GPM First
Chapter 1 of Project Management for Supplier Organizations (978-1-4724-1109-9) by Adrian Taggart

What is a Project and Why Project Management?

Chapter I

‘What is a project?’

The question is so simple but the answer is not.

Given the title of this book, it is imperative that we are able to provide an answer to the question, and indeed much of this chapter is devoted to such an answer, but before we embark on that it is helpful to remind ourselves of why the question is so important.

Projects and Non-Projects and Why We Need to Differentiate

Imagine if we cannot answer the question.

If we cannot differentiate between projects and other endeavours then how can we object to every creative process being called a project? Further, if every creative process is a project how does project management differ from any other type of management?

If everything becomes a project then the term fails to have any significance and if this is the case what is the point of having a ‘Project Management’ training course, book or qualification? In such circumstances the word ‘Project’ becomes meaningless and can be struck out; ‘Project Management’ becomes just generic management and the skills of a ‘Project Manager’ would be as appropriate to launching a space rocket as they would be, say, to running a bakery.

For the concept of ‘Project Management’ to have any relevance at all to an organization, it must satisfy itself that it is actually engaged in project work and to do this it needs to be able to define what a project is and understand how it differs from its other endeavours.

Defining a ‘Project’

Consider the following two scenarios. The first involves the construction of a main Olympic stadium. Inevitably such buildings offer a radical and cutting- edge design since they become the iconic symbol of each Olympic Games.

Would you consider this endeavour to be a project?

Secondly, consider a factory making consumer goods. Along the length of the factory is a production line that manufactures 250 washing machines each day. Let us imagine it is midday and the 125th machine of the day is about to be started. Imagine escorting it down the line and overseeing its construction.

Would you consider this endeavour to be a project?

Most readers would be happy to describe the first scenario as a project, but would be reluctant to describe the second scenario in the same way. Why is this the case?

The question is trickier if we consider the similarities between the two scenarios.

Both have a financial budget and both will have a finite timescale. Both create something new (a product), both use resources and both are technically challenging. They are similar, but we are happy to describe only one of them as a project. Why?

It is appropriate, here, to take advantage of the work of others.

Established Definitions of a Project

Project management is a mature discipline and there are many professional organizations around the world whose mission is to refine and promote the subject. Two of the most popular organizations are the Project Management Institute (PMI) based in Pennsylvania in the United States, and the Association for Project Management (APM) based in Buckinghamshire in the UK. They offer the following definitions of a project:

A unique transient endeavour undertaken to achieve a desired outcome. (APM, 2006)

A temporary endeavour undertaken to create a unique product, service or result. (PMI, 2013)

These excellent definitions warrant further examination. The first point to note is that, unsurprisingly, there is a significant similarity between the two definitions. The key adjective the two definitions have in common is the word ‘unique’.

Two other adjectives are similar. Reach for your dictionary if you like but even then you will find it difficult to differentiate between the two words ‘transient’ and ‘temporary’, with the expression ‘not permanent’ seemingly applying to both.

Both definitions consider a project as an endeavour leading to some kind of output, however, the difference in quite how this output is described is noticeable with one favouring a ‘desired outcome’, the other a ‘product service or result’. The difficulty in finding the precise words reveals that the outcome of a project is complex.

Thus, we can assume that a project is characterized by these four features:

  • Unique.

  • Temporary.

  • Transient.

  • Complex outcome.

 

They provide the key for a deeper understanding of what a project is, the challenges it poses and ultimately the rationale for project management as a discrete and separate branch of management.

We investigate them and their consequences, as follows.

The Consequences of Projects Being Unique

The obvious point to make about our Olympic stadium, above, is that to be iconic, it has to be different. Certainly, there are other sports stadia around the world but none look and operate quite like this one. It is designed and built specifically for this individual application, i.e. it is a bespoke product. When completed it will be the only one of its type. It will be unique.1[1]

In the second scenario the word unique simply does not apply. The 125th washing machine of today will be identical to the others made today and the tens of thousands made in the proceeding weeks and months. It is a standard product.

The High Degree of Uncertainty

The significance of this difference becomes clearer if, just as we are to start each of these two endeavours, we ask ourselves the following questions:

  • How much will it cost?

  • How long will it take?

  • What will it look like when it is finished?

  • What precise sequence of actions do we need to follow to complete the assignment?

 

In the case of our washing machines all of these can be answered at the very outset with precise estimates.

