Low Bidder Dilemma In Project Management

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Preface xix

1 1 Overview

1.0 Introduction 1

1.1 Understanding Project Management 2

1.2 Defining Project Success 5

1.3 The Project Manager-Line Manager Interface 6

1.4 Defining the Project Manager's Role 9

1.5 Defining the Functional Manager's Role 12

1.6 Defining the Functional Employee's Role 15

1.7 Defining the Executive's Role 16

1.8 Working with Executives 16

1.9 The Project Manager As the Planning Agent 17

1.10 Project Champions 19

1.11 The Downside Risk of Project Management 20

1.12 Project-Driven Versus Non-Project-Driven Organizations 24

1.13 Marketing in the Project-Driven Organization 26

1.14 Classification of Projects 29

1.15 Location of the Project Manager 30

1.16 Differing Views of Project Management 32

1.17 Concurrent Engineering: A Project Management 34 Approach

1.18 Total Quality Management (TQM): A Project Management 35 Approach

Problems 39 Case Studies

Jackson Industries 42

Kombs Engineering 44

Williams Machine Tool Company 45

2 47 Project Management Growth: Concepts and Definitions

2.0 Introduction 47

2.1 General Systems Management 47

2.2 Project Management: 1960-1985 48

2.3 Project Management: 1985-2000 60

2.4 Resistance to Change 65

2.5 Systems, Programs, and Projects: A Definition 70

2.6 Product Versus Project Management: A Definition 72

2.7 Maturity and Excellent: A Definition 74

2.8 Informal Project Management: A Definition 75

2.9 Project Life Cycles 76

2.10 Project Management Methodologies: A Definition 83

2.11 Systems Thinking 86 Problems 89 Case Studies

L. P. Manning Corporation 89

Project Firecracker 90

3 97 Organizational Structures

3.0 Introduction 97

3.1 Organizational Work Flow 100

3.2 Traditional (Classical) Organization 101

3.3 Developing Work Integration Positions 105

3.4 Line-Staff Organization (Project Coordinator) 109

3.5 Pure Product (Projectized) Organization 110

3.6 Matrix Organizational Form 113

3.7 Modification of Matrix Structures 124

3.8 Center for Project Management Expertise 128

3.9 Matrix Layering 129

3.10 Selecting the Organizational Form 131

3.11 Structuring the Small Company 139

3.12 Strategic Business Unit (SBU) Project Management 141

3.13 Transitional Management 143 Problems 145 Case Studies

Jones and Shephard Accountants, Inc. 151

Fargo Foods 154

Quasar Communications, Inc. 156

4 161 Organizing and Staffing the Project Office and Team

4.0 Introduction 161

4.1 The Staffing Environment 162

4.2 Selecting the Project Manager: An Executive 166 Decision

4.3 Skill Requirements for Program Managers 173

4.4 Special Cases in Project Manager Selection 180

4.5 Selecting the Wrong Project Manager 180

4.6 Next Generation Project Managers 185

4.7 Duties and Job Descriptions 186

4.8 The Organizational Staffing Process 191

4.9 The Project Office 199

4.10 The Functional Team 206

4.11 The Project Organizational Chart 208

4.12 Special Problems 211

4.13 Selecting the Project Management Implementation Team 214 Problems 217 Case Studies

Government Project Management 223

Falls Engineering 224

White Manufacturing 227

Martig Construction Company 228

The Carlson Project 229

Team-Fly®

5 231 Management Functions

5.0 Introduction 231

5.1 Controlling 232

5.2 Directing 233

5.3 Project Authority 237

5.4 Interpersonal Influences 246

5.5 Barriers to Project Team Development 249

5.6 Suggestions for Handling the Newly Formed Team 253

5.7 Team Building As an Ongoing Process 258

5.8 Leadership in a Project Environment 260

5.9 Life-Cycle Leadership 261

5.10 Organizational Impact 264

5.11 Employee-Manager Problems 266

5.12 Management Pitfalls 270

