlines,” vtdigger.org, September 27, 2013, http://vtdigger.org/2013/09/27/builder-states-health-care- exchange -misses-key-deadliness/. Project Management 7 Goswami, Neal, “State, CGI Sign Amended Contract with New Timetable and Penalties,” Vermont Press Bureau, April 3, 2014, www.vermontpressbureau.com/state-cgi-sign-amended -contract-with-new-timeline-and-penalties/. 8 True, Morgan, “CGI Misses Vermont Health Connect Deadline Again,” VermontBiz, May 21, 2014, www.vermontbiz.com/news/may/cgi-misses-vermont-health- connect-deadline-again.
93 9 Remsen, Nancy, “Health Site Contractor Misses Deadline, Again,” Burlington Free Press, June 10, 2014, www.burlingtonfreepress.com/story/news/local/2014/06/06/heal th-site-contractor -misses-deadline/10090537/. 10 Parker, Bruce, “Vermont Fires Creator of Its ‘Unacceptable,’ Glitchy ObamaCare Site,” Fox News, August 5, 2014, www.foxnews.com/politics/2014/08/05/vermont-fires-creator-its -unacceptable-glitchy-obamacare-site/. 11 Browning, Lynnley, “Thanks for Nothing: Obamacare Website Bunglers Fired,” Newsweek, August 6, 2014, www.newsweek.com/thanks-nothing-obamacare-website- bunglers-fired -263205. 12 Fitzpatrick, Alex, “Apple Has an iPhone Headache, but It Won’t Last Long,” Time, September 24, 2014, http://time.com/3426561/apple-iphone-6-plus-ios-8-problems/. 13 Brown, James, “6 Things to Remember When Projects Spiral Out of Control,” SAP Community Network, September 27, 2013, http://scn.sap.com/community/it- management/blog/2013 /09/27/6-things-to-remember-when-projects-spiral-out-of- control. 14 Tuckman, Bruce, “Developmental Sequence in Small Groups,” Psychological Bulletin, Volume 63, pages 384–389, 1965. 15 “Lead Integrator Atos Successfully Completes Delivery of World’s Biggest IT Sports Contract for Sochi 2014 Games,” Atos, February
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CHAPTER 3PROJECT MANAGEMENTT.docx

  • 1.
    CHAPTER 3 PROJECT MANAGEMENT THEESSENCE OF PROJECT MANAGEMENT “First, have a definite, clear practical ideal; a goal, an objective. Second, have the necessary means to achieve your ends; wisdom, money, materials, and methods. Third, adjust all your means to that end.” —Aristotle, ancient Greek philosopher and scientist THE BBC DIGITAL MEDIA INITIATIVE In 2007, the British Broadcasting Corporation (BBC) launched the Digital Media Initiative, an IT project meant to digitize media production and media asset management across the organization. Originally estimated at a cost of £80 million ($128 million), DMI was intended to introduce a tape- less
  • 2.
    workflow—from raw footageto finished programs—and give BBC staff immediate desktop access to the entire BBC archive. It was predicted that the DMI would save the company 2.5 percent in media production costs per hour, bringing a return of £100 million ($160 million) by 2015. In 2008, the BBC awarded the contract to Siemens, its long-time technology partner; however, that partnership broke down in 2009, with neither company taking direct responsibility for the failure. Rather, the two companies issued a statement saying, “The media environment has changed a great deal since the DMI project began, and both organizations have been in discussions about the way forward. The BBC and Siemens have reached an agreement that allows the BBC to complete the Chapter 3 project in-house.” DMI was dubbed the “Don’t Mention It” project and delegated to the BBC’s chief 62 technical architect and executive producer. Once in-house, however, DMI ran into a series of obstacles. Behind schedule, the IT team struggled to get end users to commit to firm project requirements and priorities. “Throughout the project, the team informed me that the biggest single challenge facing the project was the changes to requirements requested by the business,” said the former chief technology officer John Linwood. The result was a constantly fluctuating project scope. In addition, the technology team sought to adopt an agile development approach, so that the software would be produced
  • 3.
    bit-by-bit, with thebusiness units exploring each incremental release as it was developed. Linwood claims, however, that the business units did not want to take the time to test the releases. Eventually, the IT team simply developed major system components with minimal business unit testing. Meanwhile, the project was falling further and further behind sched- ule. In addition, the BBC did not assign anyone the responsibility or the authority to oversee the adoption of the program by the business units, depriving the DMI of effective project integration management. Because the transition from tape-based production and asset management to digital production and asset management necessitated a significant shift in work processes, management of the adoption and integration of the DMI into business units was essential. In May 2013, the BBC announced that it was scrapping the entire DMI project and firing its chief technology officer. In January 2014, the National Audit Office (NAO) of the United Kingdom released an in-depth report on the project, which was originally intended to include seven parts: an archive database, a virtual warehouse for storing audio and video content, production tools, pro- duction reporting, a music reporting system, a media infrastructure that would allow the files to Project Management move freely among the BBC staff, and enterprise services. Of these seven parts, only the music reporting system had been successfully built and deployed. According to the NAO report, DMI cost £98.4 million ($157 million), took six years, and left the BBC relying on its original tape-based production and asset managing system. 63
  • 4.
    L E AR N I N G O B J E C T I V E S As you read this chapter, ask yourself: What is project management, and what are the key elements of an effective project management process? How can an effective project management process improve the likelihood of project success? This chapter clarifies the importance of project management and outlines a tried and proven process for successful project management. WHY MANAGERS MUST UNDERSTAND PROJECT MANAGEMENT Projects are the way that much of an organization’s work gets done. No matter what the industry and no matter whether the organization is a for-profit company or a nonprofit organization—large or small, multinational or local—good project management is a positive force that enables your organization to get results from its efforts. Unfortunately, IT-related projects are not always successful. The Standish Group has been tracking the success rate of IT projects for over 20 years, and although the success rate has improved over time due to improved methods, training, and tools, roughly 61 percent of all IT projects failed or faced major challenges such as lateness, budget overruns, and lack of required features.1 The Project Management Institute also found a gap between what organizations should be doing—aligning projects to the organization’s strategy—and what they are able to accomplish. The result is that 44 percent of strategic initiatives are unsuccessful.2 This chapter provides information and guidance that will help you avoid failed and challenged
  • 5.
    information technology projects. ResearchersGary Hamel and C.K. Prahalad defined the term core competency to mean something that a firm can do well and that provides customer benefits, is hard for competitors to imitate, and can be leveraged widely to many products and markets.3 Today, many organizations recognize project management as one of their core compe- tencies and see their ability to manage projects better as a way to achieve an edge over Chapter 3 64 competitors and deliver greater value to shareholders and customers. As a result, they spend considerable effort identifying potential project managers and then training and developing them. For many managers, their ability to manage projects effectively is a key to their success within an organization. WHAT IS A PROJECT? A project is a temporary endeavor undertaken to create a unique product, service, or result. Each project attempts to achieve specific business objectives and is subject to certain constraints, such as total cost and completion date. As previously discussed, organizations must always make clear connections among business objectives, goals, and projects; also, projects must be consistent with business strategies. For example, an organization may have a business
  • 6.
    objective to improvecustomer service by offering a consistently high level of service that exceeds custo- mers’ expectations. Initiating a project to reduce costs in the customer service area by eliminating all but essential services would be inconsistent with this business objective. At any point in time, an organization may have dozens or even hundreds of active projects aimed at accomplishing a wide range of results. Projects are different from operational activities, which are repetitive activities performed over and over again. Projects are not repetitive; they come to a definite end once the project objectives are met or the project is cancelled. Projects come in all sizes and levels of complexity, as you can see from the following examples: A senior executive led a project to integrate two organizations following a corporate merger. A consumer goods company executed a project to launch a new product. An operations manager led a project to outsource part of a firm’s operations to a contract manufacturer. A hospital executed a project to load an app on physicians’ smartphones that would enable them to access patient data anywhere. A computer software manufacturer completed a project to improve the scheduling of help desk technicians and reduce the time on hold for callers to its telephone support services. A staff assistant led a project to plan the annual sales meeting. A manager completed a project to enter her departmental budget into a pre- formatted spreadsheet template. Project Variables Five highly interrelated parameters define a project—scope, cost, time, quality, and user expectations. If any one of these parameters changes for a project, there must be a corresponding change in one or more of the other parameters. A brief discussion of these parameters follows.
