Chapter 1:

An Introduction to
Project, Program, and
Portfolio
Management

ote: See the text itself for full citations. Text Web site is www.intropm.com
Learning Objectives
 Understand the growing need for better
project, program, and portfolio
management
 Explain what a project is, provide examples

of projects, list various attributes of

projects, and describe project constraints
 Describe project management and discuss

key elements of the project management

framework, including project stakeholders,
the project management knowledge areas,
common tools and techniques, and project
success factors
Copyright 2015 Kathy Schwalbe LLC 2
Learning Objectives
(continued)
 Discuss the relationship between project,
program, and portfolio management and their
contributions to enterprise success
 Describe the project management profession,
including suggested skills for project, program,
and portfolio managers, the role of professional
organizations like the Project Management
Institute, the importance of certification and
ethics, project management careers, and the
growth of project and portfolio management
software

Copyright 2015 Kathy Schwalbe LLC 3

 Introduction
Many organizations today have a new or
renewed interest in project management (PM)
 The top skills employers look for in new

college graduates are all related to project

management:
◦ the ability to work in a team structure
◦ the ability to make decisions and solve problems
◦ the ability to plan, organize and prioritize work
 In 2013, the average salary for someone in the
project management profession in U.S. dollars was
$108,000 per year in the United States; $134,658 in
Australia, (the highest-paid)

Copyright 2015 Kathy Schwalbe LLC 4

More Motivation to Study
PM
 Organizations waste $109 million for every
$1 billion spent on projects, according to
PMI’s Pulse of the Profession® report
 The U.S. spends $2.3 trillion on projects

every year, and the world as a whole

spends nearly $10 trillion on projects of all
kinds, or about one fourth of the U.S. and
the world’s gross domestic product

Copyright 2015 Kathy Schwalbe LLC 5

What Went Wrong?
 A 1995 Standish Group study (The CHAOS
Report) found that only 16.2 percent of
information technology (IT) application
development projects were successful in
meeting scope, time, and cost goals. Over
31 percent of the projects were canceled
before completion, costing over $81 billion
in the U.S. alone
 A PriceWaterhouseCoopers study of 200

companies from 30 different countries

found that over half of all projects fail

Copyright 2015 Kathy Schwalbe LLC 6

Advantages of Using Formal
Project Management
 Better control of financial, physical, and
human resources
 Improved customer relations
 Shorter development times
 Lower costs
 Higher quality and increased reliability
 Higher profit margins
 Improved productivity
 Better internal coordination
 Higher worker morale

Copyright 2015 Kathy Schwalbe LLC 7

What Is a Project?
 A project is “a temporary endeavor
undertaken to create a unique product,
service, or result”*
 Operations is work done to sustain the
business
 Projects end when their objectives have
been reached, or the project has been
terminated
*Project Management Institute, Inc., A Guide to the Project Management Body
of Knowledge (PMBOK® Guide, Fifth Edition) (2013).

Copyright 2015 Kathy Schwalbe LLC 8

Examples of Projects
 A young couple hires a firm to design and build
them a new house
 A retail store manager works with employees to
display a new clothing line
 A medical technology firm develops a device that
connects to smart phones
 A school implements new government standards
for tracking student achievement
 A pharmaceutical company launches a new drug
 The automobile industry develops standards for
electric cars

Copyright 2015 Kathy Schwalbe LLC 9

Video Highlights
 The Project Management Institute (PMI)
recognizes outstanding performance in
project management by announcing a Project
of the Year Award winner. You can watch
videos of the following projects:
◦ 2014: AP60 Phase 1 Project, Jonquiere, Quebec,
Canada
◦ 2013: Adelaide Desalination Project Adelaide,
Australia
◦ 2012: Umatilla Chemical Agent Disposal Facility
Operations Phase, Hermiston, Oregon, USA

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History of PM Video
 You can also learn about the
history of project management (music only
video)
 Or hear the author’s perspective by Mark

Kozak-Holland
 See www.intropm.com for links to all video

highlights

Copyright 2015 Kathy Schwalbe LLC 11

Project Attributes
 A project:
◦ Has a unique purpose
◦ Is temporary
◦ Is developed using progressive elaboration or in
an iterative fashion
◦ Requires resources, often from various areas
◦ Should have a primary customer or sponsor
 The project sponsor usually provides the direction
and funding for the project
◦ Involves uncertainty

Copyright 2015 Kathy Schwalbe LLC 12

Figure 1-1. Psychic (Slightly Modified
Cartoon from www.xkcd.com)

Project managers work with the project sponsors,

the project team, and the other people involved in a
project to define, communicate, and meet project
goals.

