Project Management Introduction

A fundamental tension inherent in managing most projects arises from two distinct ways of setting project objectives. Both ways reflect legitimate concerns – are often in conflict. Project objectives may be set top-down, as when executives derive ideas about what a project needs to accomplish from an analysis of the conditions in which the organization operates. Or, project objectives may be set bottom-up, as when project staff arrives at objectives based on their understanding on the amount of work required to be done to achieve target outcomes. Tension arises when the top-down objectives set by executives don’t align with what the project team considers realistic, based on their bottomup analyses. The case example below explores this notion further:

Case example

Executives at Abacus Co learn that a competitor will soon release a new product that will eclipse their main (best-selling) product and, thus, reduce their sales. These executives conclude, reasonably enough, that they must answer the competitor’s move with a move of their own. They decide, therefore, to develop their own new product. They set out to decide when they’ll need their new product, what the new product will need to do to in order to be competitive, and how much the company can afford to spend to develop it. Let’s consider these decisions in turn: 

To decide when to release their new product, executives estimate when the competition will release its new product. They might conclude that the Abacus Co new product should appear sooner or, at worst, not too much later than the competitor’s product to minimize the competitor’s opportunity to win market share. If Abacus Co executives believe the competitor’s product will appear in nine months, then Abacus Co’s development deadlines should be consistent with delivery of a new product in about that same amount of time. Working backward from a nine-month delivery date yields a product development deadline for the new product i.e., a top-down project deadline. 

These same executives must also decide what their new product should be able to do i.e., how much of an improvement it should be over the company’s current product. Again looking to the competitive landscape, Abacus Co executives might determine what the competitor’s new product will include. Following from that, executives might decide what they need from their own new product. They can aspire to avoid falling behind, to maintain parity, or to leapfrog the competitor. To avoid falling behind is likely to require less work than leapfrogging the competitor would. Let’s say the executives decide to maintain parity with the competitor: estimates of the features of the competitor’s product then determine what the Abacus Co project must accomplish, resulting in a top-down-derived project scope.

Finally, the executives might perform a cost analysis. Imagine that Abacus Co publicly traded company and that its stock price is therefore related to the firm’s profit margin. A slip in the profit margin might have an adverse effect on the company’s stock price and thereby hurt investors. Concerns about this eventuality may help the executives decide how much they can afford to spend to develop the new product. Too expensive a development effort might hurt profits and the stock market might punish the company for that. Conversely, developing the product at a low cost might lead to better profit margins and a higher stock price. Following this reasoning, executives at Abacus Co can determine what they consider a reasonable budget for the development project: a top-down-derived project cost target.

Notice that even these top-down objectives seem to have been arrived at after rational discussion, but they do not reflect the practical challenges of actually doing the project work. Top-down objectives reflect what the business needs competitively, not what is practical or even possible.  Executives might well be tempted to (i) preempt the competitor’s announcement (ii) leapfrog the competitor’s new offering, and (3) to attempt to develop a very cheap product. In other words, the most attractive project from a competitive standpoint is quite likely to challenge feasibility.

When top-down derived schedule, scope, and cost targets are conveyed to project staff, the project manager and team will use the techniques of project planning (breaking- down required  work into tasks, identifying task dependencies, and so on)  to determine whether the work can be accomplished within the time allotted and for the cost specified. Often initial project planning analyses reveal that the project objectives are not realistic.  The   Abacus Co project team might realize, for example, that because of dependencies between vital tasks, which force some tasks to be completed before others begin, a realistic development schedule will deliver a new product in no fewer than 12 months.

Such realizations typically trigger cycles of re-planning and adjustment, in which numerous questions are raised: Can ambitions for project scope be scaled back? Can dependencies be eliminated? Similar and questions arise when realistic costs are out of line with targets: Can we save money by outsourcing some work? Can we use lower-skill staff, which cost less to employ? After project planning its, objectives may be more realistic but still challenging. Because estimates of what can be accomplished on time or within budget are not perfect, projects often begin with "stretch" objectives. Adjustments to scope, resources, and schedule continue during the project itself, as the project manager seeks to configure the project in a manner that has the best chance of achieving the objectives.