  • 7.
    Scope Project Management Project scopeis a definition of which tasks are and which tasks are not included in a project. Project scope is a key determinant of the other project factors and must carefully be defined to ensure that a project meets its essential objectives. In general, the larger the 65 scope of the project, the more difficult it is to meet cost, schedule, quality, and stake- holder expectations. For example, the California Case Management System was a major IT project intended to automate court operations for the state of California with a common system across the state that would replace 70 different legacy systems. At the start of the project, planners expected the system to cost $260 million. Court officials terminated the project after spending $500 million on the effort. Today, it is estimated that the project would have cost nearly $2 billion if it had run to completion. While a variety of factors contrib- uted to this waste of resources, one primary cause was inadequate control of the project scope, with some 102 changes in requirements and scope approved over the life of the project.4 Cost The cost of a project includes all the capital, expenses, and internal cross-charges associ- ated with the project’s buildings, operation, maintenance, and support. Capital is money spent to purchase assets that appear on the organization’s balance sheet and are depreci- ated over the life of the asset. Capital items typically have a useful life of at least several years. A building,
  • 8.
    office equipment, computerhardware, and network equipment are examples of capital assets. Computer software also can be classified as a capital item if it costs more than $1000 per unit, has a useful life exceeding one year, and is not used for research and development. Expense items are nondepreciable items that are consumed shortly after they are purchased. Typical expenses associated with an IT-related project include the use of out- side labor or consultants, travel, and training. Software that does not meet the criteria to be classified as a capital item is classified as an expense item. Many organizations use a system of internal cross-charges to account for the cost of employees assigned to a project. For example, the fully loaded cost (salary, benefits, and overhead) of a manager might be set at $120,000 per year. The sponsoring organization’s budget is cross-charged this amount for each manager who works full time on the project. (The sponsoring business unit is the business unit most affected by the project and the one whose budget will cover the project costs.) So, if a manager works at a 75 percent level of effort on a project for five months, the cross-charge is $120,000 0.75 5/12 $37,500. The rationale behind cross-charging is to enable sound economic decisions about whether employees should be assigned to project work or to operational activities. If employees are assigned to a project, cross-charging helps organizations determine which project makes the most economic sense. Organizations have different processes and mechanisms for budgeting and controlling each of the three types of costs: capital, expense, and internal cross-charge. Money from the budget for one type of cost cannot be used to pay for an item associated with another type of cost. Thus, a project with a large amount of capital remaining in its budget cannot Chapter 3
  • 9.
    66 use the availabledollars to pay for an expense item even if the expense budget is overspent. Table 3-1 summarizes and classifies various types of common costs associated with an IT-related project. Time The timing of a project is frequently a critical constraint. For example, in most organiza- tions, projects that involve finance and accounting must be scheduled to avoid any conflict with operations associated with the closing of end-of-quarter books. Often, projects must be completed by a certain date to meet an important business goal or a government mandate. CGI, a Canadian consulting, systems integration, outsourcing, and solutions company was awarded a $36 million contract in December 2012 to build the Vermont Health Con- nect state health exchange.5 Work on the project quickly fell behind schedule—with CGI failing to meet more than half of Vermont’s 21 performance deadlines—so the state and CGI entered into an amended $84 million contract in August 2013 to complete the proj- ect.6 The Vermont Health Connect site launched in October 2013 as required to meet American Affordable Care Act mandates, but with serious deficiencies. Users were unable to edit their information, and the site did not work for small businesses. Despite calls to dump CGI after the flawed launch, state officials decided to continue working with CGI to complete the site. In April 2014, the state and CGI signed off on yet another agreement TABLE 3-1 Typical IT-related project costs
  • 10.
    Development Costs Capital InternalCross-Charge Expense Employee-related expenses Employees’ effort X Travel-related expenses X Training-related expenses X Contractor and consultant charges X IT-related capital and expenses Software licenses (software purchases that qualify as a capital expense) X Software licenses (software that does not qualify as a capital expense)
  • 11.
    X Computing hardware devices X Networkhardware devices X Data entry equipment X Total development costs X X X Project Management that set a new schedule for delivering missing functionality and included financial penal- ties for missed deadlines.7 When CGI failed to meet a May deadline for enabling users to edit their information, the state extended the deadline again—without assessing any pen- alties.8 CGI failed to meet the revised deadline, and in August 2014, the state fired CGI and announced it would transition the remaining work to a new contractor. In the end, Vermont paid CGI $66.7 million for completed work on the $84 million contract.9, 10 CGI was replaced by Optum, a healthcare technology company based in Minnesota that is owned by UnitedHealth Group, the nation’s largest health insurer.11 67
  • 12.
    W H AT W O U L D Y O U D O ? You are the Optum project leader taking over responsibility for implementing the Vermont Health Connect state health exchange. Your manager has just sent you a text asking you if you think it necessary to debrief Vermont state officials on what caused the project with CGI to spiral out of control. How do you reply? Quality The quality of a project can be defined as the degree to which the project meets the needs of its users. The quality of a project that delivers an IT-related system may be defined in terms of the system’s functionality, features, system outputs, performance, reliability, and maintainability. For example, Apple sold an astounding 10 million of its new iPhone 6 and iPhone 6 Plus models in the first few days they were available. Unfortunately, the new iPhones had both hardware and software problems that caused the devices to fail to meet users’ functionality and performance expectations. Apple’s new mobile operating system iOS 8 for the devices came without promised apps that used a health and fitness feature called HealthKit. In addition, it turned out that the iPhone 6 Plus was too pliable, with some users complaining that the phone bent when sitting in their pockets for extended periods. Then when Apple released an iOS 8 update aimed at fixing the HealthKit problem, some users complained the update had caused their iPhones to lose the ability to make phone calls.12 Failure to meet users’ functionality and performance needs detracted from the initial introduction of the new iPhone 6. User Expectations As a project begins, stakeholders will form expectations—or will already have expectations— about how the project will be conducted and how it will affect them. For example, based on
  • 13.
    previous project experience,the end users of a new IT system may expect that they will have no involvement with the system until it is time for them to be trained. However, the project manager may follow a more interactive development process that requires users to help define system requirements, evaluate system options, try out system prototypes, develop user docu- mentation, and define and conduct the user acceptance test. As another example, end users may expect to participate in weekly project status meetings to hear progress reports firsthand. However, the project manager may not have Chapter 3 68 considered involving them in the status meetings or may not even be planning weekly meetings. Both examples illustrate the significant differences in expectations that can exist between stakeholders and project members. It is critical to a project’s success to identify expectations of key stakeholders and team members; if there are differences, they must be resolved to avoid future problems and misunderstandings. The five project parameters—scope, cost, time, quality, and user expectations—are all closely interrelated, as shown in Figure 3-1. For example, if the time allowed to complete the project is decreased, it may require an increase in project costs, a reduction in project quality and scope, and a change of expectations among the project stakeholders, as shown in Figure 3-2.
  • 14.
    FIGURE 3-1 Thefive parameters that define a project © Thorir Aron Stefansson/Shutterstock.com FIGURE 3-2 Revised project definition © Andrey_Popov/Shutterstock.com Project Management WHAT IS PROJECT MANAGEMENT? Project management is the application of knowledge, skills, and techniques to project activities to meet project requirements. Project managers must deliver a solution that meets specific scope, cost, time, and quality goals while managing the expectations of the 69 project stakeholders—the people involved in the project or those affected by its outcome. The essence of artistic activity is that it involves high levels of creativity and freedom to do whatever the artist feels.
  • 15.
    Scientific activity, onthe other hand, involves following defined routines and exacting adherence to laws. Under these definitions, part of project management can be considered an art, because project managers must apply intuitive skills that vary from project to project and even from team member to team member. The “art” of project management also involves salesmanship and psychology in convincing others of the need to change and that this project is right to do. Project management is also part science because it uses time- proven, repeatable processes and techniques to achieve project goals. Thus, one challenge to successful project management is recognizing when to act as an artist and rely on one’s own instinct, versus when to act as a scientist and apply fundamental project management principles and practices. The following section covers the nine areas associated with the science of project management. PROJECT MANAGEMENT KNOWLEDGE AREAS According to the Project Management Institute, project managers must coordinate nine areas of expertise: scope, time, cost, quality, human resources, communications, risk, procurement, and integration as shown in Figure 3-3.