Copyright 2015 Kathy Schwalbe LLC 13

Project Constraints
 Every project is constrained in different ways.
Some project managers focus on the triple
constraint (meeting scope, time, and cost goals)
◦ Scope: What work will be done as part of the project? What
unique product, service, or result does the customer or
sponsor expect from the project?
◦ Time: How long should it take to complete the project?
What is the project’s schedule?
◦ Cost: What should it cost to complete the project? What is
the project’s budget? What resources are needed?
 Other constraints include quality, risk, and
resources

Copyright 2015 Kathy Schwalbe LLC 14

Figure 1-2. Typical Project
Constraints

Copyright 2015 Kathy Schwalbe LLC 15

What is Project
Management?
 Project management is “the application
of knowledge, skills, tools and techniques to
project activities to meet project
requirements.”*

*Project Management Institute, Inc., A Guide to the Project Management

Body of Knowledge (PMBOK® Guide, Fifth Edition) (2012).

Copyright 2015 Kathy Schwalbe LLC 16

Figure 1-3. Project
Management Framework

Copyright 2015 Kathy Schwalbe LLC 17

Project Stakeholders
 Stakeholders are the people involved in or
affected by project activities
 Stakeholders include:
◦ The project sponsor
◦ The project manager
◦ The project team
◦ Support staff
◦ Customers
◦ Suppliers
◦ Opponents to the project

Copyright 2015 Kathy Schwalbe LLC 18

 Project Management

Knowledge Areas
Project integration management is an overarching function that
coordinates the work of all other knowledge areas. It affects
and is affected by all of the other knowledge areas.
 Project scope management involves working with all
appropriate stakeholders to define, gain written agreement for,
and manage all the work required to complete the project
successfully.
 Project time management includes estimating how long it will
take to complete the work, developing an acceptable project
schedule given cost-effective use of available resources, and
ensuring timely completion of the project.
 Project cost management consists of preparing and managing
the budget for the project.
 Project quality management ensures that the project will satisfy
the stated or implied needs for which it was undertaken.

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Project Management Knowledge
Areas (continued)
 Project human resource management is concerned with
making effective use of the people involved with the project.
 Project communications management involves generating,
collecting, disseminating, and storing project information.
 Project risk management includes identifying, analyzing,
and responding to risks related to the project.
 Project procurement management involves acquiring or
procuring goods and services for a project from outside the
performing organization.
 Project stakeholder management focuses on identifying
project stakeholders, understanding their needs and
expectations, and engaging them appropriately throughout
the project. Note that PMI added stakeholder management
as a tenth knowledge area to the PMBOK® Guide, Fifth
Edition in 2013.

Copyright 2015 Kathy Schwalbe LLC 20

Project Management Tools and
Techniques
 Project management tools and techniques assist
project managers and their teams in various
aspects of project management.
 Note that a tool or technique is more than just a
software package.
 Specific tools and techniques include:
◦ Project charters, scope statements, and WBS (scope)
◦ Gantt charts, network diagrams, critical path
analyses (time)
◦ Net present value, cost estimates, and earned value
management (cost)
◦ See Figure 1-4 for more examples

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Figure 1-4. Common Project Management
Tools and Techniques by Knowledge Areas
Knowledge Area/Category Tools and Techniques

Integration management Project selection methods, project management

methodologies, project charters, project management
plans, project management software, change requests,
change control boards, project review meetings, lessons-
learned reports

Scope management Scope statements, work breakdown structures, mind

maps, statements of work, requirements analyses, scope
management plans, scope verification techniques, and
scope change controls

