Question # 1
Draw a network of any size that has at least one of each of the following features: merge activity, burst activity, hammock activity, ladder activity, critical path, serial activities, concurrent activities, and float. Mark these features on your network.List of Cases by Chapter
Chapter 1
Chapter 7
Chapter 2
Chapter 8
Development Projects in Lagos, Nigeria 2
“Throwing Good Money after Bad”: the BBC’s
Digital Media Initiative 10
MegaTech, Inc. 29
The IT Department at Hamelin Hospital 30
Disney’s Expedition Everest 31
Rescue of Chilean Miners 32
Tesla’s $5 Billion Gamble 37
Electronic Arts and the Power of Strong Culture
in Design Teams 64
Rolls-Royce Corporation 67
Classic Case: Paradise Lost—The Xerox Alto 68
Project Task Estimation and the Culture of “Gotcha!”
Widgets ’R Us 70
The Building that Melted Cars 224
Bank of America Completely Misjudges Its Customers 230
Collapse of Shanghai Apartment Building 239
Classic Case: de Havilland’s Falling Comet 245
The Spanish Navy Pays Nearly $3 Billion for a Submarine
That Will Sink Like a Stone 248
Classic Case: Tacoma Narrows Suspension Bridge 249
Sochi Olympics—What’s the Cost of National
Prestige? 257
The Hidden Costs of Infrastructure Projects—The Case
of Building Dams 286
Boston’s Central Artery/Tunnel Project 288
After 20 Years and More Than $50 Billion, Oil is No Closer
to the Surface: The Caspian Kashagan Project 297
Chapter 3
Project Selection Procedures: A Cross-Industry
Sampler 77
Project Selection and Screening at GE: The Tollgate
Process 97
Keflavik Paper Company 111
Project Selection at Nova Western, Inc. 112
Chapter 10
Enlarging the Panama Canal 331
Project Scheduling at Blanque Cheque Construction (A) 360
Project Scheduling at Blanque Cheque Construction (B) 360
Chapter 11
Chapter 4
Leading by Example for the London Olympics—
Sir John Armitt 116
Dr. Elattuvalapil Sreedharan, India’s Project
Management Guru 126
The Challenge of Managing Internationally 133
In Search of Effective Project Managers 137
Finding the Emotional Intelligence to Be a Real Leader
Problems with John 138
Chapter 5
“We look like fools.”—Oregon’s Failed Rollout
of Its ObamacareWeb Site 145
Statements of Work: Then and Now 151
Defining a Project Work Package 163
Boeing’s Virtual Fence 172
California’s High-Speed Rail Project 173
Project Management at 175
The Expeditionary Fighting Vehicle 176
Chapter 6
Engineers Without Borders: Project Teams Impacting
Lives 187
Tele-Immersion Technology Eases the Use of Virtual
Teams 203
Columbus Instruments 215
The Bean Counter and the Cowboy 216
Johnson & Rogers Software Engineering, Inc. 217
Chapter 9
Developing Projects Through Kickstarter—Do Delivery
Dates Mean Anything? 367
Eli Lilly Pharmaceuticals and Its Commitment to Critical
Chain Project Management 385
It’s an Agile World 396
Ramstein Products, Inc. 397
Chapter 12
Hong Kong Connects to the World’s Longest Natural
Gas Pipeline 401
The Problems of Multitasking 427
Chapter 13
New York City’s CityTime Project 432
Earned Value at Northrop Grumman 451
The IT Department at Kimble College 463
The Superconducting Supercollider 464
Boeing’s 787 Dreamliner: Failure to Launch 465
Chapter 14
Duke Energy and Its Cancelled Levy County Nuclear
Power Plant 478
Aftermath of a “Feeding Frenzy”: Dubai and Cancelled
Construction Projects 490
New Jersey Kills Hudson River Tunnel Project 497
The Project That Wouldn’t Die 499
The Navy Scraps Development of Its Showpiece
Warship—Until the Next Bad Idea 500
Fourth Edition
Project ManageMent
achieving coMPetitive advantage
Jeffrey K. Pinto
Pennsylvania State University
Boston Columbus Indianapolis New York San Francisco Hoboken Amsterdam
Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi
Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
To Mary Beth, my wife, with the most profound thanks and love for her unwavering
support. And, to our children, Emily, AJ, and Joseph—three “projects” that are definitely
over budget but that are performing far better than I could have hoped!
VP, Product Management: Donna Battista
Editor-in-Chief: Stephanie Wall
Acquisitions Editor: Dan Tylman
Program Manager Team Lead: Ashley Santora
Program Manager: Claudia Fernandes
Editorial Assistant: Linda Albelli
VP, Marketing: Maggie Moylan
Product Marketing Manager: Anne Fahlgren
Field Marketing Manager: Lenny Raper
Strategic Marketing Manager: Erin Gardner
Project Manager Team Lead: Judy Leale
Project Manager: Nicole Suddeth
Operations Specialist: Carol Melville
Cover Designer: Lumina Datamatics, Inc
Cover Photo: f11photo/Fotolia
VP, Director of Digital Strategy & Assessment:
Paul Gentile
Manager of Learning Applications: Paul Deluca
Digital Editor: Brian Surette
Digital Studio Manager: Diane Lombardo
Digital Studio Project Manager: Robin Lazrus
Digital Studio Project Manager: Alana Coles
Digital Studio Project Manager: Monique Lawrence
Digital Studio Project Manager: Regina DaSilva
Full-Service Project Management and Composition:
Printer/Binder: Edwards Brothers
Cover Printer: Phoenix Color/Hagerstown
Text Font: 10/12 Palatino
Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear
on the appropriate page within text.
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Library of Congress Cataloging-in-Publication Data
Pinto, Jeffrey K.
Project management : achieving competitive advantage/Jeffrey K. Pinto.—Fourth edition.
pages cm
Includes index.
ISBN 978-0-13-379807-4 (alk. paper)—ISBN 0-13-379807-0 (alk. paper) 1. Project management. I. Title.
HD69.P75P5498 2016
10 9 8 7 6 5 4 3 2 1
ISBN 10:
ISBN 13: 978-0-13-379807-4
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Introduction: Why Project Management? 1
The Organizational Context: Strategy, Structure, and Culture 36
Project Selection and Portfolio Management 76
Leadership and the Project Manager 115
Scope Management 144
Project Team Building, Conflict, and Negotiation 186
Risk Management 223
Cost Estimation and Budgeting 256
Project Scheduling: Networks, Duration Estimation,
and Critical Path 296
Project Scheduling: Lagging, Crashing, and Activity Networks 330
Advanced Topics in Planning and Scheduling: Agile
and Critical Chain 366
Resource Management 400
Project Evaluation and Control 431
Project Closeout and Termination 477
Appendix A The Cumulative Standard Normal Distribution
Appendix B Tutorial for MS Project 2013 510
Appendix C Project Plan Template 520
Glossary 524
Company Index 534
Name Index 535
Subject Index 538
Chapter 1 IntroduCtIon: Why ProjeCt ManageMent?
Project Profile: Development Projects in Lagos, Nigeria
Introduction 4
1.1 What Is a Project? 5
General Project Characteristics 6
1.2 Why Are Projects Important? 9
Project Profile: “Throwing Good Money after Bad”: the BBC’s Digital
Media Initiative 10
1.3 Project Life Cycles
◾ Box 1.1: Project Managers in Practice
1.4 Determinants of Project Success
◾ Box 1.2: Project Management Research in Brief
1.5 Developing Project Management Maturity 19
1.6 Project Elements and Text Organization 23
Summary 27 • Key Terms 29 • Discussion Questions 29
• Case Study 1.1 MegaTech, Inc. 29 • Case Study 1.2 The IT
Department at Hamelin Hospital 30 • Case Study 1.3 Disney’s Expedition
Everest 31 • Case Study 1.4 Rescue of Chilean Miners 32 • Internet
Exercises 33 • PMP Certification Sample Questions 34 • Notes 34
Chapter 2 the organIzatIonal Context: Strategy, StruCture,
and Culture 36
Project Profile: Tesla’s $5 Billion Gamble
Introduction 38
2.1 Projects and Organizational Strategy 39
2.2 Stakeholder Management 41
Identifying Project Stakeholders 42
Managing Stakeholders 45
2.3 Organizational Structure 47
2.4 Forms of Organizational Structure 48
Functional Organizations 48
Project Organizations 50
Matrix Organizations 53
Moving to Heavyweight Project Organizations
◾ Box 2.1: Project Management Research in Brief
2.5 Project Management Offices 57
2.6 Organizational Culture 59
How Do Cultures Form? 61
Organizational Culture and Project Management
Project Profile: Electronic Arts and the Power of Strong Culture in Design Teams 64
Summary 65 • Key Terms 67 • Discussion Questions 67 • Case
Study 2.1 Rolls-Royce Corporation 67 • Case Study 2.2 Classic Case:
Paradise Lost—The Xerox Alto 68 • Case Study 2.3 Project Task Estimation
and the Culture of “Gotcha!” 69 • Case Study 2.4 Widgets ’R Us 70
• Internet Exercises 70 • PMP Certification Sample Questions 70
• Integrated Project—Building Your Project Plan 72 • Notes 74
Chapter 3 ProjeCt SeleCtIon and PortfolIo ManageMent
Project Profile: Project Selection Procedures: A Cross-Industry Sampler
Introduction 78
3.1 Project Selection 78
3.2 Approaches to Project Screening and Selection 80
Method One: Checklist Model 80
Method Two: Simplified Scoring Models 82
Limitations of Scoring Models 84
Method Three: The Analytical Hierarchy Process 84
Method Four: Profile Models 88
3.3 Financial Models 90
Payback Period 90
Net Present Value 92
Discounted Payback 94
Internal Rate of Return 94
Choosing a Project Selection Approach 96
