Engineering Management

1. _____________________Dr. Atif Shahzad
BE, MECHANICAL ENGINEERING
UNIVERSITY OF ENGINEERING & TECHNOLOGY, TAXILA, PAKISTAN, 2000
MCS, SOFTWARE ENGINEERING
SZABIST,, ISLAMABAD, PAKISTAN, 2003
MS, AUTOMATION & PRODUCTION SYSTEMS
ECOLE CENTRALE DE NANTES, NANTES, FRANCE, 2007
PhD, AUTOMATION & APPLIED INFORMATICS
UNIVERSITE DE NANTES, NANTES, FRANCE, 2011
EMAIL: atifshahzad@Gmail.com
TEL: +92-333-5219846, +92-51-5179755
LINKEDIN: pk.linkedin.com/in/dratifshahzad

2. PROJECT
MANAGEMENT
COURSE OBJECTIVES

3. Dr.AtifShahzad
COURSE OBJECTIVES
 Learn what project management is and the qualities of an effective
project manager.
 Understand the nine knowledge areas of project management and
how they can be applied to your project.
 Discover the phases of a project and what deliverables are expected
when.
 Identify a project’s key stakeholders.
 Understand the different types of business cases and how to create a
Statement of Work.
 Learn to be prepared for the unexpected by utilizing risk
management and change control.
 Learn how to organize project activities by creating a Work
Breakdown Structure.
 Create a network diagram to track your project’s progress.
 Learn budgeting and estimating techniques.

4. PROJECT
MANAGEMENT
TODAY’S LECTURE

5. Dr.AtifShahzad
Outsourcing
 Contracting: If we are transferring a business
process alone, then we are subcontracting
 Procurement: act of acquiring, buying goods,
services or works from an external source.
 Outsourcing: we transfer people or assets to a
third-party provider as well as business
processes.

6. Dr.AtifShahzad
Project Partnering
 Partnering
¤A process of transforming contractual
arrangements into a cohesive, collaborative
team that deals with issues and problems
encountered to meet a customer’s needs.

7. Dr.AtifShahzad
12–7
Project Partnering:
Assumes that …
the traditional adversarial relationship
between the owner and contractor is
ineffective and self-defeating.
both parties share common goals and
mutually benefit from the successful
completion of projects.

8. Dr.AtifShahzad
12–8
Factors favoring partnering
Existence of
common goals
High costs of
the
adversarial
approach
Shared
benefits of
the
collaborative
approach

9. Dr.AtifShahzad
12–9
Reclining Chair Project
FIGURE 12.1

10. Dr.AtifShahzad
Why should
I go outside of my company?
I still don’t buy it. Why should
I go outside of my company?
Why can’t I just have my team
do all the work?

11. Dr.AtifShahzad
12–11
Outsourcing Project Work
 Advantages
¤ Cost reduction
¤ Faster project
completion
¤ High level of
expertise
¤ Flexibility
 Disadvantages
¤ Coordination
breakdowns
¤ Loss of control
¤ Interpersonal conflict
¤ Security issues

13. Dr.AtifShahzad
12–13
Chunnel project
the Chunnel project,
which created a transportation
tunnel between
France and England,
involved
more than 250 organizations.

14. Dr.AtifShahzad
12–14
Best Practices in
Outsourcing Project Work
Well-defined
requirements and
procedures.
Extensive training
and team-building
activities.
Well-established
conflict
management
processes in place.
Frequent review
and status
updates.
Co-location when
needed.
Fair and incentive-
laden contracts.
Long-term
outsourcing
relationships.

15. Dr.AtifShahzad
12–15
Key Differences Between Partnering and
Traditional Approaches to Managing Contracted
Relationships
Partnering Relationships
• Mutual trust forms the basis for
strong working relationships.
• Shared goals and objectives
ensure common direction.
• Joint project team exists with
high level of interaction.
• Open communications avoid
misdirection and bolster
effective working relationships.
• Long-term commitment
provides the opportunity to
attain continuous improvement.
Traditional Practices
• Suspicion and distrust; each
party is wary of the other.
• Each party’s goals and
objectives, while similar, are
geared to what is best for them.
• Independent project teams;
teams are spatially separated
with managed interactions.
• Communications are structured
and guarded.
• Single project contracting is
normal.

16. Dr.AtifShahzad
12–16
Key Differences Between Partnering and
Traditional Approaches …(cont’d)
Partnering Relationships
Objective critique is geared to
candid assessment of
performance.
Access to each other’s
organization resources is
available.
Total company involvement
requires commitment from CEO
to team members.
Integration of administrative
systems equipment takes place.
Risk is shared jointly among the
partners, encouraging innovation
and continuous improvement.
Traditional Practices
Objectivity is limited due to fear of
reprisal and lack of continuous
improvement opportunity.
Access is limited with structured
procedures and self-preservation
taking priority over total optimization.
Involvement is normally limited to
project-level personnel.
Duplication and/or translation takes
place with attendant costs and delays.
Risk is transferred to the other party.