In the case of our stadium, no such luxury exists. Here, especially at the commencement of the endeavour and especially if the stadium is of a truly radical design, the answers are little better than educated guesses and come with a level of imprecision to match.

This high degree of uncertainty at the outset, even about fundamental aspects, is a key characteristic of the project environment and one of the main reasons why projects are so difficult to manage successfully. Very many of the project management techniques are direct responses to the need to reduce this uncertainty as much as possible, as quickly as possible. It will only be eliminated by the end of the project, too late for the management team, who, during the project, will be faced with the unenviable obligation of making decisions in the absence of full knowledge.

It is very important to acknowledge here that this uncertainty is there not because of any failure on behalf of the team managing the project. It is there because it is a feature of projects. Project managers will deploy expertise and specialist techniques to try and deal with the challenge but, fundamentally, the presence of uncertainty is not due to their failings.

Such high levels of uncertainty present many practical difficulties. Consider the following.

High Risk of Overall Failure

When faced with making decisions in the face of high uncertainty, there is every chance that the wrong decisions will be made, with dire consequences.

The probability of our 125th washing machine not performing as expected is negligible but this stands in stark contrast to our new sports stadium. The record shows that such projects frequently flirt with disaster.2[2]

The reality is that all projects face a high risk of failure and whilst the project management team will seek to mitigate this risk, they will not be able to eliminate it.

The lack of precedents for unique endeavours does not only create uncertainty about money and time. It also has consequences for the management of the technical aspects of the project product.

For our washing machine there are opportunities for the partially completed product to be assessed continuously throughout its manufacture. Within the organization it is known precisely what an acceptable washing machine looks like at the various points. This knowledge exists because the manufacture of the machines is a routine operation which has been completed very many times and it can be expressed in a set of procedures and rules that can exert a very effective control over the creative process. Simple adherence to these rules will result in a successful outcome.

This is very different to the situation within a project environment, posed by the creation of a bespoke product.

If the product is unique then, by definition, there are no identical precedents and so no one knows for sure what it should look like at the various points of its construction. Procedures, rules and suchlike to control the creative process are far less prevalent and there is far more reliance upon those undertaking the work to attest to whether ‘it feels right’.

The very different perspectives on rules that are a consequence of these two differing scenarios have profound implications for the methods of governance appropriate in each.

A non-project environment, characterized by near total knowledge and a repeated process, can achieve good governance simply by using extensive rules that are strictly enforced.

The bespoke, uncertain and often haphazard nature of the project environment does not support this approach and considerable latitude and scope for judgement must be granted to those managing the work. In these circumstances a strict and inflexible rule-based governance approach will simply not work.

This is a lesson that many project organizations have learnt only at great cost.

The Consequences of Projects Being Temporary

‘You do realise we are building pharaoh’s tomb?’, was the expression a colleague of the author once used.

We were having a torrid time working on a difficult and unpopular project and this remark, although somewhat cynical, was conveying a very significant point. My friend had started his career as an apprentice in the shipyards of Glasgow and this had made him shrewd. He thought more than he talked and did not miss much of significance.

His remark alluded to the pyramids in Egypt that served as tombs to the pharaohs. The commonly held narrative explains that the pharaoh’s wealth and possessions were accommodated alongside his mortal remains. The ancient Egyptian belief system was such that these possessions would be required to ensure a very comfortable afterlife for the recently deceased ruler. Accordingly, grave robbers were a very real concern since they and their criminal enterprises could easily deprive an unlucky pharaoh of the very experience the pyramids were designed to provide. Therefore the pyramids were furnished with many devices such as secret passageways and secret doors to confound these would- be thieves. However, by necessity, the slaves who built these pyramids were familiar with these security arrangements and as such they constituted a major impediment to the pharaohs’ post mortem comfort, should they ever be tempted off the ‘straight and narrow’. A convenient solution to this was found whereby, upon completion of the building project, the slaves were murdered and their remains simply tossed into the basement of the pyramids.

Modern-day Egyptologists would be likely to violently disagree with the veracity of this version of events, but the story is sufficiently well known for it to offer an insight into a fundamental problem with projects, namely, they do not offer their practitioners any long-term job security.

My friend was making the simple point that, torrid as our current situation was, only unemployment lay beyond it.