Time management Gantt charts, project network diagrams, critical-path

analyses, crashing, fast tracking, schedule performance
measurements

Cost management Net present value, return on investment, payback

analyses, earned value management, project portfolio
management, cost estimates, cost management plans,
cost baselines

Quality management Quality metrics, checklists, quality control charts, Pareto

diagrams, fishbone diagrams, maturity models,
statistical methods

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Figure 1-4. Common Project Management Tools
and Techniques by Knowledge Areas
(continued)
Knowledge Area/Category Tools and Techniques

Human resource management Motivation techniques, empathic listening, responsibility

assignment matrices, project organizational charts,
resource histograms, team building exercises

Communications management Communications management plans, kickoff meetings,

conflict management, communications media selection,
status and progress reports, virtual communications,
templates, project Web sites

Risk management Risk management plans, risk registers, probability/impact

matrices, risk rankings
Procurement management Make-or-buy analyses, contracts, requests for proposals or
quotes, source selections, supplier evaluation matrices

Stakeholder management Stakeholder registers, stakeholder analyses, issue logs,

interpersonal skills, reporting systems

Copyright 2015 Kathy Schwalbe LLC 23

Super Tools
 “Super tools” are those tools that have
high use and high potential for improving
project success, such as:
◦ Software for task scheduling (such as project
management software)
◦ Scope statements
◦ Requirements analyses
◦ Lessons-learned reports
 Tools already extensively used that have
been found to improve project importance
include:
◦ Progress reports
◦ Kick-off meetings
◦ Gantt charts
◦ Change requests
Copyright 2015 Kathy Schwalbe LLC 24
What Went Right? Improved
Project Performance
Follow-up studies by the Standish Group
showed some improvement in the statistics for
IT projects:
 The number of successful projects has doubled, from
16 percent in 1994 to 39 percent in 2012
 The number of failed projects decreased from 31
percent in 1994 to 18 percent in 2012
 “This year’s results represent a high water mark for
success rates in the history of CHAOS research…
Increases in project management as a profession and
trained project management professionals can be
tied directly to increases in success rates.”

Copyright 2015 Kathy Schwalbe LLC 25

Project Success
 There are different ways to define project
success:
◦ The project met scope, time, and cost goals.
◦ The project satisfied the customer/sponsor.
◦ The project produced the desired results.

Copyright 2015 Kathy Schwalbe LLC 26

 What is a Program?

• A program is:
– “a group of related projects managed in a
coordinated way to obtain benefits and control not
available from managing them individually”*
– A program manager provides leadership and
direction for the project managers heading the
projects within the program

*Project Management Institute, Inc., A Guide to the Project Management

Body of Knowledge (PMBOK® Guide, Fifth Edition) (2013)

27
Copyright 2008
Figure 1-5. Example
Programs

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Project Portfolio
Management
 Project portfolio management is an
emerging business strategy in which
organizations group and manage projects
and programs as a portfolio of investments
that contribute to the entire enterprise’s
success.
 Pacific Edge Software’s product manager,

Eric Burke, defines project portfolio

management as “the continuous process of
selecting and managing the optimum set of
project initiatives that deliver maximum
business value.”
Copyright 2015 Kathy Schwalbe LLC 29
Project and Program Management
Compared to Project Portfolio Management
 Project and program management address
questions like:
◦ Are we carrying out projects well?
◦ Are projects on time and budget?
◦ Do project stakeholders know what they should
be doing?
 Portfolio management addresses
questions like:
◦ Are we working on the right projects?
◦ Are we investing in the right areas?
◦ Do we have the right resources to be
competitive?
Copyright 2015 Kathy Schwalbe LLC 30
The Project Management Profession

 Project, program, and portfolio managers

need to develop specific skills
 Certification is available for project
managers
 There are many software tools to assist in
project, program, and portfolio
management

Copyright 2015 Kathy Schwalbe LLC 31

Suggested Skills for Project
Managers
Knowledge of the following:
 All ten project management knowledge areas

 The application area (domain, industry,

market, etc.)
 The project environment (politics, culture,

change management, etc.)

