project planning

PROJECTOPERATIONS

P A R T 4

Introduction

StrategicContext ofProjects

OrganizationalDesign

ProjectOperations

InterpersonalDynamics

The CulturalElements

NewProspects

PM:Strategic

Design andImplementation

ProjectTermination EVMS

ProjectControls

InformationSystems

ProjectPlanning

Source: PROJECT MANAGEMENT

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PROJECT OPERATIONS



CHAPTER 11PROJECT PLANNING

Amid a multitude of projects, no plan is devised.PUBLILIUS SYRUS, CIRCA 42 B.C.

11.1 INTRODUCTION

The most important responsibility of the project team is to develop the project planin consort with other supportive stakeholders. Project planning is reflective thinkingabout the projects future in relationship to its present role in the design andexecution of enterprise strategies. The project plan must be harmonious with thestrategic plan of the enterprise, the functional plans, and, where appropriate, withthe plans of the relevant stakeholders. If adequate project plans are developed, thenan important standard for monitoring, evaluating, and controlling the applicationof project resources is available. If the project plans are inadequate, then thereview of the project during its life cycle is greatly impaired.

In this chapter, a conceptual model of project planning is offered, along with adescription of planning processes, considerations, and results that can be expectedfrom adequate planning. The work breakdown structure is put forth as an absolutepreliminary initiative to build on for the development of other project planssuch as schedules, scheduling techniques, planning charts, and networking tech-niques. A summary is given of the project planning elements, along with life-cycleplanning, cost estimating, statement of work, project specification, and supportingfunctional plans. A citation of the generic work packages of project planning isoffered as a template to guide the development of more specific planning work pack-ages for individual projects. Included in the chapter content is a summary of theplanning for project partners and outsourcing of project management, two growingareas of interest to project-driven organizations today.

11.2 THE IMPORTANCE OF PLANNING

Project planning is an important part of the deciding aspect of the project teamsjob to think about the projects future in relationship to its present in such a way

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Source: PROJECT MANAGEMENT



that organizational resources can be allocated in a manner which best suits theprojects purposes. More explicitly, project planning is the process of thinkingthrough and making explicit the objectives, goals, and strategies necessary to bringthe project through its life cycle to a successful termination when the projectsproduct, service, or process takes its rightful place in the execution of project ownerstrategies. This chapter offers an overview of the project planning function placedin the context of enterprise planning.

In Chap. 1, strategic and organizational planning is covered. The context orplanning within the organization is depicted in Fig. 1.2. This figure shows the hier-archical relationship for the enterprise, with projects subordinate to the organiza-tions mission, objectives, goals, and strategies. The operational plans andorganizational design influence how project planning will be accomplished. Forpurposes of this chapter, project and program planning are considered the same.

Three types of plans are interrelated in an enterprise: the strategic plan, thefunctional plans, and the project plans. Project planning involves the developmentof a strategy for the commitment of resources to support the project objectives andgoals. The project plan reflects the strategic plan of the enterprise in providingguidance in the likely forthcoming strategic fit of the stream of projects in theenterprise. The functional plans provide detailed guidance on how resources willbe used to support the project purposes. All three plans are essential guides for theuse of resources, as well as providing reciprocal guidance on how the three planswork together during their execution in creating value for the enterprise.

Project planning is a rational determination of how to initiate, sustain, and termi-nate a project. McNeil and Hartley define the basic concepts of project planningas developing the plan in the required level of detail with accompanying milestones,and the use of available tools for preparing and monitoring the plan.1

Project planning and controls are interrelated. Planning prescribes the path tobe followed in executing the project, whereas the controls are the means to collect,analyze, compare, and correct. Project controls are an integral part of projectplanning. A useful flowchart model (Fig. 11.1) shows this interrelationship andshows the sequence in which planning is required.

310 PROJECT OPERATIONS

Analyzerequirement

Developproject

objectives

Technicalobjectives

Scheduleobjectives

Costobjectives

PROJECT PLANNINGMissionWBSScope of workProduct descriptionScheduleBudgetRiskCommunicationsResourcesQualityContracting

CONTROLSSchedule trackingCost trackingWork package trackingTechnical performanceTestingProject auditsProject reviews

1Harold J. McNeil and Kenneth O. Hartley, Project Planning and Performance, Project Management Journal,March 1986, p. 36.

FIGURE 11.1 A flowchart of typical planning and control functions.

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Project planning has played a key role in the outcome of successful nuclearpower plant projects in an industry where many projects have had grave difficulties.For example, at the Erie Nuclear Power Plant project, an overall plan was prepared at the project beginning. This plan provided the basis for controlling and coordinat-ing the activities of the participating parties.2

At Florida Power and Lights St. Lucie Unit 2 plant, adequate project plan-ning contributed to projects success by calling for the appointment of a projectmanagement organization in the early stages of the project, an early total pro-ject schedule, and the planning, scheduling, and implementation of an effectivestart-up program.3

11.3 PLANNING REALITIES

The planning ethos of the 1970s, rooted in the extrapolation of history, has been dis-credited by the bends in the trends exemplified by the oil crises and the political andsocial upheavals of the late 1980s and early 1990s. It is giving way to a new approachto strategic planning. This new approach is based on a visionary view of the futuregained by a growing awareness of the possibility of long-term strategic alliance build-ing, project partnering, sharing of risk in exploiting new technologies and processesleading to earlier commercialization, and continuous improvement of product, service,and process development and implementation in maintaining a competitive edge.

Planning is the most challenging activity for a leader or manager. Planningstarts with the development of a visionthe ability to see something that is invisibleto others. People in general find that it is more comfortable to do the work than toplan. All too often people equate activity with progress. Taking time to thinkthrough a plan of action for the future is not considered active management orleadership. Planning involves thinking through the possibilities and the probabilitiesof the future, and then developing a strategy for how the organizational resourceswill be positioned to take advantage of future competitive conditions.

Planning is a responsibility of the project leader. Finding ways to get the full-hearted cooperation of team members and other stakeholders will facilitate theplanning process and improve the chances of the development of a project plan towhich members of the project team are committed.

Planning for the use of resources precedes the monitoring, evaluation, andcontrol of resources. Insufficient front-end planning, unrealistic project plans,failing to estimate the degree of complexity, and lack of consideration for theprojects objectives will lead to reduced accomplishment of project objectives.When planning is done by an active, participating project team, the interactions andcommunications give greater insight to the project work. Interactions among the

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2Barry M. Miller and Charles D. Williams, Management Action through Effective Project Controls: A CaseStudy of a Nuclear Power Plant Project, Proceedings, PMI Seminar/Symposium, Los Angeles, October 1978, vol. 2,pp. G.1G.5.