The temporary nature of projects is most obvious in the context of the teams that deliver them. They are a temporary arrangement that only exist as long as the project. Project teams are therefore unusual in the world of work since they work diligently to do away with the only reason for their existence.3[3]

By contrast, teams engaged in non-projects (often referred to as ‘Routine Operations’) are designed to survive beyond just one cycle. When one washing machine is complete, they simply start the next. So, if this team worked faster and better then the machines would be cheaper, sales would increase and hence their job security would be enhanced.

This represents one of the major reasons why the soft skills are so important to project managers. An understanding of the human condition is very valuable when trying to motivate someone to work themselves out of a job.4[4]

The Consequences of Projects Being Transient

As acknowledged above, the words ‘transient’ and ‘temporary’ have very similar definitions that describe a state that is not permanent. For our purpose we need to stretch the boundaries of good grammar to emphasize a slight difference that exists between the two definitions; a difference that is perhaps more familiar to physicists and engineers.

The difference is this.

Consider using the light in your room. You can turn the light on and then, after some time, you turn the light off. The illumination is temporary but whilst the light is energized the level of emitted light is constant.

Contrast this with turning on a radio and then, after some time, turning it off. Again the radio is on for only a temporary period but, critically, whilst it is on the volume of sound is not constant, it is in a state of flux, it is changing all the time; it is transient.

Projects are both temporary, in that they are not permanent, but they are also transient in that whilst they do exist they are constantly undergoing change.

This has huge relevance for those who seek to manage projects because many of these changes are not random; they are predictable.

We, as people, undergo change during our lives. Our physical size, emotional security, energy levels, priorities, all change over time. These changes are not random, they are known about, they apply to everyone and hence they are predictable. Knowledge of this makes managing our lives, and that of others, a much easier prospect, as anyone with an adolescent child will readily confirm.

It is the same for projects.

Many of the changes are known about, they apply to all projects, and hence they are predictable. Knowledge of them, and how they lead to generic models of project lifecycles, is an enormous boon to anyone trying to understand and manage projects and the teams that deliver them. Chapter 4 addresses this topic in detail.

The Consequences of Projects Having Complex Outcomes

Projects are deceptively complex entities and nowhere is this more relevant than in the consideration of what they actually achieve. Consider the following.

Change

If the world is the same at the end of the project as it was at the beginning, then the project manager will have failed. At the most fundamental level, projects deliver change!

To illuminate this, consider the management of the production line creating our washing machines. The management team seek to keep the line in operation. Much effort is spent in sustaining the supply of raw materials, ensuring work rosters are full and the pace of work is upheld. The emphasis is on maintaining the status quo, on avoiding disruption, on avoiding change. This is most prevalent within the maintenance division where even its very name reveals its ethos: maintain.

Compare this to our project. Projects usually create something new, but often they involve destruction, demolition or removal. What each has in common is that they are delivering some kind of change.

This is the root of so many project difficulties because it can be safely asserted that people have a natural resistance to change. Admittedly, some of us are more resistant than others but if it is a change that: 1) affects us; 2) is something upon which we have not been consulted; and 3) is in any way vague as to its purpose or content, then our default position is to resist it.

Of course much change is positive and if we stand to benefit then we will be more positively disposed towards it, but as a general point our attitude to change is not neutral and our bias is towards the negative. No one has articulated this particular facet of human nature better than Machiavelli and his conclusion stands repetition here:

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries … and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it. (Machiavelli, 1513)

Projects are affected by, and in turn affect, a great many people. Anyone fitting into this classification is known as a ‘stakeholder’. It is a very loose brief and as a consequence an average project can include a very large number of stakeholders.

Within this classification are all the groups and individuals who possess the skills, knowledge, resources, contacts, influence, facilities, apparatus and general wherewithal to ensure that the project is a success. It will also include those who will ultimately judge whether or not the project is a success.

For these reasons alone ‘stakeholder management’ is an important (possibly the most important) element of project management. Unfortunately, very often it is the hardest facet of the project to influence.

The reason for this is, of course, the fact that not everyone will be in favour of the project. Take any project and typically there will be about 10 per cent of the stakeholders who view the project as an excellent idea and will freely give of their time, resources and expertise to support it. By the same token about 10 per cent will think the project a disastrous idea and will give freely of their time and expertise only to confound, disrupt and, in extremis, sabotage the project team’s efforts. The other 80 per cent, frankly, will not be bothered, and wish the project would just simply go away.

If we consider that, in some instances the 10 per cent who are vehemently opposed to the project are those with the skills and resources very necessary for success, then we can begin to understand just how demanding ‘stakeholder management’ can be of both time and energy.

