Project Management, Planning and Control || Project Definition

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<ul><li><p>1Project Management, Planning, and Control. http://dx.doi.org/10.1016/B978-0-08-098324-0.00001-9Copyright 2014 Albert Lester. Published by Elsevier Ltd. All rights reserved.</p><p>CHAPTER 1</p><p>Project Definition</p><p>Project Definition</p><p>Many people and organizations have defined what a project is, or should be, but probably the most authoritative definition is that given in BS 6079-2:2000 Project Management Vocabu-lary, which states that a project is:</p><p>A unique process, consisting of a set of co-ordinated and controlled activities with start and finish dates, undertaken to achieve an objectives conforming to specific requirements, includ-ing constraints of time, cost and resources.</p><p>The next question that can be asked is Why does one need project management? What is the difference between project management and management of any other business or enterprise? Why has project management taken off so dramatically in the last 20 years?</p><p>The answer is that project management is essentially management of change, while running a functional or ongoing business is managing a continuum or business-as-usual.</p><p>Project management is not applicable to running a factory making sausage pies, but it will be the right system when there is a requirement to relocate the factory, build an extension, or produce a different product requiring new machinery, skills, staff training, and even market-ing techniques.</p><p>It is immediately apparent therefore that there is a fundamental difference between project management and functional or line management where the purpose of management is to continue the ongoing operation with as little disruption (or change) as possible. This is reflected in the characteristics of the two types of managers. While the project manager thrives on and is proactive to change, the line manager is reactive to change and hates </p><p>Chapter OutlineProject Definition 1Time-Bound Project 4Cost-Bound Project 4Performance (Quality)-Bound Project 4Safety-Bound Project 4</p></li><li><p>2 Chapter 1</p><p>disruption. In practice this often creates friction and organizational problems when a change has to be introduced.</p><p>Projects may be undertaken to generate revenue, such as introducing methods for improv-ing cash flow, or be capital projects that require additional expenditure and resources to introduce a change to the capital base of the organization. It is to this latter type of project that the techniques and methods described in this book can be most easily applied.</p><p>Figure 1.1 shows the type of operations that are suitable for a project type of organization and which are best managed as a functional or business-as-usual organization.</p><p>Both types of operations have to be managed, but only the ones in column (a) require project management skills.</p><p>It must be emphasized that the suitability of an operation being run as a project is indepen-dent of size. Project management techniques are equally suitable for building a cathedral or a garden shed. Moving house, a very common project for many people, lends itself as effec-tively to project management techniques such as tender analysis and network analysis as relocating a major government department from the capital city to another town. There just is no upper or lower limit to projects!</p><p>As stated in the definition, a project has a definite starting and finishing point and must meet certain specified objectives.</p><p>Broadly these objectives, which are usually defined as part of the business case and set out in the project brief, must meet three fundamental criteria: 1. The project must be completed on time; 2. The project must be accomplished within the budgeted cost; and 3. The project must meet the prescribed quality requirements.</p><p>(a) Project organisation (b) Functional or line organisation</p><p>Building a houseDesigning a carOrganising a partySetting up a filing systemSetting up retail cash pointsBuilding a process plantIntroducing a new computer system</p><p>Manufacturing bricksMass-producing carsServing the drinksDoing the filingSelling goods &amp; operating tillsProducing sausagesOperating credit control procedures</p><p>Figure 1.1Organization comparison</p></li><li><p>Project Definition 3</p><p>These criteria can be graphically represented by the well-known project triangle (Figure 1.2). Some organizations like to substitute the word quality with performance, but the principle is the same the operational requirements of the project must be met, and met safely.</p><p>In certain industries like airlines, railways, and mining, etc., the fourth criterion, safety, is considered to be equally important, if not more so. In these organizations, the triangle can be replaced by a diamond now showing the four important criteria (Figure 1.3).</p><p>The order of priority given to any of these criteria is dependent not only on the industry but also on the individual project. For example, in designing and constructing an aircraft, motor car, or railway carriage, safety must be paramount. The end product may cost more than budgeted or it may be late in going into service, and certain quality requirements in terms of comfort may have to be sacrificed, but under no circumstances can safety be compromised. Airplanes, cars, and railways must be safe under all operating conditions.</p><p>The following (rather obvious) examples show where different priorities on the project triangle (or diamond) apply.</p><p>Time</p><p>Cost</p><p>Safety</p><p>Qualityperformance</p><p>Figure 1.2Project triangle</p><p>Time</p><p>Cost</p><p>Safety</p><p>Qualityperformance</p><p>Figure 1.3Project diamond</p></li><li><p>4 Chapter 1</p><p>Time-Bound Project</p><p>A scoreboard for a prestigious tennis tournament must be finished in time for the opening match, even if it costs more than anticipated and the display of some secondary information, such as the speed of the service, has to be abandoned. In other words, cost and performance may have to be sacrificed to meet the unalterable starting date of the tournament.