PROJECT MANAGEMENT THE MANAGERIAL PROCESS 7E ERIK W. GRAY ® Required=Results ©Getty Images/iStockphoto McGraw-Hill Connect® Learn Without Limits Connect is a teaching and learning platform that is proven to deliver better results for students and instructors. Connect empowers students by continually adapting to deliver precisely what they need, when they need it, and how they need it, so your class time is more engaging and effective. 73% of instructors who use Connect require it; instructor satisfaction increases by 28% when Connect is required. Using Connect improves retention rates by 19.8%, passing rates by 12.7%, and exam scores by 9. Analytics Connect Insight® Connect Insight is Connect’s new one-of-a-kind visual analytics dashboard—now available for both instructors and students—that provides at-a-glance information regarding student performance, which is immediately actionable. 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Over 8 billion questions have been answered, making McGraw-Hill Education products more intelligent, reliable, and precise.com The McGraw-Hill Series Operations and Decision Sciences OPERATIONS MANAGEMENT Hayen, Seppanen, Kumar, and Chandra, Beckman and Rosenfield, SAP R/3 Enterprise Software: Process Analysis and Improvement, Operations, Strategy: Competing in the An Introduction, First Edition 21st Century, First Edition Simchi-Levi, Kaminsky, and First Edition Hill, Simchi-Levi, Benton, Manufacturing Strategy: Text & Cases, Designing and Managing the Supply Purchasing and Supply Chain Third Edition Chain: Concepts, Strategies, Case Management, Hopp, Studies, Second Edition Supply Chain Science, Third Edition Bowersox, Closs, Cooper, and Bowersox, First Edition Sterman, Supply Chain Logistics Management, Hopp and Spearman, Business Dynamics: Systems Thinking Fourth Edition Factory Physics, and Modeling for Complex World, Third Edition First Edition Brown and Hyer, Managing Projects: A Team-Based Jacobs, Berry, Whybark, and Vollmann, Stevenson, Approach, Manufacturing Planning & Control for Operations Management, First Edition Supply Chain Management, Thirteenth Edition Burt, Petcavage, and Pinkerton, Sixth Edition Swink, Melnyk, Cooper, and Hartley, Supply Management, Jacobs and Chase, Managing Operations Across the Supply Eighth Edition Operations and Supply Management: Chain, The Core, Third Edition Cachon and Terwiesch, Operations Management Fourth Edition Thomke, First Edition Jacobs and Chase, Managing Product and Service Operations and Supply Management, Development: Text and Cases, Cachon and Terwiesch, Fifteenth Edition First Edition Matching Supply with Demand: An Introduction to Operations Jacobs and Whybark, Ulrich and Eppinger, Management, Why ERP? Product Design and Development, Third Edition First Edition Fourth Edition Cooper and Schindler, Larson and Gray, Zipkin, Business Research Methods, Project Management: The Managerial Foundations of Inventory Management, Twelfth Edition Process, First Edition Finch, Seventh Edition QUANTITATIVE METHODS AND Interactive Models for Operations and Leenders, Johnson, and Flynn, MANAGEMENT SCIENCE Supply Chain Management, Purchasing and Supply Management, Hillier and Hillier, First Edition Fourteenth Edition Introduction to Management Science: A Fitzsimmons, Fitzsimmons, and Bordoloi, Nahmias, Modeling and Case Studies Approach Service Management: Operations, Production and Operations Analysis, with Spreadsheets, Strategy, Information Technology, Sixth Edition Fifth Edition Eighth Edition Olson, Stevenson and Ozgur, Gehrlein, Introduction to Information Systems Introduction to Management Science Operations Management Cases, Project Management, with Spreadsheets, First Edition Second Edition First Edition Harrison and Samson, Schroeder, Goldstein, Rungtusanatham, Technology Management, Operations Management: Contemporary First Edition Concepts and Cases, Seventh Edition Project Management: The Managerial Process Seventh Edition Erik W. Gray Oregon State University PROJECT MANAGEMENT: THE MANAGERIAL PROCESS, SEVENTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2018 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2014 and 2011. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 LWI 21 20 19 18 17 ISBN 978-1-259-66609-4 MHID 1-259-66609-3 Chief Product Officer, SVP Products & Markets: G. Scott Virkler Vice President, General Manager, Products & Markets: Marty Lange Managing Director: James Heine Brand Manager: Dolly Womack Product Developer: Christina Holt Marketing Manager: Britney Hermsen Director, Content Design & Delivery: Linda Avenarius Program Manager: Mark Christianson Content Project Managers: Melissa M. Leick, Bruce Gin, Karen Jozefowicz Buyer: Jennifer Pickel Design: Egzon Shaqiri Content Licensing Specialists: Melissa Homer, Beth Thole Cover Design: Jessica Cuevas Cover Image: © Getty Images/Georgijevic Compositor: Aptara®, Inc. Printer: LSC Communications All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Names: Gray, Clifford F. Title: Project management : the managerial process / Erik W. Larson, Oregon State University, Clifford F. Gray, Oregon State University. Description: Seventh edition. | New York, NY : McGraw-Hill Education, [2018] | Clifford F. Gray is the first named author on the earlier editions. Identifiers: LCCN 2016040029 | ISBN 9781259666094 | ISBN 1259666093 (alk. paper) Subjects: LCSH: Project management. Classification: LCC HD69.4/04—dc23 LC record available at https://lccn.gov/ 2016040029 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.com/highered About the Authors Erik W. LARSON is professor of project