Clearly, non-project endeavours also affect people, but in the absence of such fundamental change, the attendant issues are not as prevalent in the non-project environment. There is an order of magnitude in the difference between the two environments in respect of the demand for ‘stakeholder management’.

However, there is an upside for the project environment. There is something inherently appealing about working to deliver such change since it is through these that human progress occurs. At the end of each difficult day, a project manager can comfort themselves with the knowledge that they are indeed ‘delivering the future’.

Products and Benefits

The author once heard a story (most likely apocryphal) about a factory built to manufacture cassette tapes.5[5]

The factory was completed on time, under budget and the commissioning trials demonstrated that it was capable of producing cassette tapes in a quantity and quality that exceeded the dreams of all those involved.

Was the project a success?

At the point of commissioning of the factory, we are compelled to answer in the affirmative since the project manager has delivered the factory (the product) within the criteria laid down for it.

There are no prizes for guessing what happened next. A competitor created something called a Compact Disc (CD).

Demand for cassette tapes quickly collapsed and the financial return hoped for (the benefit) never materialized, indeed the backers incurred a considerable loss.

Was the project a success?

This is an example of a project successfully delivering an excellent product but failing to realize benefit.

There are a number of important observations to make here.

Firstly, the ultimate measure of project success is whether it delivers sufficient benefit. The timely and economical delivery of a technically sufficient product is but an aid to the realization of this benefit and not the end in itself. There are very many projects for which delivery of the product was late, horrendously over budget and/or technically compromised, but still delivered considerable benefit when the product was eventually operated. Concorde, the Panama Canal, are these projects failures?

Secondly, there is more to realizing benefit than having a great project product. Having staff trained and wanting to operate the product (the factory in this example) is indispensable, as is a demand for the goods ultimately produced. Too many would-be entrepreneurs have learned too late that if you haven’t got a market then you haven’t got a business, and that this simple truth holds regardless of how good the product is and how prodigious their talents.

Thirdly, the final verdict of success cannot be delivered until very late in the day. Benefit is only realized during the operation of the product and the necessary calculus, often, can only occur long after the delivery team have left the stage. Indeed the definitive comparison of benefits and costs can only be made once the project product has been finally safely disposed of. (The first fleet of commercial nuclear power stations were built in the UK and are now being decommissioned at astronomical cost. How does this affect the verdict on the success or otherwise of the project that created them?)

These difficulties in assessing project success only serve to underline how complex project outcomes are.6[6]

Real Projects and Their Management

The above text seeks to describe a project, and the environment it gives rise to, so as to compare it to a non-project. The polemic approach is appropriate to emphasize the points to be made, but it is largely an artificial concept since no real creative endeavour neatly drops into the ‘wholly unique’ or ‘wholly repetitive’ box.

A Continuum of Creative Endeavours: From ‘Project’ to ‘Routine Operations’

In practice, each and every creative endeavour has some aspects which are unique and some which are repetitive, even though the relative balance between the amounts may vary enormously. The balance between the two can be acknowledged by reference to their position on a continuum defined by a pure project at one end and a pure non-project at the other.

The degree to which of the ‘pure’ classifications an endeavour will tend towards can be assessed by reference to the following criteria based upon those characteristics of a project described above, irrespective of size of the endeavour (see Table 1.1).

 
Table 1.1 Project assessment criteria

Criterion

Examples

Degree of uniqueness

Although this is most readily applied to the product, it can relate to any aspect of the project or its environment.

 

The parameter must be considered from the perspective of the team carrying out the work and their particular experience and expertise.

Stability of the team (this encompasses the temporary and transient aspects and their implications for team dynamics and motivation)

This category includes:

  1. The relationships between the members and sub-teams both from a contractual and historical perspective. For instance are they all employees of the one corporation or are they a group of contracting companies brought together just for the purposes of the project?

  2. Do the participants know each other already? Some groupings are formed through temporary contracts but include individuals who have worked together many times before and who have very mature and long-standing relationships.

  3. The intentions of the sponsors post-project also have relevance here. Is it truly a case of ‘deliver and disband’ or is the project simply the beginning of a permanent relationship or engagement?

 

Complexity of outcome

This encompasses such aspects as:

  1. The magnitude of change being delivered by the project.

  2. Contextual issues such as the degree to which the change is supported or resisted by stakeholders.

  3. The number of factors in the project environment, beyond the product, that are required for the project benefit to be realized.