3Paraphrased from W. B. Derrickson, St. Lucie Unit 2A Nuclear Plant Built on Schedule, Proceedings, PMISeminar/Symposium, Houston, October 1983, vol. 5, pp. E.1E.14.

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team members help develop the team and give the team members greater ease indealing with each other. This guides the future use of organizational resources.

11.4 A CONCEPTUAL MODEL OF PLANNING

Project planning is preceded by comprehensive organizational strategic planning,because projects are integral elements of organizational strategies. A conceptualmodel, depicting the strategic context of organizational planning that includesboth strategic planning and strategic implementation, appears in Fig. 11.2.4

Strategic considerations are addressed in Chap. 1 and will not be restated here.This section will address the project and how planning is accomplished. It is wellto remember that projects are building blocks of the enterprise and that all projectsmust contribute to the organizations mission, as connected through organizationalobjectives and goals that are implemented through organizational strategies.

11.5 PROJECT PLANNING MODEL

Project planning begins within the framework of strategic planning in the organi-zation. For example, the strategic planning phase at a steel corporation led to theapproval of a comprehensive facility feasibility study for the location and config-uration of the steel plant. As a result of this feasibility study, which evaluatedseven alternative sites, the plant location was fixed at Cleveland, Ohio. During theplanning for this facility, several options were considered, ranging from turnkeycontract to construction management consultant to the owner acting as its owngeneral contractor with subcontractors and/or in-house personnel. These optionswere considered in detail before final project planning was carried out withapproved cost estimates and milestone schedules.

The strategic context of organizational planning, depicted in Fig. 11.2, sets thestage for project planning. Projects must adhere to the strategic umbrella toassure flow down of the enterprises mission, vision, objectives, goals, and strategies.Using these concepts, project planning becomes an elaboration of the overallapproach to business and provides for consistently building on the enterprisescapability to perform work through projects.

Understanding the strategic approach to business and linking that to the projectplanning will provide the means to pursue work that supports the organizationsobjectives and goals by using strategies that are adopted and used by the organi-zation. Ensuring that projects, as building blocks for the business, contribute to theorganizations growth and improvement is critical to future well-being.

Table 11.1 depicts the hierarchical approach at the project level and establishesan overall framework for project planning. This is an extension of the concepts inFig. 11.2, which provides the umbrella for project planning. The definitions pro-vide an understanding for each key element.


4 Adapted in part from David I. Cleland and William R. King, Systems Analysis and Project Management, 3d ed.(New York: McGraw-Hill, 1983), p. 63.

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11.6 PROJECT PLANNING PROCESS

Projects often extend for many years into the future. Thus a project plan for suchprojects becomes both operational (short term) and strategic (long term). It followsthat the project planning process requires both operational and strategic thinking.Creativity, innovation, and the ability to think prospectively form the basis forthe project planning process. The real value of such a process is a framework ofthings to consider for a projects life cycle. A project planners philosophy encom-passes characteristics such as:

The need to search out objective data that provide the basis for project planningdecision making

The value of questioning assumptions, databases, and emerging project strategiesto test their validity and relevance

An ongoing obsession with where the project should go and how it is going toget there


TABLE 11.1 Project Planning in a Strategic ContextStrategic vision, mission, objectives, and goals for

the enterprise that drives project planningProject planning element Definition

Project mission/purpose The central reason for the project, such as creating a product,service, or organizational process change.

Project objectives The desired future position of the project in terms of cost,schedule, and technical performance.

Project goals Milestones leading to the completion of the projectswork packages.

Project strategy A plan of action with accompanying policies providinggeneral direction of how resources will be used toaccomplish project goals and objectives.

Organizational structure The project-driven, matrix organizational structure, functions,and processes.

Project team roles Identification, negotiation, and resolution of individual andcollective authority, responsibility, and accountability.

Style Project manager and project team member manner,knowledge, skills, and attitudes.

Systems Combination of management and organizational functionsforming an integrated entity to support project activities.

Project resources Quality and quantity of human and nonhuman resources tosupport the project.

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A demonstrated ability to view project opportunities in the largest possible contextand to constantly seek an understanding of how everything fits together duringthe projects life cycle

A faith that, given ample opportunity, a bisociation will occur: the fittingtogether of separate events or forces on the project.5

Individuals making key project planning decisions today will have a long-termstrategic impact on the organization. Generally, the strategic roles of key individualsinvolved in project planning are as follows: The board of directors reviews and approves (or redirects for further study) key

project plans and maintains surveillance over the implementation of the plans. Senior management directs the design, development, and implementation of a

strategic planning system and a project planning philosophy and process for thecorporation.

Functional managers are responsible for the integration of state-of-the-artfunctional technology into the project plans.

The project manager is responsible for integrating and coordinating the projectplanning activity.

The work package manager is responsible for providing input to the project plans. Professionals participate as required in contributing to the project planning

processes.

By involving these individuals in the roles as described, key people are affordedthe opportunity to participate in project planning. Of course, such participationrequires relevant knowledge, skill, and insight into both the theory and the practiceof project planning. By maximizing the participation of key individuals in projectplanning, the overall value of the project plan should be improved. One largeproject-driven organization recognized the value of project planning like this: During the early 1960s, after hundreds of projects had been completed, it

became apparent that many projects successfully achieved their basic projectobjectives, whereas some failed to achieve budget, schedule, and performanceobjectives originally established.

The history of many of these projects was carefully reviewed to identify conditionsand events common to successful projects, vis--vis those conditions and eventsthat occurred frequently on less successful projects. A common identifiableelement on most successful projects was the quality and depth of early planning bythe project management group. Execution of the plan, bolstered by strong projectmanagement control over identifiable phases of the project, was another majorreason why the project was successful.6


5Arthur Koestler, The Act of Creation (London: Hutchinson, 1964). He explains creativeness as the result of biso-ciation, of putting together unconnected facts or ideas to form a single new idea.

6Robert K. Duke, H. Frederick Wohlsen, and Douglas R. Mitchell, Project Management at Fluor Utah, Inc.,Project Management Quarterly, vol. 3, no. 3, September 1977, p. 33.

PROJECT PLANNING



Thus, project planning is the business of many individuals in the organization.Understanding planning concepts and how to develop realistic plans adds value tothe organization and its ability to reach into the future to lay out a path for success.

Project planning may be considered a form of information development andcommunications. As the project team develops the project plan, the project teamshould learn more about the project goals, strategies, and team member roles. Theproject objectives then can be decided in terms of cost, schedule, and technicalperformance. Satisfaction of project goals is accomplished through the completionof the project work packages. The project strategy is a plan of action with accom-panying policies, procedures, and resource allocation schemes, providing generaldirection of how the organizational effort will be used to accomplish project goalsand project objectives.

