Project

Management
Fundamentals
dhx01 0407
© Copyright ESI International
April 2007
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 CONTENTS
Page

Project Management Fundamentals..................................................................... 1-1

Workshop Agenda ................................................................................ 1-3
Workshop Objectives ........................................................................... 1-4
Introduction: What Is Project Management? .......................................... 1-6
What Is a Project? ................................................................................. 1-7
The Project Life Cycle ........................................................................... 1-8
Project Life Cycle: Example................................................................... 1-9
“Our” Project Life Cycle...................................................................... 1-10
Project Initiation ................................................................................. 1-11
How Projects Come to Be ................................................................... 1-12
Sacred Cows and Pressing Needs ........................................................ 1-13
First Selection Criterion....................................................................... 1-14
Selection Tools ................................................................................... 1-15
Exercise 1: Office Move ...................................................................... 1-16
Project Definition ............................................................................... 1-17
Project Charter.................................................................................... 1-18
Why Have a Project Charter? .............................................................. 1-19
Project Charter Components* ............................................................. 1-20
Project Assumptions ........................................................................... 1-21
The Triple Constraint .......................................................................... 1-22
Triple Constraint Trade-Offs ................................................................ 1-23
Exercise 2: Starting the Charter............................................................ 1-24
Project Planning.................................................................................. 1-25
Work Breakdown Structures................................................................ 1-26
Phase-Based WBS ............................................................................... 1-27
Component-Based WBS ...................................................................... 1-28
Work Packages ................................................................................... 1-29
Exercise 3: WBS for the Office Move .................................................. 1-30
Schedule Planning .............................................................................. 1-31
Common Scheduling Tools ................................................................. 1-32
Network Diagramming ....................................................................... 1-33
Critical Path ........................................................................................ 1-35
Float ................................................................................................... 1-36
Network Diagramming Practice .......................................................... 1-37
Exercise 4: Network Diagram for the Office Move............................... 1-38
Ways to Speed Up Schedules.............................................................. 1-39
Gantt Charts ....................................................................................... 1-40
Milestones .......................................................................................... 1-41
Estimating ........................................................................................... 1-42
Good Estimating Practices................................................................... 1-43
Program Evaluation and Review Technique (PERT).............................. 1-44
Building a Cost Estimate...................................................................... 1-45
Cumulative Cost Curve ....................................................................... 1-46

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0BCONTENTS
Page
Risk Management Planning ................................................................. 1-47
Communication Plan .......................................................................... 1-48
Communication Made Simple............................................................. 1-49
Roles and Responsibilities Matrix........................................................ 1-50
Project Implementation....................................................................... 1-51
Project Baselines................................................................................. 1-52
Who Needs Baselines?........................................................................ 1-53
Monitoring Project Performance.......................................................... 1-54
Earned Value ...................................................................................... 1-55
Key Earned Value Terminology ........................................................... 1-56
Exercise 5: Earned Value Practice........................................................ 1-58
Assessing Complete Status .................................................................. 1-60
Managing Change............................................................................... 1-61
Project Closure ................................................................................... 1-62
Project Closeout Checklist .................................................................. 1-63
Lessons Learned.................................................................................. 1-64
Stakeholders Report/Celebration ......................................................... 1-65
Workshop Review .............................................................................. 1-66
Bibliography and Suggested Reading................................................... 1-68

iv © ESI April 2007 dhx01-tc

Project Management Fundamentals Month 1998

Project Management
Fundamentals

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Project Management Fundamentals Month 1998

Workshop Agenda
Introduction: What Is Project Management?
Project Initiation
Project Definition
Project Planning
Project Implementation
Project Closure

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Workshop Objectives
Create a working definition of the term "project
management"
Break a project into logical phases and specify the
primary activities that occur in each phase
Effectively use the components of a project charter
and appropriately scale each of them based on the
size of a project
Develop a procedure for managing changes in the
project after it is underway

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Workshop Objectives (continued)

Create a work breakdown structure (WBS) for a

project
Sequence activities within a project based on
mandatory and discretionary dependencies
Estimate activity durations and make appropriate
adjustments as needed
Identify, quantify, and give priorities to risks in
managing a project
Create a communication plan for reporting project
progress and issues
Capture valuable project lessons learned and use
them to define and improve project management
practices within your organization
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Introduction: What Is Project

Management?