5.13 Communications 273

5.14 Project Review Meetings 284

5.15 Project Management Bottlenecks 284

5.16 Communication Traps 286

5.17 Proverbs 288

5.18 Management Policies and Procedures 289 Problems 289 Case Studies

Wynn Computer Equipment (WCE) 303

The Trophy Project 304

Leadership Effectiveness (A) 308

Leadership Effectiveness (B) 310

Motivational Questionnaire 318

6 325

Time Management

6.0 Introduction 325

6.1 Understanding Time Management 325

6.2 Time Robbers 328

6.3 Time Management Forms 331

6.4 Introduction to Stress and Burnout 332

6.5 Stress in Project Management 336

6.6 Time Management Survey 337

6.7 Effective Time Management 352

6.8 Management Pitfalls 355

6.9 Project Communications 355

6.10 Project Management Bottlenecks 357

Problems 357 Case Studies

The Reluctant Workers 357

Time Management for Project Managers 358

7 379 Conflicts

7.0 Introduction 379

7.1 Objectives 379

7.2 The Conflict Environment 381

7.3 Managing Conflict 385

7.4 Conflict Resolution 401

7.5 Understanding Superior, Subordinate, and Functional Conflicts 402

7.6 The Management of Conflicts 405

7.7 Conflict Resolution Modes 406 Problems 408

Case Studies

Facilities Scheduling at Mayer Manufacturing 411

Scheduling the Safety Lab 413

Telestar International 414

The Problem with Priorities 415

Handling Conflict in Project Management 416

8 423 Special Topics

8.0 Introduction 423

8.1 Performance Measurement on the Horizontal Line 423

8.2 Financial Compensation and Rewards 432

8.3 Effective Project Management in the Small Business 439 Organization

8.4 Mega Projects 441

8.5 R&D Project Management 442

8.6 Code of Ethics 453 Problems 454 Case Studies

American Electronics International 458

9 461 The Variables for Success

9.0 Introduction 461

9.1 Predicting Project Success 461

9.2 Project Management Effectiveness 466

9.3 Expectations 467

9.4 Force Field Analysis 469

9.5 Lessons Learned 474

Problems 474

10 475 Working with Executives

10.0 Introduction 475

10.1 The Project Sponsor 475

10.2 The In-House Representatives 488

10.3 Selling Executives on Project Management 489 Problems 499 Case Studies

The Blue Spider Project 503

Greyson Corporation 514

Corwin Corporation 518

The Boeing 767: From Concept to Production (A) 526

The Boeing 767: From Concept to Production (B) 546

11 549 Planning

11.0 Introduction 549

11.1 General Planning 552

11.2 Identifying Strategic Project Variables 555

11.3 Life-Cycle Phases 558

11.4 Proposal Preparation 561

11.5 Understanding Participants' Roles 562

11.6 Project Planning 563

11.7 The Statement of Work 565

11.8 Project Specifications 570

11.9 Milestone Schedules 572

11.10 Work Breakdown Structure 573

11.11 WBS Decomposition Problems 580

11.12 Role of the Executive in Project Selection 584

11.13 Role of the Executive in Planning 587

11.14 The Planning Cycle 589

11.15 Work Planning Authorization 591

11.16 Why do plans fail? 592

11.17 Stopping Projects 593

11.18 Handling Project Phaseouts and Transfers 595

11.19 Detailed Schedules and Charts 597

11.20 Master Production Scheduling 601

11.21 Program Plan 602

11.22 Total Project Planning 608

11.23 The Project Charter 613

11.24 Management Control 616

11.25 The Project Manager-Line Manager Interface 616

11.26 Fast-Tracking 618

11.27 Configuration Management 620

11.28 Procedural Documentation 621

11.29 Established Practices 624 Problems 624 Case Studies

The Two-Boss Problem 634

Project Overrun 635

Margo Company 636

Denver International Airport (DIA) 638

Network Scheduling Techniques

12.0 Introduction

12.1 Network Fundamentals

12.2 Graphical Evaluation and Review Technique (GERT)

12.3 Dependencies