Simultaneous project planning is the process of having the project team considerall aspects, issues, and resources required for the project plan on a concurrentbasis. Concurrent planning means that everything that can or might impact theproject is reviewed during the planning phase to ensure that an explicit decision ismade concerning the role that all resources, however modest, might have on theproject. Project start-up workshops can be useful in the planning phase of a projectto help identify and get people committed to the notion of thinking through allprobable and possible aspects of the project to be reflected in the project plan.7

11.7 PROJECT PLANNINGCONSIDERATIONS

Many projects are started before the requirements are fully defined and under-stood. The lack of requirements, which may be the specification for a product, canallow the planners to drift away from the customers needs. Once project planningstarts in the wrong direction, it is difficult to correct. Like many other phenomena,the first 20 or 30 percent of the planning effort establishes a direction for the project.

The customers requirements define what the project should be. Planners whounderstand the customers requirements can collect the information to plan theproject and apply appropriate project management practices and techniques tobuild a road map to project implementation, control, and closeout.

All too often, when people think of project planning they perceive the use ofonly techniques and concepts such as PERT or CPM networking. These conceptsare briefly discussed in this chapter. The footnote references can serve as usefulguidelines in using PERT and CPM networking.8 These techniques are importantto use in the development of a project schedule; however, project planningincludes a much wider scope of activity. Such concerns as objective and goal setting,


7For a meaningful description of the role that planning workshops can play in project planning, see AlexanderWalton, Concurrent Planning Workshops: The Best Way to Communicate during Project Planning, Proceedings,Project Management Institute, 26th Annual Seminar/Symposium, New Orleans, October 1996, pp. 357366.

8Joseph J. Moder, Network Techniques in Project Management, in D. I. Cleland and W. R. King (eds.), ProjectManagement Handbook (New York: Van Nostrand Reinhold, 1983), chap. 16, pp. 303309; and James J. OBrien,CPM in Construction Management, 3d ed. (New York: McGraw-Hill, 1984).

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cost estimating and budgeting, scheduling, resource usage estimating, and specifica-tion of deliverables are key concerns. Project planning also involves a delineationof the organizational design to support the project as well as the information systemand the control system, which are used to model, evaluate, and reallocate resourcesas required during the execution of the project plan.

Project planning deals with the determination of the activities and resourcesthat have to be utilized to ensure that the project is adequately executed. Authority,responsibility, and accountability have to be planned so that members of the projectteam know what their specific roles are and how they relate to other members ofthe project team who are involved in executing work package activity. The followingkey questions need to be answered:

When is activity due? What is the time duration of each activity? What human and nonhuman resources are needed to execute each activity on

the project? What are the estimated costs? How are the budget and financial plans to be established to support the cost

considerations of the budget?

One of the changes under way in contemporary organizations is that more peopleare involved in and carry out the management functions.

Participative planning has been used effectively by AT&T. Participation isobtained through the use of workshops that include the entire project team andeven customers in joint planning sessions. A planning process facilitator helpsguide the activities and keeps the project planning moving forward. The purposeof these workshops is to have the participants agree on high-level project plans,schedules, and project monitoring and evaluation strategies. Held at the beginningof a project, the workshops achieve the benefits of early planning, including over-coming planning problems and getting the team members involved early in theplanning, which leads to more commitment and dedication to their role on theproject. In addition, team members are given an early exposure to their individualand collective roles in the project and an opportunity to identify any interpersonalanxieties that might hinder team development and operation at a later date. Thesestart-up workshops have been successful in producing planning deliverables,developing planning skills, and building team interaction and cohesiveness.9

The project manager is responsible for initiating action to bring about thedevelopment of a plan. In discharging the project leadership role, the projectleader has the final responsibility for ensuring that the right things are doneabout the project plan. The complexities of deciding what the details of the projectshould be and doing things right rest with the specialists, who are members of theproject planning team. Planning becomes a method for coordinating and synchro-nizing the forthcoming project activities. Project planning should be undertaken


9Dan Ono and Russell D. Archibald, Project Start-up Workshops: Gateway to Project Success, Proceedings,PMI Seminar/Symposium, San Francisco, September 1721, 1988, pp. 500554.

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after the project has been positioned in the overall strategy for the enterprise; thenthe detailed planning can be carried out with a high degree of assurance that theproject planning team is working on the right areas.

Because planning involves thinking through the probabilities and possibilitiesof the projects future, a detailed cookbook recipe for planning cannot be provided.However, certain key work packages and planning tools have to be addressed inthe development of the project plan of action. These planning considerations aredescribed in the next section.

11.8 WORK BREAKDOWN STRUCTURE10

The most basic consideration in project planning is the work breakdown structure(WBS). The WBS divides the overall project into work elements that representsingular work units, assigned either to the organization or to an outside agency,such as a contractor.

The WBS process is carried out in the following manner: Each project must besubdivided into tasks that can be assigned and accomplished by some organiza-tional unit or individual. These tasks are then performed by specialized functionalorganizational components. The map of the project represents the collection ofthese units and shows the project manager the many organizational and subsysteminterfaces to be managed.

The underlying philosophy of the work breakdown structure is to divide theproject into work packages that are assignable and for which accountability can beexpected. Each work package is a performance-control element; it is negotiatedand assigned to a specific organizational manager, usually called a work packagemanager. The work package manager is responsible for a specific measurableobjective, detailed task descriptions, specifications, scheduled task milestones,and a time-phased budget in dollars and work force. Each work package manageris held responsible by both the project and the functional managers for the com-pletion of the work package in terms of technical objectives, schedules, and costs.

The work breakdown structure is a means for dividing a project into easilymanaged increments, helping ensure the completeness, compatibility, and continu-ity of all work that is required for successful completion of the project. The WBSprovides the basis for a fundamental understanding of the scope of the project andhelps ensure that the project supports organizational objectives and goals.

The process of developing the WBS is to establish a scheme for dividing theproject into major groups, and then dividing the major groups into tasks, sub-dividing the tasks into subtasks, and so forth. Projects are planned, organized, andcontrolled around the lowest level of the WBS. The organization of the WBSshould follow some orderly identification scheme; each WBS element is given adistinct identifier. With an aircraft, for example, the WBS might look like the infor-mation shown in Fig. 11.3.


10Paraphrased from D. I. Cleland and W. R. King, Systems Analysis and Project Management, 3d ed. (New York:McGraw-Hill, 1983), pp. 255258.

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In the WBS, the decomposition of the aircraft includes both system componentsand the functions to support the project. The indenture at different levels indicatesthe components of that item. Decomposition is only done to the level at which theitem will be managed.