Project Profile: Project Selection and Screening at GE: The Tollgate Process
3.4 Project Portfolio Management 98
Objectives and Initiatives 99
Developing a Proactive Portfolio 100
Keys to Successful Project Portfolio Management 103
Problems in Implementing Portfolio Management 104
Summary 105 • Key Terms 106 • Solved Problems 107
• Discussion Questions 108 • Problems 108 • Case Study 3.1
Keflavik Paper Company 111 • Case Study 3.2 Project Selection at Nova
Western, Inc. 112 • Internet Exercises 113 • Notes 113
Chapter 4 leaderShIP and the ProjeCt Manager
Project Profile: Leading by Example for the London Olympics—Sir John Armitt
Introduction 117
4.1 Leaders Versus Managers 118
4.2 How the Project Manager Leads 119
Acquiring Project Resources 119
Motivating and Building Teams 120
Having a Vision and Fighting Fires 121
Communicating 121
◾ Box 4.1: Project Management Research in Brief
4.3 Traits of Effective Project Leaders 125
Conclusions about Project Leaders 126
Project Profile: Dr. Elattuvalapil Sreedharan, India’s Project Management Guru 126
4.4 Project Champions 127
Champions—Who Are They? 128
What Do Champions Do? 129
How to Make a Champion 130
4.5 The New Project Leadership 131
◾ Box 4.2: Project Managers in Practice
Project Profile: The Challenge of Managing Internationally
4.6 Project Management Professionalism
Summary 135 • Key Terms 136 • Discussion Questions 136
• Case Study 4.1 In Search of Effective Project Managers 137
• Case Study 4.2 Finding the Emotional Intelligence to Be a Real Leader 137
• Case Study 4.3 Problems with John 138 • Internet Exercises 141
• PMP Certification Sample Questions 141 • Notes 142
Chapter 5 SCoPe ManageMent
Project Profile: “We look like fools.”—Oregon’s Failed Rollout of Its Obamacare
Web Site 145
Introduction 146
5.1 Conceptual Development 148
The Statement of Work 150
The Project Charter 151
Project Profile: Statements of Work: Then and Now
5.2 The Scope Statement 153
The Work Breakdown Structure 153
Purposes of the Work Breakdown Structure 154
The Organization Breakdown Structure 159
The Responsibility Assignment Matrix 160
5.3 Work Authorization 161
Project Profile: Defining a Project Work Package
5.4 Scope Reporting
◾ Box 5.1: Project Management Research in Brief
5.5 Control Systems 167
Configuration Management
5.6 Project Closeout 169
Summary 170 • Key Terms 171 • Discussion Questions 171
• Problems 172 • Case Study 5.1 Boeing’s Virtual Fence 172
• Case Study 5.2 California’s High-Speed Rail Project 173 • Case
Study 5.3 Project Management at 175 • Case Study 5.4
The Expeditionary Fighting Vehicle 176 • Internet Exercises 178
• PMP Certification Sample Questions 178 • MS Project Exercises 179
• Appendix 5.1: Sample Project Charter 180 • Integrated Project—
Developing the Work Breakdown Structure 182 • Notes 184
Chapter 6 ProjeCt teaM BuIldIng, ConflICt, and negotIatIon
Project Profile: Engineers Without Borders: Project Teams Impacting Lives 187
Introduction 188
6.1 Building the Project Team 189
Identify Necessary Skill Sets 189
Identify People Who Match the Skills 189
Talk to Potential Team Members and Negotiate with Functional Heads 189
Build in Fallback Positions 191
Assemble the Team 191
6.2 Characteristics of Effective Project Teams 192
A Clear Sense of Mission 192
A Productive Interdependency 192
Cohesiveness 193
Trust 193
Enthusiasm 193
Results Orientation 194
6.3 Reasons Why Teams Fail 194
Poorly Developed or Unclear Goals 194
Poorly Defined Project Team Roles and Interdependencies 194
Lack of Project Team Motivation 195
Poor Communication 195
Poor Leadership 195
Turnover Among Project Team Members 196
Dysfunctional Behavior 196
6.4 Stages in Group Development 196
Stage One: Forming 197
Stage Two: Storming 197
Stage Three: Norming 198
Stage Four: Performing 198
Stage Five: Adjourning 198
Punctuated Equilibrium 198
6.5 Achieving Cross-Functional Cooperation 199
Superordinate Goals 199
Rules and Procedures 200
Physical Proximity 201
Accessibility 201
Outcomes of Cooperation: Task and Psychosocial Results 201
6.6 Virtual Project Teams 202
Project Profile: Tele-Immersion Technology Eases the Use
of Virtual Teams 203
6.7 Conflict Management 204
What Is Conflict? 205
Sources of Conflict 206
Methods for Resolving Conflict 208
6.8 Negotiation 209
Questions to Ask Prior to the Negotiation
Principled Negotiation 210
Invent Options for Mutual Gain 212
Insist on Using Objective Criteria 213
Summary 214 • Key Terms 214 • Discussion Questions 215 • Case
Study 6.1 Columbus Instruments 215 • Case Study 6.2 The Bean Counter
and the Cowboy 216 • Case Study 6.3 Johnson & Rogers Software
Engineering, Inc. 217 • Exercise in Negotiation 219 • Internet
Exercises 220 • PMP Certification Sample Questions 220 • Notes 221
Chapter 7 rISk ManageMent
Project Profile: The Building that Melted Cars
◾ Box 7.1: Project Managers in Practice
7.1 Risk Management: A Four-Stage Process
Risk Identification 228
Project Profile: Bank of America Completely Misjudges Its Customers
Risk Breakdown Structures 231
Analysis of Probability and Consequences
Risk Mitigation Strategies 234
Use of Contingency Reserves 236
Other Mitigation Strategies 237
Control and Documentation 237
Project Profile: Collapse of Shanghai Apartment Building
7.2 Project Risk Management: An Integrated Approach
Summary 243 • Key Terms 244 • Solved Problem 244 • Discussion
Questions 244 • Problems 244 • Case Study 7.1 Classic Case: de
Havilland’s Falling Comet 245 • Case Study 7.2 The Spanish Navy Pays
Nearly $3 Billion for a Submarine That Will Sink Like a Stone 248 • Case
Study 7.3 Classic Case: Tacoma Narrows Suspension Bridge 249 • Internet
Exercises 251 • PMP Certification Sample Questions 251 • Integrated
Project—Project Risk Assessment 253 • Notes 255
Chapter 8 CoSt eStIMatIon and BudgetIng
Project Profile: Sochi Olympics—What’s the Cost of National Prestige?
8.1 Cost Management 259
Direct Versus Indirect Costs 260
Recurring Versus Nonrecurring Costs 261
Fixed Versus Variable Costs 261
Normal Versus Expedited Costs 262
8.2 Cost Estimation 262
Learning Curves in Cost Estimation 266
◾ Box 8.1: Project Management Research in Brief
Problems with Cost Estimation
◾ Box 8.2: Project Management Research in Brief
8.3 Creating a Project Budget 275
Top-Down Budgeting 275
Bottom-Up Budgeting 276
Activity-Based Costing 276
8.4 Developing Budget Contingencies

Summary 280 • Key Terms 281 • Solved Problems 282
• Discussion Questions 283 • Problems 284 • Case Study 8.1 The
Hidden Costs of Infrastructure Projects—The Case of Building Dams 286
• Case Study 8.2 Boston’s Central Artery/Tunnel Project 288 • Internet
Exercises 290 • PMP Certification Sample Questions 290 • Integrated
Project—Developing the Cost Estimates and Budget 292 • Notes 294
Chapter 9 ProjeCt SChedulIng: netWorkS, duratIon eStIMatIon,
and CrItICal Path 296
Project Profile: After 20 Years and More Than $50 Billion, Oil is No Closer to the Surface:
The Caspian Kashagan Project 297
Introduction 298
9.1 Project Scheduling 299
9.2 Key Scheduling Terminology
9.3 Developing a Network 302
Labeling Nodes 303
Serial Activities 303
Concurrent Activities 303
Merge Activities 304
Burst Activities 305
9.4 Duration Estimation 307
9.5 Constructing the Critical Path 311
Calculating the Network 311
The Forward Pass 312
The Backward Pass 314
Probability of Project Completion 316
Laddering Activities 318
Hammock Activities 319
Options for Reducing the Critical Path 320
◾ Box 9.1: Project Management Research in Brief 321
Summary 322 • Key Terms 323 • Solved Problems 323 •
Discussion Questions 325 • Problems 325 • Internet
Exercises 327 • MS Project Exercises 328 • PMP Certification
Sample Questions 328 • Notes 329
Chapter 10 ProjeCt SChedulIng: laggIng, CraShIng, and aCtIvIty
netWorkS 330
Project Profile: Enlarging the Panama Canal
Introduction 333
10.1 Lags in Precedence Relationships 333
Finish to Start 333
Finish to Finish 334
Start to Start 334
Start to Finish 335
10.2 Gantt Charts 335
Adding Resources to Gantt Charts 337
Incorporating Lags in Gantt Charts 338
◾ Box 10.1: Project Managers in Practice
10.3 Crashing Projects 340
Options for Accelerating Projects 340
Crashing the Project: Budget Effects 346
10.4 Activity-on-Arrow Networks 348
How Are They Different? 348
Dummy Activities 351
Forward and Backward Passes with AOA Networks
AOA Versus AON 353
10.5 Controversies in the Use of Networks 354
Conclusions 356
Summary 356 • Key Terms 357 • Solved Problems 357 • Discussion
Questions 358 • Problems 358 • Case Study 10.1 Project Scheduling
at Blanque Cheque Construction (A) 360 • Case Study 10.2 Project
Scheduling at Blanque Cheque Construction (B) 360 • MS Project
Exercises 361 • PMP Certification Sample Questions 361 • Integrated
Project—Developing the Project Schedule 363 • Notes 365
Chapter 11 advanCed toPICS In PlannIng and SChedulIng: agIle
and CrItICal ChaIn 366
Project Profile: Developing Projects Through Kickstarter—Do Delivery Dates Mean
Anything? 367
Introduction 368
11.1 Agile Project Management 369
What Is Unique About Agile PM?
