Life Cycle and Organization

PMBoK 5th Ed

Project Life Cycle and Organization

1
Life Cycle

Life Cycle and Organization 2

Project Life Cycle Vs Project Management Process
Project life cycle What to do to get the work done
Project management process What to do to manage the
project
Project management processes are grouped in 5 categories:
Initiating Process Group
Planning Process Group
Executing Process Group
Monitoring & Control Process Group
Closing Process Group

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Project Life Cycle

Appraise Select Define Execute Operate

FEL-0 FEL-1 FEL-1 FEL-2 FEL-3 Execute Operate

Identify Appraise Select Optimize Define

Phase-1 Phase-2 Phase-3 Phase-4 Phase-5

Identify and Asses Generate and Select Dev. Preferred Alt. Execute Operate and Evaluate

Basic Comm &

Appraisal Design Pre-Project EPSC Operation
Engineering Start-up

PRE-FEED FEED EPCI OPERASI

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Project Management Process Groups

Initiating Plannin Executing Monitoring and Closing

Process Process Process Controlling Process
Group Group Group Process Group Group

Level of
Process
Interaction

Start TIME Finish

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PMBOK Guide s Process Groups
On PMBOK Guide project management processes are grouped into five
categories known as Project Management Process Groups (or Process Groups):
Initiating Process Group. Those processes performed to define a new project or a
new phase of an existing project by obtaining authorization to start the project or
phase.
Planning Process Group. Those processes required to establish the scope of the
project, refine the objectives, and define the course of action required to attain
the objectives that the project was undertaken to achieve.
Executing Process Group. Those processes performed to complete the work
defined in the project management plan to satisfy the project specifications.
Monitoring and Controlling Process Group. Those processes required to track,
review, and regulate the progress and performance of the project; identify any
areas in which changes to the plan are required; and initiate the corresponding
changes.
Closing Process Group. Those processes performed to finalize all activities across all
Process Groups to formally close the project or phase.

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Wrap-up Project Life Cycle
Process Groups Project Stage Goal Outcome

Starting the project Authorize the project Project charter

Initiating

Organizing and Plan and schedule the Project management

Planning preparing work to perform the plan
project

Carrying out the work Perform the project Project deliverables:

Executing work product, service, results

Spans the project Monitor the progress of Change requests and

lifecycle the project to identify recommendations for
Monitoring And the variance from the preventive and
Controlling plan and to correct it corrective actions

Closing the project Close the project Product acceptance,

Closing formally contract closure, and
archiving

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Project Management Process Groups

Controlling
Initiating Planning Executing and Closing
Monitoring

Authorizes the project Determine how to Execute activities in Measure project Confirm all project
Conduct cost-benefit plan and develop the the project plan performance requirements are met
analysis project management Procure required Identify variances Obtain formal
Determine and define plan, project project resources and recommend acceptance of
the business needs requirements in detail Complete work corrective actions to product from the
and the project and agree the final packages get back on track customer
scope scope Document lessons Approve changes, Hand over the
Know the project Determine the learnt defect repair, completed
boundaries and required project Implement approved corrective and deliverables to the
constraints activities and their changes, corrective preventive actions operations team
Identify high level risks sequencing and preventive Resolve conflicts and Compile lessons
Understand the Develop schedule actions issues learnt
required project Define how project Hold team building Manages changes to Measure customer
organization structure staffing will be done activities scope, time and cost satisfaction
Estimate budget and Establish the Manage resource Perform impact Archive project data
resource communication allocation and analysis to approve or and information for
requirements requirements and utilization reject changes future reference
Assign a project how it will be fulfilled Hold progress review Obtain formal Release resources
manager Identify what can go meetings and acceptance of
Obtain the project wrong and the plans distribute progress deliverables from the
charter approval to deal with them reports customer
Formally authorize to Document what Keep everyone Measure team
start a new project or products or services focused on the member
phase will be acquired from project goals performance
outside the project

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Knowledge Areas
Project Integration Management
Project Scope Management
Project Time Management
Project Cost Management
Project Quality Management
Project Human Resource Management
Project Communication Management
Project Risk Management
Project Procurement Management
Project Stakeholder Management

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Process Element
From the project management perspective, the 3 elements of a process
would be:

Input - The input to a process consists of the raw data that is needed to
start the process. For example, the list of activities that need to be
scheduled is one of several input items to the process that will be used to
develop the schedule of a project.
Tools and techniques - Tools and techniques are the methods used to
operate on the input to transform it into output. For example, project
management software that helps to develop a schedule is a tool used in
the schedule development process.
Output - The output is the outcome or the result of a process. Each
process contains at least one output item; otherwise, there would be no
point in performing a process. For example, an output item of the
schedule development process is, well, the project schedule.

