Kerzner Project Management A Systems Approach to Planning, Scheduling, and Controlling, 11th Edition

Instructor's Manual to accompany

PROJECT MANAGEMENT A SYSTEMS APPROACH to PLANNING, SCHEDULING, and CONTROLLING

ELEVENTH EDITION

HAROLD KERZNER, PH.D.

Table of Contents

PART ONE: Solutions to Chapter Problems

Chapter 1-Problems Chapter 2-Problems Chapter 3-Problems Chapter 4-Problems Chapter 5-Problems Chapter 6-Problems Chapter 7-Problems Chapter 8-Problems Chapter 9-Problems Chapter 10-Problems Chapter 11-Problems Chapter 12-Problems Chapter 13-Problems Chapter 14-Problems Chapter 15-Problems Chapter 17-Problems Chapter 18-Prob1ems

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Each of the causes can produce each of the effects. Some students have commented that these cause and effect relationships look like their last project. This is the reason why project managers must continuously replan projects.

There is no correct answer to this problem, just preferred choices.

1. a, b, c, d, f, g, i, k, m, n, p 2. b, d, e, h, i, j, k, m, n, o, p 3. a, c, d, f, g, i, j, m, n, p 4. b, d, e, h, i, j, k, m, n, o, p 5. b, d, h, i, l, m, n, p Moral: Even in the best companies, differing views of project management are possible.

Organizations should be restructured in order to get better control of resources. Therefore, those individuals who directly control the resources, namely the middle and lower level managers, should have first insight that organizational restructuring is necessary. Labors are too involved in the details of the task to realize the resource problems, and executives are too involved with top management functions.

Project managers do not control resources directly and therefore have to rely on their own interpersonal skills in negotiations with the line managers. Project managers cannot rely upon executives for help because executives prefer not to interfere and tell their line managers how to control and assign resources.

Project management is designed for industries which have complex (as opposed to simple) tasks and which operate in an ever changing, dynamic (as opposed to static) environment. These include aerospace, defense, construction, computers, high technology, electrical instrumentation, etc. . . . Companies which have highly repetitive tasks, such as low technology manufacturing companies, do not need formal project management but can use informal project management for activities such as capital equipment projects. Furthermore, project management works best in situations where activities require the involvement of more than one functional group.

Project managers believe that since they control total project costs, they are the only ones that contribute to profits, since in “project driven” organizations all profits must come out of the projects. Line managers, on the other hand, believe that they are the ones who contribute to profits by assigning the right

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salaried personnel at the right time to meet schedule commitments. Both groups are correct. Both project managers and line managers contribute to profits. It is a team effort.

1–7 In general, the most important attributes of a project manager are communicative skills and interpersonal skills. Individuals cannot be trained to be a project manager simply by taking courses or attending seminars. Project managers can only be developed by on-the-job training. Some companies prefer to train project managers by first rotating them through the various line organizations (say two weeks to two months each) and then assigning them as an assistant project manager. The question, of course, is how much they can learn in such a short period of time. Promoting from within is best because the first few project managers must know the total organization. If functional employees see promotions from within, then they feel that there are several career paths in the company. However, the new project managers must be able to divorce themselves from the functional organization. It is often best to hire from the outside so that you will have a project manager who does not have any functional ties and does not owe any favors.

1–8 Functional managers can make good project managers if they can divorce themselves from the functional details of the project and act as generalist managers worrying about time and cost as well as performance. The exception to the rule would be an R & D project manager. Generally speaking, line managers do not make good project managers if they have to wear two hats at the same time; a line manager and a project manager. In this case, the line manager may save the best resources for his project. His project will be a success at the expense of every other project that he has to supply resources for.

1–9 Functional managers would prefer to manage projects which stay within their functional groups. This greatly reduces authority problems. Sometimes, however, the line manager may be asked to manage an entire project even though only 60% of the work stays within his group. This can work if the line manager has good interpersonal skills and must interface with only one or two other departments.

1–10 All three items are more important on the horizontal line than on the vertical line. Because the project manager is under a time constraint, time management is vital. Communications are important because the project manager may be working with functional employees that he has never worked with before. Motivation is important because the project manager must try to motivate functional employees without the leverage of controlling their salaries and pay raises.

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1–11 This definitely applies to project management since the project manager may have to negotiate for all resources on the project.

1–12 All are basic characteristics of project management.

1–13 Either executives or line managers usually look over the shoulder of the project manager. If the project is a high priority, then executives may get actively involved and act as a project sponsor. And even if there exists a project sponsor, line managers should still look over the shoulders of the project managers to verify that all decisions are in the best interest of the company as well as the best interest of the project.

1–14 In most organizations, power rests with the individuals that control the resources. If the project manager has to negotiate for all resources, and the resources are still attached administratively to the line manager, then project management may very well make line managers more powerful than before. Of course, senior management still retains the right to “glorify” the project management position.

1–15 In project-driven organizations, the fastest career path is in project management, with project engineering second and line management third. The major reason for this is because project management and project engineering may be viewed as having direct control and input to corporate profitability since each project has its own profit and loss statement. In non-project-driven organizations, where the profit is measured vertically, the career path opportunities are reversed.

1–16 Placing highly technical people in charge of a project can lead to micromanagement and over-design with very little regard for budget and schedule.

1–17 This is a very common situation. The project manager must be made to realize that he is now a generalist.

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CHAPTER 2 All organizational charts are examples of closed, dynamic systems as shown in Figure 2-2.

2–2 The major item here is time. Projects generally have severe time constraints whereas systems are ongoing entities (perhaps composed of several projects) with more flexible time requirements.

2–3 R & D is a system with feedback to top management, engineering, manufacturing, and marketing.

2–4 a. Open, closed, or extended b. Extended c. Closed d. Closed e. Closed 2–5 Organizations are static, schematic models although we would like them to be dynamic. Generally, the change is so slow that they cannot be considered as dynamic.

2–6 Projects can be subdivided into smaller elements such as tasks, subtasks, and work packages. This will be discussed in Chapter 11.

2–7 People can have “tunnel vision” and not realize how their efforts fit into the big picture, thus making integration more difficult.

2–8 People try to optimize each major or minor activity rather than the total package.

2–9 A cost-benefit analysis or feasibility study is generally easier in a horizontal structure because many diverse groups can pool their knowledge toward the achievement of a single objective.

2–10 Project management can be made to work effectively on short duration activities (i.e. short life cycles). For long life cycle activities, product rather than project management may be more applicable.

2–11 Usually this entails the establishment of major decision-making milestones, such as budget approval, project approval, schedule approval, and critical design reviews.

2–12 Because the project manager is under time, cost, and performance constraints, he often has to take risks and cut corners in order to get the task accomplished.

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2-13 Yes, as long as the projects have some degree of similarity between them. But once a totally new project comes along, especially if it has some degree of complexity, the company may be in trouble.

2-14 This is usually an executive decision based upon how much control the executives want to have over the project management processes. It is also based upon how much trust they have in the project managers.

2-15 Assuming that maturity is accompanied by trust, the number of phases should decrease.

2-16 Executives are afraid that they may lose control and authority if they support project management. This is a serious fear that must be overcome.

2-17 If the corporate culture is based upon trust, cooperation and effective communications, the cost of implementation can be lessened.

2-18 If you discover early on in the project that the objectives are unrealistic and cannot be achieved, the project might be seen as a failure because the objectives are unreachable and also seen as a success because it clearly shows that you were going in the wrong direction and are no longer squandering resources.

2-19 With informal project management, there is generally less paperwork because the organization has faith in the project managers and their ability to perform.

2-20 Generally speaking, formalized project management comes first. Then, after trust is achieved, an informal project management approach is possible.

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Grinnell and Apple are correct in that a matrix would eliminate these problems provided that the problems are the result of poor interaction between diverse functional groups. If these problems are common to projects which stay within one line organization, then the problems rest with the line managers.

Converting from a traditional to a project structure may take between two to three years if employees feel that they cannot effectively report to more than one boss, or if they feel that they will not be evaluated effectively. Any organizational structural change must be married to the wage and salary administration program. Once employees learn how to report to multiple managers, a company can convert from one project organizational form to another, virtually overnight.

People should undergo therapy sessions both during conversion and for some time after, say two to three years. The follow-up sessions are designed to obtain feedback from the employees and their recommendations as to how the system can be improved. This should be done regardless of the form.

A matrix structure is well suited for each of these.

Not all project managers have the same amount of project authority. Furthermore, the project manager, by virtue of his ability to establish his own project policies and procedures, can delegate as much authority as he wishes. Everything must be documented so that all players understand the ground rules. This will be discussed in more depth in Section 5.3.

Under special circumstances, each of these factors can be used as the criteria for selecting an organizational form. In general, the only good reason for changing the organizational form is to get better control of resources. However, since customers may consider your organization as an extension of their own company, they may wish to have some say as to the organizational structure for a project.

Combining organizational forms is designed to obtain the best of two worlds. For example, the matrix is a combination of the horizontal and traditional structure. The idea is to obtain an organizational structure where the advantages grossly outweigh the disadvantages.

Obviously, the capabilities of all levels of management are important. However, if the middle and lower-level managers have demonstrated the ability to manage resources, then more authority can be delegated to them and the company can be run on a day-to-

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day basis by cooperation between the project and functional managers.

