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Lecture 2 Fundamentals
1. Content presentation
1. PMI
2. Project, program & portfolio
3. Role of Project manager
4. Organization
5. Project selection
2. Workshop
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
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PMI Introduction
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PMI
A non profit professional organization dedicated to
effective project management.
More than 450,00 Members
More than 300,000 PMP worldwide
Advance and improve effectiveness of communications among
the technologies that are involved in managing projects
Key Initiative
Development of PMP certification
PMBOK
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So What - WIIFM
Establish project management as a profession
Glue it all together
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
Project, Temporary
• A definite beginning and a definite end
– A starting point: defined
– A definite end: The project’s objectives
• have been achieved,
• will not or cannot be met, and
• the need for the project no longer exists.
– Temporary does not necessarily mean
short in duration.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
Project, Unique
• Unique Product, Service, or Result
– has never been done before, or
– has not been done the same way, or
– not by the same group of people
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
1.3 Project Management Definition
• The application of knowledge, skills, tools, and
techniques to project activities to meet project
requirements.
• Involves:
– Identifying Requirements
– Developing clear and achievable
objectives
– Balancing competing demands: scope,
time, cost, and quality
– Adapting specifications, plans, methods to
meet stakeholders differing needs and
expectations
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The Project Management Team
• Includes all personnel involved in performing project
management
• Has professional responsibility to Stakeholders
• Understands/uses at least 5 areas of expertise:
– The PMBoK
– Application area knowledge, standards, and
regulations
– Understanding project environment
– General management knowledge and skills
– Interpersonal skills
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Progressive Elaboration
Ö Progressing in steps
Ö Continuing steadily by increments
Ö Increasing in detail
We as PMs are asked to commit to a project cost, schedule,
quality measure, and define the project team before the
customer has finalized the requirements – Progressive
Elaboration.
quality measure
cost, schedule,
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
1.4.4 Project Management Office
(PMO)
• Also called ‘PSO’ (Project Support Office), ‘PO’ (Project Office), or
Program Office
• Support functions to project managers in the form of training,
software, templates, etc.
• Responsible for the results of the project depending on the roles
defined.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
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PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
Multiple Project Management
• Project Portfolio Management and Multiple Project
Management
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Management Maturity
Scope Management
Baseline Quality Management
Time Management
Cost Management
Human Resource Management
Building a Team Contractor/Procurement Management
Communications Management
Building a Project Integration Management
Building Success Risk Management
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PMBOK Scope
Application Knowledge
Project Management
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Project Drivers
Drivers of Business Operations
Stock price
New
Revenue Products
Or services
Business Sales
Earnings Growth Efficiency
New
Markets
Cost
Labor
Cost
Operating Fixed
Productivity Cost
Variable
Cost
R&D R&D
Investment
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Time is Money
Cost on budget
over five years
Time 6 months late
Actual
Revenue
Revenues
Project
Definitions
Operations Projects
Repetitive Temporary
Ongoing Beginning & End
Reset objectives & continue Unique
Product or Service
Performed by People
Constrained by limited resources
Planned, Executed, Controlled
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Differentiating
Project? Operation?
Executive reviews
Customer service
Manufacturing line
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Example
New Chip
Projects
New Product
Projects
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Product
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Cost Time
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Project Tradeoffs
Performance
Required Performance
Target
Cost
Budget limit
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Organizational Structures
Projectized Organization
Project
Coordination
Chief executive
Organizational Structures
FunctionalOrganization Project
Coordination
Chief executive
Organizational Structures
Matrix organization
• Blend of Projectized/Functional organizations
• Weak matrices
• functional, PM is coordinator, expeditor
• Strong matrices
• projectized with functional support
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Organizational Structures
Weak Matrix Organization
Chief executive
Project
Staff Staff Staff Coordination
Organizational Structures
Balanced Matrix Organization
Chief executive
Project
Staff Staff Staff Coordination
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Organizational Structures
Strong Matrix Organization
Chief executive
Project Influence
Pure Projectized
Pure Functional
in Decision Making
Functional Influence
in Decision Making
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PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
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Payback Period
(sample calculation)
The estimated cost of a project is $10,000,000.
The project is expected to yield $2,000,000 per
year. What is the Payback Period?
Solution:
Payback = total cost/yearly revenues
= 10,000,000/2,000,000
= 5 years
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Return on Investment
Return on Investment (ROI), another very commonly used
selection technique, is a financial measure of how much
profit is likely from invested costs.
How used:
‧ Average profits are divided by the average costs
expected over the period of the project’s life. Hurdle
rate is set by the senior management; product ROI
must equal or exceed the hurdle rate
Advantages:
‧ Used by most companies as one viability measure
‧ Easily understood and calculated
Disadvantages:
‧ Does not take into account the cost of money
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Return of Investment
(sample calculation)
The average cost of a 6-years project is
estimated to be $6,000,000 per year, and the
estimated total returns are expected to be
$12,000,000. What is the ROI?
Solution:
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PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
The image part with relationship ID rId15 was not found in the file.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc. 38
The image part with relationship ID rId15 was not found in the file.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
The image part with relationship ID rId15 was not found in the file.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc. 40
The image part with relationship ID rId15 was not found in the file.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc. 41
The image part with relationship ID rId15 was not found in the file.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
The image part with relationship ID rId15 was not found in the file.
43
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
The image part with relationship ID rId15 was not found in the file.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc.
The image part with relationship ID rId15 was not found in the file.
PMI® PMP® and PMBOK® Guide are registered trademarks of the Project Management Institute, Inc. 45
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PV (Revenues) = $80,691
PV (Costs) = $51,265
B/C = 80,691/51,265
or B/C = 1.57
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