Top-Down vs. Bottom-up in the Simulation Scenarios

In the simulation, different scenarios begin with different degrees of this top-down versus bottom-up tension. In Scenario A, the project objectives are realistic. Some of you will succeed in delivering this project on time and under budget. You will be able to explore, in a relatively relaxed manner the causal factors that relate management decisions to outcomes. You will compete to see who can beat project objectives by the greatest margin — by delivering a better than expected product, finishing faster, or spending less than was planned.

In Scenarios B through E, the degree of tension increases. In Scenarios B and C, unexpected events intercede to require mid-project adjustments. In Scenarios D and E, executives’ objectives are unrealistic; managing these projects will be an exercise in making unpleasant tradeoffs and limiting damage.

You will best arrive at a thorough understanding of fundamental tension in project management after managing the different scenarios. The job of a project manager is very different in Scenario A than in Scenario C or Scenario E.

Some basic requirements in the organization and preparation of the simulation include:

• Establishing a project organization (including sponsor and leader)
• Defining and agreeing on project objectives (scope, resources, and schedule)
• Setting up norms and systems for communication, meetings, issue tracking, and issue escalation
• Documentation requirements
• Work-breakdown structure and task-ownership assignment
• Estimating effort required by individual tasks
• Identifying and classifying dependencies (when Task A must be done before Task B)
• Gantt and PERT charts and the critical path
• Analysis of resource requirements and points of dependence on specialized resources
• Re-planning and adjustment to better fit top-down business objectives (what-if analysis)
• Planning for contingencies and risks

The Project Management Simulation

This simulation offers a hands-on opportunity to explore the complexities of managing projects through rapid (and safe) experimentation. By setting and changing project parameters and observing effects on project outcomes, you can discover how scope, resources and schedule  - the three main levers of project management, together with team dynamics – combine to produce success and failure (against requirements).

The dynamics and logic of the simulation are based on contemporary understanding of project management. (Causal relationships built into the simulation are described in the accompanying PowerPoint presentation.) 

Much of what has been taught in project management has focused heavily on project planning - for numerous reasons. Project planning lends itself readily to the application of analytical tools, such as algorithmic optimization approaches - that are of particular interest to academics. Also, the idea that sound planning will lead to favourable outcomes has intuitive appeal.

Varying Project Scenarios

The simulation allows the set-up of five (5) scenarios. Each one focuses on a different aspect of management during a project – and allows different learning to be attained. You will vary in the amount of time taken to complete a run of each scenario because of different approaches to experimentation. Some of you will experiment by doing many runs quickly; others will proceed more deliberately, trying something with a particular run, carefully observing the results, and then trying something else within the same run. For rough planning purposes, you should allow 15 to 20 minutes for the first run of a scenario, and maybe 10 minutes, for subsequent runs. The rapid and deliberate approach can each lead to insights that provide valuable information.

Learning Objectives

After engaging with the simulation experiences, and with other learning techniques

e.g., reading textbooks and articles, you should be able to demonstrate an understanding of the following:

1. How the three classic project management levers – scope, resources, and schedule

– can be used to improve project outcomes and how these levers interact

2. How project characteristics, including deadlines and team skill levels, impact team morale and work quality
3. The effects of project managers’ decisions on team morale and work quality i.e., how much time to spend coaching or meetings, how much to rely on overtime or outsourcing, what skill level to set for a project team, and when to add or reduce the numbers of project team members
4. The effects of poor-quality work on project outcomes
5. How un-anticipated events influence project outcomes
6. How to make trade-offs between desired project outcomes in situations in which not all project objectives can be met
7. The importance of committing to realistic project objectives and minimizing scope change.

These are by no means all the possible learning objectives that the simulation supports, but they are some of the most common ones described by past students that have used the simulation.