Companies will always be willing to accept organizational restructuring if they really want or need the customer’s business.

Once a company accepts project management, the company becomes dynamic and can usually adapt to a changing environment very quickly because individuals learn how to report effectively to multiple managers. Management must consider the feasibility of the change, the impact on the existing organization, and especially the possibility that this might become a precedent for the future.

Generally speaking, life cycles are used on long term projects where each life cycle phase can be measured in weeks or months.

Organizational structures, although they must be able to adapt to a changing environment, are designed for a stable flow of work.

Companies should not design organizational forms based upon the individual life cycle phases but rather the total project life cycle. There are exceptions, however, as in the situation where the first phase is R & D and the remaining phases include selling in the market. (See Problem 3–11) R & D is one of the best applications of the matrix structure because the best technical resources can be shared between projects and the general atmosphere fosters teamwork.

The company has been very successful in the past using informal project management where people appear to be talking to one another and making decisions which are in the best interest of the project. This type of structure cannot work effectively for large organizations or large projects which span several departments.

However, many companies find this organizational structure effective because they get the advantages of formal project management without the disadvantages of the necessity for formally defined authority and a massive flow of paperwork. Personnel resent organizational change unless they are convinced that the new structure will give them more authority, responsibility, opportunity for advancement, ability to build an empire, more status, more pay, and other such arguments.

Both statements are correct.

All three statements are correct.

The first concern in selecting an organizational form for a small company is to minimize the overhead rate. This is usually accomplished by minimizing the number of top-level managers while trying to delegate the minimum amount of authority (especially for decision-making) to lower-level personnel. Therefore, although some companies may wish to have an informal matrix, the usual selection is the formal, traditional structure.

Project managers believe that they report to every executive in

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the organization and the customer even though they may be attached to one line group. In addition, some project managers believe that they must report to every line manager as well since only the line managers control resources. Function team members report formally to their line manager and informally to all project managers. Some line employees try to avoid the “horizontal” informal reporting by asserting that they have only one boss.

Functional managers report to only one person, their functional executive.

3–17 If a project organization were large enough to control its own resources on a full-time basis, then a project organizational form may not be acceptable. Most of the time, when this occurs, the project is shown as a vertical line on the organizational chart, perhaps as a separate division, rather than a horizontal line.

3–18 Yes. There is a tendency to create more upper-level management slots when first going to a matrix in order to obtain better control. However, there comes a point where the matrix becomes mature and less top-level personnel are required.

3–19, 3–20 A matrix organizational form is that structure which best fosters teamwork and communications. The reason for this is because it forces people in each one of the functional disciplines to communicate with one another, and if the project manager gives these people more information than they have to have (i.e. the total picture), then this has a tremendous bearing on how well people will communicate with one another and work together.

3–21 Yes. The matrix structure can be used in banks to create banking general managers. Branch managers are often regarded as banking general managers performing in a matrix.

3–22 A separate project management division would alleviate many of the problems. However, line managers may perceive this new division as a threat to their power base and authority, and may not provide the support needed. A training program will be necessary to convince the line managers that the new structure is in the best interest of the company.

3–23 Project-driven industries identify all corporate profitability and loss on a project-by-project basis since the entire function of the organization is to support projects. Such industries would be aerospace, defense, construction, and divisions within larger companies, such as the MIS groups. Matrix structures are ideal for project-driven industries.

3–24 It is always better to have one individual who is dedicated and committed (perhaps through full-time assignment) than to fragment the responsibility among several people who must share their loyalties among several projects.

3–25 The major reasons are usually attributed to the responsibility

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for profit and loss. The greater one’s influence on profit or loss, the higher one usually reports. Another reason for reporting high is customer interfacing.

For projects internal to the department, this works well. However, when interfacing with other departments becomes necessary, Ralph may find a greater need for interpersonal skills.

As long as the other divisions are willing to provide support, this situation can work. The other divisions must be allowed to participate in planning and decision-making. Using the project management division would be easier, but not necessarily more practical. Not all projects must flow through the project management division.

Project management advocates that there is no one best way to organize under all conditions. Organizations must be dynamic in order to respond rapidly to an ever-changing environment. The needs of the organization should determine the structure and, as needs change, so should the structure.

This situation can do more harm than good. Organizational charts do not necessarily indicate the balance of power in the organization. The line managers may be upset about seeing project managers drawn in higher positions on the organizational charts.

Both statements are true and should be considered in developing matrix structures.

With this many project managers, it is best to set up a line group for project managers. It is not uncommon for 15 project managers to report to one manager of project managers. The reason for this is that project managers should not require any direct supervision.

Project management can work here, but a matrix is not practical.

Departmental project management may be best.

Project task forces generally have full-time membership whereas pure project management advocates sharing resources on several projects which can support full-time membership.

It is highly unlikely that both formal and informal project management can be in use at the same time and yet share the same resources.

The best application of such a structure is for multinational corporations and multinational projects.

Informal project is designed for non-project-driven organizations. The characteristics are (1) low need to define authority of the project manager, (2) low need to bury the project in paperwork, and (3) free flow of information among company personnel.

Yes. It is possible to have one matrix for the flow of work and a second matrix for communications or authority.

Project-driven organizations are used to these problems and cope

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well. Some companies may have 50–100 projects going on at the same time. If the company has a severe problem because of too many projects, then executives must be willing to delay approval or startup of projects in order to match availability of resources.

The problem is not necessarily with matrix design as much as it is with security. Going to a matrix may make priority information available to more people than necessary.

Implementation can be done in stages, say from division to division. However, this will take much longer than implementing project management across the entire organization simultaneously.

Partial implementation may result in having to solve the same problems over and over again.

As long as both categories of projects are prioritized from the same list, the line managers may find it easier to allocate resources. Without common priorities, short-term thinking together with immediate profits may become more important than long-term thinking and long-term profits.

The corporate engineering function is designed to supply a professional project manager to any line group needing service. The project manager reports “solid” to corporate engineering and “dotted” to whichever manager requires the services.

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The situations described here can occur in any organizational structure, not necessarily a project form. However, the relative intensity of this situation can vary. These situations are usually more pronounced in a matrix than in any other organizational form.

If the project manager must direct an activity which requires the establishment of a project team, then the project manager must have the authority to obtain (or at least request) manpower as necessary provided that the project constraints are not violated.

All three statements are true. The first statement, however, may have a flaw. Generally speaking, if there exists an atmosphere of trust, there may not be any need for a close customer-contractor working relationship. This, of course, may depend upon who the customer is.

Project management is designed to make effective utilization of resources. This is accomplished by sharing key personnel as needed, thus fostering an atmosphere of variable manpower loading. Performance evaluation is complex only if the line manager does not have sufficient time to observe his people in action, and therefore must rely upon the project manager for input. The project manager utilizes this input as a leverage tool to motivate his personnel (see Journal of Systems Management, February 1980 for the author’s article, “Personnel Evaluation in Project Management”). In project management, it is often impossible to distinguish between the various grade levels of project management and project engineering. Although these grade levels may be possible in a functional department, functional employees are often asked to work both above and below their normal pay grades, thus questioning the validity of using pay grades. Training in a project environment requires that people learn how to report and interact horizontally as well as vertically at the same time. Morale problems may be greater in a project environment because both project and functional managers may be competing for the loyalty of the employee.

According to the description given here, project managers appear to be grossly underpaid medical doctors. The job descriptions are the same except that only the life and death of the project is at stake.

Paul should pick up these employees early if they are that necessary for success and if the increased costs are not a problem.

Trade-off analyses may be required. This is a common technique

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used by line managers to “force” project managers to pick up key individuals earlier than required.

These are valid reasons and can be applied any place and any time.

Yes, by stressing communicative and interpersonal skills.

If the project manager does not have at least an understanding of technology, then he may be at a severe disadvantage in making technical decisions and evaluating technical alternatives.

If Frank Boone is the most knowledgeable piping engineer in the company then there is no question that you would like this man on your project because you have the best available resource. The next question, of course, is whether he has a poor attitude. My recommendation is that you sit down with him first and see what his attitude is really like. In general, you would definitely want this person because he is supposedly the best resource.

Your working relationship would be very poor, at best. You must find some way of motivating these people without creating a conflict with the functional manager.

Organizations have both formal and informal job descriptions.

Writing papers for one’s superior is an example of an informal job description. As you write the paper, you sort of hope that there will be a long question and answer period following the session.

The major cause is usually the inability of the project manager to give up his technical expertise and become a generalist.

Determining the “how” and “who” is a functional responsibility.

Determining “when” is a joint responsibility in that the project manager determines the gross milestones and the functional managers determine the intermediate, detailed milestones. Mobilizing the resources is a project office responsibility.

Project organizational forms are designed to encourage the systems approach to decision-making with group participation.

If the project is long-term and large enough to control its own resources full time, then it might be best to set up the project as a separate line organization in the company. For a short duration project, a horizontal line would be better even though the resources are employed full time.

The project manager is under a time constraint, and therefore does not have the luxury to train people in the manner in which he would like them to work with the project manager and the project office. Therefore, once a project manager develops a good working relationship with other employees, the natural tendency is to want those same employees on every project that the project manager runs.