  • 16.
    FIGURE 3-3 Thenine project management knowledge areas © Cengage Learning 70 Chapter 3 Scope Management Scope management includes defining the work that must be done as part of the project and then controlling the work to stay within the agreed-upon scope. Key activities include initiation, scope planning, scope definition, scope verification, and scope change control. Functional decomposition is a frequently used technique to define the scope of an information system by identifying the business processes it will affect. Figure 3-4 shows an example of a functional decomposition chart for a stock management system. A process is a set of logically related tasks performed to achieve a defined outcome. A process is usu- ally initiated in response to a specific event and requires input, which it
  • 17.
    processes to cre-ate output. Often the process generates feedback that is used to monitor and refine the process. To create the functional decomposition chart, begin with the name of the system and then identify the highest-level processes to be performed. Each process should be given a two-word “verb-subject” name that clearly defines the process. Next, break those high- level processes down into lower-level subprocesses. Typically, three or four levels of decomposition are sufficient to define the scope of the system. To avoid problems associated with a change in project scope, a formal scope change process should be defined before the project begins. The project manager and key business managers should decide whether they will allow scope changes at any time during the project, only in the early stages of the project, or not at all. The trade-off is that the more flexibility you allow for scope changes, the more likely the project will meet user needs for features and performance. However, the project will be more difficult to complete within changing time and budget constraints as it is harder to hit a moving target. The change process should capture a clear definition of the change that is being requested, who is requesting it, and why. If the project team has decided not to allow any scope changes during the project, then each new requested scope change is filed with other requested changes. Once the original project is complete, the entire set of requested FIGURE 3-4 Functional decomposition is used to define the scope of the system © Cengage Learning Project Management
  • 18.
    scope changes canbe reviewed and the project team can decide which, if any, of the changes will be implemented and when. Often, it is cheaper to initiate one project to implement numerous related changes than to start several independent projects. A follow- on project can then be considered to implement the recommended changes. The scope, 71 cost, schedule, and benefits of the project must be determined to ensure that it is well defined and worth doing. If the project team has decided to allow scope changes during the project, then time and effort must be allowed to assess how the scope change will affect the interrelated project variables of cost, schedule, quality, and expectations. This impact on the project must be weighed against the benefits of implementing the scope change, and the team must decide whether to implement the scope change. Of course, there may be alternatives for implementing a particular scope change, and the pros and cons must be weighed for each. The time required just to research scope changes can add considerable cost and time to the original project. Each scope change should be approved formally or rejected by the project manager and key stakeholders. Time Management Time management includes defining an achievable completion date that is acceptable to the project stakeholders, developing a workable project schedule, and ensuring the timely completion of the project. Successful project time management requires identifying spe- cific tasks that project team members and/or other resources must complete; sequencing these tasks, taking into account any task dependencies or firm deadlines; estimating the amount of resources required to complete each task, including people, material, and equipment; estimating the
  • 19.
    elapsed time tocomplete each task; analyzing all this data to create a project schedule; and controlling and managing changes to the project schedule. The bigger the project, the more likely that poor planning will lead to significant problems. Well-managed projects use effective planning tools and techniques, including schedules, milestones, and deadlines. A project schedule identifies the project activities that must be completed, the expected start and end dates, and what resources are assigned to each task. A project schedule is needed to complete a project by a defined deadline, avoid rework, and ensure that people know what to do and when to do it. A project milestone is a critical date for completing a major part of the project, such as program design, coding, testing, and release (for a programming project). The project deadline is the date the entire project should be completed and operational—when the organization can expect to begin to reap the benefits of the project. In a systems development project, each activity is assigned an earliest start time and an earliest finish time. Each activity is also allocated slack time, which is the amount of time an activity can be delayed without delaying the entire project. The critical path of a project consists of all activities that, if delayed, would delay the entire project. These activities have zero slack time. Any problems with critical path activities will cause pro- blems for the entire project. To ensure that critical path activities are completed on time, project managers use certain approaches and tools such as GanttProject, Microsoft Project, ProjectLibre, or Webplanner to help compute these critical project attributes. Although the steps of systems development seem straightforward, larger projects can become complex, requiring hundreds or thousands of separate activities. For these systems Chapter 3
  • 20.
    72 development efforts, formalproject management methods and tools are essential. A formal- ized approach called Program Evaluation and Review Technique (PERT) creates three time estimates for an activity: shortest possible time, most likely time, and longest possible time. A formula is then applied to determine a single PERT time estimate. A Gantt chart is a graphical tool used for planning, monitoring, and coordinating projects; it is essentially a grid that lists activities and deadlines. Each time a task is completed, a marker such as a darkened line is placed in the proper grid cell to indicate the completion of a task. The development of a work breakdown structure is a critical activity needed for effective time management. A work breakdown structure (WBS) is an outline of the work to be done to complete the project. You start by breaking the project into various stages or groups of activities that need to be performed. Then, you identify the tasks associated with each project stage. A task typically requires a week or less to complete and produces a specific deliverable—tangible output like a flowchart or end-user training plan. Then the tasks within each stage are sequenced. Finally, any predecessor tasks are identified—these are tasks that must be completed before a later task can begin. For example, the testing of a unit of program code cannot begin until the program has been coded, compiled, and debugged. Next you must determine how long each task in the WBS will take. Thus, building a WBS allows you to look at the project in great detail to get a complete picture of all the work that must be performed. Development of a WBS is another approach to defining the scope of a project—work not included in the WBS
  • 21.
    is outside thescope of the project. Table 3-2 shows a sample WBS for a project whose goal is to establish a wireless network in a warehouse and install RFID scanning equipment on forklift trucks for the tracking of inventory. The three phases of the project in Table 3-2 are “Define Ware- house Network,” “Configure Forklift Trucks,” and “Test Warehouse Network.” Figure 3-5 shows the associated schedule in the form of a Gantt chart, with each bar in the chart indicating the start and end dates of each major activity (heavy black lines) and task (lighter lines). Cost Management Cost management includes developing and managing the project budget. This area involves resource planning, cost estimating, cost budgeting, and cost control. As previously discussed, a separate budget must be established for each of the three types of costs— capital, expense, and internal cross-charge—and money in one budget cannot be spent to pay for another type of cost. One approach to cost estimating uses the WBS to estimate all costs (capital, expense, and cross-charge) associated with the completion of each task. This approach can require a fair amount of detailed work, such as determining the hourly rate of each resource assigned to the task and multiplying by the hours the resource will work on the task, estimating the cost per unit for supplies and multiplying that by the number of units required, and so on. If possible, the people who will complete the tasks should be allowed to estimate the time duration and associated costs. This approach helps them to better understand the tasks they are expected to complete, gives them some degree of control Project Management TABLE 3-2 Work breakdown structure Predecessor
  • 22.
    Task Duration StartEnd Tasks 1 Implement warehouse network 28d 5/06/16 6/14/16 2 Define warehouse network 25d 5/06/16 6/09/16 3 Conduct survey 3d 5/06/16 5/10/16 4 Order RF equipment 14d 5/11/16 5/30/16 3 5 Install RF equipment 6d 5/31/16 6/07/16 4 6 Test RF equipment 2d 6/06/16 6/07/16
  • 23.
    5 7 Configure forklift trucks 19d 5/06/16 6/01/16 8 OrderRFID scanners for trucks 12d 5/06/16 5/23/16 9 Install RFID scanners on trucks 5d 5/24/16 5/30/16 8 10 Test RFID scanners 2d 5/31/16 6/01/16 9 11 Test warehouse network 28d 5/06/16 6/14/16 12 Develop test plan 2d 5/06/16 5/09/16
  • 24.
    13 Conduct test 3d 6/10/16 6/14/16 6,10,12 73 FIGURE 3-5Gantt chart depicting the start and finish of project tasks
  • 25.
