Chapter 1 An Introduction to Project Management

1.1 The importance and rise of project management

  • Projects are becoming increasingly important. One of the reasons is because innovation is driven by projects and innovation is becoming increasingly important. Our economy has shifted from where competition between firms focussed on operational excellence (becoming more efficient) to one where competition is driven by disruptive innovation.
  • To understand the link between innovation and projects, it is important to understand the two essential characteristics of a project.
    • Every project has a beginning and an end. While the start can be fuzzy as ideas evolve gradually into projects, the end of a project should be clearly defined.
    • Every project produces a unique outcome Note that this outcome can be both tangible - e.g. a piece of software - or intangible - e.g. a new set of guidelines.
  • In sum, projects are unique and temporary, similar to innovation. After all, if innovation was not unique, then it would not be innovative. At the same time, innovation is temporary because once an innovation is introduced, it is picked up and becomes business as usual and is no longer considered innovative.
  • With the rise in importance of projects, the necessary skills to manage these projects have also increased. On the one hand, this gave birth to the specific function of a project manager, but also other job functions such as executives, functional managers and team members need to have project management skills. It has become a must-have job skill that will only become more valuable.
  • Project Management itself consists of methods, theories and techniques to manage the complexity of project work. As a discipline it has evolved over the past 60 years under the umbrella of several standards organizations, such as the Project Management Institute and the International Project Management Association.

1.2 Projects vs ongoing operations

  • Work within an organization can be broadly divided within two categories: projects and ongoing operations.
  • Ongoing operations represent the work an organization performs repeatedly and which is often the primary purpose why the firm or department exists. Examples are the processing of invoices by the accounting department or the production of cars at a car manufacturer’s plant.
  • The characteristics of ongoing operations are very different from those of projects.
    • Ongoing operations typically have no end and they consist of tackling similar problems, producing likewise results, all by using a repeatable set of activities.
    • The focus of operations management, which entails the management of ongoing operations, typically focusses on operational excellence, i.e. the continuous improvement of achieving a constant or increasing levels of high quality in ever more efficient ways.
    • Another managerial domain that focusses on operational (repeatable) work is that of business process management. In contrast to project management, process management deals with organizing and managing repeatable work.

1.3 When is a project successful?

  • The traditional view on project success consists of three parts and is also called the iron triangle or triple-constraint:
    • The project is executed on time.
    • The project is executed within budget.
    • The project produces an outcome of high quality. This consists of two dimensions:
      • Product Scope: What is the product supposed to do?
      • Performance: How well does the provided functionality work?
      • Both product scope and performance should be defined at the start of the project and high quality is achieved when the project delivers as specified.
  • These three aspects of project success are not independent from each other. On the contrary, typically improving one criteria implies delivering short on one of the other criteria - e.g. if one wants to execute the same project in less time, one needs more resources (higher budget) or one has to lower the specifications of the deliverable.
  • Recently, it has been argued that these three success criteria are only a small part of a bigger picture. Delivering to specification, does not guarantee that the project actually produces value to the stakeholders.
  • A more general definition of a successful project is one that delivers business value.
  • However, delivering value is not only a matter of delivering the product to specification, but also delivering the right specification, i.e. delivering the right product.

1.4 Projects and Product Development

  • Producing outcomes which deliver actual value is increasingly difficult in environments where:
    • the specifications keep changing along the way due to changing stakeholder expectations,
    • customer are often not capable of describing the actual problems they try to solve,
    • the goal is often to introduce something that nobody is asking for, but many might actually need.
  • The goals of ‘Building the right product’ and ‘building it correctly’ actually belong to yet another discipline, that of product development.
    • Product development entails processes and techniques for determining the right product or service to build and methods to ensure it is developed correctly and efficiently.
  • Product Development uses different criteria to measure success. Three common criteria are:
    • Feasibility: Is the solution (technically) feasible?
    • Desirability: Is there a market, do people want it?
    • Viability: Can the solution be delivered in a sustainable way?
  • The argument for product development as a separate discipline states that while the development of a new product is a unique project, there are clearly similarities in the process to be followed to go from identifying the right product to actually constructing the product correctly and efficiently. By creating a standard development methodology, the development process can be made repeatable and thus allows for quality improvement and cost reduction.
  • There exists a strong relationship between project management and product development. The development of a product is an innovative endeavour which requires a project-based approach. Both disciplines also focus on producing outcome according to pre-defined specifications.
  • At the same time there are also some clear differences between both disciplines.
    • The product development process explains what the work is and how to do it correctly. It describes the work required to create the product.
    • Project management emphasizes communication and coordination so the work is performed efficiently. It focuses on managing the work.

1.5 Project vs Product Development Life Cycle

  • To better understand the similarities, relationships and differences between project management and product development management, it helps to take a closer look at the life cycles of both processes.
  • A very basic process life cycle consists of four sequential stages:
    • Define: The project goals, rules, approach and cost-schedule-quality equilibrium are agreed upon by the stakeholders.
    • Plan: A plan is developed for the project. As each project is unique, this must be repeated every time for each project. This stage implies that the work to be done is identified, split up in workable pieces, the time required for each piece and the entire project is estimated, resources are assigned to the work to be done, costs are budgeted, risks are identified and risk management plans are set up, and many other activities.
    • Execute: This is the stage where the actual work is being executed. During the execution stage, the goal of project management is to keep the project on track and ensure that execution is done efficiently.
    • Close: This stage entails activities to make the transition to the next phase (operations or another project), to establish formal closure in the eyes of the customer and to review project successes and failures in order to learn for future projects.
  • Many different product development life cycles exist, but in most cycles one can distinguish the following four stages:
    • Requirements: During this step the requirements for the product to develop are identified and described.
    • Design: During this step, a product will be designed which meets the requirements. The output of this step are a set of design plans which allow the construction of the product.
    • Construction: During this step, the product is built, documented and tested.
    • Operate: In the final stage, the product will start to fulfill its purpose and requires many activities such as training, support and maintenance.