Project managers have the right to directly dismiss project office personnel who are performing unsatisfactorily. For a func-

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tional employee, dismissal must come through the line manager. If a functional employee must be removed, it should be made to appear as though the employee was simply reassigned to another activity. Otherwise, if the employee belongs to a strong informal organization, the project manager may get the reputation of having people fired from his project.

You can talk to the chief project engineer, project manager, and vice-president, in that order. If you go upstairs to the vicepresident, you had better be right.

Definitely not. You need dedicated employees in project management.

Sometimes this situation is inevitable. The result is usually inefficiency and below-standard performance, especially if overtime is required.

Project managers should be paid for results, and not based upon the number of employees that actually control or supervise.

Project managers should try to upgrade not only their subordinates in the project office, but also the functional line employees. Here we have a delicate situation; the project manager really does not have the right to upgrade functional employees without first going through the functional manager. It is best that all work, even if it requires that an individual work out of his pay rate, be first approved and blessed by the functional manager.

He shouldn’t. The best people are needed on short-term, high risk projects. Allowing a line manager to assign his best employees on a long-term effort may drastically dilute his organizational capability. The longer the project, the greater the tendency to use average or above-average personnel.

Yes. This is a common practice in several industries.

Yes, hired by top management.

The major problem here is that employees may be willing to sacrifice the success of the project in order to gain this exposure.

What happens if the employee likes project management/project engineering and does not want to leave? Best bet is to create a new line group.

Project managers can create a strong team spirit and project dedication but still be hated (on a personal basis) by the employees. This is a rare situation.

People can be trained as project managers provided they have a reasonable foundation of communicative and interpersonal skills.

Without this, additional training may be futile.

The advantage of this approach is that the employee gets the exposure. The disadvantages are (1) lack of dedication to the project (knowing you will be returning to your line group), (2) unwilling to take risks, (3) what happens if the employee likes

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project management and does not want to give it up?, and (4) what happens if the employee loses some of his technical skills while in project management? Of what value is he to his line organization now?

Maturity is not gray hair or baldness. This holds true for either vertical or horizontal promotions.

Yes. It can happen either way depending upon the desires of senior management and the capabilities of the employees.

These people are usually found in the line groups as functional employees rather than managers or project office personnel. They are usually “pure doers.” There is no set criteria on how to identify these people.

As the dollar value of a project increases, project manager selection considers previous experience, quality of project office personnel, project’s priority, risk to the company, who the customer is, and time duration.

Project managers, without a command of technology, must know how to put together the correct personnel for advice and decisionmaking. In this case, the project manager called a meeting with the vice president for engineering and the engineering managers.

It is impossible to remain in project management for an extended stay and continue to be an expert.

This is a “star position” (see Problem 4–33) as long as the employee enjoys it. You are actually a project manager in such a position and your career advancement opportunities should be the same as other project managers, if not better.

This type of policy is not very effective and, slowly but surely, the government is adopting industrial project management philosophies.

This system can work and may be mandatory if using union personnel. The check people may be considered as an overmanagement expense, but what is the undermanagement expense if employees are working above their pay grade and a union grievance occurs?

The best way to obtain line support is to allow line personnel to participate in the planning of the project. Early involvement brings dedication and commitment.

Reasonable approaches would include (1) external courses and seminars, (2) exposure to the functioning of each line group, (3) on-the-job training, and (4) follow-up training. The author would prefer the order identified here, but this is arguable.

No. There should be some sort of structure, discipline, and guidance.

Project managers should be assigned as early as possible, i.e., in the feasibility phase or even during proposal preparation activities. Early involvement brings ownership.

Project management should be used as a means for getting the job

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done. A by-product would be to develop a future general manager.

If you employ the reverse situation, you may very well be sacrificing the success of the project to create a general manager.

This is an ideal situation. It produces better project managers while lowering administrative costs.

This is a good approach and is currently used by many companies.

The major criteria should be communicative skills, interpersonal skills, and an understanding of company operations. These people can be found anywhere in the organization. Some managers prepare detailed job descriptions of the project managers and discuss them in depth with the new employees to make sure that the role of the project manager is well understood.

This question has no single answer. The author prefers the second or third choice because, with an immediate salary and grade increase, you may be hard-pressed to find another position in the company for this employee if he cannot perform in project management.

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CHAPTER 5 Project managers normally have indirect reward power. In other words, they can make recommendations to functional managers, whether it be oral or written, confidential or nonconfidential, and then the functional manager takes the project manager’s evaluation in hand and makes the final decision.

5–2 (a) Referent (b) Expert 5–3 Scientists and engineers are more creative if they are given sufficient freedom, provided that they do not become overly creative and try to “reinvent the wheel” in order to show their own creativity.

5–4 Authority varies with risk. In some cases, the greater the risk, the greater the delegated authority. In other cases, the greater the risk, the less the authority granted to project manager because top management may now be taking a more active role.

5–5 Influence project managers are found quite often in the linestaff organizational form. Here, the project manager does not give any kind of direction, but simply measures progress and reports the results to other managers and executives.

5–6 People control themselves by motivators. If the motivators are lacking, people look elsewhere. Job security and continuity are motivators.

5–7 Hodgetts categorizes each element as very important, important, or unimportant. See reference article for exact data.

5–8 Because each project can be inherently different, people assume different roles on different projects. It is therefore unlikely that any such test would be meaningful. If such tests were possible, they would be particularly useful in a matrix organizational form.

5–9 Project managers often find it necessary to treat Theory Y people as though they are Theory X. In order to do this, project managers need sufficient authority or control of funds. Functional employees would like project managers to help them attain the 3rd, 4th, and 5th levels in Maslow’s hierarchy of needs.

5–10 This problem can be resolved by letting the doers participate in the planning phase.

5–11 If the project manager has more reward power than the line manager, then a situation of severe conflict will develop because functional employees will build up a strong loyalty to the horizontal line instead of the vertical line.

5–12 (a) Project managers must adapt their leadership styles to the project participants. Unhappy employees are very difficult to motivate.

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(b) Project managers are responsible for creating a relaxed environment on the horizontal line. (c) This can be disastrous. If the project manager does not show interest and dedication, then how can the project manager motivate functional employees? (d) Functional employees must realize that not all projects will be successful. However, functional employees should not go into a project with the idea that they will fail. Project managers use penalty power only as a last resort. (a) Lack of expert power cannot cause project failure (except perhaps in R & D) because most project managers are generalists. (b) Lack of referent power cannot produce failure unless the project manager refuses to interact with the employees and persists in treating them as Theory X employees. (c) Lack of “indirect” reward power can lead to project failure.

Indirect reward power is sometimes the only leverage tool that project managers possess. (d) Lack of authority can lead to immediate failure.

Generally speaking this is “doing.” However, if formal authority is needed as part of the phone call, then this is managing.

Yes. This is a common practice on large projects. (a) Project managers often create more problems than they solve. (b) Proper planning can resolve problems. However, the final solutions may not be cost-effective.

Send out a memo which identifies the topics to be discussed and an agenda identifying the time when each topic will be discussed.

Project managers should cause things to happen.

The company may have no choice but to assign to this individual only those activities that can be handled by one person. The alternative would be to fire this employee.

Charts should be provided with titles, rather than the names.

Giving the customer the names, gives the customer the opportunity to call these people directly, without going through the project office. Some companies develop an LRC with titles for outside customers but a second LRC with names for internal use.

A) Line managers should encourage project managers to be honest.

B) Line managers should simply withdraw the resources.

There are long-term risks if people are partially successful at biting off too much. What if the employee becomes sick? Who can replace him? Can the project fail? These questions must be considered.

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5–23 The project manager is at fault for not keeping closer watch on the schedule and providing the functional manager with sufficient lead time such that there may be a project delay.

5–24 Erratic or fluctuating manpower levels can be catastrophic if the functional manager cannot adhere to the request. Perhaps manpower smoothing may be necessary.

5–25 Each of these items can provide the project manager with the authority that he needs.

5–26 Managing: 1, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 Doing: 1, 2, 5, 7.

5–27 A) Project management B) Upper-level, functional, and project management C) Project and line management 5–28 Both statements are true.

5–29 The project manager should not embarrass the employee in front of the customer, but may simply tell the customer that the employee’s remarks are personal rather than the company view, or that the information is preliminary in nature and additional information will be forthcoming.

5–30 Project management is designed to reduce or eliminate uncertainty and create the environment. Functional management is for minimization and assessment of risk, and to perform decision-making.

5–31 Manager A feels unhappy about losing control. Interpersonal skills, rather than formal authority, should be used to bring Manager A into the project. The project manager should inform upper-level management only as a last resort.

5–32 Yes, if the product manager is full-time and has been in charge of this product line for an extended period of time.

5–33 Project managers must be morally committed to the employee, as long as this situation is not prolonged. This holds true even if you feel that the employee may leave after obtaining his degree.

5–34 The proper order is b, e, a, d, c.

5–35 John should ask the project manager to keep him informed about the time, cost, and performance of the project.

5–36 Employees such as this need close supervision. This supervision should be conducted by the line manager. The alternative is to remove the employee from the project.

5–37 Most project managers prefer immediate response to actions.

5–38 Yes. The project manager must try to obtain feedback from the employees to make sure that they understood the instructions.

