The Essentials of Project Management

229 Pages·2014·1.545 MB·English

by  Dennis Lock

The Essentials of Project Management
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The Essentials of
Project Management
Fourth Edition
Dennis Lock
© Dennis Lock 2014
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording
or otherwise without the prior permission of the publisher.
Published by
Gower Publishing Limited
Wey Court East
Union Road
Farnham
Surrey GU9 7PT
England
Gower Publishing Company
110 Cherry Street
Suite 3-1
Burlington, VT 05401-3818
USA
Dennis Lock has asserted his moral right under the Copyright, Designs and Patents Act, 1988,
to be identified as the author of this work.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN: 9781472442536 (pbk)
ISBN: 9781472442543 (ePDF)
ISBN: 9781472442550 (ePUB)
The Library of Congress has cataloged the printed edition as follows:
Lock, Dennis.
The essentials of project management / by Dennis Lock. -- Fourth Edition.
pages cm
Includes bibliographical references and index.
ISBN 978-1-4724-4253-6 (pbk) -- ISBN 978-1-4724-4254-3 (ebook) -- ISBN 978-1-4724-4255-0
(epub) 1. Project management. I. Title.
T56.8.L57 2014
658.4’04--dc23
2014011279
V
Printed in the United Kingdom by Henry Ling Limited,
at the Dorset Press, Dorchester, DT1 1HD
Contents
List of Figures ix
Preface xiii
1 Introduction to Projects and their Management 1
Project Fundamentals 1
Project Characteristics 1
People and Organizations 3
Project Life Cycles and Life Histories 4
Factors Relevant to Success or Failure 5
Relationship Between the Three Primary Objectives 6
Perceptions of Project Success or Failure Beyond the Three
Primary Objectives 9
Benefits Realization 11
Principal Organizations Representing the Project
Management Profession 12
References 13
2 Defining the Project Task 15
Projects Which are Impossible to Define Accurately 16
Checklists 17
Defining the Project Scope 20
The Contractor’s Strategy 21
Specifications for Internally Funded Development Projects 23
The Project Specification and Version Control 26
3 Estimating the Project Costs 29
Cost Elements 29
Accuracy of Cost Estimates 30
Standard Estimating Tables 31
Compiling the Task List 32
Documenting the Cost Estimates 32
Collecting Departmental Estimates 34
The Estimating Abilities of Different People 35
Estimates for Material and Equipment Costs 36
Below the Line Costs 38
Reviewing the Cost Estimates 40
essenTiALs oF PRoJecT MAnAGeMenT
4 Managing Risk 43
Identifying the Possible Risks 43
Risk Appraisal and Analysis 44
Risk Register 46
Methods for Dealing with Risks 47
Obtaining Insurance 50
5 Organizing the Project 51
Matrix Organizations 51
Project Team Organization 55
Team or Matrix: which Organization is Best? 57
Hybrid Organizations 59
Contract Matrix Organizations 60
Joint Venture Projects 61
The Project Manager 62
Project Management Office (PMO) 65
6 Work Breakdown Structures 67
The WBS Concept 67
Coding Systems 72
Benefits of a Logical Coding System 75
Choosing a Coding System 79
What Happens when the Customer Says ‘You Shall Use
my Coding System!’? 80
7 Planning the Timescale 83
Bar Charts 83
Critical Path Analysis 87
Two Different Network Notation Systems 87
Critical Path Networks Using Arrow Diagrams 88
Precedence Network Diagrams 91
Planning the Furniture Project by Critical Path Network 94
Level of Detail in Network Diagrams 95
Milestones 99
Is the Predicted Timescale too Long? 99
Early Consideration of Resource Constraints 100
8 Scheduling Project Resources 103
Resource Scheduling 103
The Role of Network Analysis in Resource Scheduling 104
Introducing the Garage Project 104
Garage Project Network Planning 107
A First Look at the Garage Project Resource Schedule 108
Float 109
vi
CONTENTS
Garage Project Resource Scheduling 112
Computer Scheduling of the Garage and Other Projects 115
Recapitulation 121
9 Implementing the Project Plan 123
Project Authorization 123
Preliminary Organization of the Project 124
Physical Preparations and Organization 128
Getting Work Started 130
Detailed Plans and Work Instructions 131
Managing Progress 133
Progress Monitoring and Schedule Updating 134
When the News is Bad 137
Progress Meetings 139
Project Progress Reports 141
10 Managing Purchasing 143
Outline of the Purchasing Function 143
Specifying the Goods to be Purchased 144
Early Ordering of Long-lead Items 146
Choosing the Best Supplier 146
Purchase Order 150
Expediting 152
Shipping, Port and Customs Formalities 154
Goods Receipt 155
Shortages 155
Vendors’ Documents 156
11 Managing Changes 159
The Impact of Changes in Relation to the Project Life Cycle 159
Classification of Changes 160
Change Authorization Procedures 160
Registration and Progressing 162
Formal Procedures for External Change Requests 163
Formal Procedure for Internal Change Requests 165
Design Freeze 167
The Interchangeability Rule 167
Emergency Modifications 167
12 Managing Costs 173
A Checklist of Cost Management Factors 173
Cost Budgets 174
Milestone Analysis 176
vii
ESSENTIALS OF PROJECT MANAGEMENT
A Simple Performance Analysis Method for
Design Engineering 180
An Outline of Earned Value Analysis 180
Effect of Changes on Earned Value Analysis 185
The Project Ledger Concept 186
Predicting Profitability for a Project 187
Managing Cash Flow 189
Closing the Project Down 192
13 Corporate Managers’ Support for the Project
Manager 195
Costs and Benefits of Project Management 195
Active Support from Senior Management for
Project Management 198
Reference 201
Select Bibliography 203
Index 207
viii
List of Figures
1.1 The active part of a project life cycle 4
1.2 Typical life cycle (life history) of a large project 5
2.1  Definition of a large project from initial concept to completion  15
2.2  Part of a definition checklist for a mining project  19
2.3  Initial task checklist for a management change project  20
3.1  Elements of a cost estimate for a typical industrial project  30
3.2  A general purpose estimating form, particularly applicable to 
manufacturing projects  33
3.3  Cost estimating form for purchased materials and bought 
equipment on a capital project  38
4.1  Part of a failure, mode and effect analysis (FMEA)  45
4.2  Failure, mode, effect and criticality analysis (FMECA)  46
4.3  Example of a risk register (or risk log) format  47
4.4  Insurance options and obligations  49
5.1  A coordination matrix for a manufacturing project  52
5.2  A matrix organization for multiple manufacturing projects  53
5.3  A matrix organization for mining and petrochemical projects  54
5.4  A project team organization  55
5.5  Project team versus a balance matrix  59
5.6  A hybrid organization  60
5.7  A contract matrix organization  61
5.8  One form of joint venture organization for a large project  62
6.1  Simplified WBS for an automobile project  67
6.2  WBS for a national charity fundraising week  68
6.3  Part of the upper WBS levels for a copper mine  70
6.4  Alternative WBS patterns for a large wedding project  71
6.5  Part of the WBS and coding structure for a 
radiocommunications project  74
6.6  Detail from the radiocommunications project WBS  74
6.8  Codes used by a mining engineering company  76
6.7  Codes used by a heavy engineering company  76