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Project Management Fundamentals Month 1998

What Is a Project?
A temporary endeavor undertaken to create a unique
product, service, or result.
—PMBOK® Guide, p. 368

to create Has an intention to produce something (project “deliverables”)

unique One of a kind rather than a collection of identical items

product Tangible objects but could include things like computer software, film, or
stage works

service or Might include the establishment of a day-care center, for instance, but not its
result daily operations

“PMBOK” is a trademark of the Project Management Institute, Inc., which is registered in the United States
and other nations.

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The Project Life Cycle

General Form of a Project Life Cycle

Project

Phase 1 Phase 2 Phase 3 Phase... Phase "n"

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Project Life Cycle: Example

Eight-Phase Project Life Cycle

Project

Formulate Concept Evaluate Concept Verify Scope Design Construct Deploy Maintain Close

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“Our” Project Life Cycle

Project Life Cycle Used in this Workshop

Project

Initiation Definition Planning Implementation Closure

Phase Purpose

Initiation Introduce project to attain approval and create project charter

Definition Document project scope, deliverables, and methods for containing scope

Planning Create plan documenting the activities required to complete the project,
along with sequence of activities, resources assigned to the activities, and
resulting schedule and budgets

Implementation Execute and manage the plan, using artifacts created in the planning
phase

Closure Formally review the project, including lessons learned and turnover of
project documentation
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Project Initiation

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How Projects Come to Be

Project selection can be a difficult process,
especially when there are a large number of
potential projects competing for scarce dollars
Some selection methods are highly intuitive; others
try to add rigor through more scientific selection
processes

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Sacred Cows and Pressing Needs

“Sacred cow” selection: Senior management
wants it! (It may often turn out well; many
visionary projects start here)
Business opportunity (make more $$$)
Savings potential (save $$$)
Keeping up with competition (example, many
e-commerce projects are in response to
competitor’s initiatives)
Risk management (examples: disaster recovery
initiatives, Y2K)
Government or regulatory requirements

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First Selection Criterion

Sanity check: Does the project fit in with the stated
goals of the organization?

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Selection Tools

Numeric Method Description

Benefit/cost ratio Determines the amount of payback per investment

Net present value Estimates the current worth of anticipated cash flows resulting
from the project

Payback period Determines how quickly a project recoups its costs

Weighted selection Scores multiple projects against a set of selection criteria with
each criterion assigned a numeric weight

Unweighted selection Scores multiple projects against a set of selection criteria with all
criteria being equal

Pairwise priorities Rank ordering a number of candidate projects by systematically

comparing one with each of the others

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Exercise 1

Office Move
Your company has outgrown its office space. The company can stay
put and triple up people in offices, wait 18 months until some extra
floors of the office building become available, move to a nearby
location, or perhaps even move to the next county. Everyone seems
to have a different idea of what would be best, which they
vigorously debate in the kitchen as they heat up their lunches or get
coffee. Finally, the president makes a decision: your company will
move to new office space 10 blocks away.

What is the project in this scenario?

Who are the stakeholders?
What are some of the main issues that you will need to address in
this project?
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Project Definition

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Project Charter
The project charter is the project’s “license to do
business”
It should come from someone who is outside the
project itself and who has funding-access,
resource-assignment, and decision-making
authority sufficient to support the project. This
person usually is referred to as the project sponsor.

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Why Have a Project Charter?

Primary purpose: To get approval to proceed with
the project and obtain sufficient approval for
resources to move to the next phase of the project
Communicate the mission and the project’s
objectives to stakeholders and other interested
parties
Communicate to the project team members what
they are expected to accomplish

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Project Charter Components*

Project mission and scope
Project objectives
Project assumptions
Project constraints
Milestones
Project risks
Stakeholders
Signature page granting authority to proceed

*In some organizations, the project charter is an evolving document. Many of the components listed
will change as the project moves into the Project Definition Phase.

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Project Assumptions
Almost every lesson includes the reminder:
“Don’t assume!”
Turn that around and make it: “Document
assumptions!”
Don’t expect others to read your mind
Capture as many assumptions as possible to include
in your initial project charter
Don’t be surprised if others do not share all your
assumptions. This is the time to resolve differences—
before the project is underway!