Tasks Versus Stories 371
Key Terms in Agile PM 372
Steps in Agile 373
Sprint Planning 374
Daily Scrums 374
The Development Work 374
Sprint Reviews 375
Sprint Retrospective 376
Problems with Agile 376
◾ Box 11.1: Project Management Research in Brief
11.2 Extreme Programming (XP) 377
11.3 The Theory of Constraints and Critical Chain Project Scheduling
Theory of Constraints 378
11.4 The Critical Chain Solution to Project Scheduling 379
Developing the Critical Chain Activity Network 381
Critical Chain Solutions Versus Critical Path Solutions 383
Project Profile: Eli Lilly Pharmaceuticals and Its Commitment to Critical Chain Project
Management 385
11.5 Critical Chain Solutions to Resource Conflicts 386
11.6 Critical Chain Project Portfolio Management 387
◾ Box 11.2: Project Management Research in Brief
11.7 Critiques of CCPM
Summary 391 • Key Terms 393 • Solved Problem 393
• Discussion Questions 394 • Problems 394 • Case Study 11.1 It’s an
Agile World 396 • Case Study 11.2 Ramstein Products, Inc. 397
• Internet Exercises 398 • Notes 398
Chapter 12 reSourCe ManageMent
Project Profile: Hong Kong Connects to the World’s Longest Natural
Gas Pipeline 401
Introduction 402
12.1 The Basics of Resource Constraints 402
Time and Resource Scarcity 403
12.2 Resource Loading 405
12.3 Resource Leveling 407
Step One: Develop the Resource-Loading Table 411
Step Two: Determine Activity Late Finish Dates 412
Step Three: Identify Resource Overallocation 412
Step Four: Level the Resource-Loading Table 412
12.4 Resource-Loading Charts 416
◾ Box 12.1: Project Managers in Practice
12.5 Managing Resources in Multiproject Environments 420
Schedule Slippage 420
Resource Utilization 420
In-Process Inventory 421
Resolving Resource Decisions in Multiproject Environments
Summary 423 • Key Terms 424 • Solved Problem 424 •
Discussion Questions 425 • Problems 425 • Case Study 12.1 The
Problems of Multitasking 427 • Internet Exercises 428 • MS Project
Exercises 428 • PMP Certification Sample Questions 429 • Integrated
Project—Managing Your Project’s Resources 430 • Notes 430
Chapter 13 ProjeCt evaluatIon and Control
Project Profile: New York City’s CityTime Project
Introduction 433
13.1 Control Cycles—A General Model 434
13.2 Monitoring Project Performance 435
The Project S-Curve: A Basic Tool 435
S-Curve Drawbacks 436
Milestone Analysis 437
Problems with Milestones 438
The Tracking Gantt Chart 439
Benefits and Drawbacks of Tracking Gantt Charts 440
13.3 Earned Value Management 440
Terminology for Earned Value 441
Creating Project Baselines 442
Why Use Earned Value? 443
Steps in Earned Value Management 444
Assessing a Project’s Earned Value 445
13.4 Using Earned Value to Manage a Portfolio of Projects 450
Project Profile: Earned Value at Northrop Grumman
13.5 Issues in the Effective Use of Earned Value Management
13.6 Human Factors in Project Evaluation and Control 454
Critical Success Factor Definitions 456
Conclusions 458
Summary 458 • Key Terms 459 • Solved Problem 459 •
Discussion Questions 460 • Problems 461 • Case Study 13.1 The
IT Department at Kimble College 463 • Case Study 13.2 The Superconducting Supercollider 464 • Case Study 13.3 Boeing’s 787 Dreamliner:
Failure to Launch 465 • Internet Exercises 468 • MS Project
Exercises 468 • PMP Certification Sample Questions 469
• Appendix 13.1: Earned Schedule* 470 • Notes 475
Chapter 14 ProjeCt CloSeout and terMInatIon
Project Profile: Duke Energy and Its Cancelled Levy County Nuclear
Power Plant 478
Introduction 479
14.1 Types of Project Termination
◾ Box 14.1: Project Managers in Practice
14.2 Natural Termination—The Closeout Process 482
Finishing the Work 482
Handing Over the Project 482
Gaining Acceptance for the Project 483
Harvesting the Benefits 483
Reviewing How It All Went 483
Putting It All to Bed 485
Disbanding the Team 486
What Prevents Effective Project Closeouts? 486
14.3 Early Termination for Projects 487
Making the Early Termination Decision 489
Project Profile: Aftermath of a “Feeding Frenzy”: Dubai and Cancelled
Construction Projects 490
Shutting Down the Project
◾ Box 14.2: Project Management Research in Brief
Allowing for Claims and Disputes 493
14.4 Preparing the Final Project Report 494
Conclusion 496
Summary 496 • Key Terms 497 • Discussion Questions 497
• Case Study 14.1 New Jersey Kills Hudson River Tunnel Project 497
• Case Study 14.2 The Project That Wouldn’t Die 499 • Case Study 14.3
The Navy Scraps Development of Its Showpiece Warship—Until the Next
Bad Idea 500 • Internet Exercises 501 • PMP Certification Sample
Questions 502 • Appendix 14.1: Sample Pages from Project Sign-off
Document 503 • Notes 507
Appendix A The Cumulative Standard Normal Distribution
Appendix B Tutorial for MS Project 2013
Appendix C Project Plan Template
Company Index
Name Index
Subject Index
Project management has become central to operations in industries as diverse as construction
and information technology, architecture and hospitality, and engineering and new product
development; therefore, this text simultaneously embraces the general principles of project
management while addressing specific examples across the wide assortment of its applications.
This text approaches each chapter from the perspective of both the material that is general to
all disciplines and project types and that which is more specific to alternative forms of projects.
One way this is accomplished is through the use of specific, discipline-based examples to illustrate general principles as well as the inclusion of cases and Project Profiles that focus on more
specific topics (e.g., Chapter 5’s treatment of IT “death march” projects).
Students in project management classes come from a wide and diverse cross section of university majors and career tracks. Schools of health, business, architecture, engineering, information
systems, and hospitality are all adding project management courses to their catalogs in response to
the demands from organizations and professional groups that see their value for students’ future
careers. Why has project management become a discipline of such tremendous interest and application? The simple truth is that we live in a “projectized” world. Everywhere we look we see people
engaged in project management. In fact, project management has become an integral part of practically every firm’s business model.
This text takes a holistic, integrated approach to managing projects, exploring both technical
and managerial challenges. It not only emphasizes individual project execution, but also provides a
strategic perspective, demonstrating the means with which to manage projects at both the program
and portfolio levels.
At one time, project management was almost exclusively the property of civil and construction engineering programs where it was taught in a highly quantitative, technical manner. “Master the science of project management,” we once argued, “and the ‘art’ of project
management will be equally clear to you.” Project management today is a complex, “management” challenge requiring not only technical skills but a broad-based set of people skills as
well. Project management has become the management of technology, people, culture, stakeholders, and other diverse elements necessary to successfully complete a project. It requires
knowledge of leadership, team building, conflict resolution, negotiation, and influence in equal
measure with the traditional, technical skill set. Thus, this textbook broadens our focus beyond
the traditional project management activities of planning and scheduling, project control, and
termination, to a more general, inclusive, and, hence, more valuable perspective of the project
management process.
What’s NeW iN the foUrth editioN?
New features
• Agile Project Management
• Project Charters
• MS Project 2013 Step-by-Step Tutorials
• Appendix—Project Execution Plan Template
• New Project Managers in Practice Profiles
• Risk Breakdown Structures
• Extreme Programming
• Updated Problems in Chapters
• New Project Management Research in Brief: “Does Agile Work?”
• All MS Project Examples and Screen Captures Updated to MS Project 2013
• All Project Management Body of Knowledge (PMBOK) Referencing Updated to
5th Edition
• Quarterly Updates for All Book Adopters on Latest Cases and Examples in Project
Updated Project Profiles
Chapter 1 Introduction: Why Project Management?
• Development Projects in Lagos, Nigeria
• “Throwing Good Money after Bad”: The BBC’s Digital Media Initiative
Chapter 2 The Organizational Context: Strategy, Structure, and Culture
• Tesla’s $5 Billion Gamble
• Electronic Arts and the Power of Strong Culture in Design Teams
Chapter 3 Project Selection and Portfolio Management
• Project Selection Procedures: A Cross-Industry Sampler
Chapter 4 Leadership and the Project Manager
• Leading by Example for the London Olympics—Sir John Armitt
• Dr. E. Sreedharan, India’s Project Management Guru
Chapter 5 Scope Management
• “We look like fools.” Oregon’s Failed Rollout of Their Obamacare Website
• Boeing’s Virtual Fence
• California’s High-Speed Rail Project—What’s the Latest News?
• The Expeditionary Fighting Vehicle
Chapter 6 Project Team Building, Conflict, and Negotiation
• Engineers without Borders: Project Teams Impacting Lives
Chapter 7 Risk Management
• The Building That Melted Cars
• Bank of America Completely Misjudges Its Customers
• Collapse of Shanghai Apartment Building
• The Spanish Navy Pays Nearly $3 Billion for a Submarine That Will Sink Like a Stone
Chapter 8 Cost Estimation and Budgeting
• Sochi Olympics—What’s the Cost of National Prestige?
• The Hidden Costs of Infrastructure ProjectsThe Case of Building Dams
Chapter 9 Project Scheduling: Networks, Duration Estimation, and Critical Path
• After 20 Years and More than $50 Billion, Oil Is No Closer to the Surface: The Caspian
Kashagan Project
Chapter 10 Project Scheduling: Lagging, Crashing, and Activity Networks
• Enlarging the Panama Canal
Chapter 11 Critical Chain Project Scheduling
• Developing Projects through Kickstarter—Do Delivery Dates Mean Anything?
• Eli Lilly Pharmaceutical’s Commitment to Critical Chain Project Scheduling
Chapter 12 Resource Management
• Hong Kong Connects to the World’s Longest Natural Gas Pipeline
Chapter 13 Project Evaluation and Control
• New York City’s CityTime Project
• Boeing’s 787 Dreamliner: Failure to Launch (with update)
• Earned Value Management at Northrop Grumman
Chapter 14 Project Closeout and Termination
• Duke Energy and Its Cancelled Levy County Nuclear Power Plant
• Aftermath of a “Feeding Frenzy”—Dubai and Cancelled Construction Projects
• New Jersey Kills Hudson River Tunnel Project
• The Navy Scraps Development of Its Showpiece Warship—Until the Next Bad Idea
oUr focUs
This textbook employs a managerial, business-oriented approach to the management of projects.