A graphic representation of the WBS can facilitate its understanding. Usingnumerical listings with deeper indentation for successively lower levels can aid incommunications and in developing understanding of the total project and its integralsubsystems, sub-subsystems, and so forth. Figure 11.4 demonstrates the graphicapproach to displaying the information.

Work packages follow from a WBS analysis on the project. When the WBSanalysis is completed and the work packages are identified, a WBS comes intoexistence. As shown in Fig. 11.4 a WBS can be represented similar to traditionalorganizational structure.

In the context of a project, the WBS and the resulting work packages provide amodel of the products (hardware, software, services, and other elements) thatcompletely define the project. Such a model enables project engineers, project


X-33 Aircraft

1.0 System1.1 Airframe1.2 Tail section1.3 Wings1.4 Engines1.5 Avionics

2.0 Documentation2.1 Operators manual2.2 Repair manual

3.0 Test and Demonstration3.1 Static system test on the ground3.2 Dynamic air test

3.2.1 Initial flight for aerodynamics3.2.2 Initial flight maneuver test3.2.3 Endurance flight test

4.0 Logistics4.1 Maintenance tools4.2 Repair parts (spares)

FIGURE 11.3 Work breakdown structure coding scheme for an aircraft (example).

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managers, functional managers, and general managers to think of the totality of allproducts and services comprising the project as well as its component subsystems.The model is the focus around which the project is managed. More particularly,the development of a WBS provides the means for:

Summarizing all products and services comprising the project, including sup-port and other tasks

Displaying the interrelationships of the work packages to each other, to the totalproject, and to other engineering activities in the organization

Establishing the authority-responsibility matrix organization Estimating project cost Performing risk analysis Scheduling work packages Developing information for managing the project Providing a basis for controlling the application of resources on the project Providing reference points for getting people committed to support the project

Work packages are the goals to be accomplished on the project. There are certaincriteria that should be applied to the project goals: Are the goals clear? Are they specific? Are they time based? Are they measurable? Can they be communicated easily to the project team? Can they be clearly assigned to the work package managers/professionals?

The WBS provides a natural framework or skeleton for identifying the workelements of the project: hardware, software, documentation, and miscellaneouswork to be accomplished to bring the project to completion. The WBS providesan identifier and a management thread to manage myriad aspects of the project.In some projects unique work packages are found. For example, in some globalprojects a cultural planning work package is included in the work breakdownstructure. From this work package, successful cultural training and orientationcan be carried out.

11.9 PROJECT SCHEDULES

A key output of project planning is the project master schedule, along with support-ing schedules, which is a graphic time representation of all necessary project-relatedactivities. The project schedule establishes the time parameters of the project


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and helps the managers effectively coordinate and facilitate the efforts of the entireproject team during the life of the project. A schedule becomes an effective partof the project control system. For a project schedule to be effective, it must be: Understandable by the project team Capable of identifying and highlighting critical work packages and tasks Updated, modified as necessary, and flexible in its application Substantially detailed to provide a basis for committing, monitoring, and eval-

uating the use of project resources Based upon credible time estimates that conform to available resources Compatible with other organizational plans that share common resources

Several steps are required to develop the project master schedule. These stepsshould be undertaken in the proper sequence.

Define the project objectives, goals, and overall strategies. Develop the project work breakdown schedule with associated work packages. Sequence the project work packages and tasks. Estimate the time and cost elements. Review the master schedule with project time constraints. Reconcile the schedule with organizational resource constraints. Review the schedule for its consistency with project costs and with technical

performance objectives. Senior managers approve the schedule.

11.10 SCHEDULING TECHNIQUES

Several scheduling techniques are useful in dealing with the timing aspect of the pro-ject resources. The typical graphic illustration is the bar chart, whereas the networksfor PERT (program evaluation and review technique) and CPM (critical path method)show the connectivity between work packages or activities.

Project Planning Bar Charts

A technique for simple project planning and scheduling is based on the bar chart(or Gantt chart, after Henry Gantt, one of the early users of a bar chart). This chartconsists of a scale divided into units of time (e.g., hours, days, weeks, or months)across the top and a listing of the project work packages or elements down the left-hand side. Bars or lines are used to indicate the schedule and status of each workpackage in relation to the time scale. Figure 11.5 is an example of a project planningbar chart for the development of an electronic device.


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PROJECT PLANNING



The work packages of the project are listed on the left-hand side, and the units oftime in weeks are shown at the top. Light horizontal lines indicate the schedule forthe project elements, with the specific tasks or operations written above the sched-ule line. Work accomplished is indicated by a heavy line below the schedule line.11The triangles represent milestones in the project.

Bar graphs are easy to develop and understand, and by showing the scheduledstart and finish of the work packages they provide a simple picture of where theproject stands. A variation of the bar chart is the milestone chart, which replacesthe bar with lines and triangles to indicate project status. A bar chart does not showwork package interdependence and time-resource trade-offs. Network techniquesused on larger projects help plan, track, and control complex projects effectively.

Network Techniques

The network techniques known as PERT and CPM came out in 1956. The networkdiagram of PERT/CPM provides a more powerful picture of the work packagerelationships than either the bar chart or the milestone chart. The network diagram,basic to PERT/CPM techniques, provides a dynamic interrelated picture of theactivities and interrelationships relative to the project. The main value of the networktechnique is its depiction of these relationships to show the sequence in whichwork is being executed. While PERT and CPM are excellent systems for sum-marizing work being tracked on a large project, they also aid in analysis of work dur-ing delays in one or more tasks during project execution.12 Figure 11.6 shows thebasic characteristics of a PERT/CPM diagram.

This diagram shows nodes that represent connections for tasks, which areshown by arrows. The solid lines of connectivity between the nodes representwork, or tasks, to be completed. The broken lines of connectivity indicate con-straints. A completed diagram would have a time on each arrow to represent thetime duration required to accomplish the task. PERT uses three time estimates andcomputes the estimate as follows:

Time expected (Te) equals Optimistic time (O), plus four times Most Likely(ML), plus Pessimistic time (P), divided by six, or Te (O 4ML P)/6.This gives the resultant number a central tendency that does not cover the full

range of options. For example, the actual time could be less than the optimistic ormore than the pessimistic estimates.

The more common type of diagram being used in most projects today is theprecedence diagram. Figure 11.7 depicts the precedence diagram. The precedencediagram is a critical path methodology and closely follows the CPM protocols. Itsmajor difference is that the work is in the nodes rather than in the arrows. Thearrows are connectors to the work and do not consume time. This diagramming


11Ibid.12For a summary of network techniques see Hans J. Thamhain, Engineering Program Management (New York:

Wiley, 1984), pp. 109140.

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method is more flexible than CPM/PERT in that no lines constrain the work likethe dashed lines of CPM.