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The Triple Constraint

Or, in plain
English . . .
p

Scope/Quality
Fa
ea

st
Ch

Good
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Triple Constraint Trade-Offs

Scope/Quality
Constraint Required Adjustment Alternatives
Change (One or Combination of Both)
Shorter Time Higher Cost Reduced Quality or Narrowed
Scope
Reduced Cost More Time Reduced Quality or Narrowed
Scope
Higher Quality or More Time Higher Cost
Increased Scope

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Project Charter Worksheet

Project Mission
Write Project Mission Statement Here:

Project Scope
Brief statement of project scope. (Supplement with Product Scope and Project Scope Diagrams as part of

Exercise 2 appendix.)

Project Objectives
List at least three SMART Objectives.

Starting Project Assumptions

the Charter List at least three Project Assumptions.

Project Constraints
See Project Priority Matrix in Appendix. List any other constraints here.

Project Phases
Indicate the phases of the proposed project.

Milestones
List major milestones for project identified so far (include at least five throughout the life of the project).

Project Risks
Attach Risk Identification Worksheets and Risk Priority Worksheet.

Stakeholders
Attach Potential Stakeholders Worksheet.

Signature Page Granting Authority to Proceed

Obtain signatures of Project Sponsor and Project Manager.
Project Sponsor Signature:
Project Manager Signature:
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Project Planning

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Work Breakdown Structures

Work breakdown structures (WBSs) help to
organize the activities required to meet the
objectives of the project
Focus is on deliverables
May be organized by—
Phase of the project
Component

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Phase-Based WBS
Partial WBS for Software Project Based on Phase

Customer Relationship Management System

Project Management Requirements Design Build

Planning Client Interviews Logical Design Logical Design etc.

Reporting Review of Current Workflows

Process Models Process Models
Administration Business Objectives
Use Cases Use Cases
Meetings Preliminary Test Planning
Logical Data Models Physical Data Models
Documentation Planning Documentation Planning

Training Requirements

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Component-Based WBS

Partial WBS for Luxury Townhouse Complex by Component

IYHTAYCAI* Village Project

(*If you have to ask, you can't afford it)

Project Management Buildings Land Planning Sales and Marketing

Planning Townhouse Units Water and Sewers Advertising

Reporting Clubhouse Roads and Access Lanes Association Declarations

Administration Gatehouses Retention Ponds General Legal

Meetings Pro Shop 18-Hole Golf Course

Documentation Planning Documentation Planning Permits and Inspections

Maintenance Staffing Requirements

Permits and Inspections

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Work Packages
The lowest level of WBS is called a work package
if further deconstruction into activities is possible
May be assigned as a subproject
May be subordinated into WBS structure for
estimating purposes
Activities at this level become the basis for time
and duration estimates

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Exercise 3

WBS for the Office Move

Use the following major categories to develop a WBS of those
activities necessary to accomplish an office move: project
management; pre-move activities; moving activities; post-move
activities.

Arrange the following tasks as work packages under the four

headings described above: select furniture; prepare office for move;
hold kickoff meeting; set up utilities (wiring and so on); complete
internal construction to final floor plan; plan move; move/relocate;
install new furniture, communications equipment, and computers;
install new signs; and of course, close out project.

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Schedule Planning
Determines the time duration to complete the
project
Clarifies relationships between various work
packages
Tools help in schedule planning only when
accurate information is used with the tools

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Common Scheduling Tools

Network diagrams
Gantt charts
Project calendars
Milestone charts

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Network Diagramming
Shows the logical relationship between work packages
Work packages are represented by boxes
Dependencies are represented by arrows
Multiple arrows (dependencies) are possible

Start 1.1.1 1.1.2 1.2.2 Finish

Start

1.2.1 1.3.1 1.3.2

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Network Diagramming (continued)

Toast Bread Butter Toast

2 minutes 1 minute

Boil Water Boil Egg

7 minutes 3 minutes

Start Finish

Make Coffee Pour Coffee

8 minutes .5 minute

Set Table Prepare cereal

3 minutes 2 minutes

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Critical Path
Longest of all paths through the project
Shortest time to complete the project
Path with zero float/slack time