Thus we have integrated Project Profiles into the text.
• Project Profiles—Each chapter contains one or more Project Profiles that highlight current examples of project management in action. Some of the profiles reflect on significant
achievements; others detail famous (and not-so-famous) examples of project failures.
Because they cover diverse ground (IT projects, construction, new product development,
and so forth), there should be at least one profile per chapter that is meaningful to the
class’s focus. There is a deliberate effort made to offer a combination of project success
stories and project failures. While successful projects can be instructive, we often learn far
more from examining the variety of reasons why projects fail. As much as possible, these
stories of success and failure are intended to match up with the chapters to which they are
attached. For example, as we study the uses of projects to implement corporate strategy, it
is useful to consider Elon Musk’s $5 billion dollar decision to develop a “gigafactory” to
produce batteries for his Tesla automobiles.
The book blends project management within the context of the operations of any successful organization, whether publicly held, private, or not-for-profit. We illustrate this through the use of
end-of-chapter cases.
• Cases—At the end of each chapter are some final cases that take specific examples of the
material covered in the chapter and apply them in the alternate format of case studies.
Some of the cases are fictitious, but the majority of them are based on real situations, even
where aliases mask the real names of organizations. These cases include discussion questions that can be used either for homework or to facilitate classroom discussions. There are
several “classic” project cases as well, highlighting some famous (and infamous) examples
of projects whose experiences have shaped our understanding of the discipline and its
best practices.
Further, we explore both the challenges in the management of individual projects as well as broadening out this context to include strategic, portfolio-level concepts. To do this, we ask students to
develop a project plan using MS Project 2013.
• Integrated Project Exercises—Many of the chapters include an end-of-chapter feature that
is unique to this text: the opportunity to develop a detailed project plan. A very beneficial
exercise in project management classes is to require students, either in teams or individually, to learn the mechanics of developing a detailed and comprehensive project plan, including scope, scheduling, risk assessment, budgeting, and cost estimation. The Integrated
Project exercises afford students the opportunity to develop such a plan by assigning these
activities and illustrating a completed project (ABCups, Inc.) in each chapter. Thus, students
are assigned their project planning activities and have a template that helps them complete
these exercises.
And finally, we have integrated the standards set forth by the world’s largest governing body for
project management. The Project Management Institute (PMI) created the Project Management
Body of Knowledge (PMBOK), which is generally regarded as one of the most comprehensive
frameworks for identifying the critical knowledge areas that project managers must understand if
they are to master their discipline. The PMBOK has become the basis for the Project Management
Professional (PMP) certification offered by PMI for professional project managers.
• Integration with the PMBOK—As a means to demonstrate the coverage of the critical
PMBOK elements, readers will find that the chapters in this text identify and cross-list
the corresponding knowledge areas from the latest, fifth edition of PMBOK. Further,
all terms (including the Glossary) are taken directly from the most recent edition of the
• Inclusion of Sample PMP Certification Exam Questions—The Project Management
Professional (PMP) certification represents the highest standard of professional qualification for a practicing project manager and is administered by the Project Management
Institute. As of 2014, there were more than 600,000 PMPs worldwide. In order to attain
PMP certification, it is necessary for candidates to undergo a comprehensive exam that
tests their knowledge of all components of the PMBOK. This text includes a set of sample
PMP certification exam questions at the end of most of the chapters, in order to give readers an idea of the types of questions typically asked on the exam and how those topics are
treated in this book.
other PoiNts of distiNctioN
The textbook places special emphasis on blending current theory, practice, research, and case
studies in such a manner that readers are given a multiple-perspective exposure to the project
management process. A number of in-chapter features are designed to enhance student learning,
• MS Project Exercises—An additional feature of the text is the inclusion at the end of several
chapters of some sample problems or activities that require students to generate MS Project
output files. For example, in Chapter 9 on scheduling, students must create an MS Project
network diagram. Likewise, other reports can be assigned to help students become minimally adept at interacting with this program. It is not the purpose of this text to fully develop
these skills but rather to plant the seeds for future application.
• Research in Brief—A unique feature of this text is to include short (usually one-page) text
boxes that highlight the results of current research on the topics of interest. Students often find
it useful to read about actual studies that highlight the text material and provide additional
information that expands their learning. Although not every chapter includes a “Research in
Brief” box, most have one and, in some cases, two examples of this feature.
• Project Managers in Practice—An addition to this text is the inclusion of several short profiles
of real, practicing project managers from a variety of corporate and project settings. These
profiles have been added to give students a sense of the types of real-world challenges project
managers routinely face, the wide range of projects they are called to manage, and the satisfactions and career opportunities available to students interested in pursuing project management as a career.
• Internet Exercises—Each chapter contains a set of Internet exercises that require students to
search the Web for key information and perform other activities that lead to student learning through outside-of-class, hands-on activities. Internet exercises are a useful supplement,
particularly in the area of project management, because so much is available on the World
Wide Web relating to projects, including cases, news releases, and Internet-based tools for
analyzing project activities.
• MS Project 2013 Tutorials—Appendix B at the end of the text features two in-depth tutorials
that instruct students in the rudiments of developing a project schedule, resource leveling,
and critical path development. A second tutorial instructs students in methods for updating
the project plan, generating output files such as earned value metrics, and tracking ongoing
project activities. These tutorials are not intended to substitute for fuller instruction in this
valuable software, but they do provide a critical means for initial familiarization with the
• Project Execution Plan Template—Appendix C provides a template for developing
a fully evolved project execution plan. Instructors using previous versions of this text
noted the value in requiring that students be able to create a project plan and requested
a more comprehensive template that could be employed. This template addresses the
critical elements of project scope, as well as offers a method for putting these details in a
logical sequence.
instructor resources
At the Instructor Resource Center,, instructors can easily register
to gain access to a variety of instructor resources available with this text in downloadable format. If
assistance is needed, our dedicated technical support team is ready to help with the media supplements that accompany this text. Visit for answers to frequently asked
questions and toll-free user support phone numbers.
The following supplements are available with this text:
• Instructor’s Solutions Manual
• Test Bank
• TestGen® Computerized Test Bank
• PowerPoint Presentation
Preface xvii
In acknowledging the contributions of past and present colleagues to the creation of this text,
I must first convey my deepest thanks and appreciation for the 30-year association with my original mentor, Dr. Dennis Slevin of the University of Pittsburgh’s Katz Graduate School of Business.
My collaboration with Denny on numerous projects has been fruitful and extremely gratifying,
both professionally and personally. In addition, Dr. David Cleland’s friendship and partnership in
several ventures has been a great source of satisfaction through the years. A frequent collaborator
who has had a massive influence on my thinking and approach to understanding project management is Professor Peter W.G. Morris, lately of University College London. Working with him has
been a genuine joy and constant source of inspiration. Additional mentors and colleagues who
have strongly influenced my thinking include Samuel Mantel, Jr., Rodney Turner, Erik Larson,
David Frame, Francis Hartman, Jonas Soderlund, Young Kwak, Rolf Lundin, Lynn Crawford,
Graham Winch, Terry Williams, Francis Webster, Terry Cooke-Davies, Hans Thamhain, and Karlos
Artto. Each of these individuals has had a profound impact on the manner in which I view, study,
and write about project management. Sadly, 2014 saw the passing of three of these outstanding
project management scholars—Hans Thamhain, Sam Mantel and Francis Hartman. I hope that my
efforts help, in some small part, to keep their vision and contributions alive.
Over the years, I have also been fortunate to develop friendships with some professional project
managers whose work I admire enormously. They are genuine examples of the best type of project
manager: one who makes it all seem effortless while consistently performing minor miracles. In particular, I wish to thank Mike Brown of Rolls-Royce for his friendship and example. I would also like
to thank friends and colleagues from the Project Management Institute, including Lew Gedansky,
Harry Stephanou, and Eva Goldman, for their support for and impact on this work.
I am indebted to the reviewers of this text whose numerous suggestions and critiques have been
an invaluable aid in shaping its content. Among them, I would like to especially thank the following:
Kwasi Amoako-Gyampah— University of North Carolina, Greensboro
Ravi Behara—George Mason University
Jeffrey L. Brewer—Purdue University
Dennis Cioffi—George Washington University
David Clapp—Florida Institute of Technology
Bruce DeRuntz—Southern Illinois University at Carbondale
Ike Ehie—Kansas State University
Michael H. Ensby—Clarkson University
Lynn Fish—Canisius College
Linda Fried—University of Colorado, Denver
Mario Guimaraes—Kennesaw State University
Richard Gunther—California State University, Northridge
Brian Gurney—Montana State University, Billings
Gary Hackbarth—Iowa State University
Mamoon M. Hammad—George Washington University
Scott Robert Homan—Purdue University
John Hoxmeier—Colorado State University
Alex Hutchins—ITT Technical Institute
Richard Jensen—Hofstra University
Robert Key—University of Phoenix
Homayoun Khamooshi—George Washington University
Dennis Krumwiede—Idaho State University
George Mechling—Western Carolina University
Julia Miyaoka—San Francisco State University
xviii Preface
LaWanda Morant—ITT Technical Institute
Robert Morris—Florida State College at Jacksonville
James Muller—Cleveland State University
Kenneth E. Murphy—Willamette University
John Nazemetz—Oklahoma State University
Patrick Penfield—Syracuse University
Ronald Price—ITT Techincal Institute
Ronny Richardson—Southern Polytechnic State University
John Sherlock—Iona College
Gregory Shreve—Kent State University
Randall G. Sleeth—Virginia Commonwealth University
Kimberlee Snyder—Winona State University
Jeff Trailer—California State University, Chico
Leo Trudel—University of Maine
Oya Tukel—Cleveland State University
Darien Unger—Howard University
Amy Valente—Cayuga Community College
Stephen Whitehead—Hilbert College
I would also like to thank my colleagues in the Samuel Black School of Business at Penn State, the
Behrend College. Additionally, my thanks goes to Dana Johnson of Michigan Technological University
for preparing the PowerPoints for this edition, and Geoff Willis of University of Central Oklahoma
for preparing the Test Bank. Extra-special thanks go to Kerri Tomasso for her help in preparing
the final manuscript and for her integral role in permissions research and acquisitions. I am especially indebted to Khurrum Bhutta, who accuracy checked this edition. I am very grateful for his time
and effort, and any errors that may remain are entirely my own.