    © Cengage Learning indefining how the work will be done, and obtains their “buy- in” to the project schedule and budget. You can develop a project duration based on the sequence in which the tasks must be performed and the duration of each task. You can also sum the cost of each task to develop an estimate of the total project budget. This entire process is outlined in Figure 3- 6, and the resulting budget is depicted in Table 3-3. 74 Chapter 3 FIGURE 3-6 Development of a WBS leads to creation of a schedule and budget TABLE 3-3 Project budget © Cengage Learning Task Capital Expense Cross-Charges 1 Implement warehouse network 2
  • 26.
    Define warehouse network 3 Conductsurvey $2400 4 Order RF equipment $9000 5 Install RF equipment $7800 6 Test RF equipment $ 960 7 Configure forklift trucks 8 Order RFID scanners for trucks $12,500 9 Install RFID scanners on trucks
  • 27.
    $2400 10 Test RFID scanners $1200 11 Testwarehouse network $ 960 12 Develop test plan 13 Conduct test $1440 TOTAL Costs $21,500 $10,200 $6960 Project Management As an example, suppose that a company plans to implement a new software package for its accounts payable process. The company must spend $150,000 on computer hard- ware (capital) and pay the software vendor $20,000 for its time and effort to implement
  • 28.
    the software (expense).The vendor must also be paid $125,000 for the software package 75 license (capital). In addition, one business manager will spend six months full time leading the implementation effort. Six months’ worth of the fully loaded cost of the manager (say, $120,000 per year) must be charged to the cross-charge budget of the accounting organi- zation. The cross-charge is a total of $60,000. W H A T W O U L D Y O U D O ? The new warehouse inventory control system will use the recently installed wireless net- work and RFID scanning equipment mounted on forklift trucks to track inventory in the warehouse. You have been holding off meeting with the project team to develop a sched- ule and cost estimate because three key members of the five-person project team are not available to meet until late next week. The CFO is on the phone with you. She needs dates, effort estimates, and dollar estimates to complete the capital and staffing forecast for next year and ensure there will be a budget for this project. What do you say? Quality Management Quality management ensures that the project will meet the needs for which it was undertaken. This process involves quality planning, quality assurance, and quality control. Quality planning involves determining which quality standards are relevant to the project and determining how they will be met. Quality assurance involves evaluating the progress of the project on an ongoing basis to ensure that it meets the identified quality standards. Quality control involves checking project results to ensure that they meet identified qual- ity standards. When it comes to developing IT-related systems, the source of
  • 29.
    the majority ofdefects uncovered in system testing can be traced back to an error in specifying requirements. Thus, most organizations put a heavy emphasis on accurately capturing and documenting system requirements and carefully managing changes in user requirements over the course of the project. A useful checklist for assessing the validity of system requirements includes the following questions:13 Does the requirement describe something actually needed by the customer? Is the requirement correctly defined? Is the requirement consistent with other requirements? Is the requirement defined completely? Is the requirement verifiable (testable)? Is the requirement traceable back to a user need? Hewlett Packard’s Quality Center, Jama from Jama Software, and Innoslate from Sys- tems and Proposal Engineering Company are three examples of requirements management software. 76 Chapter 3 Human Resource Management Human resource management is about making the most effective use of the people involved with the project. It includes organizational planning, staff acquisition, and team development. The project manager must be able to build a project team staffed with peo- ple with the right mix of skills and experience and then train, develop, coach, and moti- vate them to perform effectively on the project.
  • 30.
    The project managermay be assigned all members of the team, or may have the lux- ury of selecting all or some team members. Team members should be selected based on their skills in the technology needed for the project, their understanding of the business area affected by the project, their expertise in a specific area of the project, and their ability to work well on a team. Often, compromises must be made. For example, the best available subject matter expert may not work well with others, which becomes an addi- tional challenge for the project manager. Experienced project managers have learned that forming an effective team to accom- plish a difficult goal is a challenge in itself. For the team to reach high levels of perfor- mance, it takes considerable effort and a willingness to change on the part of the entire team. A useful model to describe how teams develop and evolve is the forming- storming-norming-performing model, which was first proposed by Bruce Tuckman (see Figure 3-7).14 During the forming stage, the team meets to learn about the project, agrees on basic goals, and begins to work on project tasks. Team members are on their best behavior and try to be pleasant to one another while avoiding any conflict or disagreement. Team members work independently of one another and focus on their role or tasks without understanding what others are attempting to do. The team’s project manager in the for- mation stage tends to be highly directive and tells members what needs to be done. If the team remains in this stage, it is unlikely to perform well, and it will never develop break- through solutions to problems or effectively solve a conflicting set of priorities and constraints. The team has moved into the storming stage when it recognizes that differences of opinion exist among team members and allows these ideas to compete for consideration.
  • 31.
    FIGURE 3-7 Tuckman’sforming-storming-norming- performing model © Cengage Learning Project Management Team members will raise such important questions as “What problems are we really supposed to solve?” “How can we work well together?” “What sort of project leadership will we accept?” The team might argue and struggle, so it can be an unpleasant time for everyone. An inexperienced project manager, not recognizing 77 what is happening, may give up, feeling that the team will never work together effectively. The project manager and team members must be tolerant of one another as they explore their differences. The project manager may need to continue to be highly directive. If the team survives the storming stage, it may enter the norming stage. During this stage, individual team members give up their preconceived judgments and opinions. Mem- bers who felt a need to take control of the team give up this impulse. Team members adjust their behavior toward one another and begin to trust one another. The team may decide to document a set of team rules or norms to guide how they will work together. Teamwork actually begins. The project manager can be less directive and can expect team members to take more responsibility for decision making. Some teams advance beyond the norming stage into the performing stage. At this point, the team is performing at a high level. Team members are competent, highly moti- vated, and knowledgeable about all aspects of the project. They have
  • 32.
    become interdepen- denton one another and have developed an effective decision-making process that does not require the project manager. Dissent is expected, and the team has developed an effective process to ensure that everyone’s ideas and opinions are heard. Work is done quickly and with high quality. Problems that once seemed unsolvable now have “obvious” solutions. The team’s effectiveness is much more than the sum of the individual members’ contributions. The project manager encourages participative decision making, with the team members making most of the decisions. No matter what stage a team is operating in, it commonly will revert to less advanced stages in the model when confronted with major changes in the work to be done, a change in project leadership, or substantial changes in the team’s makeup. The project manager and business managers must recognize and consider this important dynamic when con- templating project changes. Another key aspect of human resource management is getting the project team and the sponsoring business unit to take equal responsibility for making the project a success. The project team members must realize that on their own they cannot possibly make the project a success. They must ensure that the business managers and end users become deeply involved in the project and take an active role. The project team must actively involve the end users, provide information for them to make wise choices, and insist on their participation in major decisions. The business unit must remain engaged in the proj- ect, challenge recommendations, ask questions, and weigh options. It cannot simply sit back and “let the project happen to them.” Key users need to be identified as part of the project team with responsibility for developing and reviewing deliverables. Indeed, some organizations require that the project manager come from the sponsoring business unit. Other organizations assign co-project managers to IT-related projects—one from the IT organization and one from the business unit.
  • 33.
    In addition tothe development team, each project should have a project steering team, made up of senior managers representing the business and IT organizations, to provide guid- ance and support to the project. The number of members on the steering team should be Chapter 3 78 limited (three to five) to simplify the decision-making process and ease the effort to schedule a quorum of these busy executives. The project manager and select members of the development team should meet with the steering team on an as- needed basis, typically at the end of each project phase or every few months. The three key members of the steering team include the project champion who is a well-respected manager with a passion to see the project succeed and who removes barriers to the project success; the project sponsor who is a senior manager from the business unit most affected by the project and who ensures the project will indeed meet the needs of his or her organization; and the IT manager who ensures proper IT staffing for the project and ensures the project uses approved technology and vendors. These roles are further explained in Figure 3-8 and outlined in Table 3-4. Many projects also draw on key resources who are not assigned to the project team but who provide valuable input and advice. A subject matter expert is someone who pro- vides knowledge and expertise in a particular aspect important to the project. For exam- ple, an accounting system project may seek advice from a member of the internal auditing group in defining the mandatory
  • 34.
    control features ofa new system. A technical resource is essentially a subject matter expert in an IT topic of value to the project. For example, the accounting system project may seek advice from a database management system guru (either inside or outside the company) to minimize the processing time for certain key business transactions. Communications Management Communications management involves the generation, collection, dissemination, and storage of project information in a timely and effective manner. It includes communica- tions planning, information distribution, performance reporting, and managing communi- cations to meet the needs of project shareholders. The key stakeholders include the project steering team, the team itself, end users, and others who may be affected by the project (potentially customers or suppliers). FIGURE 3-8 The project steering team © Cengage Learning Project Management TABLE 3-4 Responsibilities of project steering team Project Champion Project Sponsor IT Manager Well-respected senior manager with a passion to see project succeed Senior manager of business unit most affected by the project Well-respected IT manager Assures that project goals and objectives are aligned with organizational goals and objectives Ensures that the business unit’s expectations and needs are clearly communicated and understood
  • 35.