 

Figure 1.1 offers such a continuum and is populated with some examples of typical endeavours and where they would be expected to lie. It should be noted that the assessment is wholly subjective and qualitative.

 
Figure 1.1 Continuum of Creative Endeavours

graphics/fig1_1.jpg

Notes: 1. Assessment is from the perspective of the party stated within the brackets.

2. Characters in square brackets indicate assessment of the endeavour against criteria of:

Degree of uniqueness

Degree of temporariness and transience

Complexity of outcome

Assessment made as:

H – High

M – Medium

L – Low

Appropriate Managerial Responses

When faced with having to manage the various endeavours discussed, organizations must make decisions about the most appropriate organizational techniques and cultures.

At either end of the continuum this is a relatively simple decision. The creation of washing machines invites ‘Operations Management’ and its attendant structures and cultures, whereas those endeavours at the other extreme warrant ‘Project Management’ and its attendant structures and cultures. The real difficulty comes when addressing those endeavours that sit in-between.

Organizations faced with this prospect will realize that there is some merit in either approach, and the creation of a management response that combines the best of both is a very difficult proposition, especially since the two managerial approaches can be diametrically opposed. Further, such organizations may find little assistance from the literature since most books discuss each approach from the idealized positions associated with the extremes of the continuum.

Many organizations have a background associated with one of these extremes and, through a change of circumstances, need to embrace change. For instance an organization manufacturing identical products may find that the market increasingly demands bespoke models, thus requiring them to manage an increase in ‘uniqueness’ of their output. Another may need to reduce overheads by ‘outsourcing’ many of their key processes and thereby increase the transience and temporariness of their organizational structures. Another may choose to supply ‘solutions’ rather than selling standard products, which will involve them choosing the appropriate product model and thus increase the complexity of their involvement.

In each of these instances the organization’s endeavours will migrate from the bottom to the top of the continuum, requiring them increasingly to embrace aspects of project management.7[7]

The following chapters in Part 1 further explore the differences in structure and culture associated with the organizations that address these different types of endeavours, located at the extremes of the continuum. As such it indicates the manner of challenges faced by any organization attempting a migration along the continuum.

Part 4 of this book addresses, directly, selected aspects of project management which are deemed particularly relevant when such a migration is undertaken.

Notes

[1] Usually, the product is the unique element of a project but this is not always the case. For instance a project may be initiated to create a standard product but to do so using a different manufacturing technique, or by using alternative equipment, or in a different location. In each of these cases the challenge is to do something which has not been attempted before and as such the word ‘unique’ is applicable and hence the use of the word ‘project’ justified.

[2] The troubled facility created for the 1976 Olympic Games in Montreal, the chaotic preparation of the stadia for the FIFA World Cup in Brazil in 2014 and the reconstruction of Wembley Stadium in 2007 are notable examples in this respect.

[3] Many readers will be employed by organizations that deliver successive projects and the completion of one project does not lead to termination of employment. These types of organizations are referred to as ‘matrix’ organizations and have special characteristics, some of which they share with organizations engaged in non-project work. They will be addressed in some detail in Chapter 2 but for the purposes of this chapter it is appropriate to consider what may be referred to as a ‘pure project’, like our stadium project, a characteristic of which is its temporary management structures.

[4] In practice, the involvement of individual project team members is even more volatile than the life of the overall project team. Most likely, an individual will be a member of a sub-team which will only exist until the fragment of the project for which the sub-team is responsible, is complete. For this reason the make-up of the overall project team is always changing.

[5] This may stretch the historical knowledge of some of our younger readers but suffice to say that after vinyl records, the favoured medium for storing music was a spool of magnetic tape contained within a plastic case; the cassette tape.

[6] The various levels of project success and the interplay between products and benefits is addressed in detail in Chapter 16.

[7] There are instances where organizations may choose to move in the opposite direction, and for good reason, but this book does seek to address their concerns.

[8] Ultimately, all expenditure is for the engagement of people since all material comes out of the ground (either mined or harvested) and at this point is free of charge.

[9] For the mathematically minded it is the integral of the earlier curve (area under the curve) and its gradient, or steepness is equal to the value of the previous curve, at any individual point in time.