Another advantage of the precedence diagram is that the connectivity can bearranged in the schedule through four relationshipsfinish-to-start, finish-to-finish,start-to-start, and start-to-finish. Each connectivity relationship has its advan-tages. However, the most common is the finish-to-start, or finish one activity andstart another.

11.11 PROJECT LIFE-CYCLE PLANNING

The project life cycle is a key consideration in project planning. Project life cyclescontain phases, or control mechanisms, to divide the project into different workefforts. The typical project life cycle has four phases: initiation, planning, executionand control, and closeout. These phase can be different to meet the needs of a specificindustry and the names may differ. However, the concept is the samedividethe life of the project into manageable parts, each one representing a controlpoint at the end.


2

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FIGURE 11.6 PERT/CPM diagram.

FIGURE 11.7 Precedence diagram.

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Once the appropriate work packages for each phase of the projects life cyclehave been depicted, a substantial start has been made toward the development of theproject plan. Figure 11.8 shows an example of how the work is to be accomplishedby project phase. This model is also shown in Fig. 2.3 in a different context.

11.12 PROJECT PLANNING ELEMENTS

There are a few fundamental components in the project planning process. Theseelements include the outputs from the techniques and processes previously dis-cussed as well as the elements discussed in the material that follows.

Statement of Work

A statement of work describes the actual work that is going to be performed on theproject which, when combined with the specifications, usually forms the basis fora contractual agreement on the project. As a derivative of the WBS, the statementof work (sometimes called scope of work) describes what is going to be accom-plished, a description of the tasks, and the deliverable end products that will be


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FIGURE 11.8 Tasks accomplished by project phase. [Source: John R. Adams and Stephen E.Brandt, Behavioral Implications of the Project Life Cycle, in David I. Cleland and William R.King (eds.), Project Management Handbook (New York: Van Nostrand Reinhold, 1983), p. 227.]

PROJECT PLANNING



produced, such as hardware, software, tests, documentation, and training. Thestatement of work may also make reference to specifications, directives, or standards,that is, the guidance to be followed in the project work. The statement of workincludes input required from other tasks involving the project and a key elementof the customers request for a proposal.

Project Specification

Specifications are the descriptions of the technical content of the project. These spec-ifications typically describe the product of the project and the requirements thatthe product must meet. Further, they contain the characteristics of the various sub-systems in the projects product or service, in order to include an overall systemspecification, hardware, software, test specifications, and logistics support.

Cost Estimate

The cost estimate forms the baseline budget from which all actual expenditureswill be measured. Typically, the cost estimate follows the WBS during developmentand implementation. The type of cost estimate determines the precision associatedwith individual cost items.

Detailed cost estimates are expensive because of the time and labor effortrequired to perform the estimate. The less precise the estimate, typically, the lessthe cost that is associated with the estimate. The three types of cost estimates areas follows:

Order of magnitude (25%, 75%). Used to make an initial estimate of a projectfor purposes of getting a rough idea of the cost. Note that the project may havea 100 percent variance, that is, 25 percent less or 75 percent more.

Budget (10%, 25%). Used to perform a tighter estimate than can be usedfor decision making concerning whether the project is within the tolerances ofthe organization.

Definitive (5%, 10%). Used to start a project based on solid planning and agood estimate of all parts of the project.During implementation, the cost estimate forms the baseline for project expen-

ditures and provides a means of comparing actual costs to the estimate. Projectsmay require weekly or monthly cost reports to reflect the actual expenditure ascompared to the baseline estimate. An element of the cost system is a report,which provides weekly actual cost with estimated cost as well as a comparison ofactual worker-hours with target worker-hours in manufacturing or construction.

The cost account usually is considered the basic level at which project perfor-mance is measured and reported. This account represents a specific work packageidentified by the WBS, usually tracked by information on a daily or weekly timecard, which ties in with the organizational cost accounting system.


PROJECT PLANNING



Financial Plan

Assuming that project budget, work package budget, and budgets for the appropriatecost accounts have been developed, financial planning involves the developmentof action plans for obtaining and managing the organizational funds to support theproject through the use of the work authorization process.

The project manager usually authorizes the expenditure of resources on theproject for work to be accomplished within the organization as well as on worksubcontracted to vendors. The work authorization process is an orderly way to dele-gate authority to expend resources for the project. The work authorization documentusually includes:

The responsible individual and/or organization A work package WBS A schedule Cost estimate and funding citation A statement of work

Usually the work authorization document is in a one-sheet format that is consid-ered a written contract between the project manager and the performing organizationand/or person.

Functional Plan

Each functional manager should prepare a functional operations plan thatestablishes the nature and timing of functional resources necessary to support the pro-ject plan. For example, the accounting/financial organization that supports theproject manager should establish a plan for how the project budget can be monitored.Such a plan would be an information system for monitoring actual project costsand comparing them with budgeted costs.

11.13 PLAN FORMAT

The organization and arrangement of the project plan depend on the nature of theproject. The bare essentials of a project plan include: A summary of the project that states briefly what is to be done and the methods

and techniques to be used. It lists the deliverable end products in such a way thatwhen they are produced, they can be identified easily and compared with the plan.

A list of tangible and discrete goals, identified in such a way that there can beno ambiguity about whether a goal has been achieved.

A WBS that is detailed enough to provide meaningful identification of all tasksassociated with job numbers, plus all higher-level groupings such as work unitsor work packages.


PROJECT PLANNING



A strategy outlining how organizational resources will be used to accomplishproject objectives and goals.

An activity network that shows the sequence of elements of the project and howthey are related (which can be done in parallel, which can start only whenanother is finished, etc.).

Separate budgets and schedules for all the elements of the project for whichsome individual is responsible.

An interface plan that shows how the project relates to the rest of the world,most particularly to the customer.

An indication of the review process: who reviews the project, when, and forwhat purpose.

A list of key project personnel and their assignments in relation to the WBS.

11.14 PROJECT MANAGEMENT MANUAL

An important part of project planning is the development of organizational policiesand procedures that support the project plan. Many organizations use a projectmanagement manual that tells all project participants what they have to do andhow they have to do it. Bitner suggested the contents for a representative projectprocedure manual.13

The project management manual is the document that establishes standingprocedures for project planning and implementation. When properly constructed,the project management manual covers aspects of the organizations project man-agement that are consistent across projects and programs. For example, it maystate that all projects will have a formal review by senior management no less thanonce each quarter and once a month for projects that are experiencing difficulties.

11.15 PROJECT PLANNING WORKPACKAGES

Even the task of planning a project should be broken down into work packages.Here is a general guide to these work packages, not necessarily done in the sequenceindicated:

Establish the strategic fit of the project. Ensure that the project is truly abuilding block in the design and execution of organizational strategies andprovides the project owner with an operational capability not currently exist-ing or improves an existing capability. Identify strategic issues likely to affectthe project.