5–39 This is often “planned” by the customer in order to see if the people on the project team are in agreement.

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1. c, e, f 14. c, d, e, h 2. g 15. c, d, h 3. e 16. d, h 4. c 17. d, e, h 5. b, c, d, e 18. e, f 6. a, c, d, e 19. b, c, e 7. b, c, e 20. b, c, e 8. a, c 21. g 9. c, g 22. d, e 10. b, c, e, f 23. g 11. b, c, d, f 24. d, e, g 12. g 25. b, c, d, e 13. d, e, f There are situations where the project manager would withhold sensitive information from functional personnel. However, information must never be withheld from project office personnel.

The danger with raw data is that the customer might formulate their opinions before your technical specialists can.

This is beneficial. The prime contractor wants to make sure that there are no surprises for the customer. Remember, the subcontractor works for the prime contractor, not the customer.

No! You work for the prime contractor.

This should become apparent during decision-making during team meetings.

You write the report for being stupid. You should have made sure that the functional manager assigned someone who had writing skills.

These are protection memos. Whenever an employee feels that he is being done an injustice or that there is some sort of problem at hand, there is a natural tendency to document all the results.

In each case, people hear what they want to hear. This can have a catastrophic effect on horizontal communications and time management.

This can be achieved by encouraging group decision-making and common goals and objectives on both the horizontal and vertical lines. Project and functional managers must work together.

Polarization occurs because functional groups neglect to talk to one another, or even to top management.

Employees who are either afraid to make decisions or do not have the authority to make decisions often flood agendas with useless items in order to avoid major decision-making.

Any communicative method is sufficient as long as you obtain some sort of feedback showing that the functional employee or subordinate understood your information or request.

This should never be permitted unless you are willing to give up all privacy. Customers always make demands like this but know

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that there is a good chance that their request will be disapproved.

In this situation the project manager should immediately stand up and inform everyone in the group that the employees are making remarks that are not the position of the company; they are remarks of the functional employee himself and they reflect his own personal opinion.

Documenting results does in fact force people to learn, provided they understand what they are doing in the documentation, whether it be the writer or the reader. Many times when you force people to actually document the results, they must learn more than they normally would.

Project managers should encourage the flow of all problems to them in a project environment, especially if there is a possibility that any of these problems will have an impact on the time, cost, or performance constraints; and the project manager should be selective in the ones that he actually resolves. Many of the problems can be delegated to assistant project managers; other problems should be handled primarily by the functional managers themselves.

It is definitely possible for a project manager to hold too few project review meetings. People that work in a project environment like nothing better than to see how their job relates to the entire picture. Project management thrives on effective communications, and therefore project managers must hold the correct number of team meetings.

Yes. Although all projects may be different, there should still exist standardized procedures for planning, scheduling (especially in manufacturing), procurement, cost control, and possibly status reporting.

Directing: a, c, f, g, h, i Controlling: b, d, e, j They are all part of the seven M’s of Management.

1. Management by inaction: Grows out of fear and anxiety.

2. Management by detail: Needs every conceivable fact. Methodical, orderly. Often is inappropriate or late.

3. Management by invisibility: Is not around. Has good subordinates. Works in office, offstage.

4. Management by consensus: Can be important in uncertain areas. Subordinates are independent and powerful. Could be a substitute for decision-making.

Important for setting policy.

5. Management by manipulation: Can be fair or unfair, effective or ineffective, legitimate or illegitimate. Some people are manipulators of others for power feeling. People are not puppets.

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6. Management by rejection: The roughly negative style. Always has ideas. Devil’s advocate. Well-prepared proponents can win—so such a “boss” can be stimulating.

7. Management by survival: Executive will do anything to survive. The jungle fighter. Done constructively. The executive will build instead of destroy.

8. Management by despotism: Totalitarian. No clashes of ideas.

The organization moves. Creative people flee. Always know who is boss.

9. Management by creativity: Good, so long as it’s based on reality. Has a trained instinct.

10. Management by leadership: The executive who manages with flair, wisdom, and vision. He listens to his men, prods them and leads them.

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CHAPTER 6 6–1

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This depends upon the type of standard. If the standard is obtainable, then time robbers should not be included. However, if this standard is the ultimate goal, then you may wish to include time robbers. However, the latter is not a common practice.

Knowing the employee’s energy cycle can be beneficial, i.e., scheduling team meetings in the morning when employees are more attentive. The energy cycle can vary as a function of hour of the day, day of the week, and scheduled or nonscheduled overtime.

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CHAPTER 7 It is definitely possible to establish formal organizational procedures for the resolution of conflicts, provided that the project manager planned for the conflicts. If the project manager knows what type of conflicts can occur in a project environment then the project manager can develop a linear responsibility chart aimed primarily at the resolution of these conflicts.

7–2 Employees must have clearly defined roles and responsibilities in a project environment. LRCs are one such way of resolving these problems.

7–3 Possible, but highly unlikely. Conflicts generally lengthen the decision-making process.

7–4 When this mistrust prevails, activity documentation definitely increases and most of the time it is not linear, but an exponential increase.

7–5 There are always situations which can develop into meaningful conflict. The most common type is when two technical employees are competing with one another to show that their technical opinions are better. They continuously look for supporting information. Project managers should let this type of situation continue as long as it doesn’t produce any bad conflicts and as long as it stays within the time, cost, and performance constraints of the project.

7–6 NO! 7–7 This is a conflict over authority and control of resources, and salary status.

7–8 Top-level executives prefer to deal with other top-level executives of the same status, rank, and authority. Therefore, either Company A must lower the rank of its negotiator or Company B must increase the rank of its negotiator.

7–9 a) Traditional, project b) Traditional, project c) Project, traditional 7–10 Withdrawal Smoothing Compromise Forcing Confrontation a) U F F U F b) U F F U F c) F U F U F d) F F F U F 7–11 Expertise Authority Reward Penalty Referent a) D I D I D b) I I I I D c) I I I I I d) D I I I D 7–1

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7–12 Agree.

7–13 Obviously, the project manager must resort to his interpersonal skills to resolve these situations. a) The project manager or executive may have to use formal authority here. b) Need preventive medicine; show people that power struggle is not in best interest of project. c) Need form authority by project manager. d) Communicate all knowledge to everyone. e) If matrix is destroyed, it probably will never be resurrected. f) Too many people have veto power. g) Poor understanding of matrix operations. h) Too much interdependence on interpersonal skills.

7–14 a) Here, it might be best if the project manager uses his formal authority and has both people removed from the project. Removing only one person will create problems by showing favoritism for the second person. b) Manufacturing must be involved in the early stages of a project. This is to prevent the situation where engineering writes the specifications but manufacturing cannot live with it. c) Since the project manager cannot have functional managers removed from the project, he should simply withdraw until that time when the managers can no longer work out the differences themselves.

7–15 If people are forced to confront one another on the resolution of a conflict, mistrust can prevail if the conflicting parties have not been given sufficient time to develop their own cases and develop the supporting data. Confrontation works best if both parties have the information necessary to be at the confrontation meeting.

7–16 The project manager should be at the same organizational level as the department manager, the man with whom he negotiates on a dayto-day basis for the resources of the company. When it comes to resolving conflicts, it is best if the conflicting parties are at the same level, so that one person does not try to exert influence on the other person by virtue of their position, pay rate, salary, or other such factors.

7–17 Manufacturing wants a high raw material inventory; sales wants a high finished goods inventory; but accounting wants low inventories.

7–18 A. Conflict intensity may increase if people are afraid that the constraints will not be met.

B. Conflict intensity will probably decrease because the number of conflicts (i.e., types) will decrease.

C. Shortening a project life cycle will cause conflict intensity to increase.

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D. Conflict intensity can either increase or decrease depending who the conflict is with.

For non-project-driven companies, the highest intensity conflicts are with equipment and facilities, personalities, and technical opinions and trade-offs.

Most people would agree with these figures.

It is preferred to handle all conflicts as they occur. However, trade-offs may be necessary if you know that more intense conflicts may occur downstream and that the line manager with whom the conflict exists is difficult to work with.

The usual procedure is to resolve conflicts according to the priority list. However, in this case, it may be better to allow the customer to participate in conflict resolution.

This system is reasonable as long as there do not exist a lot of projects in any single category or level.

This technique works well as long as the project managers talk to one another and are willing to cooperate by making decisions in the best interest of the company. Good project managers are willing to make trade-offs without “pulling rank” through the priority list.

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CHAPTER 8 8–1

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This technique is doomed to failure if the line managers decide to protect themselves by “padding” all future cost estimates and schedules.

The answer depends upon whether asking the employee to violate his loyalty will be illegal or detrimental to the project and/or company. Project managers may have to make concessions in this case.

This is usually the best approach, but too many executives do not realize this. Executives may be able to accelerate the transition to project management by realizing this problem.

Credit or Blame to Project Manager’s Merit Evaluation Increase % P.M. FCT. MGR. Reason Excellent 5 Blame No Feedback Excellent 7 Credit No Feedback Excellent 9 Credit No Feedback Average 5 Blame No Feedback Average 7 Credit No Feedback Average 9 Credit No Feedback Poor 5 Blame No Feedback Poor 7 Credit No Feedback Poor 9 Credit No Feedback No. It can do more harm than good.