12.4 Slack Time

12.5 Network Replanning

12.6 Estimating Activity Time

12.7 Estimating Total Program Time

12.8 Total PERT/CPM Planning

12.9 Crash Times

12.10 PERT/CPM Problem Areas

12.11 Alternative PERT/CPM Models

12.12 Precedence Networks

12.13 Lag

12.14 Understanding Project Management Software

12.15 Software Features

12.16 Software Classification

12.17 Project Software Evaluation

12.18 Implementation Problems

Problems

671 674 679

680 686

692 694 698

701 704 704 706

Case Studies

Crosby Manufacturing Corporation 722

13 725 Project Graphics

13.0 Introduction 725

13.1 Customer Reporting 726

13.2 Bar (Gantt) Chart 727

13.3 Other Conventional Presentation Techniques 734

13.4 Logic Diagrams/Networks 738 Problems 740

14 741 Pricing and Estimating

14.0 Introduction 74!

14.1 Global Pricing Strategies 742

14.2 Types of Estimates 743

14.3 Pricing Process 746

14.4 Organizational Input Requirements 749

14.5 Labor Distributions 750

14.6 Overhead Rates 754

14.7 Materials/Support Costs 757

14.8 Pricing out the Work

14.9 Smoothing out Department Man-Hours

14.10 The Pricing Review Procedure

14.11 Systems Pricing

14.12 Developing the Supporting/Backup Costs

14.13 The Low-Bidder Dilemma

14.14 Special Problems

14.15 Estimating Pitfalls

14.16 Estimating High-Risk Projects

14.17 Project Risks

14.18 The Disaster of Applying the 10 Percent Solution to Project Estimates

14.19 Life-Cycle Costing (LCC)

14.20 Logistics Support

14.21 Economic Project Selection Criteria: Capital Budgeting

14.22 Payback Period

14.23 The Time Value of Money

14.24 Net Present Value (NPV)

14.25 Internal Rate of Return (IRR)

14.26 Comparing IRR, NPV, and Payback

14.27 Risk Analysis

14.28 Capital Rationing

766 770

773 777

779 784 787

Problems

Team-Fly®

Case Studies

Polyproducts Incorporated 798

Small Project Cost Estimating at Percy 801 Company

Capital Industries 804

Payton Corporation 805

Cory Electric 806

Camden Construction Corporation 809

15 813 Cost Control

15.0 Introduction 813

15.1 Understanding Control 817

15.2 The Operating Cycle 820

15.3 Cost Account Codes 821

15.4 Budgets 828

15.5 Variance and Earned Value 829

15.6 Recording Material Costs Using Earned Value Measurement 848

15.7 The Material Accounting Criterion 850

15.8 Material Variances: Price and Usage 851

15.9 Summary Variances 853

15.10 Status Reporting 853

15.11 Cost Control Problems 860 Problems 862 Case Studies

The Bathtub Period 873

16 875 Trade-off Analysis in a Project Environment

16.0 Introduction 875

16.1 Methodology for Trade-off Analysis 879

16.2 Contracts: Their Influence On Projects 897

16.3 Industry Trade-off Preferences 898

16.4 Conclusion 901

17 903 Risk Management

17.0 Introduction 903

17.1 Definition of Risk 905

17.2 Tolerance for Risk 906

17.3 Definition of Risk Management 907

17.4 Certainty, Risk, and Uncertainty 907

17.5 Risk Management Process 913

17.6 Risk Planning 914

17.7 Risk Assessment 915

17.8 Risk Identification 915

17.9 Risk Analysis 920

17.10 The Monte Carlo Process 927

17.11 Risk Handling 932

17.12 Risk Monitoring 937

17.13 The Use of Lessons Learned 938 Problems 942 Case Studies

Teloxy Engineering (A) 948

Teloxy Engineering (B) 949

18 951 Learning Curves

18.0 Introduction 951

18.1 General Theory 951

18.2 The Learning Curve Concept 953

18.3 Graphic Representation 954

18.4 Key Words Associated with Learning Curves 956

18.5 The Cumulative Average Curve 957

18.6 Sources of Experience 960

18.7 Developing Slope Measures 964

18.8 Unit Costs and Use of Midpoints 965

18.9 Selection of Learning Curves 965

18.10 Follow-on Orders 967

18.11 Manufacturing Breaks 967