‘People Factors’ in project management (Scenarios A and B)

Of all the factors that influence project outcome, those related to people, teams, politics, and other "people factors” are perhaps the most important and elusive. They are difficult to convey to anyone that has never been involved in running a project, or who lacks practical work experience; and difficult to incorporate into a simulation, to facilitate learning about such people factors. By experimenting within the simulation, especially within Scenarios A and B, it is possible to gain insights into such issues as:

• How stress levels and team morale change when deadlines become less realistic
• How stress and morale affect team productivity
• How stress and morale affect the quality of a project
• How changing team membership influences team productivity
• How communicating with outsourcing vendors affects team productivity

In scenario B, you will experience a staffing crisis that causes loss of people from the project team. Total team productivity falls and experience is lost. The remaining team members experience greater stress and lower morale. You can take actions to influence stress level and morale (you might, for example, temporarily change project targets). The staffing crisis may also prompt you to give greater attention to people factors in future.

Managing Risk and Uncertainty (Scenario B and C)

For a long time, much project management advice seemed to imply that encountering an event for which you hadn't made a contingency meant you should have planned better. If the unexpected event resulted from a change in what the project needed to achieve, then, as project manager, the assumption was that you should have prevented "scope creep," or you should have been more disciplined or thorough in forcing customers to say what they needed in the first place. The prescription for avoiding the trauma associated with the unexpected always seemed to boil down to "You should plan better next time."

Knowing that you should have planned better is, of course, of little help in dealing with the problems you are currently confronting. Thorough planning is indeed important to project success. But as projects become more and more complex, it becomes less and less likely that all contingencies can be anticipated, no matter how thoroughly a manager plans. As long as the refrain "more planning" remained the answer to how to manage risk and uncertainty, there remained a huge, gaping hole in project management understanding. Project management wisdom included quite good advice for managing problems you can anticipate, but very little to help with the problems you can't anticipate. 

In the article "Managing Project Uncertainty: From Variation to Chaos," MIT Sloan Management Review, 42, 2, Winter 2002, the authors distinguish between environments that exhibit 1) variation, unforeseen uncertainty, and 4) chaos, and they recommend different project management approaches for each. Measures that lead to better success in situations of high risk and uncertainty include:

• Selecting project team members capable of in-progress learning and adjustment (rather than more narrowly task-oriented team members who are best at executing against a stable plan)
• Obtaining top management sponsorship and attention, and establishing a process for their rapid intervention when needed
• Taking a flexible approach to scope that permits arranging project components for completion in a different order than planned
• Creating risk-sharing arrangements with partners and vendors that provide everyone with incentives to adjust, rather than to continue to operate under out-ofdate plans
• Creating more iterative project structures that divide projects into smaller pieces and allow more frequent scope, resource, and schedule reconfiguration.

Within the simulation, Scenarios B and C both present managers with unanticipated events. The key maximizing potential for learning in these scenarios is to pose questions about how to change the way you manage a project when you are uncertain that you will be surprised by unexpected events. On reflection we should be asking: “What changes to our thinking takes place when we are sure we expect the unexpected?”

Making Tough Tradeoffs (Scenarios D and E)

Scenarios D and E present yet another kind of project management situation: one in which you can't win. The top-down objectives specified in these scenarios are unachievable. You are forced to contend with a situation all too familiar to many experienced project managers, one in which they need to make tough tradeoffs and prioritize the outcomes that are most important to business success (scope, cost, deadline).

In scenarios like these, the best a project manager may be able to do is to strike a new deal with senior management for more achievable top-down objectives — in effect, to turn Scenario D or E situation into a Scenario A situation. Alas, that is not always possible, whether because senior executives are intransigent or because the business situation does not permit a new deal without compromising the company's competitive situation. Thus, these last two scenarios provide an opportunity to think about what to do in situations that are far from ideal. Actions that might help in such situations include:

• Negotiating with senior managers for more flexibility in top-down objectives
• Prioritizing the most important business objectives when making tradeoffs
• Helping senior management to understand that not everything that's desired can be achieved (to avoid surprises and disappointment)
• Gaining agreement across the organization about what will not be achieved, so that other things can be (i.e., making sure everyone is onboard when difficult tradeoffs are made)
• Preserving team capabilities for the next project, even in difficult situations (i.e., avoiding the frustration, burnout, and attrition that can result when objectives seem impossible to meet).

Simulation Summary – And your assignment task

Your Role

You are a senior project manager at Delphi Printers & Peripherals, a small electronics and computer peripheral manufacturer based in Santa Clara, California. You have been tasked with assembling and directing a product design team to develop a new and innovative consumer printer. Delphi has intelligence suggesting that a competitor is launching a printer with similar features and capabilities in 6 months, putting pressure on you and your team to develop a new printer that can compete effectively against the competitor's offering.