Employees should have the right to challenge any item, whether it be on the project manager’s or line manager’s evaluation form.

Students should do this.

The author believes that these items should be part of the project manager’s evaluation form.

Only the line managers are qualified to evaluate employees on technical judgment unless, of course, the employees report “solid” to the project manager. This holds true regardless of the pay grades of the project manager, line manager, or functional employees.

It will be very difficult for Gary to honestly and effectively evaluate the employees. If Gary is a part-time assistant project manager, the project manager should come to his rescue. If Gary is a part-time project manager, then the line manager should come to his rescue.

These remarks are valid for most companies.

Yes, but there may be a built-in conflict of interest.

Even though work is decentralized, there should be a company-wide priority list to resolve these problems.

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8–14 This approach has serious long-term implications because the expertise no longer rests in the functional departments. Therefore, the line managers will not be dedicated and committed to the project. As time progresses, the expertise will transfer from the project function to the line function, and people may not realize it until too late.

8–15 Having to prepare detailed job descriptions creates the greatest headaches for all because of conflicts over authority, responsibility, and accountability.

8–16 There is no correct answer to this question.

8–17 Planning may be easier because of well established standards of the union shops, but motivating people to perform at a 110% level can only be accomplished through added incentives.

8–18 All three of these are nonmonetary rewards appealing to levels 4 and 5 of Maslow’s hierarchy of needs.

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CHAPTER 9 9–1

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Project managers should communicate with one another in order to learn from each other and understand what problems may occur downstream such that resource scheduling on projects may be different from planned activities.

Project management is usually more effective if the rules of the game are known by all. However, in non-project-driven organizations, nonproject personnel may not understand project management.

The major reason today for implementing project management is to integrate activities that cut across several functional boundaries. Therefore, a definition of the boundaries must be made.

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Younger executives appear to accept project management more readily.

The major argument should be to identify that project management will integrate activities across several functional boundaries, without disrupting the stability of the traditional organization, and while making efficient utilization of resources.

This may be a good approach if the individual’s health is good and if the project manager can still make decisions that are in the best interest of both the company and the project.

This rationale is reasonable as long as the efficiency of the organization is not affected.

The problem here is not with the organizational structure, but with understanding why the company rushes into projects. Actually, the rush was due to the fact that executives were delaying the start date but keeping the end date fixed.

This is an executive management problem.

This is a common situation. If line managers make project management work and support project management, then executives may decide to provide support. It is highly unlikely that an outside consultant will “convert” a strong-willed executive.

Yes, if this is what it takes to make project management work effectively.

This is an executive decision because the project managers may have no control over the line managers. Project managers have a right to see how the resources are being utilized.

A. The project manager may not get the loyalty and respect he needs.

B. The plant manager may be more interested in supplying the best resources to short-term projects with long-term profitability.

C. The project manager may have more loyalty to the plant manager’s desires than to the project.

A. Program management reports to marketing and all others report to engineering.

B. Yes. C. Identify major project milestones by working with the customers.

D. Not necessarily for these types of projects.

Yes, if the in-house representative is disrupting the operations of the company.

Yes, this is common because most companies do not know how to manage resources (i.e., tools) that already exist.

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10–14 Advanced degrees are not required for a lot of projects. Communicative and interpersonal skills are more important. The problem is that line employees may feel that their promotion slots have been absorbed.

10–15 Many projects are overmanaged because the cost of undermanagement can be orders of magnitude greater than the cost of overmanagement.

10–16 All answers are possible.

10–17 Brainstorming cannot work unless there exists a good environment with free flow of information. Brainstorming can produce beneficial results if properly controlled.

Arguments for brainstorming include: 1. Not an ongoing method for solving problems.

2. It is a technique for stimulating ideas.

3. Provides a structure for creative thinking.

4. Provides an atmosphere of free expression.

Arguments against brainstorming: 1. Does not work where trial and error (instead of judgment) are needed.

2. Does not allow for growth of ideas.

3. Attacks only superficial problems.

4. Does not recognize or reward creators.

5. How about people who are more creative by themselves?

6. Does harm by forcing good ideas to come out prematurely.

10–18 1. Define problem (avoid broad questions; i.e., too many targets, and start with small problems).

2. Select participants; select those who are not responsible for implementation; select workers from all levels, inside and outside company; shuffle people around.

3. Assemble the group but allow people to decline.

4. Where and when? (hotel? avoid normal setting).

5. Get started by defining procedures; basic rules and many ideas and no criticism; prevent negative phrases such as “We’ve tried it but it won’t work”; insure that people will speak up; see that all ideas are recorded but not traceable; create an atmosphere, i.e., music, art, slides.

6. Limit session to 30–60 minutes.

7. Follow-up procedures.

10–19 It is possible for the scope of a project to change (during execution) by as much as 80%, but executives want all changes to be made within the original budget.

10–20 There should exist a single priority list for all project managers under the same roof, or at least sharing the same resources.

10–21 This is an actual situation. The project manager asked the prime contractor and the EPA to call his vice-president stating their

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support for the consultant. The vice-president eventually backed down.

Meetings will always be more productive when both customers and contractors have had a chance to review the handouts and data.

Otherwise, expensive and time-consuming follow-up meetings will be necessary.

Selection of the subcontractors is a project management responsibility with recommendations by the line managers. After selection, the line managers are usually the people best qualified to deal with contractors, assuming the line manager is capable of making the proper decision.

The client usually prefers one-to-one communications with his counterpart in the project office. This should not be prevented from occurring.

You may have to make the decision for the sponsor. This may be a no-win situation for you, but is the lesser of the evils. You cannot let the project slow down.

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CHAPTER 11 11–1

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a) A small dollar value effort which does not require detailed cost control. b) Inhouse or often small R & D efforts. c) R & D efforts; sometimes specifications are written after the project is completed. d) This should always be available.

Those planning steps that should proceed total program scheduling are the development of a work-breakdown structure, statement of work, specifications, and gross schedule. In other words, total program scheduling cannot be completed unless complete definition of the work that has to be accomplished is completely available to all employees involved in the project, especially in pricing it out and scheduling.

This involves the size of the project, the complexity, and the interrelatedness of the line organizations doing work on the project.

Most of the time objectives can be identified and scheduled; however, there are situations, such as in research and development projects, where the objectives might not be clearly identified or labeled.

No! The WBS assumes that the work is well-defined. This may not be possible in R & D projects.

The project manager is responsible for completely defining the work requirements in order to accomplish an objective. The functional manager is responsible for determining the level of work that is needed to meet that requirement.

Functional managers must live with the WBS and therefore should work closely with the project managers in establishing the structure for project control.

Yes, on both accounts.

Yes. To request a new WBS and statement of work.

Administrative and scheduling conflicts will be most important.

Compromise and confrontation are the best modes.

No change.

A very small or one-man project.

Hedge positions should be identified on schedules which include a great deal of risk.

Elimination of these activities assumes that the project manager is totally knowledgeable in the integration of the detailed schedules or that a minimum of integration between various departments is necessary.

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11–16 Responsibility identification is usually accomplished between activities 3 and 6. Functional managers must have a complete identification of the requirements and rough schedules in order to consider the assignment of personnel.

11–17 All of the decisions are made by the project manager with input from the functional managers. Strategic variable identification must be done immediately, since this affects the assumptions.

11–18 Executives do not have the right to expect a project manager to be dedicated to a project or a project plan that is established by a planning group, especially if the project manager has not been invited to participate in the planning of the activity, or does not know or understand the objectives and the assumptions that went into the developing of the plan.

11–19 The answer to this question can only come through continuous communications between the customer and the contractor, perhaps even on a day-to-day basis.

11–20 The difference between a good project manager and a bad project manager is that a bad project manager will take the project plan and run with it. A good project manager will look at the project plan and then start “what if” games: What if this goes wrong?

What if that goes wrong? The project manager who is a good planner will always have alternate schedules that will get him to the same objective at the same point in time within the same cost, and within the same technological constraints.

11–21 A lot of project managers have the philosophy that staff meetings are the best way of doing planning, scheduling, and controlling on a project. The author agrees, provided that the people who attend the team meeting are people who actually have the right to make the decisions for the line organizational managers.

11–22 Some people consider project management as management by objectives. The work-breakdown structure is actually total objectives and structured subobjectives. The more depth in the WBS, the greater the likelihood that each subobjective will be understood and attained.

11–23 This technique cannot work in project management where each project may be a unique, one-of-a-kind activity without any historical standards.

11–24 Yes. 11–25 Answer depends on the requirements of the project, levels of the WBS, and cost reporting procedures.

11–26 Program: New Product Introduction Project 1: Sales Promotion/Advertising Task 1: Layout artwork Task 2: Approve artwork Task 3: Sales manual Task 4: Sales promotion

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Task 5: Trade advertising Task 6: Introduce at trade show Project 2: Pricing Task 1: Analyze selling costs Task 2: Analyze customer reactions Task 3: Storage and shipping costs Task 4: Review plant costs Task 5: Review cost of production Task 6: Revise cost of production Task 7: Revise selling costs Task 8: Establish billing procedures Task 9: Establish credit procedures Project 3: Market testing Project 4: Manufacturing Task 1: Final specifications Task 2: Production layout Task 3: Material requisitions Project 5: Training Task 1: Select salesman Task 2: Select distributors Task 3: Train salesmen Task 4: Train distributors Task 5: Print literature Task 6: Literature to salesmen Task 7: Literature to distributors Check points should be built into a schedule, especially on long duration projects. The check points may appear as review meetings, progress meetings, technical interchange meetings, or any other such milestone.