13L. M. Bitner, Project Management: Theory versus Application, Project Management Journal, June 1985, p. 67.

PROJECT PLANNING



Develop the project technical performance objective. Describe the project deliv-erable end product(s) that satisfies a customers needs in terms of capability,capacity, quality, quantity, reliability, efficiency, and so on.

Describe the project through the development of the project WBS. Develop aproduct-oriented family tree division of hardware, software, services, and othertasks to organize, define, and graphically display the product to be produced, aswell as the work to be accomplished to achieve the specified product.

Identify and make provisions for the assignment of the functional work packages.Decide which work packages will be done in-house, obtain the commitment ofthe responsible functional work managers, and plan for the allocation of appro-priate funds through the organizational work authorization system.

Identify project work packages that will be subcontracted. Develop procurementspecifications and other desired contractual terms for the delivery of the goodsand services to be provided by outside vendors.

Develop the master and work package schedules. Use the appropriate schedul-ing techniques to determine the time dimension of the project through a collabo-rative effort of the project team.

Develop the logic networks and relationships of the project work packages.Determine how the project parts can fit together in a logical relationship.

Identify the strategic issues that the project is likely to face. Develop a strategyto deal with these issues.

Estimate the project costs. Determine what it will cost to design, develop, andmanufacture (construct) the project, including an assessment of the probabilityof staying within the estimated costs.

Perform risk analysis. Establish the degree or probability of suffering a setbackin the projects schedule, cost, or technical performance parameters.

Develop the project budgets, funding plans, and other resource plans. Establishhow the project funds should be utilized, and develop the necessary informationto monitor and control the use of funds on the project.

Ensure the development of organizational cost accounting system interfaces.Because the project management information system is tied in closely with costaccounting, establish the appropriate interfaces with that function.

Select the organizational design. Provide the basis for getting the projectteam organized, including delineation of authority, responsibility, and account-ability. At a minimum, establish the legal authority of the organizational boardof directors, senior management, and project and functional managers, as wellas the work package managers and project professionals. Use the LRC (linearresponsibility chart) process to determine individual and collective roles onthe project team.

Provide for the project management information system. An information sys-tem is essential to monitor, evaluate, and control the use of resources on the pro-ject. Accordingly, develop such a system as part of the project plan.


PROJECT PLANNING



Assess the organizational cultural ambience. Project management works bestwhere a supportive culture exists. Project documentation, management style,training, and attitudes all work together to make up the culture in which projectmanagement is found. Determine the project management training that wouldbe required. What cultural fine-tuning is required?

Develop project control concepts, processes, and techniques. How will the pro-jects status be judged through a review process? On what basis? How often?By whom? How? Ask and answer these questions prospectively during theplanning phase.

Develop the project team. Establish a strategy for creating and maintainingeffective project team operations.

Integrate contemporaneous state-of-the-art project management philosophies,concepts, and techniques. The art and science of project management continueto evolve. Take care to keep project management approaches up to date.

Design project administration policies, procedures, and methodologies.Administrative considerations often are overlooked. Take care of them duringearly project planning, and do not leave them to chance.

Plan for the nature and timing of the project audits. Determine the type ofaudit best suited to get an independent evaluation of where the project stands atcritical junctures.

Determine who the project stakeholders are and plan for the management ofthese stakeholders. Think through how these stakeholders might change throughthe life cycle of the project.If the project team follows the suggested development of the project planning

work packages suggested in this chapter, it is probable that all the needed projectplanning will be carried out. As these project planning work packages are prepared,it is likely that planning initiatives not reflected in these work packages will beidentified and can be planned for accordingly.

11.16 MANAGEMENT REALITIES

Complete plans are but a best effort of the planning team based on informationand guidance received. The larger the project, the greater the chance that the planwill change through either new guidance or updated information being received.Plans are living documents that change as competitive and environmental systemschange. Continual update of information and additional planning are typicallyrequired throughout the life of the project.

Implementation of plans requires that communications and coordination takeon added emphasis. Teams, rather than fixed organizational structures, are theorder of the day. Integration becomes supreme as organizational processes arecrossed as needed, and when needed, pulls together synchronized and qualityefforts to produce customer value.


PROJECT PLANNING



For many managers, who grew up in a command and control culture, the newparadigm of consensus and consent management is disquieting. They will needto adapt to the new way of getting things donethat is, by sharing the decisionmaking and power in the project. Managers have become the servants of thosethey choose to rule. This new world is concerned with flexibility in strategies,markets, projects, resources, and people.

In the past, we managed as if the optimization of the parts of the organizationresearch, manufacturing, engineering, marketing, product development, and soforthwould lead to the optimization of the whole of the organization. Today,we optimize the integration of the organizational processes by using projectteams as focal points to pull together the human and nonhuman resources neededto do the job. The major breakthroughs in improving organizational efficiencyand effectiveness have come about because of the management of the organiza-tional processes rather than the functional entities of the organization. The man-agement of the organizational processes through a self-directed team has finallycaptured the essence of the interdependencies of the organizational functions.

All planning efforts need to consider the new world and dynamic changes thatoccur, some on a daily basis. Planning does provide the framework and the thoughtprocess to visualize the work required to build a product or service that bringsbenefits to the customers. Planning also gives a foundation from which to initiatechange, when required to meet new situations. No plan is perfect to carry onethrough an entire project, but a good plan does provide a path from which one canadjust to meet the changes.

11.17 PROJECT PARTNERING14

Partnering in projects has emerged in recent years as a means of sharing equallyin managing large projects by two or more organizations. One organization mayinitiate partnering to gain additional capability for a project as well as share inthe risks of large complex projects. Partnering is also a means of combininginformation, such as in research and development projects, to improve thechance of success.

Partnering may be accomplished between public, private, and for-profit andnot-for-profit organizations. A government agency may, for example, partner witha private organization to conduct research. Another example is for a private for-profitprofessional association to partner with a not-for-profit company to develop acommercial product from intellectual property.

There is no limit to project partnering by organizations. A common goal andcomplementing capabilities are the basis for a project partnership. Finding the talentneeded to perform specific project work and developing cooperative arrangementsfor the partnering are needed for a working partnership.


14Paraphrased from David I. Cleland and Lewis R. Ireland, Project Managers Portable Handbook (New York:McGraw-Hill, 2000) pp. 4.84.15.

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11.18 TYPES OF PROJECT PARTNERINGARRANGEMENTS

Project partnerships may take many forms of cooperative agreements. The formalityand contractual relationship are determined by the needs of all partners. Someexamples of these relationships are depicted in Table 11.2.