In developing the cases for this edition of the textbook, I was truly fortunate to develop
wonderful professional relationships with a number of individuals. Andrea Finger and Kathleen
Prihoda of Disney were wonderfully helpful and made time in their busy schedules to assist me in
developing the Expedition Everest case for this text. Stephanie Smith, Mohammed Al-Sadiq, Bill
Mowery, Mike Brown, Julia Sweet, and Kevin O’Donnell provided me with invaluable information
on their job responsibilities and what it takes to be a successful project manager.
Finally, I wish to extend my sincere thanks to the people at Pearson for their support for
the text during its development, including Dan Tylman, editor, and Claudia Fernandes, program
manager. I also would like to thank the Pearson editorial, production, and marketing staffs.
The textbook team and I would appreciate hearing from you. Let us know what you think about
this textbook by writing to Please include “Feedback about
Pinto” in the subject line.
If you have questions related to this product, please contact our customer service department
online at
Finally, it is important to reflect on an additional salient issue as you begin your study of
project management: Most of you will be running a project long before you are given wider management
responsibilities in your organizations. Successful project managers are the lifeblood of organizations
and bear the imprint of the fast track. I wish you great success!
Jeffrey K. Pinto, Ph.D.
Andrew Morrow and Elizabeth Lee Black Chair
Management of Technology
Samuel Black School of Business
Penn State, the Behrend College
■ ■ ■
Why Project Management?
Chapter Outline
Project Profile
Development Projects in Lagos, Nigeria
1.1 What is a Project?
General Project Characteristics
1.2 Why are Projects imPortant?
Project Profile
“Throwing Good Money after Bad”:
The BBC’s Digital Media Initiative
1.3 Project life cycles
Project managers in Practice
Stephanie Smith, Westinghouse Electric
1.4 determinants of Project success
Project Management Research in Brief
Assessing Information Technology (IT) Project
1.5 develoPing Project management
1.6 Project elements and text
Key Terms
Discussion Questions
Case Study 1.1 MegaTech, Inc.
Case Study 1.2 The IT Department at Hamelin
Case Study 1.3 Disney’s Expedition Everest
Case Study 1.4 Rescue of Chilean Miners
Internet Exercises
PMP Certification Sample Questions
Chapter Objectives
After completing this chapter, you should be able to:
1. Understand why project management is becoming such a powerful and popular practice in
2. Recognize the basic properties of projects, including their definition.
3. Understand why effective project management is such a challenge.
4. Differentiate between project management practices and more traditional, process-oriented
business functions.
5. Recognize the key motivators that are pushing companies to adopt project management
6. Understand and explain the project life cycle, its stages, and the activities that typically occur
at each stage in the project.
7. Understand the concept of project “success,” including various definitions of success, as well
as the alternative models of success.
Chapter 1 • Introduction
8. Understand the purpose of project management maturity models and the process of benchmarking in organizations.
9. Identify the relevant maturity stages that organizations go through to become proficient in
their use of project management techniques.
Project MAnAgeMent Body of Knowledge core
concePts covered in this chAPter
Definition of a Project (PMBoK sec. 1.2)
Definition of Project Management (PMBoK sec. 1.3)
Relationship to Other Management Disciplines (PMBoK sec. 1.4)
Project Phases and the Project Life Cycle (PMBoK sec. 2.1)
The world acquires value only through its extremes and endures only through moderation; extremists make
the world great, the moderates give it stability.1
Project Profile
Development Projects in lagos, Nigeria
Lagos is the capital of Nigeria and home to an estimated 15–20 million people, making its population larger than
London or Beijing. As the largest and fastest-growing city in sub-Saharan Africa (estimates are that 600,000 people
are added to Lagos’ population each year), Lagos is in desperate need of developing and maintaining infrastructure
to support its population, while supporting its claim as a high-technology hub on the African continent. Considering
that about 85% of the world’s population resides in the developing world and transitioning economies, and nearly
two-thirds of that population is below the age of 35, the need for infrastructure to support critical human needs is immense. About 70% of the city’s population is believed to live in slums, while a 2006 United Nations report estimated
that only 10% of households in the Lagos Metropolitan area were directly connected to a municipal water supply. In
spite of these problems, Nigeria is Africa’s biggest economy, driven by economic growth in Lagos, home to film and
fashion industries, financial markets, and consumer goods manufacturers.
The list of critical items on the list for urban improvement is large. For example, for a city of more than 15 million,
electricity is scarcely to be found. Lagos power stations only generate a mere 2,000 megawatts of electricity—less than
half of that available for a single city block in midtown Manhattan! “We have about two hours, maybe, of public power
a day,” says Kola Karim, CEO of Nigeria’s Shoreline Energy International. “It’s unbearable.” Everywhere in the city people
are using gasoline or diesel generators to supply power when the inevitable rolling blackouts resume.
Additionally, Lagos is critically short on housing. To overcome this shortage people of Lagos resort to living in
shanty towns, one such shanty town is Makoko. Makoko is situated on the mainland’s Lagos lagoon. Home to several
hundred thousand inhabitants, Makoko lacks access to basic services, including clean drinking water, electricity, and
waste disposal, and is prone to severe environmental and health hazards. Consisting of rickety dwellings on stilts
perched over the foul-smelling lagoon, Makoko is one of the many chaotic human settlements that have sprouted in
Lagos in recent years. As these cities spread out and move too close to major bridges or electrical towers, the government periodically sends in troops to demolish portions of the floating village.
How did the city get to this point? A big reason was a lack of forethought and development planning. In metropolitan Lagos there are 20,000 people per square kilometer with thousands more arriving each day. Given the physical
constraints of the city, originally built on a narrow strip of land and bordering the ocean, there is just not enough space
to absorb the new inhabitants. Urban planning, as we know it today, simply did not exist and the city swelled organically, without forethought or a sense of direction. Thus, Lagos has no urban transportation system, few functioning
traffic lights, and a crumbling and outdated road system.
The problems do not stop there. Land prices in Lagos are extremely high, due to lack of space for commercial
development. However, because of the unreliable electricity supply that makes elevator use questionable, there
are few high-rise apartments or office buildings in the city. Banks have been reluctant to invest in real estate transactions because of past failures and general economic instability. Faced with the need to drastically change the
direction of the city, Babatunde Fashola, Lagos’ visionary governor who took power in 2010, has launched a series
Project Profile
of urban development projects to address a variety of the city’s needs. Fashola has announced $50 billion in new
infrastructure projects for Lagos, to be developed over the next 10 years. These new project initiatives include the
lagos Metro Blue line
The blue line is a major cosmopolitan light-rail transport project to connect districts in Nigeria’s largest city. Designed
to ease congestion and speed up journey times for the city’s inhabitants, the Blue Line will run between Marina and
Okokomaiko, stopping at 13 stations, and is part of the Lagos Rail Mass Transit program implemented by the government. Originally proposed in 2008, funding issues have pushed the launch of the Blue Line back to at least 2015. The
Line is set to cost $1.2 billion and will be funded by the Lagos State Government.
eko Atlantic
Eko Atlantic is an ambitious land reclamation project, a pioneering residential and business development located on
Victoria Island, along its upmarket Bar Beach coastline. The project is being built on three and a half square miles of
land reclaimed from the Atlantic Ocean and is expected to provide accommodation for 250,000 people and employment opportunities for a further 150,000. The complex will function as a city-within-a-city, including recreational
facilities, business and shopping districts, and modern conveniences.
Bus rapid-transit System
To ease the crush of public transportation, the Bus Rapid Transport (BRT) system was introduced 10 years ago to
streamline and modernize the motley collection of buses that had transported residents around the city. Lagos has
long suffered from an unregulated transportation system in which a variety of different “buses,” ranging from battered minibuses to old, yellow-painted school buses, competed for customers. Fares were also unregulated, leaving
Figure 1.1
traffic congestion in lagos, Nigeria
Source: Femi Ipaye/Xinhua Press/Corbis
Chapter 1 • Introduction
drivers free to charge whatever fares they chose. “They might charge $1 in the morning for one trip one way and by
afternoon they can go to $3,” says Dayo Mobereola, managing director of the Lagos Metropolitan Area Transport
Authority, noting that commuters spend on average 40% of their income on transportation. Before the project was
announced, the city had projected that it would transport 60,000 passengers daily, but now it transports over 200,000
passengers daily. The BRT system has reduced waiting times at bus stops, the travel time across the city, all at a reduced
rate when compared to the old system.
Schools, Bridges, and Power Plants
Part of the aggressive infrastructure modernization includes improving traffic by building the first suspension bridge
in West Africa, as well as adding a number of new schools around the city. Two new power plants are also slated to be
constructed, bringing a more dependable source of power to the city, including powering street lights to ease crime
and other problems. The city has even launched a fleet of brand new garbage trucks to deal with the 10,000 tons of
waste generated every day.
Lagos’ modernization efforts in recent years have come not a moment too soon in support of its citizens. As
Professor Falade observed, these efforts to modernize the city’s facilities are a breath of fresh air. “The difference is
clear, the evidence is the improved landscape of Lagos in the urban regeneration project.”2
Projects are one of the principal means by which we change our world. Whether the goal is to
split the atom, tunnel under the English Channel, introduce Windows 9, or plan the next Summer
Olympic Games in Rio de Janeiro, the means through which to achieve these challenges remains
the same: project management. Project management has become one of the most popular tools for
organizations, both public and private, to improve internal operations, respond rapidly to external opportunities, achieve technological breakthroughs, streamline new product development,
and more robustly manage the challenges arising from the business environment. Consider what
Tom Peters, best-selling author and management consultant, has to say about project management
and its place in business: “Projects, rather than repetitive tasks, are now the basis for most valueadded in business.”3 Project management has become a critical component of successful business
operations in worldwide organizations.