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Float
Amount of time an activity may be delayed from its
early start without delaying the project finish date
Calculated from the network diagram after
completing a backward pass
Indicates the amount of flexibility the project
manager has to adjust the timing of a particular
activity
Float is calculated by subtracting early finish
from late finish (or early start from late start)

Source: PMBOK® Guide, p. 378

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Network Diagramming Practice

Exercise 1

Start Dur=3 Dur=6 Dur=4

Dur=5 Dur=7 Dur=3 Finish

Exercise 2

Start Dur=4 Dur=6 Dur=4 Dur=3

Dur=5 Dur=7 Dur=1 Finish

Exercise 3

Dur=1 Dur=7 Dur=3 Dur=8

Start Finish

Dur=5 Dur=6 Dur=2 Dur=4

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Exercise 4
Network Diagram for the Office Move
Using the WBS you developed for the office move and the
durations provided below, build a network diagram for the office
move.

Work Package/Activities Duration (days)

Plan move 20

Hold kickoff meeting 1

Select furniture 25

Prepare office for move 20

Move/relocate 5

Set up utilities 30

Close out project 5

Install new signs 15

Complete internal construction to final floor plan (build out) 45

Install new furniture/communications equipment/computers 10

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Ways to Speed Up Schedules

Methods
Crashing
Fast tracking
To speed up a project, you must speed up the
critical path

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Gantt Charts
Today Today

Task A Task A

Task B Task B

Task C Task C

Task D Task D

Task E Task E

Task F Task F
Project Project
Month 1 2 3 4 5 6 7 Month 1 2 3 4 5 6 7

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Milestones
Significant events or deliverables
Major project happenings (component X
complete)
Funding points (30% of budget expended)
Key dates (April 15)
Activities of “zero duration”
Take no time; consume no resources
Serve as reminders for checking overall project
status at key points

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Estimating
An assessment of the likely quantitative result;
usually applied to project costs and duration and
should always include some indication of accuracy
Work packages provide the basis for the project
manager’s estimates

Source: PMBOK® Guide, p. 360

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Good Estimating Practices

Acknowledge the level of accuracy
Estimates can and should be done at varied
levels of accuracy
Communicate the level of accuracy with the
estimate
Get input from many sources
In-house sources
Outside sources
Professional organizations

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Program Evaluation and Review Technique

(PERT)

Optimistic + ( 4 × Most Likely ) + Pessimistic

Estimated Time =
6

3 days + ( 4 × 5 days ) + 8 days

e( t ) = = 5.17 days
6

NOTE: PERT is useful in estimating costs as well as schedule.

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Building a Cost Estimate

Top-down estimating
Early approximations using categories of work
Often has a higher level of variance
Bottom-up estimating
Based on completed WBS
Assign cost to work packages or control
accounts
Sum up for total cost
Either method needs to include—
Direct cost
Indirect cost (overhead)
Reserve
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Cumulative Cost Curve

350
300
250
200
150
100
50
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

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Risk Management Planning

The process of deciding how to approach, plan, and
execute risk management activities for a project
—PMBOK® Guide, p. 373
Risks are threats or opportunities
Risk planning is an integral part of project planning
Risk management consists of six processes:*
Risk management planning
Risk identification
Qualitative risk analysis
Quantitative risk analysis
Risk response planning
Risk monitoring and control

*Source: PMBOK® Guide, p. 237

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Communication Plan

Communication Format Frequency Distribution

Team briefing Restricted intranet Daily at 9:00 Team and stakeholders
with access to secure
project info area

Weekly Web bulletin Internal intranet Weekly Team, sponsor, senior

management
Technical Incident E-mail Immediately after Webmaster, IT
Report incident department
Budget and schedule Spreadsheets and Biweekly Sponsor, senior
detail detailed Gantt chart management
Accomplishments and E-mail and intranet Weekly All internal stakeholders
setbacks
Schedule milestones E-mail and intranet Weekly All internal stakeholders

Cost-to-date E-mail and intranet Weekly All internal stakeholders

milestones
Current top five risks E-mail and intranet Weekly All internal stakeholders