18.12 Learning Curve Limitations 968

18.13 Prices and Experience 970

18.14 Competitive Weapon 972 Problems 974 Case Studies

Insight Optical Equipment Company 975

19 987 Managing Cultural Differences

19.0 Introduction 987

19.1 An Introduction to Global Projects 987

19.2 Uniqueness and Trends in Global Projects 988

19.3 Cultural Challenges Broken down by Knowledge Areas 989

19.4 The Project Manager's Checklist for Global Projects 1000

19.5 Managing during Political, Social, and Economic Reform 1000

19.6 An Introduction to Project Management in South Africa 1001

19.7 Internal Factors Affecting Project Management 1001

19.8 External Factors Affecting Project Management 1003

Problems 1008

20 1009 Strategic Planning for Excellence in Project Management

20.0 Introduction 1009

20.1 Influence of Economic Conditions 1009

20.2 What is general strategic planning? 1012

20.3 What is strategic planning for project management? 1013

20.4 Critical Success Factors for Strategic Planning 1017

20.5 Identifying Strategic Resources 1023

20.6 Strategic Selection of Projects 1028

20.7 Portfolio Selection of Projects 1031

20.8 Horizontal Accounting 1034

20.9 Continuous Improvement 1036

20.10 The Project Office/Center for Excellence 1039

20.11 Why does strategic planning for project management fail? 1040

20.12 Organizational Restructuring 1042

20.13 Career Planning 1044

Modern Developments in Project Management

21.0 Introduction

21.1 The Project Management Maturity Model (PMMM)

21.2 Developing Effective Procedural Documentation

21.3 Project Management Methodologies

21.4 Continuous Improvement

21.5 Capacity Planning

21.6 Competency Models

21.7 Managing Multiple Projects

21.8 End-of-Phase Review Meetings

The Impact of Concurrent Engineering on Project Management

22.0 Introduction 1069

22.1 Understanding Concurrent Engineering 1070

22.2 Project Planning 1072

22.3 Risk Management 1073

22.4 Creeping Scope 1073

22.5 Project Management Guidelines 1074

22.6 Selecting the Project Manager 1077

22.7 The Project Office 1077

22.8 The Functional Team 1079

22.9 Project Sponsorship 1080

22.10 Wage and Salary Administration 1081

1045

1045 1045 1050

1056

1057 1062 1063 1066 1067 1069

22.11 Conclusion 1082

23 1083 Quality Management

23.0 Introduction 1083

23.1 Definition of Quality 1085

23.2 The Quality Movement 1086

23.3 The Taguchi Approach 1090

23.4 The Malcolm Baldrige National Quality Award 1093

23.5 ISO 9000 1096

23.6 Quality Management Concepts 1097

23.7 The Cost of Quality 1100

23.8 The Seven Quality Control Tools 1103

23.9 Process Capability (C p) 1120

23.10 Acceptance Sampling 1123

23.11 Operating Characteristic Curves 1123

23.12 Implementing Six Sigma 1126

23.13 Quality Leadership 1129

23.14 Responsibility for Quality 1130

23.15 Quality Circles 1131

23.16 Just-in-Time Manufacturing (JIT) 1131

23.17 Total Quality Management (TQM) 1134

24 1139 Contracts and Procurement

24.0 Introduction 1139

24.1 Procurement 1140

24.2 Requirement Cycle 1141

24.3 Requisition Cycle 1142

24.4 Solicitation Cycle 1143

24.5 Award Cycle 1145

24.6 Types of Contracts 1146

24.7 Incentive Contracts 1152

24.8 Contract Type Versus Risk 1153

24.9 Contract Administration Cycle 1155

24.10 Using a Checklist 1157

24.11 Proposal-Contractual Interaction 1159

24.12 Summary 1163 Appendix A. Solutions to the Project Management Conflict Exercise 1165 Appendix B. Solution to Leadership Exercise 1171 Author Index 1177 Subject Index 1181

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  • dirk herman
    What is the problem of lowest bidder selection in scheduling?
    6 months ago

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