 General management (financial management,

strategic planning, etc.)

 Human relations (leadership, motivation,

negotiations, etc.)

Copyright 2015 Kathy Schwalbe LLC 32

Media Snapshot – Good Project
Management Skills from The
Apprentice
 Leadership and  Be a team player
professionalism are  Don’t be overly
crucial emotional and stay
 Know what your organized
sponsor expects  Work on projects and for
from the project, people you believe in
and learn from your  Think outside of the box
mistakes  Some luck is involved in
 Trust your team, project management,
and you should always
and delegate
aim high
decisions
 Know the business
 Stand up for
yourself Copyright 2015 Kathy Schwalbe LLC 33
Figure 1-6. Most Significant Characteristics of
Effective and Ineffective Project Managers*
EFFECTIVE PROJECT INEFFECTIVE
MANAGERS PROJECT
MANAGERS
Lead by example Set bad examples
Are visionaries Are not self-assured
Are technically Lack technical
competent expertise
Are decisive Avoid or delay making
decisions
Are good Are poor
communicators communicators
Are good motivators Are poor motivators
*Zimmerer, Thomas W. and Mahmoud M. Yasin, "A Leadership Profile of
American Project Managers," Project Management Journal (March 1998), 31-
38.
Copyright 2015 Kathy Schwalbe LLC 34
Importance of Leadership
Skills
 Effective project managers provide
leadership by example.
 A leader focuses on long-term goals and
big-picture objectives while inspiring people
to reach those goals
 A manager deals with the day-to-day
details of meeting specific goals
 Project managers often take on the role of
both leader and manager

Copyright 2015 Kathy Schwalbe LLC 35

 FIGURE 1-7. Ten Most Important
Skills and Competencies for
Project Managers*
1. People skills 6. Verbal communication
2. Leadership 7. Strong at building teams
3. Listening 8. Conflict
resolution/management
4. Integrity, ethical 9. Critical thinking/problem
behavior, consistent solving
5. Strong at building trust 10. Understands and
balances priorities
*Jennifer Krahn, “Effective Project Leadership: A Combination of Project
Manager Skills and Competencies in Context,” PMI Research Conference
Proceedings (July 2006).

Copyright 2015 Kathy Schwalbe LLC 36

Different Skills Needed in
Different Situations
 Large projects: leadership, relevant prior
experience, planning, people skills, verbal
communication, and team-building skills are
most important
 High uncertainty projects: risk management,
expectation management, leadership, people
skills, and planning skills are most important
 Very novel projects: leadership, people skills,
having vision and goals, self-confidence,
expectations management, and listening skills
are most important

Copyright 2015 Kathy Schwalbe LLC 37

Additional Skills for Program and
Portfolio Managers
Program managers normally have
experience as project managers. They often
rely on their past experience, strong
business knowledge, leadership capability,
and communication skills to manage
programs
 Portfolio managers must have strong

financial and analytical skills and understand

how projects and programs can contribute to
meeting strategic goals

Copyright 2015 Kathy Schwalbe LLC 38

Best Practice
A best practice is “an optimal way recognized by
industry to achieve a stated goal or objective.”*
Robert Butrick suggests that organizations need to
follow basic principles of project management,
including these two mentioned earlier in this
chapter:
● Make sure your projects are driven by your strategy. Be able
to demonstrate how each project you undertake fits your
business strategy, and screen out unwanted projects as soon
as possible.
● Engage your stakeholders. Ignoring stakeholders often leads
to project failure. Be sure to engage stakeholders at all
*Project
stages Management
of a Institute,
project, and Inc., Organizational
encourage Project Management
teamwork and Maturity
Model (OPM3) Knowledge Foundation (2003), p. 13.
commitment
**Ultimate Businessat all times.
Library, Use leadership
Best Practice: and open
Ideas and Insights from the World’s
communications
Foremost to make
Business Thinkers, things
Perseus happen.**
Publishing (2003).