Managing Your Project

Before you start the project, and each week as it unfolds, you will have an opportunity to adjust certain project parameters. Spend about 15 minutes now entering initial decisions for the following areas. 

1. Project Scope

You have flexibility as to what type of printer you wish to design. Below are four possible products you might develop. Each builds on the previous, allowing you to adjust mid-course if desired. 

Senior management has conveyed to you their expectations about project scope based on 1) their analysis of the competitive situation and 2) their market objectives for the new printer. 

You may change your project scope in any round. You may also choose to end the project at any time by clicking the End Project button. However, if you depart from the scope expectations of senior management, you can expect your project performance to reflect this departure. 

2. Project Schedule

Senior management has given you its objectives regarding schedule based on its analysis of the competitive situation and required time for market launch of the new printer. 

You may change your schedule (your target completion time) in any round. However, if you exceed the completion target handed to you by senior management, you can expect your project performance to be judged accordingly. 

3. Project Resources

To staff your project, you must choose a number of project team members and an average staff skill level. You may also choose to outsource some of the work in any round. More project team members can do more work, but of course each additional team member also adds to project costs. Teams with higher average skill levels are more productive, but they also cost more. Outsourcing offers some staffing cost savings, but also incurs additional effort to coordinate work done at remote locations. Note that adding resources during a project requires some start-up communication and coordination work; this may temporarily hinder the team's productivity. Also, changing skill level during a project incurs temporary productivity penalties, due to the changeover in personnel. 

While you may choose how many individuals to put on the team, you will be rated on the total cost of labour for this project. 

Team Process

You may make two ongoing types of decisions regarding your team process.

Overtime

You may choose to allow overtime. Team members will work in excess of 40 hours/week as required to complete the project. This is not guaranteed. If your team suffers from poor morale, absenteeism, or tardiness, for example, the number of hours worked will decline. Alternatively, if you "encourage" your team to work overtime, they will work more hours per week than they would have otherwise. Finally, you may also prohibit overtime. 

Meetings

As you assemble your staff, you may want to schedule meetings to help coordinate activities or train new staff in the details of the project. You may choose among a number of types of meetings: 

Meetings can have a positive effect on team productivity and skill level, but too many meetings will reduce available task time and create stress. 

You will also be rated on the average morale of your team members. 

A Note on "Tasks"

Product design efforts are measured in "Tasks", each of which typically takes about a personday to accomplish. For the purposes of this initiative, you may treat them as independent tasks that can be assigned and completed by your team. 

Not all tasks are completed successfully. Problems with coordination, lack of knowledge, or ordinary carelessness can lead to mistakes on tasks which must be redone. Decisions you make on organizing and running your team can have dramatic impact on productivity and reducing rework requirements. 

Scoring

Senior management at Delphi is looking closely at how you perform while managing this effort. The specific breakdown will be listed under Project Objectives. You will be graded on these areas: 

• Project Scope: Did you deliver a competitive printer that met or exceeded senior management's expectations?
• Project Schedule: Did you deliver on time to meet senior management's schedule requirements? Was your schedule estimate consistent during the project?
• Project Resources: Did you complete the project within senior management's budget objective?

In addition, you will receive points for maintaining a consistently high level of morale throughout the project. 

Project Objectives

Senior management expects you to release a new printer retaining rough parity with the competitor's new printer. The projected schedule allows you to ramp up manufacturing and marketing quickly enough to match the competitor's new printer profile with your own printer. The target budget supports a cost structure that will permit profit margins at a level roughly equivalent to those of the current printer. Management has indicated that scope, schedule and cost are of equal importance in a successful launch. 

The details are as follows: 

1. Target Scope: Wireless

You will retain rough parity with the competitor's expected new printer. You will receive 200 points for delivering a printer with the scope requested and up to 100 points for delivering a printer with a more sophisticated scope. 

2. Target Schedule: Week 18

This schedule will allow you to ramp manufacturing and marketing soon enough to quickly match the competitor new product announcement with one of your own You will receive 200 points for meeting your schedule goals and up to 100 points for completing ahead of schedule. 