A good rule is to show the customer the level of detail down through which the customer wishes costs to be reported back to the project. You may impress the customer with the additional levels or the customer may then ask you for reporting at these levels and your administrative costs will rise sharply.

Correct order is 3, 2, 1, 6, 4, 5 A. Some products must be introduced into the marketplace only in specific months; i.e., automobiles.

B. Problems on other projects may have a serious impact on manpower availability for your project, or a shift in your base case may result in a lack of available manpower when needed.

C. A shift in the base case may cause a shift in the cash flow of the project and company, or vice-versa.

D. Some companies plan projects knowing that their line groups just do not contrain the desired technical expertise.

E. Personnel training at the beginning of a project, or even before the project begins, may ease problems for the project

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manager. Project managers are not happy conducting on-thejob training on their projects.

F. Frequent priority shifts are catastrophic. Some companies go so far as to shift these priorities on a weekly basis.

Does it really matter what you say? They will go anyway. Give them your blessing. Once you do this, they will feel obligated to make up the time when they return.

Although both have responsibility and accountability, executives hold the line manager responsible (because he directly controls the resources) but hold the project manager totally accountable.

Both statements are valid in the theoretical sense. Unfortunately, in the real world, the reverse tends to hold true.

Some people contend there are differences; the author contends that, under given circumstances, we can argue for either case.

You must not delay the start date to do the replanning or else you may get further behind. Also, the line manager may assign his resources elsewhere if you do not use them when planned for.

Project replanning should be a continuous effort through the life of the project. Kickoff the project and replan it as you go along.

Do not shut down the project. This will give your resources a good excuse to “desert a sinking ship.” Let the project continue and (as in problem 11-35) replan as you go along. Why incur additional delays?

Establishing: Goals and objectives; work description and instructions.

Budgeting: Budgets.

Scheduling: Network scheduling and master/detailed schedules.

Resource allocation: Time, cost, performance tracking, and systems reports.

A top-down WBS design rather than bottom up.

No. It is unfair to hold the project manager accountable for cost control in a situation such as this.

Project managers must allow the line people to review their previous estimates and revise them as necessary. You may be working now at a higher position on the learning curve or you may have lost, over the past three years, some of your key people.

1. a, b, d, g 2. a, b, d, e, f, g 3. b, c, d, g 4. a, c, d, e, f, g, h 5. c, d, e, f, g, h 6. d, f, g, h Column 3: 14, 13, 2, 20, 26, 22, 5, 25, 1, 3, 18, 17, 15, 16, 12, 23, 11, 24, 8, 9, 7, 21, 19, 6, 4, 10 Yes. This is the purpose of the work-breakdown structure.

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11–44 Depending on the type of project, cost-savings through reduced documentation could easily save 30% or more. With the departure of Mr. Lopez, the pressure for informal project management decreased, and companies began stressing formal project management again. The problem seems to have been that informal project management did not have enough time to mature to a point where people believed it would be a viable long-term solution.

11–45 There was no pressure or criteria placed upon the project engineers to prepare adequate statements of work for internal projects. Mistakes were easily resolved. However, with subcontractors, all changes required substantial funding. The project engineers received little or no training in project management until outsourcing became a way of life.

11–46 A. This can work well as long as management is willing to release the project manager this early in the life cycle process. The project manager’s contribution to the conceptual phase may be minimal. Stifle creativity until the end.

B. The basic advantage is that more ideas should come forth if there is a chance that you could be the project manager. The disadvantage is that the brainstorm team members may not be the best qualified to be the project manager.

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CHAPTER 12 PERT/CPM charts can often be used in lieu of written reports.

Definitely so.

Project managers, on both accounts.

PERT networks should always follow the work-breakdown structure.

As a matter of fact, any scheduling techniques should follow the work-breakdown structure. If the work is priced out at the task level, then there should be PERT schedules and bar charts for each one of the tasks that you find in the work-breakdown structure.

12–5 By identifying specific activities as departmental efforts.

12–6 Time and cost. High cost for overmanagement.

12–7 Yes, but perhaps more dependent upon how much depth the project manager wishes to have.

12–8 Yes. 12–9 There should always be key milestones at points where tradeoffs are most likely to occur: this is mandatory.

12–10 At completion, accelerating a project may cost more money because it is more difficult to motivate people who are looking for different roles on other projects. Furthermore, key individuals may not be available.

12–11 The major difficulties with PERT are identified in section 12-8.

Generally speaking, these difficulties cannot be overcome unless the project manager establishes separate policies, procedures, rules, and guidelines on his project. Most good project managers realize these types of problems with PERT scheduling as such and try to overcome them. Most good projects have more than one scheduling technique. They might have PERT, bar charts, and other graphical forms or techniques as precedence networks.

12–12 Yes, but it is not easy to do. Advanced scheduling techniques may be required.

12–1 12–2 12–3 12–4

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12–13 The figure below is the solution to Problem 12-13. Identify the early start, early finish, latest start, and latest finish for each activity.

12–14 The figure below is the solution to Problem 12-14. Identify the earliest/latest start and finish times for each activity.

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12–15 (a), (b)

(c) (d) ␴ Limit % Range Outer Limit 1 68 23 ⫾ 1.45 24.45 2 95 23 ⫾ 2.90 25.90 3 99 23 ⫾ 4.35 27.35 (e) There would be two critical paths. (f) Total slack ⫽ 9.33 12–16 (a) Critical path ⫽ 1 ⫺ 2 ⫺ 5 ⫺ 6 ⫺ 9 ⫺ 10 or 1 ⫺ 4 ⫺ 7 ⫺ 9 ⫺ 10 (b) Total slack ⫽ 11 weeks (c) No, critical length will still be 14 weeks. (d) There will be three critical paths.

12–17 (a) Week Activity crashed Crash coast Penalties 13 — — 35,000 12 E 1,500 30,000 11 A, E 3,500 25,000 10 A, E ⫹ C or F 6,500 20,000 9 A, E, F 9,500 15,000 8 A, E, C, F 12,500 10,000 7 crash all 18,000 5,000 (b) Future/follow-on resource requirements or simply people employed.

Total $ 97,000 93,500 90,500 88,500 86,500 84,500 85,000 to keep

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12–18 A. Based upon the figure below, time to complete is either five or six weeks, depending if you wish to crash.

B. Assuming % complete is linear over time, but not cost:

Activity AB AC AD BF DE

% Complete 100 60 100 40 0

Budgeted Cost Work Scheduled 6000 15000 7500 2000 35000

Budgeted Cost Work Performed 6000 11000 7500 5000 0

Actual 6200 12500 7400 4500 0

(200) (1500) 100 500 0

C. Decision can be made now, but actual crashing should not take place until the last moment in case a new critical path occurs.

D. See part B. 12–19 Line managers can carry as much depth as possible into PERT scheduling as long as a commitment is made to the milestones at the project managers level of WBS management.

12–20 Sophisticated software programs can account for each of these items as well as simulation to see the downstream impact.

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12–21

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12–22

12-24

There is no general rule. Most project managers find it easier to use the tree diagram where the PERT chart follows the WBS development.

Activity A B C D E

Early Start 0 0 6 6 12

Early Finish 6 3 12 15 18

Latest Start 0 9 6 9 12

Latest Finish 6 12 12 18 18

a. No impact b. The end date slips by 1 week c. No impact d. The activities on the critical path are looked at first 12-25

Activity A B C D E F G H

Early Start 0 3 3 6 5 6 12 5

Early Finish 3 6 5 9 12 9 18 7

Latest Start 0 6 3 9 5 15 12 16

Latest Finish 3 9 5 12 12 18 18 18

a. No impact b. The end date slips by one week c. The start date will slip by two weeks and two weeks of slack will be removed. d. No impact

12-26

Activity A B C

Early Start 0 0 0

Early Finish 5 4 8

Latest Start 1 5 0

Latest Finish 6 9 8

D E F G H I J K

5 5 8 13 14 14 21 21

13 10 14 18 21 17 24 28

6 9 8 20 14 18 25 21

14 14 14 25 21 21 28 28

a. No impact b. Anything greater than one week c. One week of slack will be removed d. The critical path is now 21 weeks in length 12-27 Activity Duration A 3 B 7 C 5 D 2 E 6 F 1 G 4

ES 0 0 0 7 7 5 13

EF 3 7 5 9 13 6 17

LS 4 0 2 11 7 12 13

LF 7 7 7 13 13 13 17

12-28 Activity Duration A 4 B 2 C 5 D 3 E 7 F 6 G 1

ES 0 0 0 2 5 5 12

EF 4 2 5 5 12 11 13

LS 1 3 0 9 5 6 12

LF 5 5 5 12 12 12 13

The critical path is 13 weeks. Activity F has an early finish time of 11 weeks, but activity F cannot be on the critical path because there is only one critical path and activity E is on the critical path. Therefore, activity G must have a duration of one week. We now know the ES, EF, LS, and LF for activity E. Because Activity F has an EF of eleven weeks, the durations of activities C and F must be 11 weeks total, and therefore 5 and 6 weeks. Activity C must be 5 weeks to align with the ES of five in activity E. If activity C were 6ix weeks in duration, the length of the critical path could not be thirteen weeks. Using clue 3, and knowing that LF of activity D must be 12 weeks, the duration of activity D must be 3 weeks.