    Ensures project isstaffed with appropriate IT staff Convinces other senior man- agers of the project’s merits to gain their approval to fund and staff it Ensures that the project solution is truly workable and consistent with business and end-user requirements Ensures technology and vendors suggested for inclusion in the project are consistent with IT strategy Acts as a vocal and visible champion for the project to gain the support of others Works to overcome resistance to change and prepare the organi- zation to embrace the new system and way of doing things Identifies and removes barriers to project success Identifies workers from business unit to be assigned on a full- or part-time basis to project Resolves any issues outside the control of the project manager Provides advice and counsel to the project team Keeps informed of major project activities and developments Has final approval of all requests for changes in project scope, budget, and schedule Signs off on approvals to proceed to each succeeding project phase
  • 36.
    79 In preparing acommunications plan, the project manager should recognize that the various stakeholders have different information needs in the project. A useful tool for identifying and documenting these needs is the stakeholder analysis matrix
  • 37.
    shown in Table3-5. This matrix identifies the interests of the stakeholders, their information needs, and important facts for managing communications with the champion, sponsor, project team members, and key end users who are associated with the project. The project manager should include his or her manager in this analysis. Based on analysis of this data, the preferred form and frequency of communication is identified for each stakeholder. Chapter 3 80 TABLE 3-5 Sample stakeholder analysis matrix Key Stakeholders Ray Boaz Klem Kiddlehopper John Smith Forklift Drivers Organization Project champion and VP of supply chain Project sponsor and warehouse manager Experienced forklift driver 15 different drivers Useful facts Very persuasive Trusted by CEO Risk taker, very aggressive
  • 38.
    Will push thisthrough, no matter what Has driven fork- lift truck for five years Well respected by peers Not highly moti- vated to make project a success Level of interest High High Medium Low Level of influence High Medium High Low Suggestions on managing relationship Demands respect, somewhat formal Speak in business terms, never get technical; no surprises! Poor listener, forgets details Put it in writing Must keep John enthusiastic about project Don’t ignore Attend occa- sional shift change-over meeting Information needs ROI, budget, and schedule Schedule and potential opera- tional conflicts Schedule, especially timing of training Schedule, especially tim- ing of training Safety and pro- ductivity issues Safety issues Information medium, format, and timing Biweekly face- to-face meeting Weekly email newsletter Biweekly face- to-face
  • 39.
    Newsletter Catch-as-catch can Brief updatesat weekly depart- ment meeting If the project team is unable to recruit either a project champion or sponsor, the problem may be that management does not see clearly that the benefits of the project outweigh its costs, or that the project appears to run counter to organizational goals and strategies. A potential project without either a champion or a sponsor is highly unlikely to get the needed resources, and for good reason. No project should be started without both a champion and a sponsor. Risk Management “Things will go wrong, and at the worst possible time,” according to a variation of Murphy’s Law, a popular adage. Project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project objective. Known risks are risks that can be identified and analyzed. For example, in creating a new IT-related system that includes the acquisition of new computing and/or networking hardware, a known risk might be that the hardware will take longer than expected to arrive at the installation site. If the hardware is delayed by several weeks, it could have a negative effect on the project completion date. Countermeasures can be defined to avoid some known risks entirely, and Project Management contingency plans can be developed to address unavoidable known risks if they occur. Of course, some risks simply cannot be anticipated. A hallmark of experienced project managers is that they follow a deliberate and sys- tematic process of risk management to identify, analyze, and
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    manage project risks.Having 81 identified potential risks, they make plans to avoid them entirely. When an unavoidable risk occurs and becomes an issue, the project team has already defined an alternative course of action to minimize the impact on the project. They waste no time executing the backup plan. Unknown risks cannot be managed directly; however, an experienced project manager will build some contingency into the project budget and schedule to allow for their occurrence. While inexperienced project managers realize that things may go wrong, they fail to identify and address known risks and do not build in contingencies for unknown risks. Thus, they are often unsure of what to do, at least temporarily, when a project setback occurs. In their haste to react to a risk, they may not implement the best course of action. The project manager needs to lead a rigorous effort to identify all risks associated with the project. The project team, business managers, and end users should participate in the effort. These resources can include seasoned project managers and members of the orga- nization’s risk management department. After each risk is identified and defined, as shown in Table 3-6, the group should attempt to classify the risk by the probability that it will occur and the impact on the project if the risk does occur. Both the probability and the impact can be classified as high, medium, or low, as shown in the example in Table 3-7. TABLE 3-6 Identification of project risks Risk Example R1 The required new servers arrive at the installation site more than two weeks late. R2 Business pressures make key end users unavailable to develop the user acceptance test by the date it is needed.
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    R3 Business pressures makeend users unavailable during time scheduled for training. R4 One or more end-user computers have insufficient memory or CPU capacity to run the new software efficiently (or at all). Rn …. TABLE 3-7 Example of an assessment of project risks Impact on Project Low Medium High Probability risk occurs High Medium Low R10 R5, R6 R2, R3 Rn R1 R8, R11 R7, R9 R4
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    Dark High risk/highimpact; risk management plan is needed Lightest Medium or high risk and impact; risk management plan recommended Lighter Low or medium risk and impact; risk management plan not needed Chapter 3 82 The project team then needs to consider which risks need to be addressed with some sort of risk management plan. Generally, the team can ignore risks with a low probability of occur- rence and low potential impact. Risks with a high probability of occurrence and a high poten- tial impact need to have a risk owner assigned. The risk owner is responsible for developing a risk management strategy and monitoring the project to determine if the risk is about to occur or has occurred. One strategy is to take steps to avoid the risk altogether, while another is to develop a backup plan. The risk management plan can be documented as shown in Table 3-8. One of the biggest risks associated with a project is that considerable time, energy, and resources might be consumed with little value to show in return. To avoid this poten- tial risk, an organization must ensure that a strong rationale exists for completing a proj- ect. The project must have a direct link to an organizational strategy and goal, as shown in Figure 3-9. In this example, assume that an organization has been losing sales because of customer dissatisfaction. It has set an objective of improving customer service, with a goal of increasing the retention rate of existing customers. The organization has
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    defined one ofits key strategies as improving customer service to world-class levels. A project that is consistent with this strategy and that can deliver results to achieve this goal is clearly aligned with the organization’s objectives. Objective—Improve customer service. Goal—Reduce customer turnover from 25 percent per year to 10 percent by June 2017 by responding to 95 percent of customers’ inquiries within 90 seconds, with less than 5 percent callbacks about the same problem. Strategy—Improve customer service to world-class levels. Project—Implement a state-of-the-art customer call center with “24/7” availability and a well-trained staff. TABLE 3-8 Risk management plan Risk Description Risk Owner Risk Strategy Current Status R2 Business pressures Jon Andersen, Try to avoid this Key users have been make key end users manager of end problem by starting identified and have unavailable to users in the busi- development of the started developing the
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    develop the user nessarea user acceptance test test. acceptance test by three weeks earlier the deadline. than originally planned. Monitor progress carefully. R3 Business pressures Jon Andersen, Try to avoid this pro- Three of four temporary make end users manager of end blem by hiring and workers have been
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    unavailable during users inthe busi- training four tempor- hired. Their training is the time scheduled ness area ary workers to fill in scheduled to begin next for training. for end users as they week. participate in training. R1 The required new Alice Fields, team Set a firm delivery The contract with the servers arrive at the member responsi- deadline with the penalty clause has been installation site ble for hardware vendor, with a sub- signed by the vendor, who more than two
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    acquisition stantial dollar penalty agreesto provide a ship- weeks late. for each day that the ment status update each equipment is late. Tuesday and Friday. Project Management 83