The number of arrangements is left to the organizations desiring to partner andwork together. One important aspect is for the visibility that the customer has ofthe accomplishment of different work packages. In some partnering, the customerwants to be aware of who is doing the work, and in other situations, the customer isonly concerned with the quality of the work.


TABLE 11.2 Types of Project Partnering ArrangementsRelationship and Description of possible

binding documentation working arrangements Remarks

Formal and contract Two companies obligate One or both companies must themselves to perform parts commit to the customer for of a project. The allocation delivery. One or both may signof work is based on expertise the contract with the customer.in the type of work to be performed.

Formal and Two or more companies The consortium represents itself consortium obligate themselves to per- to the customer as the contract-

form project work through ing entity. The individual a single contract that joins identities of the companies them in a separate legal may not be visible to the entity. customer.

Formal and contract One company may bid on a The arrangement is invisible to project and use another the customer. The loaningcompanys resources. The company has an obligation to resources are excess to the provide qualified resources to loaning company, but the project and may or may become a part of the project not provide supervision.under the direction of the host company.

Informal and One company bids and wins Second-tier companies are agreement work on a project. One or invisible to the customer. Work

more other companies agree performed by second-tier that they will contribute to companies is accomplished as the success of the project needed, but the customer does through selected work. not know other companies are

involved.

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11.19 EXAMPLES OF PROJECTPARTNERING ARRANGEMENTS

There are many examples of project partnering that demonstrate the concept andthe future of this type of business relationship. Figure 11.9 shows several examplesof project partnering. Engineering and construction firms partner to obtain the best mix of talent and

capability for projects. Partnering to obtain excellence in project control formajor projects is often found in major projects such as the Super ColliderProject in Dallas, Texas.

Aerospace companies partnered to build a stealth bomber on a $4 billion project.Several companies worked together to develop the best in stealth technology.

Three small companies combined their capabilities to bid and win a projectrequiring expertise in computer technology, computer network operations, andprocurement knowledge.


FIGURE 11.9 Examples of project partnering.

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Licensing of intellectual property of a professional association to a company tobuild software products is a current project. The associations standards werelicensed to a company for the specific purpose of expanding the distribution ofknowledge in the standards and to generate a modest profit for the association.

11.20 MANAGING PARTNERED PROJECTS

Customers are concerned with the management of the project work and who willbe responsible for such items as reports, corrective actions, changes to the project, andoverall project direction. Strong management capability builds confidence with thecustomer, whereas a weak or vague project management structure erodes confidence.Figure 11.10 shows typical types of arrangements for managing partnered projects.A discussion follows.Some management structures for partnered projects are: Steering committee. Senior managers from all partnering organizations. This com-

mittee reviews progress and sets direction. A project manager or co-project man-ager is designated for all partnered work and reports to the steering committee.

Project manager and deputy project manager (or co-project manager). Twoindividuals are designated from the partnering companies to lead the project.These individuals may report to their respective company executives or to asteering committee.

Project manager. A single individual is appointed as the project manager for allthe project work. Project team members report to the project manager for per-formance issues.


FIGURE 11.10 Managing partnered projects.

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These three management structures can be modified to meet any situation.Large projects need senior guidance from a group such as a steering committee,whereas small projects would only require a single project manager.

11.21 TECHNICAL ASPECTS OF PARTNEREDPROJECTS

One of the primary reasons for partnering is to gain additional technical capability.A customer wants assurances that the project will be technically successful and thatthe performing organization has the capability to accomplish the work. Partneringgives that assurance by bringing the best talent from more than one company.

Strategies of partnering will guide companies to better work solutions and betterproducts for the customers. The following is a list of sample strategies:

Work allocation. Divide work so the work packages are performed with an inte-gral team when possible.

Project control. A team could be assigned responsibility for controlling theproject work. This team may be individuals from different companies, but shouldhave clear work responsibilities.

Project management. There needs to be a single person responsible for man-aging the work. Some work may be performed under the supervision of a manager,but that manager is responsible to the project manager for delivering a productcomponent.

Company participation. Company managers must not, as individuals, becomeinvolved in the direction of the project. Direction must be through a consolidatedbody, such as a steering committee or senior management representative group.

Customer interface. Like any project, partnered projects must have a singleinterface with the customer. This may be the project manager, the chair of thesteering committee, or the elected representative from the management group.In some situations, there are two levels of customer interface. The strategicdirection and liaison are from the senior steering committee and the daily inter-face is between the project manager and the customers representative.

11.22 PARTNERING CHALLENGES ANDBENEFITS

Project partnering takes on many forms based on the desires and creativity of thepartners. The arrangements will vary according to the project and the visibility oforganizations may be more or less, depending on the needs for the partnered project.Organizations, public and private, for-profit and not-for-profit, can create partner-ships to meet the needs of a small, medium, or large project.


PROJECT PLANNING



Managing a partnered project is typically driven by the desires of the customer.Customer confidence and visibility into the project dictate the managementapproach as well as the size of the project. It is not uncommon to have a two-tiermanagement structure, that is, a project manager and a steering committee to whichthe project manager reports.

Many benefits are derived from partnered projects. These include learningfrom other organizations management and technical processes, obtaining tech-nical knowledge about project management methodologies and processes,acquiring improved work methods from others and large profit shares throughimproved productivity.

11.23 OUTSOURCING PROJECTMANAGEMENT15

Outsourcing, or out-tasking as some organizations call it, is a growing field.Historically, the soft areas such as custodial services, food services, and landscapinghave dominated the outsourced work; nearly 50 percent of recently surveyed orga-nizations identify these areas. Maintenance of fleet automobiles and aircraft arealso examples of areas for outsourcing.

Outsourcing is contracting for services that could be provided by the organization,if the organization had the capability and desire to perform those functions.Outsourcing has many advantages in that it is typically more economical to buythe products and services than provide them in-house. There is no investmentin the function in terms of people, equipment, or maintenance for the outsourc-ing organization.

At GE, under the banner of no back offices, CEO Jack Welch told managersto digitize or outsource the pants off their business that didnt touch the customer.16Outsourcing of core competencies is not recommended because an organizationloses its capability to function effectively. Core competencies must be nurturedand grown rather than contracted for through another organization. A providingorganization has little incentive to improve on another organizations core compe-tencies as long as the products and services are being purchased.

11.24 PROJECT MANAGEMENT AS ANOUTSOURCED SERVICE

Project management services have been outsourced in several instances and thefuture looks promising for more outsourcing. The benefits of outsourcing projectmanagement include improved and more economical operations.


15Paraphrased from David I. Cleland and Lewis R. Ireland, Project Managers Portable Handbook (New York:McGraw-Hill, 2000), pp. 7.527.59.

16Its All Yours, Jeff. Now What? Fortune, September 17, 2000, p. 66.