management at the College of Business, Oregon State University. He teaches executive, graduate, and undergraduate courses on project management and leadership. His research and consulting activities focus on project management. He has published numerous articles on matrix management, product development, and project partnering. He has been honored with teaching awards from both the Oregon State University MBA program and the University of Oregon Executive MBA program. He has been a member of the Portland, Oregon, chapter of the Project Management Institute since 1984. In 1995 he worked as a Ful- bright scholar with faculty at the Krakow Academy of Economics on modernizing Polish business education. He was a visiting professor at Chulalongkorn University in Bangkok, Thailand, and at Baden-Wuerttemberg Cooperative State University in Bad Mergentheim, Germany. in psychology from Claremont McKenna College and a Ph. in management from State University of New York at Buffalo. He is a certified project management professional (PMP) and Scrum Master. GRAY is professor emeritus of management at the College of Busi- ness, Oregon State University. He has personally taught more than 100 executive development seminars and workshops. Cliff has been a member of the Project Man- agement Institute since 1976 and was one of the founders of the Portland, Oregon, chapter. He was a visiting professor at Kasetsart University in Bangkok, Thailand, in 2005. He was the president of Project Management International, Inc. He received his B. in economics and management from Millikin University, M. from Indiana Univer- sity, and doctorate in operations management from the College of Business, University of Oregon. He is certified Scrum Master. vii “Man’s mind, once stretched by a new idea, never regains its original dimensions.” Oliver Wendell Holmes, Jr. To my family, who have always encircled me with love and encouragement—my parents (Samuel and Charlotte), my wife (Mary), my sons and their wives (Kevin and Dawn, Robert and Sally) and their children (Ryan, Carly, Connor and Lauren). “We must not cease from exploration and the end of all exploring will be to arrive where we began and to know the place for the first time. Eliot To Ann, whose love and support have brought out the best in me. To our girls Mary, Rachel, and Tor-Tor for the joy and pride they give me. And to our grandkids, Mr. B, Livvy, and Xmo, whose future depends upon effective project management. Finally, to my muse, Neil—Walk on! E.L viii Preface Our motivation in writing this text continues to be to provide a realistic, socio-technical view of project management. In the past, textbooks on project management focused almost exclusively on the tools and processes used to manage projects and not the human dimension. This baffled us since people not tools complete projects! While we firmly believe that mastering tools and processes is essential to successful project management, we also believe that the effectiveness of these tools and methods is shaped and determined by the prevailing culture of the organization and interpersonal dynamics of the people involved. Thus, we try to provide a holistic view that focuses on both of these dimensions and how they interact to determine the fate of projects. The role of projects in organizations is receiving increasing attention. Projects are the major tool for implementing and achieving the strategic goals of the organization. In the face of intense, worldwide competition, many organizations have reorganized around a philosophy of innovation, renewal, and organizational learning to survive. This philosophy suggests an organization that is flexible and project driven. Project management has developed to the point where it is a professional discipline having its own body of knowledge and skills. Today it is nearly impossible to imagine anyone at any level in the organization who would not benefit from some degree of expertise in the process of managing projects. Audience This text is written for a wide audience. It covers concepts and skills that are used by managers to propose, plan, secure resources, budget, and lead project teams to suc- cessful completions of their projects. The text should prove useful to students and prospective project managers in helping them understand why organizations have developed a formal project management process to gain a competitive advantage. Readers will find the concepts and techniques discussed in enough detail to be imme- diately useful in new-project situations. Practicing project managers will find the text to be a valuable guide and reference when dealing with typical problems that arise in the course of a project. Managers will also find the text useful in understanding the role of projects in the missions of their organizations. Analysts will find the text useful in helping to explain the data needed for project implementation as well as the opera- tions of inherited or purchased software. Members of the Project Management Insti- tute will find the text is well structured to meet the needs of those wishing to prepare for PMP (Project Management Professional) or CAPM (Certified Associate in Project Management) certification exams. The text has in-depth coverage of the most critical topics found in PMI’s Project Management Body of Knowledge (PMBOK). People at all levels in the organization assigned to work on projects will find the text useful not only in providing them with a rationale for the use of project management processes but also because of the insights they will gain on how to enhance their contributions to project success.