[10] The name derives from ‘S’ being an abbreviation for ‘Summation’, since these curves are most properly referred to as ‘Summation Curves’. This explains why, very often, real ‘S-curves’ do not look much like an ‘S’. The important features are, firstly, that it is always ascending (the cumulative expenditure never reduces) and, secondly, the gradient, on a large scale, is shallow-steep-shallow, even though locally, on a finer scale, there may be some variation in gradient.

[11] The decision made at the gates involves the marginal benefit and marginal cost. Actual expenditure to date is ignored on the basis that it is a ‘sunk cost’ and cannot be recovered in any case. This is a reason why, especially at the later Decision Gates, a project may be continued with, even though the total benefits may be exceeded by the total costs.

[12] Further detailed analysis and comparison of strategic and tactical control is offered in Chapter 16.

[13] There is again an analogy to our own lives. Shakespeare once famously wrote about the ‘Seven Ages of Man’ and yet Hinduism talks about the four stages of man. Each is describing the same life; the same journey from cradle to grave, and yet they choose to decompose it in different ways, each to reflect their own understanding and their own emphasis.

[14] Readers may wish to note that in some countries, most notably the United States, the mandate document that bears the authorizing signatures is a ‘Project Charter’. This is a standalone and separate document that will refer to a Business Case.

[15] Some care is required here because there are some obligations of the SO that may not be explicitly stated in the contract. For instance, in any case, the SO is obliged to provide goods of ‘merchantable quality’ and this will confer ‘implied terms’ on the SO.

[16] The analysis is more straightforward if we assume the contract is of ‘Firm Price’ type (see Chapter 13).

[17] Some OO manage major assets and infrastructure (rail, water and telecommunication networks) and are constantly commissioning projects to create or refurbish assets. For them, projects are an ongoing feature, but they are the exception. For most OO their involvement in projects is sporadic.

[18] Like the lifecycle offered in Chapter 5, the lifecycle offered here is a model. To be useful, models need to be simple, however their principal weakness is always their simplicity. The nature of procurement is such that there are a great many combinations and permutations of payment terms, contract types, and the like that can result in variation in the exact Decision Gates and phases that apply. The model is offered as a generic model to assist in the understanding of what appertains to most SO, most of the time. Real examples may, and will, vary.

[19] Some legal obligations of the SO do live on beyond this point, for instance its obligations for latent defects.

[20] It should be noted, however, that this is not always the case. Acme Pool Services is selected on the basis that, unlike the Owner Organization (OO), it is experienced in the construction of pools. It has skills, equipment, knowledge, expertise and contacts that enable it to manage the building of the pool far better than the OO, such that it may well be able to do the work for a considerably cheaper sum and some of this saving may be passed onto the OO in which case the second scenario is both easier and cheaper for the OO.

[21] There are variants that do not contain such an agreement but are less attractive to the OO.

[22] The exact sharing of risk is determined by the wording and quantifications within each specific contract. The arrangement within a continuum offers an approximate guide only.

[23] Ideally such negotiations should be embraced as early as possible and not wait for the final phase but practicalities often result in them being held to the end.

[24] For example some EU legislation imposes constraints on publicly funded projects.

[25] Discrete probability distributions for time or cost of a project are rarely symmetrical. It is almost always the case that it is more likely to cost more, or last longer, than the ‘most likely’ figure, than less, i.e. the mean is very likely to be greater than the mode. This results in a distorted distribution curve with a longer tail to the right of the mode. It is for this reason that the single estimate derived by the three-point estimating technique is usually greater than the mean and a more representative figure of the overall distribution.

[26] Or other entity such as Work Package.

[27] The use of Product Breakdown Structures and Work Breakdown Structures (WBS) will be addressed comprehensively in Chapter 14.

[28] There is an opportunity to withdraw an offer by the offerer, before the expiry of any validity period, but it is limited and different legal systems have different approaches. It is, for instance, an area of inconsistency between English and Scottish law.

[29] For an OO the ‘why’ is addressed within the Business Case and the ‘Project Background’ section of their PMP is informed by this.

[30] This ‘locking’ of the estimate is sometimes referred to as ‘baselining’.

[31] It is the case for project control as it is for planning. ‘Scope creep’ (doing something that was not intended) impacts upon duration and cost and, without a scope baseline, ‘scope creep’ cannot be recognized and hence project cost and duration cannot be controlled.

[32] For projects with very large physical deliverables, such as machinery, many practitioners choose to draw up a PBS (Product Breakdown Structure) that decomposes the deliverable into discrete parts, as a prelude to creating the WBS.