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Project management services can be improved by transferring the functions toan organization specializing in project management. This specialized companyhires the right skills and uses the best of practices because it is their core competency.They have resources that focus on providing these services and have the in-depthexpertise to perform at high-performance levels.

Outsourcing relieves the parent company of the burden of managing projectmanagement services. Through contractual relationships, the parent companystates its needs and then manages the contract and delivery of services. There isless effort required to receive the products and services from outsourced projectmanagement than to manage it in house.

Outsourcing companies may be concerned with loss in the project managementfunction. Organization outsourcing will lose visibility into the details of work, butthere is no need to see detail when the end product meets the requirements.Outsourcing companies should only be concerned with the delivered product andless concerned over the details of production.

11.25 OUTSOURCING TRENDS

Project management outsourcing has been primarily one of providing services toorganizations by one person at a time. It is referred to as body shop or hired gunbecause the project management professional is typically working on-site with theorganizations staff. This type of arrangement is profitable for the organizationdoing the work, but is not outsourcing.

The body shop or hired gun approach mixes different levels of proficiency andcompetency. The lower level of project management proficiency and competency istypically the resident employee of the organization and the outside person bringsthe expertise. This places the resident employee as the driver and the expert as thefollower. There is considerable waste in talent, time, and money with this approach.

Outsourcing of project management services will, like other professional services,continue to be used to fulfill the needs of organizations. This has a high-growthpotential because of the ability of project management service providers to deliverbetter products in a timely manner at lower cost. Project management serviceproviders will have the expertise and skills to build better products than a part-timeeffort in-house.

11.26 SELECTING AN OUTSOURCEPROVIDER

Successful selection of an outsource provider is accomplished in four sequentialsteps. These steps give a high degree of assurance that the best provider is selectedand that the outsourcing relationship is satisfactory. Figure 11.11 graphicallydisplays the steps.


PROJECT PLANNING



Conduct an internal analysis. Identify those functions that can be outsourced,assess the tactical and strategic impact of outsourcing each identified function,evaluate the total cost of each function selected for possible outsourcing, anddetermine the advantages and disadvantages of outsourcing. Classify each functionas no outsourcing, possible outsourcing, and definite outsourcing. Usecriteria for each category such as listed in Table 11.3.

Establish a relationship with providers. Issue a request for information (RFI)that solicits interest in providing products/services, select two or three respondents,and ask for due diligence. Conduct a due diligence survey to validate the capabili-ties of the potential providers.

Establish a contract. From the three respondents meeting the due diligence surveycriteria, negotiate a contract with one. Establish scope and boundaries for thecontract and describe the following: Resources to be used to produce the products and services Key deliverables and the schedule for delivery Performance measures and other quality metrics Invoice and payment schedule to include provisions for timing of payments Change and termination provisions of the contract

Administer the outsourcing relationship. Establish the contract managementprocess, establish the technical review process, establish a change order process,and establish a steering committee or oversight committee. Involve the usersor consumers of the products and services in the steering/oversight committee.

Identifying providers who can meet the organizations needs involves morethan establishing a contract and working to enforce the provisions and clauses. Agood contract is the basis for promoting understanding with the provider of prod-ucts and services. It is also essential that the provider have a record of meetingcontract provisions.


Four Steps for Selection ofan Outsource Provider

1. Conduct an internal analysis.

2. Establish a relationship with providers.

3. Establish a contract.

4. Administer the outsource relationship.

FIGURE 11.11 Selecting an outsource provider.

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References should be checked during due diligence and references should beasked the following questions:

Did the contractor deliver the products and services called for in the contract? Were the products and services usable by the consumer as delivered? Did the contractor demonstrate flexibility in minor changes to the contract or

was each minor change an issue? Were change orders to the contract performed on a fair and equitable basis? Do you recommend the contractor for these products and services? Would you award a contract to this contractor again?

11.27 OUTSOURCING PROJECTMANAGEMENT SERVICES AND PRODUCTS

From an organizations perspective, there is a need to determine what may be out-sourced and to which project management service provider. First, the areas of projectmanagement that may be outsourced need to be identified. Second, identify thebest provider.

Project management products and services that may be outsourced dependupon the organizations structure for project management, the degree of maturityin project management, the number of projects, and the management style. Theorganization must know what is needed in terms of project management productsand services. An organization with a loosely structured project management capa-bility may not know what is needed.

The entire project may be outsourced. This frequently happens within suchfields as information technology or information systems where the organization


TABLE 11.3 Criteria for Outsource Provider Selection

Category Criteria

No outsourcing of Part of core competency.function Negative benefit or value added to outsourcing.

Impacts strategic goals.Possible outsourcing Cost and other benefits show no advantage or disadvantage.

of function Neither contributes to strategic goals nor impacts strategic goals. All factors equal for in house or outsourcing.

Definite outsourcing Definite cost savings to outsource.of function Reduces complexity of management for in-house work.

Better product/service results from outsourcing. More responsiveness to needs of organization. Outsourcing uses better practices and technology than availablein-house.

PROJECT PLANNING



only wants to be concerned with software solutions and not the challenges ofdesigning, developing, testing, and delivering software releases. When only com-ponents of project management are outsourced, Table 11.4 may be helpful.

11.28 PROJECT MANAGEMENTOUTSOURCING GUIDELINES

Outsourcing for any products and services needs to consider all aspects of the rela-tionship and how it is managed. Transition of the responsibility for products and


TABLE 11.4 Outsourcing by Project Management ComponentProject management

component Outsourcing potential

Project planning High. Project planning expertise is typically not resident incompanies. A centralized planning effort with the projectteam can provide many benefits by getting the projectsstarted from a solid basis.

Project scheduling High. Scheduling and schedule maintenance skills are oftenand maintenance resident in house, but the work is time-consuming for highly

qualified technical people.Project cost High. Cost estimating is an art that requires specific skill sets

estimating that are typically not resident in a company. It can be time-consuming for technical people who are better employed onother tasks.

Project progress High. Status and progress reporting are part of the schedulereporting maintenance. Consistent reporting to senior leaders will be

achieved as well as standard reports across projects.Change control High for both categories. This is the administration of the

Product change control process. Initiation of changes and decisions Project on changes are typically performed in house.

Issue tracking High. Tracking issues by a standard procedure and collectinginformation on the status is a routine matter that should notburden the project manager.

Problem tracking High. Tracking actions by a standard procedure and collectinginformation on the status is a routine matter that should notburden the project manager.

Risk assessment and Medium. Conducting risk assessments and mitigation actionsrisk tracking can be performed by an outsource provider. There must be

good coordination with the

project planning

Documents

project managementdownloaded

project partners

project operationsdownloaded

project planssuch

project teamsjob

project specification

project planningamid

project planning elements