Copyright 2015 Kathy Schwalbe LLC 39

Project Management
Certification
 PMI provides certification as a Project
Management Professional (PMP)
 A PMP has documented sufficient project

experience, agreed to follow a code of

ethics, and passed the PMP exam
 The number of people earning PMP

certification is increasing quickly

Copyright 2015 Kathy Schwalbe LLC 40

Figure 1-8. Growth in PMP
Certification, 1993-2014

Copyright 2015 Kathy Schwalbe LLC 41

Maintaining Certification
 There are also requirements to maintain
active certification status by continuing to
develop expertise
 The PMI talent triangle includes:

◦ technical project management

◦ strategic and business management, and
◦ leadership

Copyright 2015 Kathy Schwalbe LLC 42

PMI Student Membership
and Certification
Information
 As a student, you can join PMI for a reduced

fee ($40 vs. $129 in 2015)

 Also consider earning the Certified

Associate in Project Management (CAPM)

credential from PMI
 If you complete a bachelor’s degree, you do

not need any work experience to earn the

CAPM
 However, if you have enough work

experience, the PMP is more marketable

Copyright 2015 Kathy Schwalbe LLC 43

Ethics in Project
Management
 Ethics — a set of principles that guide our
decision making based on personal values
of what is “right” and “wrong” — is an
important part of all professions
 Project managers often face ethical

dilemmas.
 In order to earn PMP certification, applicants

must agree to the PMP code of ethics and

professional conduct
 Several questions on the PMP exam are

related to professional responsibility,

including ethics
Copyright 2015 Kathy Schwalbe LLC 44
Project Management Careers
 Today, individuals and organizations often take a
more proactive approach to becoming a project
manager
 The need for project managers is evident in
recent studies and job postings
◦ Between 2010 and 2020, 15.7 million new project
management roles will be created globally across
seven project-intensive industries
◦ Indeed.com listed almost 347,000 jobs in the U.S.
when searching for project manager in early 2015
◦ Sixty percent of hiring managers say interest in project
management careers among younger job applicants
has grown over the past decade

Copyright 2015 Kathy Schwalbe LLC 45

Possible Career Path
 Project administrator
 Junior project coordinator
 Senior project coordinator
 Project manager level 1
 Project manager level 2
 Project manager level 3
 Project manager level 4
 Program manager
 Senior program manager

Copyright 2015 Kathy Schwalbe LLC 46

Project Management
Software
There are hundreds of different products available
today
 Microsoft Project continues to lead the market with
over 880,000 customer and 22 million users. See
Appendix A for details on the various configurations
available for Microsoft Project and detailed instructions
for using Project Professional 2013, the product
available for a free trial
 Three main categories of tools are the following:
◦ Low-end tools: Handle single or smaller projects well; cost
under $200 per user. Smart phone apps and/or integration
with them also available
◦ Midrange tools: Handle multiple projects and users; cost
$200-600 per user; Microsoft Project is the most popular
◦ High-end tools: Also called enterprise project management
software; often licensed on a per-user basis

Copyright 2015 Kathy Schwalbe LLC 47

Free Trials and Information on Using Project 2013,
MindView, Basecamp, and Other Software

 A 60-day evaluation copy of Microsoft Project is

available from Microsoft’s Web site at
www.microsoft.com, and users of this book can
access a special trial of MindView Business
software at www.matchware.com/intropm
 Note that both of these tools require downloads

and Windows software as of early 2015

 Basecamp is a totally online project

management tool that does not require

Windows. Educators can request a free
Basecamp account without a time restriction
from www.basecamp.com
Copyright 2015 Kathy Schwalbe LLC 48
Figure 1-9. Screen from Microsoft
Project Showing a Gantt Chart

Copyright 2015 Kathy Schwalbe LLC 49

Chapter Summary
 A project is a temporary endeavor undertaken to
create a unique product, service, or result
 Project management is the application of knowledge,
skills, tools, and techniques to project activities to
meet project requirements
 A program is a group of related projects managed in a
coordinated way to obtain benefits and control not
available from managing them individually
 Project portfolio management involves organizing and
managing projects and programs as a portfolio of
investments that contribute to the entire enterprise’s
success
 The project management profession continues to
grow and mature

Copyright 2015 Kathy Schwalbe LLC 50