One of the key features of modern business is the nature of the opportunities and threats
posed by external events. As never before, companies face international competition and the need
to pursue commercial opportunities rapidly. They must modify and introduce products constantly,
respond to customers as fast as possible, and maintain competitive cost and operating levels. Does
performing all these tasks seem impossible? At one time, it was. Conventional wisdom held that
a company could compete using a low-cost strategy or as a product innovator or with a focus on
customer service. In short, we had to pick our competitive niches and concede others their claim
to market share. In the past 20 years, however, everything turned upside down. Companies such
as General Electric, Apple, Ericksson, Boeing, and Oracle became increasingly effective at realizing all of these goals rather than settling for just one. These companies seemed to be successful in
every aspect of the competitive model: They were fast to market and efficient, cost-conscious and
customer-focused. How were they performing the impossible?
Obviously, there is no one answer to this complex question. There is no doubt, however,
that these companies shared at least one characteristic: They had developed and committed
themselves to project management as a competitive tool. Old middle managers, reported Fortune
are dinosaurs, [and] a new class of manager mammal is evolving to fill the niche they once
ruled: project managers. Unlike his biological counterpart, the project manager is more agile
and adaptable than the beast he’s displacing, more likely to live by his wits than throwing his
weight around.4
Effective project managers will remain an indispensable commodity for successful organizations in the coming years. More and more companies are coming to this conclusion and adopting
1.1 What Is a Project?
project management as a way of life. Indeed, companies in such diverse industries as construction,
heavy manufacturing, insurance, health care, finance, public utilities, and software are becoming
project savvy and expecting their employees to do the same.
1.1 What is a Project?
Although there are a number of general definitions of the term project, we must recognize at the
outset that projects are distinct from other organizational processes. As a rule, a process refers to
ongoing, day-to-day activities in which an organization engages while producing goods or services.
Processes use existing systems, properties, and capabilities in a continuous, fairly repetitive manner.5
Projects, on the other hand, take place outside the normal, process-oriented world of the firm.
Certainly, in some organizations, such as construction, day-to-day processes center on the creation
and development of projects. Nevertheless, for the majority of organizations, project management
activities remain unique and separate from the manner in which more routine, process-driven work
is performed. Project work is continuously evolving, establishes its own work rules, and is the antithesis of repetition in the workplace. As a result, it represents an exciting alternative to business as
usual for many companies. The challenges are great, but so are the rewards of success.
First, we need a clear understanding of the properties that make projects and project management so unique. Consider the following definitions of projects:
A project is a unique venture with a beginning and end, conducted by people to meet established goals within parameters of cost, schedule, and quality.6
Projects [are] goal-oriented, involve the coordinated undertaking of interrelated activities,
are of finite duration, and are all, to a degree, unique.7
A project can be considered to be any series of activities and tasks that:
• Have a specific objective to be completed within certain specifications
• Have defined start and end dates
• Have funding limits (if applicable)
• Consume human and nonhuman resources (i.e., money, people, equipment)
• Are multifunctional (i.e., cut across several functional lines)8
[A project is] [o]rganized work toward a predefined goal or objective that requires resources
and effort, a unique (and therefore risky) venture having a budget and schedule.9
Probably the simplest definition is found in the Project Management Body of Knowledge (PMBoK)
guide of the Project Management Institute (PMI). PMI is the world’s largest professional project
management association, with more than 450,000 members worldwide as of 2014. In the PMBoK
guide, a project is defined as “a temporary endeavor undertaken to create a unique product, service, or result” (p. 553).10
Let us examine the various elements of projects, as identified by these set of definitions.
• Projects are complex, one-time processes. A project arises for a specific purpose or to meet
a stated goal. It is complex because it typically requires the coordinated inputs of numerous
members of the organization. Project members may be from different departments or other
organizational units or from one functional area. For example, a project to develop a new
software application for a retail company may require only the output of members of the
Information Systems group working with the marketing staff. On the other hand, some projects, such as new product introductions, work best with representation from many functions,
including marketing, engineering, production, and design. Because a project is intended to
fulfill a stated goal, it is temporary. It exists only until its goal has been met, and at that point,
it is dissolved.
• Projects are limited by budget, schedule, and resources. Project work requires that members
work with limited financial and human resources for a specified time period. They do not
run indefinitely. Once the assignment is completed, the project team disbands. Until that
point, all its activities are constrained by limitations on budget and personnel availability.
Projects are “resource-constrained” activities.
• Projects are developed to resolve a clear goal or set of goals. There is no such thing as
a project team with an ongoing, nonspecific purpose. The project’s goals, or deliverables,
Chapter 1 • Introduction
define the nature of the project and that of its team. Projects are designed to yield a tangible
result, either as a new product or service. Whether the goal is to build a bridge, implement a
new accounts receivable system, or win a presidential election, the goal must be specific and
the project organized to achieve a stated aim.
• Projects are customer-focused. Whether the project is responding to the needs of an internal
organizational unit (e.g., accounting) or intended to exploit a market opportunity external to
the organization, the underlying purpose of any project is to satisfy customer needs. In the
past, this goal was sometimes overlooked. Projects were considered successful if they attained
technical, budgetary, and scheduling goals. More and more, however, companies have realized that the primary goal of a project is customer satisfaction. If that goal is neglected, a firm
runs the risk of “doing the wrong things well”—pursuing projects that may be done efficiently
but that ignore customer needs or fail commercially.
general Project characteristics
Using these definitional elements, we can create a sense of the key attributes that all projects
share. These characteristics are not only useful for better understanding projects, but also offer the
basis for seeing how project-based work differs from other activities most organizations undertake. Projects represent a special type of undertaking by any organization. Not surprisingly, the
challenges in performing them right are sometimes daunting. Nevertheless, given the manner in
which business continues to evolve on a worldwide scale, becoming “project savvy” is no longer a
luxury: It is rapidly becoming a necessity.
Projects are characterized by the following properties:11
1. Projects are ad hoc endeavors with a clear life cycle. Projects are nontraditional; they are
activities that are initiated as needed, operate for a specified time period over a fairly well
understood development cycle, and are then disbanded. They are temporary operations.
2. Projects are building blocks in the design and execution of organizational strategies. As we
will see in later chapters, projects allow organizations to implement companywide strategies.
They are the principal means by which companies operationalize corporate-level objectives.
In effect, projects are the vehicles for realizing company goals. For example, Intel’s strategy for market penetration with ever newer, smaller, and faster computer chips is realized
through its commitment to a steady stream of research and development projects that allows
the company to continually explore the technological boundaries of electrical and computer
3. Projects are responsible for the newest and most improved products, services, and organizational processes. Projects are tools for innovation. Because they complement (and often
transform) traditional process-oriented activities, many companies rely on projects as vehicles for going beyond conventional activities. Projects are the stepping-stones by which we
move forward.
4. Projects provide a philosophy and strategy for the management of change. “Change” is an
abstract concept until we establish the means by which we can make real alterations in the
things we do and produce. Projects allow organizations to go beyond simple statements of
intent and to achieve actual innovation. For example, whether it is Chevrolet’s Volt electric
car or Apple’s newest iPhone upgrade, successful organizations routinely ask for customer
input and feedback to better understand their likes and dislikes. As the vehicle of change, the
manner in which a company develops its projects has much to say about its ability to innovate and commitment to change.
5. Project management entails crossing functional and organizational boundaries. Projects
epitomize internal organizational collaboration by bringing together people from various
functions across the company. A project aimed at new product development may require
the combined work of engineering, finance, marketing, design, and so forth. Likewise, in the
global business environment, many companies have crossed organizational boundaries by
forming long-term partnerships with other firms in order to maximize opportunities while
emphasizing efficiency and keeping a lid on costs. Projects are among the most common
means of promoting collaboration, both across functions and across organizations.
6. The traditional management functions of planning, organizing, motivation, directing, and
control apply to project management. Project managers must be technically well versed,
1.1 What Is a Project?
proficient at administrative functions, willing and able to assume leadership roles, and,
above all, goal-oriented: The project manager is the person most responsible for keeping
track of the big picture. The nature of project management responsibilities should never be
underestimated because these responsibilities are both diverse and critical to project success.
7. The principal outcomes of a project are the satisfaction of customer requirements within
the constraints of technical, cost, and schedule objectives. Projects are defined by their
limitations. They have finite budgets, definite schedules, and carefully stated specifications for completion. For example, a term paper assignment in a college class might include
details regarding form, length, number of primary and secondary sources to cite, and so
forth. Likewise, in the Disney’s Expedition Everest case example at the end of the chapter,
the executive leading the change process established clear guidelines regarding performance
expectations. All these constraints both limit and narrowly define the focus of the project and
the options available to the project team. It is the very task of managing successful project
development within such specific constraints that makes the field so challenging.
8. Projects are terminated upon successful completion of performance objectives—or earlier
in their life cycle, if results no longer promise an operational or strategic advantage. As we
have seen, projects differ from conventional processes in that they are defined by limited life
cycles. They are initiated, completed, and dissolved. As important alternatives to conventional organizational activities, they are sometimes called “temporary organizations.”12
Projects, then, differ from better-known organizational activities, which often involve repetitive
processes. The traditional model of most firms views organizational activities as consistently
performing a discrete set of activities. For example, a retail-clothing establishment buys, stocks,
and sells clothes in a continuous cycle. A steel plant orders raw materials, makes steel, and ships
finished products, again in a recurring cycle. The nature of these operations focuses our attention on a “process orientation,” that is, the need to perform work as efficiently as possible in an
ongoing manner. When its processes are well understood, the organization always seeks better,
more efficient ways of doing the same essential tasks. Projects, because they are discrete activities,
violate the idea of repetition. They are temporary activities that operate outside formal channels.
They may bring together a disparate collection of team members with different kinds of functional
expertise. Projects function under conditions of uncertainty, and usually have the effect of “shaking
up” normal corporate activities. Because of their unique characteristics, they do not conform to
common standards of operations; they do things differently and often reveal new and better ways
of doing things. Table 1.1 offers some other distinctions between project-based work and the more
traditional, process-based activities. Note a recurring theme: Projects operate in radical ways that
consistently violate the standard, process-based view of organizations.