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Knowledge Area
Project Integration Management
Project Scope Management
Project Time Management
Project Cost Management
Project Quality Management
Project Human Resource Management
Project Communication Management
Project Risk Management
Project Procurement Management
Project Stakeholder Management

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Project Selection Method

Life Cycle and Organization 12

Project Selection Method
Mathematical Approach (Constrained Optimization Methods)
Linear Programming
Integer Programming
Dynamic Programming
Multi-objective Programming
Cooperative Approach (Benefit Measurement Methods)
Scoring models
Benefit Contribution
Economic models
Benefit-Cost Analysis
Payback period
Discounted cash flows
Net Present Value
Internal Rate of Return (IRR)

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Scoring Models
A scoring model evaluates projects by using a set of criteria with a weight
or score assigned to each criterion. You can assign different weights to
different criteria to represent the varied degree of importance given to
various criteria. All projects are evaluated against this set of criteria, and
the project with the maximum score is selected.

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Benefit Contributions
These methods are based on comparing the benefit contributions from
different projects. These contributions can be estimated by performing a
cost-benefit analysis, which typically calculates the projected cost,
revenue, and savings of a project.
This method favors the projects that create profit in the shortest time and
ignores the long-term benefits of projects that might not be tangible at the
current time, such as innovation and strategic values.

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Economic Models
Benefit-Cost Analysis
Compares the project benefit to the costs to derive a ratio from which a decision
can be made. Ex: if a project generates $125,000 in profits and costs $50,000, the
benefit-cost ratio would be 2.5 (also written as 5:2)
Payback period
Number of periods to pay back a projects cost. Ex: if a project costs $1 million
and will generate revenue of $100,000 per year, then the payback period would
be 10 years.

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Economic Model
Discounted cash flows
Calculates in todays (discounted) terms what the value of a project would be
given cash inflows and/or outflows over a period of time
Net Present Value (NPV)
A formula that calculates the value today of a future cash flow
Ex: if you will receive a future cash flow in 3 years of $1,157.62, what would that
be worth today if the interest rate is 5%?
PV = FV / (1 + i) n
PV = $1,157.62 / (1 + .05)3
PV = $1,000
*Always choose projects with the biggest positive NPV, reject negative NPV
Internal Rate of Return (IRR)
The discounted interest rate when NPV equals zero
Always choose the project with the highest IRR
Assumes that cash flows are reinvested at the IRR value

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Project Organization

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Organizational Structures
There are three types of organizational structures based on the authority of
the project manager. They include:
Functional: The organization is grouped by areas of specialization within
different functional areas (e.g. accounting, marketing, and engineering).
Each employee typically reports to a functional manager.
Projectized: The organization is often grouped by organizational units
called departments. These groups either report directly to the project
manager or provide support services to the various projects.
Matrix: This is organization is a blend of both the above types. The three
matrix forms are strong matrix, weak matrix, and balanced matrix.

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 Organizational Influences on Projects
Organization
Structure
Matrix
Project Functional Projectized
Characteristics
Weak Balanced Strong

Project Manager Low to Moderate to High to almost

Authority Little or None Limited
Moderate High Total
Resource Low to Moderate to High to almost
Availability Little or None Limited
Moderate High Total
Who is control Functional Functional Project Project
Project Budget Mixed
Manager Manager Manager Manager
Project
Managers Role Part-time Part-time Full-time Full-time Full-time

Administrative
Staff Part-time Part-time Part-time Full-time Full-time

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Organizational Influences on Projects

Type Advantages Disadvantages

Highly visible project objectives Not cost effective because of extra administrative
personnel

Better Project Manager control over resources More than ONE boss for project teams

Matrix
Better coordination More complex to monitor and control

Team members maintain a home Higher potential for conflict and duplication of effort
and functional managers have different priorities
Team members report to one supervisor and clearly No career path in Project Management
defined career paths
Functional
Easier management specialists People place more emphasis on their functional
specialty to the determent of the project

Efficient project organization No Home when project is completed

More effective communication than functional Duplication of facilities and job functions
Projectized

Loyalty to the project Lack of professionalism in disciplines and less efficient

use of resources

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Functional Organization
Project
Chief Executive Coordination

Functional Functional Functional

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

(Grey boxes represent staff engaged in projects activities)

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Weak Matrix Organization

Chief Executive

Functional Functional Functional

Manager Manager Manager

Project
Staff Staff Staff
Coordination

Staff Staff Staff

Staff Staff Staff

(Grey boxes represent staff engaged in projects activities)

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Balanced Matrix Organization

Chief Executive

Functional Functional Functional

Manager Manager Manager

Project
Staff Staff Staff
Coordination

Staff Staff Staff

Project Staff Staff

Manager

(Grey boxes represent staff engaged in projects activities)

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 Strong Matrix Organization

Chief Executive

Functional Functional Functional Manager of Project

Manager Manager Manager Managers

Staff Staff Staff Project Manager

Staff Staff Staff Project Manager

Staff Staff Staff Project Manager

Project
Coordination (Grey boxes represent staff engaged in projects activities)

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 Composite Matrix Organization

Chief Executive

Functional Functional Manager of Project

Manager Manager Managers
Project B
Coordination
Staff Staff Project Manager

Staff Staff Project Manager

Staff Staff Project Manager

Project A
(Grey boxes represent staff engaged in projects activities) Coordination

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Projectized Organization
Project
Coordination Chief Executive

Project Project Project

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

(Grey boxes represent staff engaged in projects activities.)

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Thank you

Life Cycle and Organization 28