Ch 4 - Projects

Question 1

How can products be categorized?

Answer 1

Projects can be categorized based on the type of change being planned. For example, a
development project might be looking at ways to change the product in response to market feedback, or it might be looking at ways to change the process in order to improve efficiency or quality. The four major types of change are product change, process change, research and development, and alliance and partnership. Projects can also be categorized based on the amount of change that is planned.

Question 2

Which are the degrees of change according to the book?

Answer 2

The three categories based on the amount of change are derivative (incremental changes such as new packaging or no-frills versions), platform (fundamental improvements to existing products), and breakthrough (major changes that create entirely new markets).

Question 3

What is a project?

Answer 3

A project may be defined as a series of related jobs usually directed toward some major output and requiring a significant period of time to perform.

Question 4

What is project management?

Answer 4

Project management can be defined as planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of the project.

Question 5

Before the project starts, senior management must decide which of three organizational structures will be used to tie the project to the parent firm:

Answer 5

• Pure projects - A structure for organizing a project where a selfcontained team works full time on the project.
• Functional projects - In this structure, team members are assigned from the functional units of the organization. The team members remain a part of their functional units and typically are not dedicated to the project.
• Matrix projects - A structure that blends the functional and pure project structures. Each project uses people from different functional areas. A dedicated project manager decides what tasks need to be performed and when, but the functional managers control which people to use.

Question 6

What are the advantages and disadvantages of a pure project?

Answer 6

Advantages
∙ The project manager has full authority over the project.
∙ Team members report to one boss. They do not have to worry about dividing loyalty with a functional-area manager.
∙ Lines of communication are shortened. Decisions are made quickly.
∙ Team pride, motivation, and commitment are high.

Disadvantages
∙ Duplication of resources. Equipment and people are not shared across projects.
∙ Organizational goals and policies are ignored, as team members are often both physically and psychologically removed from headquarters.
∙ The organization falls behind in its knowledge of new technology due to weakened functional divisions.
∙ Because team members have no funct

Question 7

What are the advantages and disadvantages of a functional project?

Answer 7

Advantages
∙ A team member can work on several projects.
∙ Technical expertise is maintained within the functional area even if individuals leave the project or organization.
∙ The functional area is a home after the project is completed. Functional specialists can advance vertically.
∙ A critical mass of specialized functional-area experts creates synergistic solutions to a project’s technical problems.

Disadvantages
∙ Aspects of the project that are not directly related to the functional area get shortchanged.
∙ Motivation of team members is often weak.
∙ Needs of the client are secondary and are responded to slowly.

Question 8

What are the advantages and disadvantages of a matrix project?

Answer 8

Advantages
∙ Communication between functional divisions is enhanced.
∙ A project manager is held responsible for successful completion of the project.
∙ Duplication of resources is minimized.
∙ Team members have a functional “home” after project completion, so they are less worried about life-after-project than if they were a pure project organization.
∙ Policies of the parent organization are followed. This increases support for the project.

Disadvantages
∙ There are two bosses. Often the functional manager will be listened to before the project manager. After all, who can promote you or give you a raise?
∙ It is doomed to failure unless the PM has strong negotiating skills.
∙ Suboptimization is a danger, because PMs hoard resources for their own project, thus harming other projects.

Question 9

What are the advantages and disadvantages of a matrix project?

Answer 9

Advantages
∙ Communication between functional divisions is enhanced.
∙ A project manager is held responsible for successful completion of the project.
∙ Duplication of resources is minimized.
∙ Team members have a functional “home” after project completion, so they are less worried about life-after-project than if they were a pure project organization.
∙ Policies of the parent organization are followed. This increases support for the project.

Disadvantages
∙ There are two bosses. Often the functional manager will be listened to before the project manager. After all, who can promote you or give you a raise?
∙ It is doomed to failure unless the PM has strong negotiating skills.
∙ Suboptimization is a danger, because PMs hoard resources for their own project, thus harming other projects.

Question 10

What is a task?

Answer 10

A task is a further subdivision of a project. It is usually not longer than several months in duration and is performed by one group or organization. A subtask may be used if needed to further subdivide the project into more meaningful pieces.

Question 11

What is a work package?

Answer 11

A work package is a group of activities combined to be assignable to a single organizational unit. It still falls into the format of all project management; the package provides a description of what is to be done, when it is to be started and completed, the budget, measures of performance, and specific events to be reached at points in time. These specific events are called project milestones. Typical milestones might be the completion of the design, the production of a prototype, the completed testing of the prototype, and the approval of a pilot run.

Question 12

What is work breakdown structure?

Answer 12

The work breakdown structure (WBS) defines the hierarchy of project tasks, subtasks, and work packages. Completion of one or more work packages results in the completion of a subtask; completion of one or more subtasks results in the completion of a task; and, finally, the completion of all tasks is required to complete the project.

Question 13

How much detail or how many levels of WBS to use depends on the following:

Answer 13

∙ The level at which a single individual or organization can be assigned responsibility and accountability for accomplishing the work package.
∙ The level at which budget and cost data will be collected during the project.

Question 14

What are activites?

Answer 14

Activities are defined within the context of the work breakdown structure and are pieces of work that consume time. Activities do not necessarily require the expenditure of effort by people, although they often do. For example, waiting for paint to dry may be an activity in a project. Activities are identified as part of the WBS.

Question 15

The Critical Path Method (CPM) was developed for scheduling maintenance shutdowns at chemical processing plants owned by DuPont. What is CRM?

Answer 15

The sequence(s) of activities in a project that form the longest chain in terms of their time to complete. This path contains zero slack time. It is possible for there to be multiple critical paths in a project. Techniques used to find the critical path are called CPM, or critical path method, techniques.

Question 16

What is an early start schedule?

Answer 16

An early start schedule is one that lists all of the activities by their early start times. For activities not on the critical path, there is slack time between the completion of each activity and the start of the next activity. The early start schedule completes the project and all its activities as soon as possible.

Question 17

What is a late start schedule?

Answer 17

A late start schedule lists the activities to start as late as possible without delaying the completion date of the project. One motivation for using a late start schedule is that savings are realized by postponing purchases of materials, the use of labor, and other costs until necessary. These calculations are shown in Exhibit 4.5. From this, we see that the only activity thathas slack is activity E. This certainly would be a fairly difficult project to complete ontime.

Question 18

In practice, project managers are as much concerned with the cost to complete a project as with the time to complete the project. For this reason, time–cost models have been devised. What is it?

Answer 18

The basic assumption in minimum-cost scheduling, also known as “crashing,” is that there is a relationship between activity completion time and the cost of a project.

Crashing refers to the compression or shortening of the time to complete the project. On one hand, it costs money to expedite an activity; on the other, it costs money to sustain (or lengthen) the project.

The costs associated with expediting activities are termed activity direct costs and add to the project direct cost. Some may be worker-related, such as requiring overtime work, hiring more workers, and transferring workers from other jobs; others are resource-related, such as buying or leasing additional or more efficient equipment and drawing on additional support facilities. The costs associated with sustaining the project are termed project indirect costs: overhead, facilities, and resource opportunity costs, and, under certain contractual situations, penalty costs or lost incentive payments. Because activity direct costs and project indirect costs are opposing costs dependent on time, the scheduling problem is essentially one of finding the project duration that minimizes their sum or, in other words, finding the optimum point in a time–cost trade-off.