Consider Apple’s development of the iPod, a portable MP3 player that can be integrated with
Apple’s popular iTunes site to record and play music downloads. Apple, headed by its former
chairman, the late Steven Jobs, recognized the potential in the MP3 market, given the enormous
popularity (and, some would say, notoriety) of file-sharing and downloading music through
table 1.1 Differences Between Process and Project Management13
Repeat process or product
Several objectives
People are homogenous
Well-established systems in place to integrate efforts
Greater certainty of performance, cost, schedule
Part of line organization
Bastions of established practice
Supports status quo
New process or product
One objective
One shot—limited life
More heterogeneous
Systems must be created to integrate efforts
Greater uncertainty of performance, cost, schedule
Outside of line organization
Violates established practice
Upsets status quo
Source: R. J. Graham. (1992). “A Survival Guide for the Accidental Project Manager,” Proceedings of the Annual Project
Management Institute Symposium. Drexel Hill, PA: Project Management Institute, pp. 355–61. Copyright and all rights
reserved. Material from this publication has been reproduced with the permission of PMI.
Chapter 1 • Introduction
the Internet. The company hoped to capitalize on the need for a customer-friendly MP3 player,
while offering a legitimate alternative to illegal music downloading. Since its introduction in
2003, consumers have bought nearly 400 million iPods and purchased more than 25 billion songs
through Apple’s iTunes online store. In fact, Apple’s iTunes division is now the largest U.S. market
for music sales, accounting for 29% of all music sold in the United States and 64% of the digital
music market.
In an interview, Jobs acknowledged that Apple’s business needed some shaking up, given
the steady but unspectacular growth in sales of its flagship Macintosh personal computer, still
holding approximately 13% of the overall PC market. The iPod, as a unique venture within Apple,
became a billion-dollar business for the company in only its second year of existence. So popular
has the iPod become for Apple that the firm created a separate business unit, moving the product
and its support staff away from the Mac group. “Needless to say, iPod has become incredibly
popular, even among people who aren’t diehard Apple fanatics,” industry analyst Paolo Pescatore
told NewsFactor, noting that Apple recently introduced a smaller version of the product with great
success. “In short, they have been very successful thus far, and I would guess they are looking at
this realignment as a way to ensure that success will continue.”14
A similar set of events are currently unfolding, centered on Apple’s introduction and successive upgrades of its iPad tablet. Among the numerous features offered by the iPad is the ability to
download books (including college textbooks) directly from publishers, effectively eliminating the
traditional middlemen—bookstores—from the process. So radical are the implications of the iPad
that competitors have introduced their own models (such as Samsung’s Galaxy tablet) to capture
a share of this market. Meanwhile, large bookstores are hoping to adapt their business models to
the new electronic reality of book purchase by offering their own readers (for example, Kindle for
Amazon). Some experts are suggesting that within a decade, tablets and other electronic readers
will make traditional books obsolete, capturing the majority of the publishing market. These are
just some examples of the way that project-driven technological change, such as that at Apple, is
reshaping the competitive landscape.
Given the enthusiasm with which project management is being embraced by so many organizations, we should note that the same factors that make project management a unique undertaking are also among the main reasons why successful project management is so difficult. The track
record of project management is by no means one of uninterrupted success, in part because many
companies encounter deep-rooted resistance to the kinds of changes needed to accommodate a
“project philosophy.” Indeed, recent research into the success rates for projects offers some grim
• A study of more than 300 large companies conducted by the consulting firm Peat Marwick
found that software and/or hardware development projects fail at the rate of 65%. Of companies studied, 65% reported projects that went grossly over budget, fell behind schedule, did
not perform as expected, or all of the above. Half of the managers responding indicated that
these findings were considered “normal.”15
• A study by the META Group found that “more than half of all (information technology)
IT projects become runaways—overshooting their budgets and timetables while failing to
deliver fully on their goals.”16
• Joe Harley, the Chief Information Officer at the Department for Work and Pensions for the
UK government, stated that “only 30%” of technology-based projects and programs are a
success—at a time when taxes are funding an annual budget of £14bn (over $22 billion) on
public sector IT, equivalent to building 7,000 new primary schools or 75 hospitals a year.17
• The United States Nuclear Security Administration has racked up $16 billion in cost overruns on 10 major projects that are a combined 38 years behind schedule, the Government
Accountability Office reports. For example, at Los Alamos National Laboratory, a seven-year,
$213 million upgrade to the security system that protects the lab’s most sensitive nuclear
bomb-making facilities does not work. A party familiar with the organization cites a “pervasive culture of tolerating the intolerable and accepting the unacceptable.”18
• According to the 2004 PriceWaterhouseCoopers Survey of 10,640 projects valued at $7.2 billion,
across a broad range of industries, large and small, only 2.5% of global businesses achieved
100% project success, and more than 50% of global business projects failed. The Chaos Summary
2013 survey by The Standish Group reported similar findings: The majority of all projects were
1.2 Why Are Projects Important?
either “challenged” (due to late delivery, being over budget, or delivering less than required
features) or “failed” and were canceled prior to completion, or the product developed was
never used. Researchers have concluded that the average success rate of business-critical
application development projects is 39%. Their statistics have remained remarkably steady
since 1994.19
• The Special Inspector General for Iraq Reconstruction (SIGIR) reported that more than $8 billion
of the $53 billion the Pentagon spent on thousands of Iraqi reconstruction projects was lost due
to “fraud, waste, and abuse.” Hundreds were eventually canceled, with 42% of the terminated
projects ended because of mismanagement or shoddy construction. As part of their final 2013
report, SIGIR noted: “We found that incomplete and unstandardized databases left us unable to
identify the specific use of billions of dollars spent on projects.”20
These findings underscore an important point: Although project management is becoming
popular, it is not easy to assimilate into the conventional processes of most firms. For every firm
discovering the benefits of projects, many more underestimate the problems involved in becoming
“project savvy.”
These studies also point to a core truth about project management: We should not overestimate the benefits to be gained from project management while underestimating the commitment
required to make a project work. There are no magic bullets or quick fixes in the discipline. Like
any other valuable activity, project management requires preparation, knowledge, training, and
commitment to basic principles. Organizations wanting to make use of project-based work must
recognize, as Table 1.1 demonstrates, that its very strength often causes it to operate in direct contradiction to standard, process-oriented business practices.
1.2 Why are Projects imPortant?
There are a number of reasons why projects and project management can be crucial in helping an
organization achieve its strategic goals. David Cleland, a noted project management researcher,
suggests that many of these reasons arise from the very pressures that organizations find themselves facing.21
1. Shortened product life cycles. The days when a company could offer a new product and
depend on having years of competitive domination are gone. Increasingly, the life cycle of
new products is measured in terms of months or even weeks, rather than years. One has only
to look at new products in electronics or computer hardware and software to observe this
trend. Interestingly, we are seeing similar signs in traditional service-sector firms, which also
have recognized the need for agility in offering and upgrading new services at an increasingly rapid pace.
2. Narrow product launch windows. Another time-related issue concerns the nature of opportunity. Organizations are aware of the dangers of missing the optimum point at which to
launch a new product and must take a proactive view toward the timing of product introductions. For example, while reaping the profits from the successful sale of Product A, smart
firms are already plotting the best point at which to launch Product B, either as a product
upgrade or a new offering. Because of fierce competition, these optimal launch opportunities
are measured in terms of months. Miss your launch window, even by a matter of weeks, and
you run the risk of rolling out an also-ran.
3. Increasingly complex and technical products. It has been well-documented that the average
automobile today has more computing power than the Apollo 11 space capsule that allowed
astronauts to walk on the moon. This illustrates a clear point: the world today is complex.
Products are complicated, technically sophisticated, and difficult to produce efficiently. The
public’s appetite for “the next big thing” continues unabated and substantially unsatisfied.
We want the new models of our consumer goods to be better, bigger (or smaller), faster, and
more complex than the old ones. Firms constantly upgrade product and service lines to feed
this demand. That causes multiple problems in design and production as we continually
seek to push the technical limits. Further, in anticipating future demand, many firms embark
on expensive programs of research and development while attempting to discern consumer tastes. The effect can be to erroneously create expensive and technically sophisticated
Chapter 1 • Introduction
projects that we assume the customer will want. For example, Rauma Corporation of Finland
developed a state-of-the-art “loader” for the logging industry. Rauma’s engineers loaded the
product with the latest computerized gadgetry and technologies that gave the machine a
space-age feel. Unfortunately, the chief customer for the product worked in remote regions
of Indonesia, with logistics problems that made servicing and repairing the loaders impractical. Machines that broke down had to be airlifted more than 1,000 miles to service centers.
Since the inception of this project, sales of the logging machinery have been disappointing.
The project was an expensive failure for Rauma and serves to illustrate an important point:
Unless companies find a way to maintain control of the process, an “engineering for engineering’s sake” mentality can quickly run out of control.22
4. Global markets. The early twenty-first century has seen the emergence of enormous new
markets for almost every type of product and service. Former closed or socialist societies, as
well as rapidly developing economies such as Brazil, China, Vietnam, and India, have added
huge numbers of consumers and competitors to the global business arena. The increased globalization of the economy, coupled with enhanced methods for quickly interacting with customers and suppliers, has created a new set of challenges for business. These challenges also
encompass unique opportunities for those firms that can quickly adjust to this new reality.
In the global setting, project management techniques provide companies with the ability to
link multiple business partners, and respond quickly to market demand and supplier needs,
while remaining agile enough to anticipate and respond to rapid shifts in consumer tastes.
Using project management, successful organizations of the future will recognize and learn to
rapidly exploit the prospects offered by a global business environment.
5. An economic period marked by low inflation. One of the key indicators of economic health
is the fact that inflation has been kept under control. In most of the developed Western economies, low inflation has helped to trigger a long period of economic expansion, while also
helping provide the impetus for emerging economies, such as those in India and China, to
expand rapidly. Unfortunately, low inflation also limits the ability of businesses to maintain
profitability by passing along cost increases. Companies cannot continue to increase profit
margins through simply raising prices for their products or services. Successful firms in the
future will be those that enhance profits by streamlining internal processes—those that save
money by “doing it better” than the competition. As a tool designed to realize goals like internal efficiency, project management is a means by which to bolster profits.
