BUS 5003

Project Management

Session 3
Professor: Kevin Yam ([email protected])
 Agenda
1. Module 2 Check-In

2. Defining Projects
• Scope
• Schedule (WBS)
Part 1

3. Group Assignments | Assignment Overview

4. For Next Class…

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 Questions from last week…
 Projects vs. Programs
 Project Life Cycle & Knowledge
Areas
 Teams - FSNP
 Organizations
• Strategy vs. Operations
• Project Selection
• Structure / PM Maturity / Culture

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 Chapter Four
Defining the Project

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 Where We Are Now

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 Learning Objectives
1. Identify key elements of a project scope statement and
understand why a complete scope statement is crucial to
project success
2. Understand why it is important to establish project priorities
in terms of cost, time, and performance
3. Demonstrate the importance of a work breakdown structure
(WBS) to the management of projects and how it serves as
a data base for planning and control
4. Demonstrate how the organization breakdown structure
(OBS) establishes accountability to organizational units
5. Describe a process breakdown structure (PBS) and when
to use it
6. Create responsibility matrices for small projects
7. Create a communication plan for a project
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 Chapter Outline
4.1 Step 1: Defining the Project Scope
4.2 Step 2: Establishing Project Priorities
4.3 Step 3: Creating the Work Breakdown
Structure
4.4 Step 4: Integrating the WBS with the
Organization
4.5 Step 5: Coding the WBS for the Information
System
4.6 Process Breakdown Structure
4.7 Responsibility Matrices
4.8 Project Communication Plan

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 Defining the Project

Step 1: Defining the Project Scope

Step 2: Establishing Project Priorities
Step 3: Creating the Work Breakdown Structure
Step 4: Integrating the WBS with the Organization
Step 5: Coding the WBS for the Information
System

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 Step 1: Defining the Project Scope
• Project Scope
– Is a definition of the end result or mission of your
project—a product or service for your client/customer.
– Defines the results to be achieved in specific,
tangible, and measurable terms.
• Purposes of the Project Scope Statement
– To clearly define the deliverable(s) for the end user
– To direct focus on the project purpose throughout the
life of the project for the customer and project
participants
– To be used by the project owner and participants
as a planning tool and for measuring project success
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 Project Scope Checklist

1. Project objective
2. Product scope description
3. Justification
4. Deliverables
5. Milestones
6. Technical requirements
7. Limits and exclusions
8. Acceptance criteria

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 Project Scope: Terms and Definitions

• Scope Statements
– Is a short, one- to two-page summary of key elements of the
scope, followed by extended documentation of each element.
– Is also referred to as “statements of work (SOWs)”
• Project Charter
– Is a documentation that authorizes the project manager to
initiate and lead the project.
– Often includes a brief scope description as well as such items as
risk limits, business case, spending limits, and even team
composition.
• Scope Creep
– Is the tendency for the project scope to expand over time—
usually by changing requirements, specifications, and priorities.

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Five of the Most Common Causes of Scope
Creep
• Poor requirement analysis
• Not involving users early enough
• Underestimating project complexity
• Lack of change control
• Gold plating

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 Step 2: Establishing Project Priorities
• Causes of Project Trade-offs
– Three major criteria (trade-offs) that a project manager must
manage are:
• Budget–Cost
• Schedule–Time
• Performance–Scope
• A project manager can manage the project trade-offs by
completing a priority matrix for the project and identifying
which criterion is:
– Constrain: original parameter is a fixed requirement.
– Enhance: optimizing a criterion over others
– Accept: reducing (or not meeting) a criterion requirement

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Project Management Trade-offs

FIGURE 4.1
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 Project Priority Matrix

FIGURE 4.2
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 Step 3: Creating the Work
Breakdown Structure

• Work Breakdown Structure (WBS)

– Is a hierarchical outline of the project with different levels of
detail.
– Identifies the products and work elements involved in a project.
– Defines the relationship of the final deliverable (the project) to its
sub-deliverables, and, in turn, their relationships to work
packages.
– Serves as a framework for tracking cost and work performance.
– Is best suited for design and build projects that have tangible
outcomes rather than process-oriented projects.

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 Hierarchical
Breakdown of the
WBS

* This breakdown groups work

packages by type of work
within a deliverable and allows
assignment of responsibility to
an organizational unit. This
extra step facilitates a system
for monitoring project progress
(discussed in Chapter 13).