1.6 Project Management Methodologies

  • Over the past decades, different frameworks, standards and methodologies with respect to project management have been established. In this course, we will highlight three such methodologies: PMBOK, Prince2 and Agile Project Management.

1.6.1 PMBOK

  • The Project Management Body of Knowledge is a set of standard terminology and guidelines (a body of knowledge) for project management. The PMBOK Guide is published by the Project Management Institute (PMI) and recognized as a standard by the American National Standards Institute (ANSI) and the Institute of Electrical and Electronics Engineers (IEEE). Its sixth edition was released in 2017.
  • The PMBOK Guide defines 47 processes, which describe a set of tools and techniques to turn a set of required inputs into a set of expected outputs, with the goal to achieve a pre-specified result.
    • Some example processes are ‘Estimate Activity Durations’ or ‘Plan Human Resource Management’
  • These 47 processes are on the one hand grouped into 5 Process Groups, which define categories of processes that show a strong resemblance with the different stages in the project life cycle. These five process groups are:
    • Initiating
    • Planning
    • Executing
    • Monitoring and Controlling
    • Closing
  • Additionally, PMBOK also organizes these 47 processes into 10 Knowledge Areas. It defines a Knowledge Area as representing a “complete set of concepts, terms and activities that make up a professional field, project management field, or area of specialization”. These 10 Knowledge Areas are:
    • Project Integration Management
    • Project Scope management
    • Project Schedule Management
    • Project Cost Management
    • Project Quality Management
    • Project Resource Management
    • Project Communications Management
    • Project Risk Management
    • Project Procurement Management
    • Project Stakeholder Management
  • Together, the Process Groups and Knowledge Areas form a matrix containing the 47 processes.
  • PMBOK has a rather descriptive nature, i.e. extensively describing different aspects of project management.
  • PMBOK is mainly popular in the USA.
  • One of the main strengths of PMBOK is that it provides a comprehensive range of useful tools and techniques (119 in total!). Many of these tools are not described in detail, but PMBOK does describe when they might be useful.

1.6.2 Prince2

  • Prince2 (PRojects IN Controlled Environments) is a structured project management method, originally developed by the UK Government as a standard for information systems projects. It has become increasingly popular and is now one of the de facto standards for project management. It’s mainly popular in the UK, the EU and Australia.
  • There have been two major revisions of PRINCE2 since its launch in 1996: “PRINCE2:2009 Refresh” in 2009, and “PRINCE2 2017 Update” in 2017.
  • Prince2 identifies 41 activities in total which closely resemble the processes in the PMBOK Guide.
  • These 41 activities are grouped into 7 processes, which should not be confused with processes in the PMBOK Guide. Processes in Prince2 are rather similar to the Process Groups in the PMBOK Guide. These Prince2 processes are:
    • Starting Up a Project
    • Initiating a Project
    • Directing a Project
    • Controlling a Project
    • Managing Product Delivery
    • Managing a Stage Boundary
    • Closing a Project
  • These Prince2 processes also describe who is responsible and accountable for what, and when. This makes Prince2 much more prescriptive, in contrast to the descriptive nature of PMBOK.
  • Additionally, Prince 2 identifies 7 themes, which are aspects of project management which must be continuously addressed throughout the project lifetime, as well as 7 principles which act as the building blocks upon which everything is based.
  • One of the strengths of Prince2 is the central role the business case plays in the methodology. Prince2 requires that prior to the project a robust business case is developed which provides a clear understanding of the benefits versus the costs and risks. This business case is further refined during the initiation stage and is updated on a stage-by-stage basis throughout the project. This ensures that the project is always seen as a means to an end, rather than an end in itself and should avoid that the product is successful in terms of time, cost and resources, but fails to provide value. Furthermore, Prince2 prescribes explicit responsibilities for developing, maintaining and approving the business case.

1.6.3 Agile Project Management

  • Agile Project Management is a significantly different approach to project management compared to the more traditional approaches such as described in the PMBOK Guidelines or by Prince2. Whereas, PMBOK and Prince2 follow a very structured approach, with predefined processes, roles and responsibilities, Agile Project Management is fundamentally much less structured.
  • Agile Project Management actually originates from Agile Software Development (and thus a product development approach!), which was a reaction against traditional waterfall approaches that relied on structure and documentation. The Agile Software Development movement was kick-started by the Agile Manifesto which identified 4 core values and 12 fundamental agile principles.
  • The core values are:
    • Communication with parties is more important than standard procedures and tools.
    • Focus on delivering a working application and less focus on providing thorough documentation.
    • Collaborate more with clients.
    • Be open to changes instead of freezing the scope of the work.
  • The fundamental principles are:
    • Satisfy the customer through early and continuous delivery of value.
    • Welcome change, even when it arrives late.
    • Deliver frequently.
    • Work together (with different skills).
    • Trust and support your people to get the job done.
    • Face-to-face conversations.
    • Produce results that get (part of) the job done (Working software).
    • Sustainable development.
    • Continuous attention to excellence and design.
    • Simplicity is essential.
    • Self-organizing teams.
    • Reflect and adjust.
  • In a sense, Agile is more of a belief system than a methodology. It has become an umbrella term for different project management methodologies, such as Scrum.