These are just some of the more obvious challenges facing business today. The key point is
that the forces giving rise to these challenges are not likely to abate in the near future. In order to
meet these challenges, large, successful companies such as General Electric, 3M, Apple, Samsung,
Bechtel, and Microsoft have made project management a key aspect of their operating philosophies.
Project Profile
“throwing Good Money after Bad”: the BBc’s Digital Media initiative
The British Broadcasting Corporation (BBC) recently announced the cancelation of a major Information Technology (IT)
project intended to update their vast broadcast operations. The project, called the Digital Media Initiative (DMI), was
originally budgeted at £81.7 million ($140 million) and was developed to eliminate the outdated filing systems and
use of old-fashioned, analog videotape with its expensive archival storage. The BBC is one of the world’s largest and
most widely recognized news and media organizations; it is publically funded and under British government oversight.
The DMI project was intended to save the organization millions annually by eliminating the cost of expensive and outdated storage facilities, while moving all media content to a modern, digital format. As an example of a large-scale IT
project, the plan for DMI involved media asset management, archive storage and retrieval systems, and media sharing
The DMI project was begun in 2008 when the BBC contracted with technology service provider Siemens, with
consulting expertise to be provided by Deloitte. Interestingly, the BBC never put the contract out for competitive bidding, reasoning that it already had a 10-year support contract with Siemens and trusted Siemens’ judgment on project
development. As part of this “hands-off” attitude, executives at the BBC gave Siemens full control of the project, and
1.2 Why Are Projects Important?
apparently little communication flowed back and forth between the organizations. The BBC finally grew concerned with
the distant relationship that was developing between itself and the contractor when Siemens began missing important
delivery milestones and encountering technical difficulties. After one year, the BBC terminated its $65 million contract
with Siemens and sued the company for damages, collecting approximately $47 million in a court settlement. Still, losing
nearly $20 million in taxpayer money after only one year, with nothing to show for it, did not bode well for the future.
Having been burned by this relationship with an outside contractor, the BBC next tried to move the project “in
house,” assigning its own staff and project manager to continue developing the DMI. The project was under the overall
control of the BBC’s Chief Technology Officer, John Linwood. It was hoped that the lessons learned from the first-round
failure of the project would help improve the technology and delivery of the system throughout the organization.
Unfortunately, the project did no better under BBC control. Reports started surfacing as early as 2011 that the project
was way behind schedule, was not living up to its promises, and, in fact, had been failing most testing along the way.
However, although there are claims that the BBC was well aware of the flaws in the project as early as 2011, the picture
it presented to the outside world, including Parliamentary oversight committees, was relentlessly upbeat. The BBC’s
Director General, Mark Thompson, appeared before a committee in 2011 and told them DMI was definitely on schedule
and was actually working already: “There are many programs that are already being made with DMI and some have
gone to air and are going to air,” he told Members of Parliament.
The trouble was, the project was not working well at all. Continual failures with the technology were widely
known within the project team and company executives, but reports suggest that concerns were buried under a flood
of rosy projections. In fact, a later report on the project by an outside consulting firm suggests that throughout 2012,
the deteriorating fortunes of DMI were not accurately reported either within management or, critically, to the BBC
Trust. For example, the BBC’s own internal project management office issued a “code red” warning of imminent project
failure in February that wasn’t reported to the trust until six months later. The CTO, John Linwood, maintained that the
project did work, would lead to a streamlined and more cost-effective method for producing media, and did not waver
from that view throughout these years.
This rosy view hid a deeper problem: the technology just was not working well. Different views emerged as to
why DMI was not progressing. To the “technologists,” there was nothing wrong with the system; it did deliver working technology, but the project was undermined by would-be users who never bought into the original vision and
who continually changed their requirements. They believed that DMI was failing not because it did not work, but as a
result of internal politics. On the other side were those who questioned the development of the project because the
technology, whether it had been “delivered” or not, never really worked, certainly not at the scale required to make it
adopted across the whole organization. Further, it was becoming evident that off-the-shelf technology existed in the
marketplace which did some of what DMI promised but which, critically, already worked well. Why, then, was the BBC
spending so much time and money trying to create its own system out of thin air?
Figure 1.2
BBc Digital initiative Project
Source: Roberto Herrett/Loop Images/Corbis
Chapter 1 • Introduction
According to a news report, it was not until April 2013 that events demonstrated the ongoing problems with
DMI. During BBC coverage of the death and funeral of Margaret Thatcher, news staff worked feverishly to transfer
old archived analog videotape to digital format in order to produce footage for background on the life and career of
the former Prime Minister. So poorly did the new digital archive system work that it was reported that tapes had to be
physically transported around London by taxi and subway system to get to their locations while video transfer work was
being carried out by private production companies. All this after nearly four years working to develop DMI!
The failure of the system during Thatcher’s funeral was the final straw. In May 2013 the new Director General of
the BBC, Lord Hall, announced the cancellation of the project and that the BBC’s chief technology officer, John Linwood,
was to be suspended pending an external investigation into the management of the DMI project. It was later revealed
that a senior BBC manager had expressed grave doubts about DMI to BBC Chairman Lord Patten one year before the
project was cancelled. He had also claimed that there was a “very significant risk” that the National Audit Office had
been misled about the actual progress of DMI in 2011. Other BBC executives had also voiced similar concerns for about
two years before DMI was abandoned. The final cost of the project to the BBC and British taxpayers has been estimated
at about $160 million. BBC Trust member Anthony Fry remarked that the DMI had been a “complete catastrophe” and
said that the project was “probably the most serious, embarrassing thing I have ever seen.”
Members of Parliament, looking into the failure of DMI, also had a number of very pointed criticisms of the project,
executive oversight of DMI, and the operations of the BBC in general. Margaret Hodge MP, Chair of the Committee of
Public Accounts, summed up the project in her Parliament report:
“The BBC’s Digital Media Initiative was a complete failure. License fee payers paid nearly £100 million ($160 million)
for this supposedly essential system but got virtually nothing in return.
The main output from the DMI is an archive catalogue and ordering system that is slower and more cumbersome
than the 40-year-old system it was designed to replace. It has only 163 regular users and a running cost of
£3 million ($5.1 million) a year, compared to £780,000 ($1.3 million) a year for the old system.
When my Committee examined the DMI’s progress in February 2011, the BBC told us that the DMI was “an absolutely essential have to have” and that a lot of the BBC’s future was tied up in the successful delivery of the DMI.
The BBC also told us that it was using the DMI to make many programs and was on track to complete the system
in 2011 with no further delays. This turned out not to be the case.
The BBC was far too complacent about the high risks involved in taking it in-house. No single individual had
overall responsibility or accountability for delivering the DMI and achieving the benefits, or took ownership of
problems when they arose.
Lack of clearly defined responsibility and accountability meant the Corporation failed to respond to warning signals that the program was in trouble.”
Bad planning, poor corporate governance, excessively optimistic projections, and a cloak of secrecy regarding the
real status of the Digital Media Initiative project all resulted in a very public black eye for one of the most respected
broadcasting organizations in the world. It is likely that the causes of the failure of the DMI project will be debated for
years to come, but at a minimum this story should be a cautionary tale for organizations developing sophisticated IT
Project management also serves as an excellent training ground for future senior executives in
most organizations. One unique aspect of projects is how they blend technical and behavioral challenges. The technical side of project management requires managers to become skilled in project
selection, budgeting and resource management, planning and scheduling, and tracking projects.
Each of these skills will be discussed in subsequent chapters. At the same time, however, project
managers face the equally strong challenge of managing the behavioral, or “people,” side of projects. Projects, being temporary endeavors, require project managers to bring together individuals
from across the organization, quickly mold them into an effective team, manage conflict, provide
leadership, and engage in negotiation and appropriate political behavior, all in the name of project
success. Again, we will address these behavioral challenges in this text. One thing we know is:
Project managers who emphasize one challenge and ignore the other, whether they choose to focus
on the technical or behavioral side of project management, are not nearly as successful as those
who seek to become experts in both. Why is project management such a useful training ground for
senior executives? Because it provides the first true test of an individual’s ability to master both the
technical and human challenges that characterize effective leaders in business. Project managers,
and their projects, create the kind of value that companies need to survive and prosper.
1.3 Project Life Cycles
1.3 Project liFe cycles
Imagine receiving a term paper assignment in a college class. Our first step would be to develop a
sense of the assignment itself—what the professor is looking for, how long the paper should be, the
number of references required, stylistic expectations, and so forth. Once we have familiarized ourselves with the assignment, our next step would be to develop a plan for how we intend to proceed
with the project in order to complete it by the due date. We make a rough guess about how much
time will be needed for the research, writing the first draft, proofreading the paper, and completing
the final draft; we use this information to create some tentative milestones for the various components of the assignment. Next, we begin to execute our plan, doing the library or online research,
creating an outline, writing a draft, and so forth. Our goal is to complete the assignment on time,
doing the work to our best possible ability. Finally, after turning in the paper, we file or discard our
reference materials, return any books to the library, breathe a sigh of relief, and wait for the grade.
This example represents a simplified but useful illustration of a project’s life cycle. In this
case, the project consisted of completing the term paper to the standards expected of the instructor
in the time allowed. A project life cycle refers to the stages in a project’s development. Life cycles
are important because they demonstrate the logic that governs a project. They also help us develop
our plans for carrying out the project. They help us decide, for example, when we should devote
resources to the project, how we should evaluate its progress, and so forth. Consider the simplified
model of the project life cycle shown in Figure 1.3, which divides the life cycle into four distinct
phases: conceptualization, planning, execution, and termination.
• Conceptualization refers to the development of the initial goal and technical specifications for
a project. The scope of the work is determined, necessary resources (people, money, physical
plant) identified, and important organizational contributors or stakeholders signed on.
• Planning is the stage in which all detailed specifications, schematics, schedules, and other
plans are developed. The individual pieces of the project, often called work packages, are broken down, individual assignments made, and the process for completion clearly delineated.
For example, in planning our ap…
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