Using clue 4, which tells us that activity A has only 1 week of slack, and knowing

that the LF for activity A is five weeks, the duration of activity A must be four weeks.

12-29 Activity Duration A 3 B 7 C 5 D 2 E 6 F 1 G 4

ES 0 0 0 7 7 5 13

EF 3 7 5 9 13 6 17

LS 4 0 2 11 7 12 13

LF 7 7 7 13 13 13 17

From the clues, activities A, C and E have slack. Activity F must also have slack since Activity C is on a path with it. Therefore, the critical path must be B-D-G. Since activity C has eight weeks of slack, Activity F must also have 8 weeks of slack which means, by elimination, that activity A has 6 weeks of slack and the duration for activity A must be 4 weeks. From clue 1, the critical path, which must have three and only three activities in it, must be the numbers five, six, and seven, and equal to eighteen weeks. From clue 5, the duration for activity F must be 3 weeks and activity C must be 1 week. Therefore, activity E must be 2 weeks in duration. Now we can calculate the ES, EF, LS, and LF for activities C and F. Since the length of the critical path is 18 weeks, we now know that the duration of activity G must be 6 weeks. After calculating the ES, EF, LS, and LF for activity E, we know that the duration of Activity B must be 7 weeks.

PROJECT MANAGEMENT INSTRUCTOR’S MANUAL

CHAPTER 13 13–1

13–2

13–3

All schedules are prepared, updated, and presented to the customer by the project office. However, there must be sufficient functional input so that the schedules can be updated.

The customer should have the right to dictate to the contractor how the schedule should be prepared and presented. The reason for this is if the customer is used to seeing schedules presented in one certain fashion, then the contractor should be willing to develop schedules in that fashion in order to satisfy the customer needs. What if this is contradictory to company policies and procedures? In cases such as that, it is not unusual for the contractor to bill the customer the cost of the additional data items.

See answer to 13-2.

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CHAPTER 14 14–1

14–2

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There are several approaches to this problem. One approach is to price out the job incrementally as each phase is defined in more depth. A second technique is to price out the whole project the best you can, hopefully based upon historical estimates; as each phase becomes well-defined, the estimates are revised. This problem is quite common because not all projects have well-defined specifications during project definition. a. See attached graph b. See attached graph c. Curve is linear on a log/log plot d. 49 hours e. 38 hours f. If 300th ⫽ 44 hours, then 44 ⫹ 49 ⫽ 46.5 hours 2 g. 45/x ⫽ 49; x ⫽ 45/49 h. If you can assume the same team, you may assume the same efficiency factor, or perhaps slightly below. i. Yes, you would be performing lower on the learning curve and, therefore, need more hours. j.

45 45 ⫺ ⫻ $40 ⫻ 150 ⫽ $90,000 0.6 0.75 k. Scrap factors

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(a) If the project manager does not have sufficient funding available for pricing the job, or sufficient time, then there is a tendency for the project manager to price out the job himself. (b) This situation always occurs if top-level executives feel they have more information available to them, or if they feel that a certain price is necessary in order to make them competitive. (c) This should never happen. This is an indication of poor project management. (d) Happens all the time. This is one of the privileges of being the chief executive officer. (e) This situation can happen because top-level executives do not want to get involved in bids that are under a certain value, say $30,000 or $40,000; or if they have complete confidence in the project manager himself.

14–4 Yes, because you’ll have to do it. I would question this regardless of follow-on work, but this is the way some companies work.

14–5 (a) Yes, definitely. This may be due to follow-on contracts or politics. (b) Yes (c) Virtually anyplace 14–6 (a) Short-term project (b) 0% ⫽ off-the-shelf items; 100% ⫽ specialty items (c) Specialty long-lead procurement (d) 0% ⫽ for job shops or construction labor shops; 100% for inhouse personnel.

14–7 In a project-driven company, management can sum up the manpower hourly summary on each project to determine a total company position. Shortages or overabundance are not considered in the short-term.

14–8 Program man-loading schedule.

14–9 By creating a separate WBS task or project element.

14–10 If changes take place in midstream, there is no guarantee that project managers have priced the work correctly or that they have checked to see if sufficient resources were available. For example, Project Manager A has 60% of the job and Project Manager B has 40%. It is entirely possible that Project Manager B cannot handle more than 40% of the job and, if shifting in the statement of work requirements are necessary, then the project may be elongated.

14–11 There should be a separate clause in the contract permitting you to renegotiate the overhead rates, or you could simply negotiate a cost reimbursable package.

14–12 Generally, companies try to “buy in” in the R & D phase. How14–3

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ever, if this becomes the standard for production, then care must be taken or else severe overruns can occur in production.

14–13 You should listen to the line manager. The work-breakdown structure is developed by the project office in order to be used as a tool by which the project office can communicate with line managers. If line managers feel that the work-breakdown structure is inaccurate or that it should be modified somehow, project managers should always listen to the line managers, since whatever commitment that they make will be a commitment to the workbreakdown structure.

14–14 Project managers should always give the final manpower loading curve to the functional managers. These should be given to the functional managers during the planning of the activity to make sure that the function has the resources available that he actually priced out as part of the contract.

14–15 Yes, at the beginning of the project or even the planning stage.

Why conceal information from managers who control the resources needed to make the project a success?

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14–16 There is no correct answer here. There are basically four ways to prepare a proposal: A. By the project manager alone B. By the proposal manager alone C. The project manager reports to the proposal manager D. The proposal manager reports to the project manager The exact answer depends upon the size of the project, the importance to the company, and the importance to the client.

14–17 Again, there is no correct answer. Every company has its own approaches for cost estimating.

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CHAPTER 15 15–1 Cost overruns do not just happen; they are most often caused by improper estimating, improper definition of the requirements, and other such factors. True, there are situations where a cost overrun can occur because you have a higher escalation factor on salaries, or a higher escalation factor on raw materials; but generally speaking, good project managers can plan for this and anticipate it during the perturbation analysis that goes on at the beginning of a project. This does not include situations such as research and development where it is entirely possible you could be going in the dark.

15–2 (a) Planning (b) Planning (c) Planning (d) Planning (e) Planning (f) Planning 15–3 (a) Good upfront planning. (b) Good upfront planning and historical data, with sufficient time allocated for planning. (c) Good upfront planning and good integration of ongoing activities. (d) Good upfront project planning. (e) This could be company policy and may require new company directives. (f) Need strong project authority or better definition of working during upfront planning; need commitment to goals and objectives.

15–4 The figures in Chapter 13 are applicable to all levels of reporting (above level 3 of the WBS). They are all examples of summary data, not the specialized data that stays with departmental employees.

15–5 Early starts and late starts create havoc for BCWS because a percentage of the allocated budget may already show up as spent when, in fact, the work has not yet begun.

15–6 Line managers will “pad” their estimates in order to protect themselves.

15–7 There is no correct answer to this question on morality and ethics.

15–8 Nothing other than selecting another subcontractor. Possible reasons are that the subcontractor either does not have the capability to provide costs at this level or fears that information at this level would be proprietary.

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15–9

15–10

15–11 15–12 15–13

15–14 15–15

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The management reserve should be used on high-risk activities, and only when needed. Otherwise, there may not be any use for the management reserve.

This is a common situation and can be alleviated somewhat by budgeting for management support direct labor hours for the line manager.

It cannot be prevented unless all personnel charge to overhead.

Inflation rates must be accounted for in payments and budgeting.

A. Yes. Poor status reporting may occur on large tasks.

B. Not effectively.

C. To be determined by management; weekly in project-driven companies and monthly in non-project-driven companies.

See attached table.

Cumulative Cost, in Thousands Variance $ Week BCWS BCWP ACWP Schedule Cost EAC % 1 50 50 25 0 25 50 2 70 60 40 (10) 20 66.6 3 90 80 67 (10) 13 83.7 4 120 105 90 (15) 15 85.7 5 130 120 115 (10) 5 95.8 6 140 135 130 (5) 5 96.3 7 165 150 155 (15) (5) 100.3 8 200 175 190 (25) (15) 108.6 9 250 220 230 (30) (10) 104.5 10 270 260 270 (10) (10) 103.8 11 300 295 305 (5) (10) 103.4 12 350 340 340 (10) 0 100.0 13 380 360 370 (20) (10) 102.8 14 420 395 400 (25) (5) 101.3 15 460 460 450 0 10 97.8

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1. $2,800,000 2. $2,500,000 3. $2,330,000 4. $2,380,000 5. $ 170,000 6. Lowered by $50k to $120,000 7. Subsystems A, C and Manufacturing Support 8. $ 324,000 9. $1,190,000 10. $ 73,800 11. $ 67,500 12. ⬍$6300⬎ ⫽ ⬍8.5%⬎ 13. $ 78,300 14. ⬍$10,800⬎ ⫽ ⬍16%⬎ 15. Subsystems A, B and Manufacturing Support 16. ⬍$53,100⬎ ⫽ ⬍11%⬎ 17. $23,300 ⫽ 5.28% 18. Worse: ⬍16%⬎ vs. ⬍11%⬎ 19. Worse: ⬍8.25%⬎ vs. 5.28% 20. Cannot tell without PERT 21. $2,652,249 22. $ 269,550 23. $ 50,000 15–19 Total price variance for direct labor ⫽ $6975 (favorable) Labor rate lost variance ⫽ $0.50 (unfavorable) 15–20 One of your assistant project managers has given you an earned value report which is only partially complete. Can you fill in the missing information?

