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1、Topic 1INTRODUCTION+PROJECT SELECTIONI. Introduction1. Evolution of an IdeaPeople have been planning and managing Projects since the dawn of time. Whenever and wherever civilizations took root, there were projects to manage: building to erect, roads to pave, laws to write. Without the advanced tools
2、, techniques and methodologies we have today, people created project timelines, located materials and resources and weighed the risk involved. Examples: great wall Over time, people realized that the techniques for cost control,timeline development, resource procurement and risk management were appl
3、icable to a wide range of projects,whether erecting bridges, rotating crops or deciding how to govern themselves. These early idea were the precursors to a set of management techniques we now know as “modern project management.Modern organizations are finding that project management provides many ad
4、vantages-not the least of which is improving the bottom line! Savvy customers demand more and better products and faster services. Time-to-market pressures forces greater efficiency. Professional project management has found its place in todays competitive, global business arena.The past several dec
5、ades have been marked by a rapid growth in the use of project management as a means by which Org. achieve their objectives.PM has emerged because the characteristics of our late 20th society demand the development of new methods of management.The exponential expansion of human knowledge; The growing
6、 demand for broad range of complex,sophisticated,customized goods and services;The evolution of worldwide competitive markets. All 3 forces combine to mandate the use of TEAM to solve problems that used to be solvable by individuals.Knowledge expansion-TEAM: call for high level of coordination and c
7、ooperation between groups of people.Intensive Competition-make their complex,customized outputs available as quickly as possible. “Time-to-market is critical. The projects undertake are large and getting larger. “The more we can do, the more we try to do.Project fails too oftenSystems projects: 30-4
8、5%of system projects fail prior to completion. Over half of all system projects overrun their budgets and schedules by up 200% or more. Combined costs of failure and overruns total in the hundreds of billions of dollars.Computerworlds survey: failed system projects cost more than $100 billion per ye
9、ar; one of two projects overrun its budget by 180% or more; A survey of what was missing in PM process indicated:project office-42%; integrated methods-41%; training and monitoring-38%; policies and procedures-35%; implementation plans-23%; executive support-22% Example of failed projectChina, Rest
10、of the world2. What is a Project?Org. Perform work. Work generally involves either operations or projects.Operation: ongoing and repetitiveProject: temporary and uniqueproject is a temporary endeavor undertaken to achieve a particular aim. Every project has a definite beginning and a definite end. E
11、xamples: running a political campaign.In the broadest sense, a project is a specific, finite task to be accomplished. Whether large- or small-scale or whether long- or short-run is not particularly relevant. What relevant is that the project be seen as a unit.Attributes: Purpose, Life cycle, Interde
12、pendencies, Uniqueness, Conflict M&M,p.8-9Project stakeholders and conflictIndividuals or organizations who are actively involved in the project, or whose interest may be positively or negatively affected as a result of project execution or successful project completion.They include: project manager
13、, customers, performing organization, sponsor, suppliers and contractors, team members and their families, government agency, lobbying organizations etcthe stakeholders often have very different objectives that may come into conflict. Examples: the owner of real estate development project, local gov
14、erning body, environment group, nearby residents. The project life cycle% of project completion:Slow start-Quick momentum-Slow finish(Fig.1-2, p.13)100Project life cycle(Fig.1-3):ConceptionSelectionPlanning, scheduling, monitoring, controlEvaluation and terminationExamples of Project life cycle: see
15、 PMBOK 1996, p. 13-16, Fig,2-2, 2-3, 2-4, 2-5.Level of effort peak effort level conception selection planning-control evaluation and terminationUncertainty of the project cost at specific points in timecost t time3 What is project managementProject management is the application of knowledge,skills,
16、tools and techniques to a broad range of activities in order to meet or exceed stakeholder needs and expectations from a project. This will involve balancing competing demands among: Scope, time, cost, and quality; Stakeholders with differing needs and expectations; Identified requirements and unide
17、ntified requirements.Projects General Objectives: performance, cost and timeFig.1-1,p.3: Performance, cost, time, and project targetsrequired performance-budget limit-due datetrade-offs PERFORMANCETARGETCOSTTIME(SCHEDULE)Project management focuses critical attention on the interdependent nature of c
18、omplex tasks-an action, or failure to take action, in one area will usually affect other areas.The project management knowledge areas Project integration management: project plan development, project plan execution, overall change controlProject scope management: initiation, scope planning, scope de
19、finition, scope verification, scope change controlProject time management: activity definition, activity sequencing, activity duration estimating, schedule development, schedule controlProject cost management: resources planning, cost estimating, cost budgeting, cost controlProject quality managemen
20、t: Quality planning, quality assurance, quality controlProject human resource management: organizational planning, staff acquisition, team developmentProject communication management: communication planning, information distribution, performance reporting, administrative closureProject risk manageme
21、nt: risk identification, risk quantification, risk response development, risk response controlProject Procurement management: procurement planning, solicitation planning, solicitation, source selection, contract administration, contract close-out.The project manager is expected to integrate all aspe
22、cts of the project,ensure that the proper knowledge and resources are available when and where needed, and above all, ensure that the expected results are produced in a timely, cost-effective manner.-Project manager is a super-manager.PMI: founded at 1969PMBOK: 1987, 1996, 2000Project managem