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    FIGURE 3-9 Projectsmust be well linked to an organizational goal and strategy © Cengage Learning Risk management software—such as Risk Management from Intelex, Full Monte from Barbecana, and @Risk from Intaver Institute—integrates with project scheduling soft- ware and can reflect the potential impact of various risks on the project schedule and cost. Use of such software can lead to more realistic estimates for project milestones and budgets. Procurement Management Procurement management involves acquiring goods and/or services for the project from sources outside the performing organization. This activity is divided into the following processes: Plan purchase and acquisition—This process determines what is needed and when. Plan contracting—This process documents requirements for products and services and identifies potential providers. Request seller responses—This process obtains bids, information, proposals, or quotations from potential providers. Select seller—During this process, offers are reviewed, the preferred provider is identified, and negotiations are started. Contract administration—This process manages all aspects of the contract and the relationship between the buyer and the provider. The process Chapter 3
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    84 includes tracking anddocumenting the provider’s performance, managing contract changes, and taking any necessary corrective actions. Contract closure—This process completes and settles terms of any contracts, including resolving any open items. The make-or-buy decision is a key decision made during the plan purchase and acquisition process. The make-or-buy decision involves comparing the pros and cons of in-house production versus outsourcing of a given product or service. In addition to cost, two key factors to consider in this decision are (1) “Do we have a sufficient number of employees with the skills and experience required to deliver the product or service at an acceptable level of quality and within the required deadlines?” (2) “Are we willing to invest the management time, energy, and money required to identify, recruit, train, develop, and manage people with the skills to do this kind of work?” Outsourcing is discussed further in Chapter 4. A contract is a legally binding agreement that defines the terms and conditions of the buyer–provider relationship, including who is authorized to do what, who holds what responsibilities, costs and terms of payment, remedies in case of breach of contract, and the process for revising the contract. Contract types fall into three main categories: Fixed-price contract—With this type of contract, the buyer and provider agree to a total fixed price for a well-defined product or service. For example, the purchase of a large number of laptop computers with specified capabili- ties and features frequently involves a fixed-price contract. Cost-reimbursable contract—This type of contract requires paying the pro- vider an amount that covers the provider’s actual costs plus an additional amount or percentage for profit. Three common types of cost-reimbursable contracts exist. In a
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    cost-plus-fee or cost-plus-percentageof cost contract, the provider is reimbursed for all allowable costs and receives a percentage of the costs as a fee. In a cost-plus-fixed-fee contract, the provider is reim- bursed for all allowable costs and receives a fixed fee. In a cost- plus-incentive-fee contract, the provider is reimbursed for all allowable costs. In addition, a predetermined fee is paid if the provider achieves specified performance objectives—for example, the provider’s hardware must be received, installed, and operational by a specific date. In such con- tracts, buyers run the risk of paying more for the work but are rewarded by having their objectives met or exceeded. Providers run the risk of reduced profits if they fail to deliver, but can be rewarded for superior performance. Time and material contract—Under this type of contract, the buyer pays the pro- vider for both the time and materials required to complete the contract. The con- tract includes an agreed-upon hourly rate and unit price for the various materials to be used. The exact number of hours and precise quantity of each material are not known, however. Thus, the true value of the contract is not defined when the contract is approved. If not managed carefully, time and material contracts actu- ally can motivate suppliers to extend projects to maximize their fees. Poor procurement management can result in serious project problems and even a project’s outright cancellation. Project Integration Management Project Management Project integration management is perhaps the most important knowledge area because it requires the assimilation of all eight other project management knowledge areas. Project integration management requires the coordination of all
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    appropriate people, resources, 85 plans,and efforts to complete a project successfully. Project integration management comprises seven project management processes: 1. Developing the project charter that formally recognizes the existence of the project, outlines the project objectives and how they will be met, lists key assumptions, and identifies major roles and responsibilities. 2. Developing a preliminary project scope statement to define and gain consen- sus about the work to be done. Over the life of the project, the scope state- ment will become fuller and more detailed. 3. Developing the project management plan that describes the overall scope, schedule, and budget for the project. This plan coordinates all subsequent project planning efforts and is used in the execution and control of the project. 4. Directing and managing project execution by following the project management plan. 5. Monitoring and controlling the project work to meet the project’s perfor- mance objectives. This process requires regularly measuring effort and expenditures against the project tasks, recognizing when significant devia- tions occur from the schedule or budget, and taking corrective action to regain alignment with the plan. 6. Performing integrated change control by managing changes over the course of the project that can affect its scope, schedule, and/or cost. 7. Closing the project successfully by gaining stakeholder and customer accep- tance of the final product, closing all budgets and purchase orders after con- firming that final disbursements have been made, and capturing knowledge from the project that may prove useful for future projects. As an example of a firm that excels in project integration management, consider Atos, an international IT services
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    company that employs76,300 workers in more than 52 countries, with 2013 annual revenue of €8.6 billion ($11.0 billion). The firm successfully delivered the information technology systems that enabled the smooth running of the Sochi 2014 Olympic Games in Russia. Atos had the primary responsibility for project integration, consulting, sys- tems integration, operations management, information security, and software applications development for the games. Through its experience with previous Olympics (Atos has been the Worldwide IT partner for the Olympic Games, both winter and summer, since Salt Lake City in 2002), Atos has developed an effective project management process. The firm spent over four years configuring, testing, and retesting some 10,000 pieces of equipment deployed to 30 different venues. Atos coordinated the work of hundreds of subcontractors to deliver a reliable IT infrastructure and IT services in support of one of the world’s widely viewed sporting events. The Sochi project was coordinated so that custom software, thousands of workstations and laptops, tens of thousands of phones, hundreds of servers, and multiple operations centers and data centers all operated together effectively and efficiently.15 The manager’s checklist in Table 3-9 provides a set of recommended actions for business managers to improve the success rate of their organization’s projects. The appropriate answer to each question is yes. Chapter 3 TABLE 3-9 A manager’s checklist Recommended Action Yes No
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    Are project scope,cost, time, quality, and user expectations treated as highly interrelated variables—in other words, changing one affects the others? Is an internal cross-charge system used to account for the cost of employees assigned to a project? Is the project scope well defined and managed? Is a detailed work breakdown structure prepared to define the project schedule and cost? Is the project’s estimated cost well defined and controlled? Is the project team performing quality planning, quality assur- ance, and quality control? Is there a heavy emphasis on defining user requirements? Does the project manager take action to form and maintain an effective working team?
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    Do the projectteam and sponsoring organization take equal responsibility for the success of the project? Have a project champion and project sponsor been identified for the project? Has a communications plan for all key stakeholders been defined for the project? Has the project manager followed a deliberate and systematic process of risk management to identify, analyze, and manage project risks? Is it clear that a strong rationale exists for doing the project? Does the project have a direct link to an organizational strategy and goal? Is a process in place to manage project procurement? Has responsibility for the seven project integration management processes been defined?
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    Are the sevenproject integration management processes being performed? 86 KEY TERMS communications management core competency cost management cost-reimbursable contract critical path fixed-price contract forming-storming- norming-performing model functional decomposition Gantt Chart human resource management make-or-buy decision predecessor tasks process procurement management CHAPTER SUMMARY
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    Program Evaluation andReview Technique (PERT) project project champion project deadline project integration management project management project milestone project risk project schedule project scope project sponsor project stakeholders project steering team quality Project Management quality assurance quality control quality management quality planning 87 risk management risk owner scope management slack time sponsoring business unit subject matter expert technical resource time and material contract time management work breakdown structure (WBS) Roughly 61 percent of all IT projects are challenged or failed. About 44 percent of all strategic initiatives are unsuccessful. Today, many organizations have recognized project management as one of their core competencies. Organizations must always make clear connections among business objectives, goals, strategies, and projects. A project is a temporary endeavor undertaken to create a unique product, service, or result. Five highly interrelated parameters define a project—scope, cost, time, quality, and user expectations. If any one of these project parameters is changed, there must be a corre- sponding change in one or more of the other parameters.