15–18

(All numbers are in thousands of dollars) WBS Work Packages A B D H P S

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BCWS 103 0 42 66 87 175

BCWP 115 10 12 255 77 60

ACWP 206 40 33 94 116 184

SV 12 10 具30典 189 具10典 具115典

CV 具91典 具30典 具21典 161 具39典 具124典

473

529

673

56

具144典

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15.21 Using the exhibit of cost accounts at the end of this exercise, and the actual costs given below for WBS elements 5.1 thru 5.4 and elements 4.1 and 4.2, answer the questions shown below.

E-1–5.1 E-1–5.3 E-2–5.2 E-2–5.4 E-3–5.1 E-3–5.3 E-4–5.1 E-4–5.2

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Actual Costs $1.0 $1.5 $1.0 $2.0 $1.0 $2.5 $3.0 $3.5

WBS element 5.1 WBS element 5.2 WBS element 5.3 WBS element 5.4 WBS element 4.1 WBS element 4.2

$5.0 $4.5 $4.0 $2.0 $9.5 $6.0

Functional element E-1 Functional element E-2 Functional element E-3 Functional element E-4 Functional element D-1 Functional element D-2

$2.5 $3.0 $3.5 $6.5 $5.5 $10.0

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Answer key 15-22

a. 1840 hours per year or 153.33 hrs/month b. 3000 / 1840 = 1.63 years c. d. 3000 / 12 = 250 hours needed per month 250 / 153.33 = 1.63 people to finish the program in one year

15-23

a. Using formula I, EAC = (1900/1500) x 3000 = 3800 Using formula II, EAC = (1900/1500) x 2000 + 1000 = 3533 Using formula III, EAC = 1900 + 500 + 1000 = 3400 b. c. d. e.

15-24

Formula III Formula I Formula II It is best to use the same formula all the way through the project. However, when extraordinary situations occur, the formula might need to be changed, but everyone should be made aware of he change.

a. For A, SV = +200 and CV = -100 For B, SV = -200 and CV = +100 For C, SV = +200 and CV = +300 For D, SV = -200 and CV = -100 For E, SV = 0 and CV = +200 b. There are several possible answers for each scenario c. Totaling up the variances, the summary schedule variance is zero (i.e. on schedule) and the summary cost variance is +400, which is under budget. Things appear to look good. d. Since B and D are on the critical path, it appears that we are really behind schedule even though the

summary schedule variance indicates we are on schedule.

15-25

a. CV($) = -4400 but CV(hrs) = +80 b. Using BCWS or BCWP, the fully loaded labor rate = $85.00 c. Using ACWP, the charge back labor rate, fully loaded, = $120.00 d. We are using either higher salaried labor or the work is being done on overtime e. 150 percent f. The people assigned are at a higher pay grade than originally planned

15-26

Assuming a constant labor rate, 12,000 hours @ $97.50 = $1,170,000 Assuming a change in labor rates during the project, 6000 hours @ $97.50 + 6000 hours @ ($42 x 2.55) = 585,000 + 642,600 = 1,227,600. There will be a cost overrun of $57,600

15-27

There are several possible answers to this problem: a. For the entry labeled “Other”, it would be necessary to include an entry for meetings. The cost from the travel group is $2000 per person. You must also include the full loaded labor rates from the employees. If the meeting is one day in length, including travel days this could be three days away from the company, which equates to 24 fully loaded hours in addition to $2000 per person. b. The “Labor and Material” costs must be adjusted to include shipping c. There must be an entry for the cost of capital d. There might need to be an entry called “management reserve” or simply an adjustment in the hours to compensate for the risks.

e. Several possibilities exist.

15-28

BCWS = 6000; BCWP = 5000; ACWP = 5400; BAC = 8000; SV = -1000; CV = -400; EAC = 8640; ETC = 3240; VAC = -640; % complete = 62.5 %; 5 money spent = 67.5 %; CPI = 0.926; and SPI = 0.833

15-29

1. SPI = 0.833 and CPI = 0.90909 2. EAC = 132,000 3. ETC = 132,000 – 33,000 = 99,000 4. VAC = 120,000 – 132,000 = -12,000 5. 10 months / SPI = 12 months

15-30:

BCWS = $34,000 BCWP = $33,000 BAC = $52,000 SV = <$1000> CV = <$7000>

15-31

First figure: Behind schedule Second figure: Under budget Third figure: Cannot be determined. It does indicate that you have spent more money than planned, but you do not know if that’s good or bad because you do not know the amount of work that was performed.

PROJECT MANAGEMENT INSTRUCTOR’S MANUAL

CHAPTER 17 17–1

17–2

The expected value of the loss for the insurance company would be (.02%) (1,000,000) ⫹ (.08%) (400,000) ⫹ (.10%) (200,000) ⫽ $720. Therefore the premium is $720 ⫹ 300 ⫽ $1020 EVs1 ⫽ 具16K典 EVs2 ⫽ 具6K典 EVs3 ⫽ 具11K典 EVs4 ⫽ 具55K典 EVs5 ⫽ 0 A. Do not develop product; i.e. S5 B. S4 C. S2 D. S5

17–3

Better to purchase and save $20,048

17-4

a. Risk transfer b. Risk mitigation, also possibly assumption c. Risk mitigation, also possibly assumption d. This is a form of avoidance

17-5

Lack of understanding of the processes or delivery system (i.e. EPM system) that the supplier uses.

17-6

It does not detect all of the risks, and further more it implies that all risks can be identified using this technique.

17-7

The advantage of this technique is simplicity and may be good for qualitatively assessing risks. But for risk handling, this technique has limitations.

17-8

The model has limited use because it assumes that all information can be classified according to the scales.

17-9

If quantitative numbers can be assigned to each of the axes, then the entries in each cell will be quantitative. However, as is quite often the case, project managers may not be able to assign values quantitatively, and in such cases a qualitative assessment may be necessary by assigning values of high, moderate or low.

CHAPTER 17 17-10

The probability of a risk occurring comes from measurement and past learning. We might be able guess at the probability but history is a good teacher.

17-11

Answer for instructor’s manual: As risk management has matured, so has our understanding that there are other numerous factors that can create risks for us. This is the primary reason why almost all risk management processes begin with risk identification.

17-12

While it may seem appropriate, pharmaceutical companies would never indicate potential loss of life in a PI matrix.

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CHAPTER 18 18–1

18–2 18–3

18–4

18–5

18–6

18–7 18–8

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On log-log paper, the rate of change is constant. On regular graph paper, the rate of change looks like it is tapering off when, in fact, it simply means that the magnitude of the improvement is getting less and less. Improvements cannot occur indefinitely because of worker capability.

T300 ⫽ 620(300)⫺0.235 ⫽ 162 A) 85 ⫽ T1 (100)⫺0.415 T1 ⫽ 85(100)0.415 ⫽ 575 B) Not necessarily. The estimate for the 100th unit may be wrong.

Using the computer program, for a 75% learning curve the total hours are 175370. For a 77% learning curve, the total hours are 211889.

(211889 ⫺ 175370) ⫻ $65 ⫽ $2,373,735 211889 ⫺ 175370 ⫽ 36519 hours 36519/175370 ⫽ 20.8% Therefore, an error of 2% in the learning curve could generate an error of 20.8% in total hours.

315 ⫽ 1200(150)x log(315) ⫽ log(1200) ⫹ xlog(150) log(315) ⫺ log(1200) x⫽ log(150) 2.4983 ⫺ 3.0792 ⫽ ⫽ ⫺0.267 2.1761 Therefore, the learning curve is approximately 83%.

The next 500 units will require 5376 hours.

5376/500 ⫽ 10.75 hours/unit (5376 hours) ⫻ ($80/hours) ⫻ (1.12) ⫽ $481690 From the computer program the 150th unit of the follow-on program will be required to reach breakeven.

On a 75% learning curve, 700 units will be required to reach $475/unit. This answer may be unrealistic. The market leader required $10719 for the first unit whereas you require only $7150, which is 33% less cost. The question here is why the lower cost and the better learning curve?

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18–9

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First of all, 800 units on an 80% learning curve requires 465579 hours, with the first 200 units requiring 180069 hours. Therefore, units 201-800 require 285510 hours.

Installing new equipment, the last 600 units will require 107278 hours.

A) 285510 ⫺ 107278 ⫽ 178232 hours of savings.

B) At $70/hour, savings ⫽ 178232 ⫻ 70 ⫽ $12,476,240.

If this is simply one year’s depreciation, then the breakeven point is $62,381,200 for the equipment. This assumes that the machinery will be used in years 2-5.

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