[33] A Work Breakdown Structure Dictionary is a textual document that supports the WBS by containing additional information about individual Work Packages.

[34] ‘Cost’ is a complex entity and care is required here. Chapter 17 refers.

[35] Such ‘house standards’ will be key elements of the project management method adopted by the SO.

[36] Although presented in the context of management of resource, since time and cost are inextricably linked, they can be thought of as time or cost management techniques, depending upon the context.

[37] To many, this four-part cycle is known as the ‘Deming Cycle’ or the ‘Deming Wheel’ on the understanding that it was originated by W. Edwards Deming. However, in his book Out of the Crisis, Deming (1982) himself attributed the original design to W.A. Shewhart.

Others, such as Ronald D. Moen and Clifford L. Norman (2010) differentiate between ‘Deming’s Wheel’ and the PDCA cycle, attributing the latter to a reworking of Deming’s work by a group of Japanese executives after receiving a presentation by Deming in the 1950s.

[38] This can be considered as an example of the ‘Hawthorne Effect’ (Buchanan and Huczynski, 2004).

[39] As discussed in Chapter 7, through the life of a contract the SO has progressively less influence over the gate decisions than the OO. For example, once the contract is signed the opportunity for the SO to terminate the contract is negligible.

[40] For convenience we will consider a Firm Price contract.

[41] If the estimated cost within the baselines of the PMP is less than that within the pre-contract sales estimate it is inconceivable that SO management would not insist on the former being adopted as the target cost.

[42] Although it is easy to refer to just cost, the real goal of the SO is profit and so there is a pressing need to manage and control revenue, both in terms of expediting payments to which the SO is already entitled, and also maximising the amount of entitlement. The latter will involve the SO’s PM acting as a marketer and salesperson seeking out new opportunities within the context of the existing OO and project. Such activity is akin to the ‘farmer’ aspect of selling as opposed to the more conventional ‘hunter’ aspect, as addressed in Chapter 13.

[43] To some extent this is because this strategic level of control is not as easy to exert within an SO because, once a contract is signed, the SO has no option to withdraw.

[44] It is said that project managers spend upwards of 90 per cent of their time simply communicating with others (Heldman, 2009).

[45] Care is required here since some projects will have their own contractual requirements that may not be adequately serviced by the existing facility.

[46] This also helps to manage the risks associated with the unexpected departure of key project staff.

[47] Some practitioners also include the processes and documents required to manage change as being part of the Configuration Management System (CMS).

[48] For instance, to avoid potential for any contradictions such suites should, ideally, ensure that a requirement (such as a dimension) is only stated once, in one document, which is then referenced by the others.

[49] Or alternatively with a CMS imposed by a SO higher in the supply chain.

[50] Some recipients will receive a ‘Controlled Copy’ in which case they will automatically receive any subsequent updated versions. Recipients of ‘Uncontrolled Copies’ do not atomically receive updated versions.

[51] Further enhancement can be adopted when using a spreadsheet’s logic to colour the cells to indicate status (for instance: Green - Work Package has started/finished before its planned date Amber - Work Package has started/finished but after the planned date; Red - Work Package has not started/finished and it is after the planned date).

[52] The size (and hence number) of the smallest fragment into which the project is decomposed.

[53] Implicit within all these discussions of costs incurred by a SO, and their use in the strategic and tactical control of projects, is the assumption that costs can be attributed to each individual bespoke product. Those SO who currently only produce standard products and are looking to embrace the supply of bespoke products may find this requirement surprisingly onerous. This is because, currently, many will operate a cost collection system that uses only functional departments as cost centres and lack the facility to record costs against individual products. Converting such a system can represent a significant amount of work and may, for instance, include the need for employees to create timesheets. Cultural resistance can be expected as well as significant technical difficulties and additional complexity.

[54] Many SO choose to have a ‘Cost Management Plan’, as a subsidiary management plan within the PMP that contains such definitions and conventions.

[55] The precise point of commencement of the warranty period is defined within the contract in question.

[56] In some instances such access is an element within the original supply contract. It can be a useful negotiating token for the OO.

References

1 

Association for Project Management, (2006) APM Body of Knowledge, 5th Edn, High Wycombe: APMKnowledge.

2 

Machiavelli, N., 1513. The Prince.

3 

Project Management Institute, 2013 A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 5th edn, Pennsylvania: Project Management Institute Inc.

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