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    Project scope isthe definition of which work is and which work is not included in a project. The cost of a project includes all the capital, expenses, and internal cross-charges associ- ated with the project’s buildings, operation, maintenance, and support. The timing of a project is frequently a critical constraint. Quality of a project can be defined as the degree to which the project meets the needs of its users. Project management is the application of knowledge, skills, and techniques to project activ- ities to meet project requirements. Project managers must attempt to deliver a solution that meets specific scope, cost, time, and quality goals while managing the expectations of the project stakeholders—the people involved in the project or those affected by its outcome. 88 Chapter 3 According to the Project Management Institute, project managers must coordinate nine areas of expertise, including scope, time, cost, quality, human resources, communica- tions, risk, procurement, and integration. Scope management includes defining the work that must be done as part of the project and then controlling the work to stay within the agreed-upon scope. Functional decomposition is a technique frequently used to define the scope of an infor- mation system by identifying the business processes it will affect. Time management includes defining an achievable completion
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    date that isacceptable to the project stakeholders, developing a workable project schedule, and ensuring the timely completion of the project. Cost management includes developing and managing the project budget. Quality management ensures that the project will meet the needs for which it was undertaken. Human resource management is about making the most effective use of the people involved in the project. The forming-storming-norming-performing model describes how teams form and evolve. Each project should have a project steering team—made up of senior managers representing the business and IT organizations—to provide guidance and support to the project. Three key members of the steering team are the project champion, project sponsor, and IT manager. Communications management involves the generation, collection, dissemination, and storage of project information in a timely and effective manner. Risk management is a process that attempts to identify, analyze, and manage project risks. Experienced project managers follow a deliberate and systematic process of risk management to avoid risks or minimize their negative impact on a project. Procurement management involves acquiring goods and/or services for the project from sources outside the organization. Project integration management is a critical knowledge area of project management that involves chartering, scoping, planning, executing, monitoring and controlling, change control, and project closing. DISCUSSION QUESTIONS 1. Do research online to find the success rate of IT projects compared to all types of organiza- tional projects. Which has the higher success rate? Why do you think that this is so?
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    2. What ismeant by the scope of a project? How can the scope of a project be defined? 3. Distinguish between the role of the project champion and the role of the project sponsor. Is one more important to the success of a project than the other? 4. Present an argument of why organizations should not include internal cross-charges in evalu- ating the economic desirability of projects. Now present an argument of why they should. What is your final position on the use of cross-charges? 5. What is the difference between quality assurance and quality control? Project Management 6. Describe three specific actions that the ideal project sponsor should take to ensure the success of a project. 7. Is there a difference between project time management and personal time management? Can someone be “good” at one but not the other? Explain your answer. 89 8. Discuss the team dynamics for a highly effective (or ineffective) team of which you were a member. Can you explain why the team performed so well (or poorly) using the forming- storming-norming-performing model? 9. What sort of behaviors would indicate that the business organization is not fully engaged in a project and instead is looking to the project team to make the project a success? What is the danger with this attitude? 10. Identify some of the challenges of performing project integration management on a project in which team members are distributed globally and cannot physically meet in one location. How might these challenges be overcome? 11. Imagine that you are hiring a firm to complete a large but
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    undetermined amount ofproject work for your firm. Which form of contract would you prefer and why? 12. How would you respond to a project team member who feels that risk management is a waste of time because the future cannot be predicted? Instead, this person prefers to react to pro- blems as they occur. ACTION NEEDED 1. You are on the phone with the project sponsor of a project you are managing. He informs you that he accepted the role reluctantly and now, two months into this eight-month project, he is considering withdrawing as project sponsor. He does not see the need for this role and is extremely busy with his other responsibilities. How do you respond? 2. You and a small group of managers from the sponsoring organization have just completed defining the scope, schedule, and cost for an important project in your firm. You estimate that the project will take 12 people about 10 months and cost just over $2.5 million. You just received an email from your manager insisting that the project schedule be shortened by three months because senior management is impatient for the improvements this project is expected to deliver. He promises to “free up” four additional resources within the next month or so to be assigned to your project. How do you respond? 3. You are surprised when your project team “pushes back” on your request for them to schedule a full-day offsite to work with you to develop a risk management plan. They state that they are simply too busy to afford time for this activity. And besides, they feel that if something unfore- seen occurs, it is your responsibility to react to it. How do you respond to your team? WEB-BASED CASE BBC Digital Media Initiative Revisited The National Audit Office (NAO) scrutinizes public spending in the United Kingdom. Its memoran- dum on the BBC’s DMI project reported on several key findings. First, the in-house
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    team was 90 Chapter 3 severelychallenged by the fact that the project was already 18 months behind schedule when they began work on the project. Second, the technology team issued releases throughout the project that did not meet end-user expectations and eroded confidence in the project. Third, the BBC focused more on the technological development rather than on encouraging organization-wide changes in workflow that would encourage adoption. Finally, the NAO concluded, the DMI lacked governance arrangements for the scale, risk, and complexity of the project. Do research online to identify the capabilities of digital asset management software. What are the top rated digital asset management software products? Who uses this software? Given the NAO’s findings and what you discover about available off-the-shelf products, would it have been wiser for the BBC to adopt a collection of these existing products? What actions would be necessary to gain the cooperation of the business units to incorporate this collection of products into their work processes? CASE STUDY Webcor: Building Buy-In in the Brick-and-Mortar Business
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    Founded in 1971,Webcor Builders is one of the largest construction companies in California and one of the largest green construction companies in the United States. Committed to innovative practices, Webcor has gained considerable attention due to its award-winning construction, historic restoration, and seismic renovation work. As Webcor expanded from multifamily residences to com- mercial offices, interiors, retail, public works, parking structures, and federal, education, and health- care facilities, the company opened offices first in San Francisco, and then in San Diego, Los Angeles, and Alameda. Its merger with the large Japanese construction firm Obayashi positioned the company to reach customers along the Pacific Rim, with a new office in Honolulu. Along with developing innovations in building materials and methods, Webcor has leveraged cutting-edge information technologies—in an industry that is often slow to consider, accept, and adopt IT advances. As early as 1984, Webcor integrated the Apple desktop into its work process. In 2011, Webcor made a significant commitment to virtual design and construction in its public sector building projects. Adopting Vico Software’s 5D Virtual Construction application allowed Webcor to estimate costs, schedule projects, and manage projects with increased efficiency. With this software, Webcor can take its customers through a series of what-if scenarios that allow them to make key design decisions from the start. Frank Haase, Director of Virtual Building at Webcor, explains, “We have amassed a knowledge base of real data—from past projects and from our subcontractors—that when combined with the integrated 5D approach gives us an unprecedented planning and management capability on all projects. The precise information derived from this approach, both in preconstruction planning and in ongoing construction operations, helps us to resolve issues early and to make prompt fact-based decisions.” Using the software, Webcor can also predict the scheduling and cost impact of changes that occur throughout building design and construction.