3. Target Cost: $42,500

This will support a cost structure that will permit printer profit margins at a level roughly equivalent to those of the current printer. You will receive 200 points for meeting your budget/resources goals and up to 100 points for completing under budget.  

You may also receive up to 100 points for team process by maintaining a consistent morale of 85% - 95%.

How to Play

Step 1: Plan Your Project

Submit your initial decisions.

Step 2: Analyze the Results

Monitor project progress, comparing against management and personal targets.

Step 3: Make Decisions

Continue to make decisions, advancing 1 week, 2 weeks, 4 weeks or to the end of the project. You may end your project early at any time.

Step 4: Review Rating

At the end of the simulation, you will receive a total score broken down by scope, schedule, resources, and team process.

Plan Your Project

You must fill out each section before starting the simulation.

HBP Project Management Simulation Demo

In this abbreviated demonstration, the simulation runs for three weeks only. 

Assignment Questions

Session 1: Play and Debrief of Scenario A (Project Management Causes and Effects)

This is your first encounter with the simulation, so you should make plenty of time available (if done in the computer room allow at least 30 to 40 minutes). 

Assignment Questions for Session 1

1. As you play the simulation, try to discover how varying decision parameters (target scope, team size, team skill level, amount of outsourcing, target completion date, overtime allowed, time in meetings) affects project outcomes (tasks completed, costs incurred, productivity, new problems discovered, projected completion date) and team attributes (morale, stress level, rates of mistakes). What causes each effect? What might explain the causal relationships you’ve discovered?
2. What strategies did you attempt in managing your project? What worked? What didn’t?
3. What assumptions underlie your emerging ideas about managing projects in the simulation? In other words, what might change that would prompt you to reconsider the approach you’re discovering is best for managing projects?

Some general observations:

Was this a frustrating or easy exercise to complete?

Did your team complete the project faster or slower than you expected?

If your team got behind schedule, what did you do?

What kinds of meetings did you organize?

Were your teams mostly stressed, mostly bored, or in between?

Did you complete your projects successfully?

How productive were your team members?

Did you encounter a significant number of problems or need for rework?

How did your team morale vary over time?

What seemed to be driving these factors? What made them worse or better?

With regard to the cause-effect relationships built into the model, what did you observe with regard to:

What determines the primary metrics of project implementation: productivity, hours worked, and rate of mistakes

The effect of stress on productivity and on problems

The effect of project knowledge on productivity and on problems

The effect of project coordination on problems The effect of morale on hours worked and productivity.

Session 2: Play and Debrief of Scenarios B and C (Managing Risk and Uncertainty)

Assignment Questions for Session 2

1. In this scenario, how have causal relationships been affected or changed? Why have they changed?
2. What strategies did you use to deal with this scenario? What worked? What didn't? Were you able to complete the project successfully?
3. Having dealt now with different project scenarios, how would   you   revise   your project management advice?

Session 3: Play and Debrief of Scenarios D and E (Making Tough Tradeoffs)

Scenarios D and E present another very different situation. You will find these scenarios very challenging and perhaps quite frustrating as you come to realize that they cannot achieve their objectives. Scores in D and E tend to be lower than for the other scenarios, and the range of scores can be very wide. You should play long enough until you realize you have achieved as much as you can. You will therefore need to adopt an approach that makes the best of a challenging situation.

Assignment Questions for Session 3

1. In this scenario, what has changed?
2. What strategies did you use to deal with this scenario? What worked? What didn’t? Where you able to complete the project successfully?
3. Having dealt now with these different project scenarios, how would you revise your project management advice?

Session 4: Summary and Conclusions

Assignment Questions for Session 4

1. Let's revisit your ideas about how decision parameters (target scope, team size, team skill level, amount of outsourcing, target completion date, overtime allowed, time in meetings) affect project outcomes (tasks completed, cost incurred, productivity, new problems discovered, projected completion date) and team attributes (morale, stress level, rates of mistakes). How have your ideas about these causal relationships changed? How confident are you now in your hypotheses about them?
2. What strategies work for managing projects? … when uncertainty is low or high? . . .

when objectives are realistic or not?