FIGURE 4.3
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 How WBS Helps the Project Manager
• WBS
– Assures project managers that all products and work elements are
identified, to integrate the project with the current organization, and to
establish a basis for control.
– Facilitates the evaluation of cost, time, and technical performance at all
levels in the organization over the life of the project.
– Provides management with information appropriate to each
organizational level.
– Helps project managers to plan, schedule, and budget the project.
– Helps in the development of the organization breakdown structure
(OBS), which assigns project responsibilities to organization units and
individuals.
– Provides the opportunity to “roll up” (sum) the budget and actual costs
of the smaller work packages into larger work elements.
– Defines communication channels and assists in understanding and
coordinating many parts of the project.

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 Work Breakdown Structure

FIGURE 4.4
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 Work Packages

• A work package practically speaking:

• Is the lowest level of the WBS.
• Is a short-duration task that has a definite start and stop
point, consumes resources, and represents cost.
• Should not exceed 10 workdays or one reporting period.
• Should be as independent of other work packages of the
project as possible.
• Is the basic unit used for planning, scheduling, and
controlling the project.

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 Work Packages

• A work package is the lowest level of the WBS.

– It is output-oriented in that it:
• Defines work (what).
• Identifies time to complete a work package (how long).
• Identifies a time-phased budget to complete
a work package (cost).
• Identifies resources needed to complete
a work package (how much).
• Identifies a person responsible for units of work (who).
• Identifies monitoring points for measuring success (how
well).

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 Step 4: Integrating the WBS
with the Organization

• Organizational Breakdown Structure (OBS)

– Depicts how the firm is organized to discharge its work
responsibility for a project.
• Provides a framework to summarize
organization unit work performance.
• Identifies organization units responsible
for work packages.
• Ties organizational units to cost control accounts.

The intersection of work packages and the

organization unit creates a project cost point or cost
account that integrates work and responsibility.
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 Integration of
WBS and OBS

FIGURE 4.5
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 Step 5: Coding the WBS for
the Information System
• WBS Coding System
– Defines:
• Levels and elements of the WBS
• Organization elements
• Work packages
• Budget and cost information
– Allows reports to be consolidated at
any level in the organization structure
• WBS Dictionary
– Provides detailed information about
each element in the WBS.
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 Coding
the WBS

EXHIBIT 4.1
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 Process Breakdown Structure

Process Breakdown Structure (PBS)

• Is used for process-oriented projects.
• Is often referred to as the “waterfall method” in the
software industry.
Process-oriented project
• Is a project that the final outcome is a product of a series
of steps and phases.
• Is a project that evolves over time with each phase
affecting the next phase.
• Is a project that is driven by performance requirements,
not by plans/blueprints.

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Process Breakdown Structure (PBS) for
Software Development Project

FIGURE 4.6
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 Responsibility Matrices

• Responsibility Matrix (RM)

– Is also called a linear responsibility chart
– Summarizes the tasks to be accomplished and
who is responsible for what on the project.
• Lists project activities and participants responsible for
each activity.
• Clarifies critical interfaces between units
and individuals that need coordination.
• Provide a means for all participants to view their
responsibilities and agree on their assignments.
• Clarifies the extent or type of authority that
can be exercised by each participant.

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Responsibility Matrix for a Market Research Project

FIGURE 4.7
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Responsibility Matrix for the Conveyor Belt Project

FIGURE 4.8
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 Project Communication Plan

• What information needs to be collected

and when?
• Who will receive the information?
• What methods will be used to gather
and store information?
• What are the limits, if any, on who has access
to certain kinds of information?
• When will the information be communicated?
• How will it be communicated?

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 Steps for developing a
Communication Plan

1. Stakeholder analysis — identify the target groups.

2. Information needs — project status reports, deliverable issues,
changes in scope, team status meetings, gating decisions,
accepted request changes, action items, milestone reports, etc.
3. Sources of information — where does the information reside?
4. Dissemination modes — hardcopy, e-mail, teleconferencing,
SharePoint, and a variety of database sharing programs.
5. Responsibility and timing — determine who will send out the
formation and when.

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 Stakeholder Communications

FIGURE 4.9
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 Information Needs

• Project status reports

• Deliverable issues
• Changes in scope
• Team status meetings
• Gating decisions
• Accepted request changes
• Action items
• Milestone reports

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Shale Oil Research Project Communication Plan

FIGURE 4.10
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 Key Terms
Acceptance criteria
Cost account
Gold plating
Milestone
Organization breakdown structure (OBS)
Priority matrix
Process breakdown structure (PBS)
Project charter
Responsibility matrix
Scope creep
Scope statement
WBS dictionary
Work breakdown structure (WBS)
Work package
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