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    The big questionmany observers asked was, “How did Webcor Builders manage to persuade its workforce to adopt the new technologies?” The decision to adopt the system involved fairly high risks, given the potential resistance of its end users. As Vince Sarrubi, Webcor CIO, explained the complexity of the challenge, “Blue collar industries tend to focus on completing tasks, meeting deadlines, and doing what they know how to do best to minimize time loss. New technologies Project Management mean changes to physical work practices, which could mean missing a deadline. These workers live in the physical world and have been manually practicing their art for years. There’s a mentality of ‘head down and nose to the grindstone gets the work done’ and ‘if it ain’t broke, don’t fix it.’ ” So, how did Webcor achieve this success? First, Sarrubi is not alone in leading the call for 91 innovative IT utilization within the company. Webcor cites innovation as one of its strengths, and its top management has been firmly committed to technological innovation. Company CEO Andy Ball spearheaded the virtual construction project. He insists, “Change is never easy, and it has an emotional toll and it has a financial toll. Initially, it has a reduction in productivity in order to have a significant gain in productivity. So all of these things sort of work against change, but if you don’t embrace it and you don’t move forward, you’re just going to move backward and fall off the back because it occurs every day.” The management of Webcor understands the risks and advan- tage of innovation and is fully invested in seeing it through. With the firm backing of the top management team, Sarrubi has used two tactics to persuade his blue-collar workforce to adopt
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    technological innovation. First,Sarrubi searches for and hires what he calls technology “cheerleaders,” young college graduates who are more collaborative and who have embraced technology from their early years as a means of producing higher quality work in less time. “Once older workers see a ‘greenhorn’—a new construction worker—using tech- nology to manage a job, the older, senior superintendents begin to see the benefits of the technol- ogy and start to hop on the wagon,” Sarrubi confides. This strategy successfully persuaded older employees to adopt Box, a cloud-based storage platform for the company’s architectural drawings and financial documents. Cloud technology has facilitated low-cost collaboration and electronic document management for both Webcor and its subcontractors. For a small fee, workers can use the Box application and an iPad to access drawings and 3-D models, report problems, submit inspections, and notify all stakeholders of issues or changes. Sarrubi recalls how Webcor adopted Box technology: “Our enterprise adoption of Box grew out of a trial at one job site and just took off, caught fire, adoption-wise…. All of a sudden, what started as a small group test project grew into almost one hundred Box users within a few weeks. The match that lit the Box fuse was word-of-mouth employee testimonials within the company.” In addition to his cheerleader approach, Sarrubi also makes sure that working with the new technology is “as easy as using Amazon.” Cost, scalability, and return-on-investment are important factors the company considers when making IT decisions, but end-user preference is also a big factor in what technologies the company adopts. When deciding between different technology solutions, Sarrubi tells Webcor’s top management to “slip on the user’s boots and walk a mile.” That he feels will lead to the best IT choice. Discussion Questions 1. How has Webcor used technology to support project management in the construction field?
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    2. List themain lessons IT managers can learn from Webcor Builders about the successful adop- tion of new technologies. 3. Webcor bought an application called PlanGrid to mark up construction blueprints on iPads. PlanGrid can be used when the workers are offline and later syncs up with files on the Box platform. Webcor frequently follows this approach of buying applications and then building application programming interfaces (APIs) to connect these programs to its main enterprise systems. What are the advantages and disadvantages of this IT development process? 92 Chapter 3 4. How might developing whole IT systems themselves, rather than adopting already developed solutions and integrating them using APIs, change Webcor’s ability to encourage IT adoption? 5. What obstacles do companies face when developing customized IT systems themselves? Under what circumstances does it make sense? Sources: Webcor Builders, www.webcor.com, accessed October 5, 2014; “Webcor Builders Standardizes on Vico Office for Virtual Construction,” Vico Software, June 9, 2011, www .vicosoftware.com/0/webcor-builders-standardizes-on-vico- office-for-virtual-construction/tabid/250240 /Default.aspx; Florentine, Sharon, “Construction Company CIO Builds a Better Business with the Cloud,” CIO, August 1, 2014, www.cio.com/article/2459507/leadership-
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    management/construction -company-cio-builds-a-better-business-with-the-cloud.html; “Webcore Builders Namedas 2014 Contractor of the Year,” Market Watch—PR Newswire, August 6, 2014, www.marketwatch.com /story/webcor-builders-named-as-2014-contractor-of-the-year- 2014-08-06; Geron, Tomio, “Webcor Moves Construction Industry to the Cloud,” Forbes, August 21, 2013, www.forbes.com/sites /tomiogeron/2013/08/21/webcor-moves-construction-industry- to-the-cloud/; Green, Laura, “Andy Ball Leads Webcor Builders into a New Age of Construction,” Smart Business, September 1, 2011, www.sbnonline.com/article/andy-ball-leads-webcor- builders-into-a-new-age-of-construction/. NOTES Sources for the opening vignette: Rushton, Katherine, “BBC Ditches Siemens from £80m DMI Scheme,” BBC, December 10, 2009, www .broadcastnow.co.uk/news/broadcasters/bbc-ditches-siemens- from-80m-dmi-scheme/5008953. article; Glick, Bryan, “The BBC DMI Project—What Went Wrong?” ComputerWeekly.com, February 5, 2014, www.computerweekly.com/news/2240213773/The-BBC-DMI- project-what-went-wrong; Glick, Bryan, “Lack of Business and IT Engagement Led to BBC DMI Failure, Say MPs,” ComputerWeekly.com, April 10, 2014, www.computerweekly.com/news/2240217918/Lack-of -business-and-IT-engagement-led-to-BBC-DMI-project-being-a- complete-failure-say-MPs; “Digital Media Initiative, Memorandum prepared by the Comptroller and Auditor General presented to the BBC Trust, National Audit Office, British Broadcasting Corporation—Digital Media Initiative,” January 2014, www.nao.org.uk/wp-content/uploads/2015/01/BBC-
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    Digital-Media-Initiative.pdf. 1 “CHAOS Manifesto2013; Think Big, Act Small,” The Standish Group, www.versionone.com /assets/img/files/CHAOSManifesto2013.pdf, accessed June 11, 2014. 2 “PMI’s Pulse of the Profession,” Project Management Institute, www.pmi.org/Learning/Pulse .aspx, accessed September 20, 2014. 3 Hamel, Gary and Prahalad, C.K., “The Core Competence of the Corporation,” Harvard Business Review, Volume 68, no. 3, pages 79–93, May–June 1990. 4 Krigsman, Michael, “California Abandons $2 Billion Court Management System,” Zdnet, April 2, 2012, www.zdnet.com/blog/projectfailures/california- abandons-2-billion-court-management -system/15363. 5 Brino, Anthony, “CGI to Build Vermont’s HIX,” Government Health IT, December 20, 2012, www.govhealthit.com/news/vermont-sign-hix-it-contract-cgi. 6 Stein, Andrew, “Builder of State’s Health Care Exchange Misses Key Deadlines,” vtdigger.org, September 27, 2013, http://vtdigger.org/2013/09/27/builder-states-health-care- exchange -misses-key-deadliness/. Project Management 7 Goswami, Neal, “State, CGI Sign Amended Contract with New Timetable and Penalties,” Vermont Press Bureau, April 3, 2014, www.vermontpressbureau.com/state-cgi-sign-amended -contract-with-new-timeline-and-penalties/. 8 True, Morgan, “CGI Misses Vermont Health Connect Deadline Again,” VermontBiz, May 21, 2014, www.vermontbiz.com/news/may/cgi-misses-vermont-health- connect-deadline-again.
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    93 9 Remsen, Nancy,“Health Site Contractor Misses Deadline, Again,” Burlington Free Press, June 10, 2014, www.burlingtonfreepress.com/story/news/local/2014/06/06/heal th-site-contractor -misses-deadline/10090537/. 10 Parker, Bruce, “Vermont Fires Creator of Its ‘Unacceptable,’ Glitchy ObamaCare Site,” Fox News, August 5, 2014, www.foxnews.com/politics/2014/08/05/vermont-fires-creator-its -unacceptable-glitchy-obamacare-site/. 11 Browning, Lynnley, “Thanks for Nothing: Obamacare Website Bunglers Fired,” Newsweek, August 6, 2014, www.newsweek.com/thanks-nothing-obamacare-website- bunglers-fired -263205. 12 Fitzpatrick, Alex, “Apple Has an iPhone Headache, but It Won’t Last Long,” Time, September 24, 2014, http://time.com/3426561/apple-iphone-6-plus-ios-8-problems/. 13 Brown, James, “6 Things to Remember When Projects Spiral Out of Control,” SAP Community Network, September 27, 2013, http://scn.sap.com/community/it- management/blog/2013 /09/27/6-things-to-remember-when-projects-spiral-out-of- control. 14 Tuckman, Bruce, “Developmental Sequence in Small Groups,” Psychological Bulletin, Volume 63, pages 384–389, 1965. 15 “Lead Integrator Atos Successfully Completes Delivery of World’s Biggest IT Sports Contract for Sochi 2014 Games,” Atos, February