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Communication Made Simple

The Two-Floor Rule

Every stakeholder should receive information at

just the right level of detail for him or her
High-level managers won’t want to see all the gory
details of the project
Your team members need to see a great deal more
If your level of reporting is appropriate and one of
your stakeholders steps into the elevator and asks
about the status of the project, you should be able
to brief him or her by the time the elevator stops
two floors away
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Roles and Responsibilities Matrix

R—Responsible
Resource A—Accountable
Pat Jean Francis
Task C—Consult
I—Inform

1.1.1

1.1.2

1.1.3

Source: PMBOK® Guide, p. 206

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Project Implementation

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Project Baselines
The original plan, plus or minus approved changes
NOTE: baselines (plural)
Scope
Cost
Time

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Who Needs Baselines?

Customer
Project manager
Management
Accounting
Project team

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Monitoring Project Performance

Compare against baselines:
Cost
Time
Scope
Identify variance
React as necessary

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Earned Value
An objective look at project status
Schedule and cost variances
Assessing schedule, cost, work status
Single system to integrate multiple assessments into
a single reporting structure

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Key Earned Value Terminology

Planned value (PV)—the sum of approved cost
estimates for activities scheduled to be performed
during a given period
Actual cost (AC)—the total cost incurred in
accomplishing work during a given time period
Earned value (EV)—the sum of approved cost
estimates for activities completed during a given
period
Budget at completion (BAC)—the sum of approved
cost estimates for all activities in a project

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Key Earned Value Terminology (continued)

Cost variance (CV)—the difference between the

value of the work completed and actual costs of the
work completed of an activity
Schedule variance (SV)—the difference between
the planned scheduled completion of an activity
and the amount of work actually completed
expressed in dollars

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Exercise 5

Earned Value Practice

Michael and Angela are working on a dinosaur reconstruction
project. Specifically, they have been assigned to reconstruct the
mouth of a hadrosaur, a dinosaur with 2,000 teeth. Each tooth
has a budget of $150. They are each supposed to complete 10
teeth a day.

It is the end of the twelfth day. They have reconstructed 300

teeth in the hadrosaur’s mouth. A status report from the project
accountant shows that they have spent $48,000.

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Exercise 5

Earned Value Practice (continued)

AC =
PV =
EV =
BAC =
CV =
SV =

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Assessing Complete Status

Time
Cost
Scope
Resources
Quality
Customer perspective

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Managing Change
Change happens for many reasons and in many forms:
Customer input
Team input
Business input
An organized, systematic approach is helpful in
managing change:
Change request forms
Review and evaluation process
Decisions

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Project Closure

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Project Closeout Checklist

Provide the customer with all project information
Recognize, reward, and reassign project team members
Terminate outstanding purchase orders from
subcontractors
Prepare final payment
Dispose of materials and supplies
Prepare final cost and schedule reports
Document lessons learned
Celebrate project successes

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Lessons Learned
Timely
Relevant
In context
Detailed
Filed and accessible

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Stakeholders Report/Celebration
Communicate results
Pinpoint successes
Propose maintenance/
corrective measures if
needed
Share contributing
success factors
Present plans for
corrective action
“Sharpen the saw” for future
project best practices
Celebrate successes!

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Workshop Review
By now, you should be able to—
Create a working definition of the term “project
management”
Name the key stakeholders in a project and
determine ways of keeping them “on task” during
the phases of a project
Break a project into logical phases and specify the
primary activities that occur in each phase
Effectively use the components of a project charter
and appropriately scale each of them based on the
size of a project
Develop a procedure for managing changes in the
project after it is underway
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Workshop Review (continued)

By now, you should be able to—
Create a WBS for a project
Sequence activities within a project based on
mandatory and discretionary dependencies
Estimate activity durations and make appropriate
adjustments as needed
Identify, quantify, and give priorities to risks in
managing a project
Create a communication plan for reporting project
progress and issues
Capture valuable project lessons learned and use
them to define and improve project management
practices within your organization
© ESI April 2007 dhx01-01.ppt 1-67

Bibliography and Suggested Reading

Project Management Institute. A Guide to the
Project Management Body of Knowledge.
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Working Glossary. Arlington, Va.: ESI International,
2000.

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Project Management Fundamentals Month 1998

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