</p><p>(In practice, the increased cost may well be a matter of further negotiation and the temporar-ily delayed display can usually be added later during the non-playing hours.)</p><p>Cost-Bound Project</p><p>A local authority housing development may have to curtail the number of housing units and may even overrun the original construction programme, but the project cost cannot be exceeded, because the housing grant allocated by central government for this type of develop-ment has been frozen at a fixed sum. Another solution to this problem would be to reduce the specification of the internal fittings instead of reducing the number of units.</p><p>Performance (Quality)-Bound Project</p><p>An armaments manufacturer has been contracted to design and manufacture a new type of rocket launcher to meet the clients performance specification in terms of range, accuracy, and rate of fire. Even if the delivery has to be delayed to carry out more tests and the cost has increased, the specification must be met. Again, if the weapons were required during a war, the specification might be relaxed to get the equipment into the field as quickly as possible.</p><p>Safety-Bound Project</p><p>Apart from the obvious examples of public transport given previously, safety is a factor that is required by law and enshrined in the Health &amp; Safety at Work Act.</p><p>Not only must safe practices be built into every project, but constant monitoring is an essen-tial element of a safety policy. To that extent it could be argued that all projects are safety-bound, since, if it became evident after an accident that safety was sacrificed for speed or profitability, some or all of the project stakeholders could find themselves in real trouble, even in jail. This is true for almost every industry, especially agriculture, food/drink production and preparation, pharmaceuticals, chemicals, toy manufacture, aircraft production, motor vehicle manufacture, and, of course, building and construction.</p><p>A serious accident that may kill or injure people will not only cause anguish among the relatives, but, while not necessarily terminating the project, could very well destroy the </p></li><li><p>Project Definition 5</p><p>company. For this reason the S symbol when shown in the middle of the project manage-ment triangle gives more emphasis of its importance (see Figure 1.2).</p><p>While the other three criteria (Cost, Time, and Quality/Performance) can be juggled by the project manager to suit the changing requirements and environment of a project, safety cannot under any circumstances be compromised. As any project manager knows, the duration (Time) may be reduced by increasing resources (Cost), and cost may be saved by sacrificing quality or performance, but any diminution of safety can quickly lead to disaster, death, and even the closure of an organisation. The catastrophic explosions on the Piper Alpha gas platform in the North Sea in July 1988 killed 167 men and cost millions of dollars to Occi-dental and its insurers, and the explosion at the Buncefield, England, oil depot in 2009 caused massive destruction of its surroundings and huge costs to Total Oil Co. Additionally, the explosion on its Texas City refinery in March 2005, which killed 15 men and injured 170, and the blowout of the Deepwater Horizon drilling rig in the Gulf of Mexico in April 2010, causing 11 fatalities, have seriously damaged the reputation of BP and resulted in a consid-erable drop in its share price. In the transport industry, the series of railway accidents in 2000 resulted in the winding up of British Rail and subsequently one of its main contractors. More recently, Toyota had to recall millions of cars to rectify an unsafe breaking and control system, after which Mr. Toyoda, the Chairman of the company, publicly stated that Toyotas first priority is safety, the second is quality, and the third is volume (Quantity). These occurrences clearly show that safety must head the list of priorities for any project or organisation.</p><p>The priorities of the other three criteria can of course change with the political climate or the commercial needs of the client, even within the life cycle of the project, and therefore the project manager has to constantly evaluate these changes to determine the new priorities. Ideally, all the main criteria should be met (and indeed on many well-run projects, this is the case), but there are times when the project manager, with the agreement of the sponsor or client, has to make difficult decisions to satisfy the best interests of most, if not all, the stakeholders.</p><p>However, the examples given above highlight the importance of ensuring a safe operating environment, even at the expense of the other criteria. It is important to note that while a project manager can be reprimanded or dismissed for not meeting any of the three corner criteria, the one transgression for which a project manager can actually be jailed is not complying with the provisions of the Health and Safety regulations.</p><p>If one were to list the four project management criteria in the order of their importance, the sequence would be safety, performance, time, and cost, which can be remembered using the acronym SAPETICA. The rationale for this order is as follows: </p><p>If the project is not safe, it can cost lives and/or destroy the constructor and other stakeholders.</p></li><li><p>6 Chapter 1</p><p>If the performance is not acceptable, the project will have been a waste of time and money.If the project is not on time, it can still be a success, but may have caused a financial loss.Even if the cost exceeds the budget, the project can still be viable, as extra money can usually be found. (The most famous (or infamous) example is the Sydney Opera House, which was so much over budget that the extra money had to be raised via a New South Wales State lottery but is now celebrated as a great Sydney landmark.)</p><p>1 - Project DefinitionProject DefinitionTime-Bound ProjectCost-Bound ProjectPerformance (Quality)-Bound ProjectSafety-Bound Project</p></li></ul>

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