23、ent helps organizations meet their customers need by standardizing routine tasks and reducing the number of tasks that could potentially be forgotten. Project management ensures that available resources are used in most effective and efficient manner. Project management provides senior executives in
24、sight into “what is happening and “where things are going within their organization.Many org. Around the world such as NASA, IBM, AT&T utilize PM to enable innovative process, to plan,to organize, and control strategic initiative, to monitor enterprise performance,analyze significant deviations and
25、forecast their impact on the organization and projects.The application of PM principles enables the senior executive to: Establish measures of successQuantify value commensurate with coatIncorporate quality principlesEnsure fast time-to-marketEnable customer focus and alignmentOptimize the use of or
26、ganizational resourcesPut strategic plan into practiceREADINGS.II. Project SelectionProject SelectionProject selection is the process of evaluating individual project or groups of projects, and then choosing to implement some set of them so that the objectives of the parent Org.will be achieved. “De
27、termining the right projects to pursue with the right peopleMain pointsTypes of project selection modelsLimitation, strengths, and weaknesses of project selection models 1 Criteria for project selection modelsRealismCapabilityFlexibilityEase to useCostEasy to computerization2 The nature of project s
28、electing modelsModel do not make the decisions, people doAll models,however sophisticated, are only partial representations of the reality they are meant to reflect.Meet the firms objectives: financial goals/non-financial goalsA list of factors that contribute org.s objectives(goals)(M&M: PP.44-46):
29、Production factors,18Marketing factors,10Financial factors,9Personnel factors,10Administrative and miscellaneous factors,14Production factorstime until ready to installlength of disruption during installation/ degree of disruption during installationtime until operating as desired-learning curveeffo
30、rts on waste and rejectsenergy requirementfacility and other equipment requirementsafety of processother application of technologyconsistency with current technological know-howchange in cost to produce a unit output /change in time to produce a unit output change in raw materials/availability of ra
31、w materialsrequired development time and costimpact on current supplierschange in quality of outputchange in quality control proceduresMarketing factorssize of potential market for outputprobable market share of outputtime until market share is acquiredimpact on current product lineability to contro
32、l qualityconsumer acceptanceimpact on consumer safetyestimated life of outputshape of life cycle curvespin-off project possibilitiesFinancial factorsprofitability, net present value of the investmentimpact on cash flowpayout periodcash requirementtime until break-evensize of investment requiredimpac
33、t on seasonal and cyclical fluctuationscost of getting system up to speedlevel of financial riskPersonal factorstraining requirementlabor skill requirementavailability of required labor skillslevel of resistance from current workforceother worker reactionschange in size of labor forcechange in sex,
34、age, or racial distribution of labor forceinter- and intra-group communication reqirementsupport labor requirementimpact on working conditionsAdministrative and miscellaneous factorsmeet government safety standardsmeet government environment standardsimpact on information systemimpact on computer us
35、ageneed for consulting help, inside and outsidereaction of stockholders and security marketspatent and trade secret protectionimpact on image with customers, suppliers, and competitorscost of maintaining skill in new technologyvulnerability to single supplierdegree to which we understand new technol
36、ogyelegance of new processdegree to which new process differs from current processmanagerial capacity to direct and control new process3 Type of project selection modelsNon-numeric models: the sacred cow; the operating necessity; the competitive necessity; the product line extension; comparative ben
37、efit modelNumeric models: Profit/profitability-single goal; Scoring-multi-goals;Comparative benefit modelAn Org. has many projects to consider, ORDERING the projectsIts not a formal model, is widely adopted for selection decisions on all sorts of projects. PEER REVIEWtechniques: Q-Sort, figure 2-1,p
38、.49 HighlevelLowlevelMediumlevelMediumlevelOriginal deckLow levelHighlevelVeryhighhighVerylowlowFor each participant in the exercise, assemble a deck of cards, with the name and description of one project on each card.Instruct each participant to divide the deck into 2 piles,one representing a high
39、priority, the other a low priority levelInstruct each participant to select card from each pile to form a third pile representing the medium-priority level.Instruct each participant to select cards from the high-level pile to yield another pile representing the very high level of priority; select ca
40、rds from low level pile representing the very low level of priority.Finally, instruct each participant to survey the selections and shift any cards that seem out of the place until the classification are satisfactory.Profit/profitability modelPayback periodAverage rate of returnInternal rate of retu
41、rnDiscount cash flow: Strategy behind the model. Mistakes.Profitability index4 Discounted Cash FlowStrategy behind the DFC Popular mistakes: examples, Production capacity? Market capacity?StrategyProduct market: compete- monopolise -innovationCapital market: opportunity cost5 Other profitability mod
42、elsPacificos methodr= probability of research successd=probability of development success, given research successp=probability of process success, given the development successc=probability of commercial success,given the process successC: total cost of R&D effort for projectS: estimated average ann
43、ual sales volume in units of productP: estimated average profit per unitL: estimated life of the product extension in yearsComments on profit-profitability modelssee M&M P.53-54 Advantagessimple to use and understand accounting datamodel output is in terms familiar to business decision makerallow “a
44、bsolute go/no-go decisionsDisadvantages ignore all non-money factorssome of them do not include discountingsensitive to errors in the input data for the early years of the project.6 Scoring modelsMultiple criteria to evaluate the projectUn-weighted 0-1 factor model, Fig.2-2, M&M p.56Un-weighted factor scoring modelWeighted factor scoring modelConstraine
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