18. Dr.AtifShahzad
Strategies for Communicating
with Outsourcers
1
.
2
.
3
.
4
.
Recognize cultural differences
Choose the right words
Confirm your requirements
Set deadlines

19. Dr.AtifShahzad
12–19
Project Partnering Charter

20. Dr.AtifShahzad
12–20
Preproject Activities—Setting the Stage
for Successful Partnering
 Selecting a Partner(s)
¤ Voluntary, experienced, willing,
with committed top management.
 Team Building: The Project Managers
¤ Build a collaborative relationship among
the project managers.
 Team Building: The Stakeholders
¤ Expand the partnership commitment to
include other key managers and specialists.

21. Dr.AtifShahzad
12–21
Project Implementation—Sustaining
Collaborative Relationships
 Establish a “we” as opposed to “us and them” attitude toward the project.
¤ Co-location: employees from different
organizations work together at the same location.
 Establish mechanisms that will ensure the relationship withstands problems
and setbacks.
¤ Problem resolution
¤ Continuous improvement
¤ Joint evaluation
¤ Persistent leadership

22. Dr.AtifShahzad
12–22
Project Completion—Celebrating
Success
 Conduct a joint review of accomplishments
and disappointments.
 Hold a celebration for all project participants.
 Recognize special contributions.

23. Dr.AtifShahzad
12–23
Sample Partnering
Evaluation

24. Dr.AtifShahzad
12–24
Why Project Partnering Efforts Fail
 Causes of Partnering Failures
¤ Senior management fails to address problems or does not
empower team members to solve problems.
¤ Cultural differences are not adequately dealt with
such that a common team culture develops.
¤ No formal evaluation process is in place to identify problems
and opportunities at the operating level or to assess the current
state of the partnering relationship.
¤ A lack of incentive for continuous improvement by contractors
participating in the partnering relationship.

25. Dr.AtifShahzad
12–25
Advantages of Long-term
Partnerships
 Reduced administrative costs
 More efficient utilization of resources
 Improved communication
 Improved innovation
 Improved performance

26. Dr.AtifShahzad
12–26
Negotiating
Negotiating is pervasive through all aspects of project management work.
 Project managers must negotiate
¤ support and funding from top management.
¤ staff and technical input from functional managers.
¤ project priorities and commitments with other project
managers
¤ within their project team to determine assignments,
deadlines, standards, and priorities.
¤ prices and standards with vendors and suppliers.

27. Dr.AtifShahzad
12–27
The Art of Negotiating
Project management is NOT a contest.
Everyone is on the same side—OURS.
Everyone is bound by the success of the
project.
Everyone has to continue to work together.

28. Dr.AtifShahzad
12–28
The Art of Negotiating
Principled Negotiations
Separate
the people
from the
problem
Focus on
interests, not
positions
Invent
options for
mutual gain
When
possible, use
objective
criteria
developing win/win solutions
Be hard on the
problem, soft on
the people.
Seek first to
understand, then to be
understood.
create the
opportunity for
dovetailing interests
should insist on
using external,
objective criteria

29. Dr.AtifShahzad
12–29
The Art of Negotiating
Dealing with Unreasonable People
If pushed, don’t push back.
Ask questions instead of making statements.
Use silence as a response to unreasonable demands.
Ask for advice and encourage others to criticize your ideas and
positions.
Use Principled Negotiation to a negotiated agreement (BATNA)
concept to work toward a win/win scenario.

30. Dr.AtifShahzad
Dealing with Unreasonable People:
BATNA
 A strong BATNA gives you the power to walk away and say,
“No deal unless we work toward a win/win scenario.”
 Your BATNA reflects how dependent you are on the other party.
If you are
negotiating price
and delivery dates
and can choose
from a number of
reputable suppliers,
then you have a
strong BATNA.
If on the other hand
there is only one
vendor who can
supply you with
specific, critical
material on time,
then you have a
weak BATNA.

31. Dr.AtifShahzad
12–31
Managing Customer Relations
Customer Satisfaction
¤ The negative effect of dissatisfied customers on a firm’s
reputation is far greater than the positive effect of satisfied
customers.
 For every happy customer who shares his satisfaction regarding a particular
product or service with another person, a dissatisfied customer is likely to share
her dissatisfaction with eight other people.

32. Dr.AtifShahzad
12–32
Managing Customer Relations
Met Expectations
¤ Every customer has a unique set of performance expectations
and met-performance perceptions.
 customer satisfaction is a function of the extent to which perceived performance
(or outcome) exceeds expectations.
¤ Satisfaction is a perceptual relationship:
Met Expectations =
Perceived performance
Expected performance
Project managers must be skilled at managing both customer expectations and
perceptions.
with all other things being equal, one should strive for a satisfaction ratio of 1.05, not 1.5!

33. Dr.AtifShahzad
12–33
The Met-Expectations Model
of Customer Satisfaction
FIGURE 12.5
0.90
=
Perceived performance
=
1.10
Dissatisfied Expected performance Very satisfied
When performance falls short of expectations (ratio <
1), the customer is dissatisfied. If the performance
matches expectations (ratio = 1), the customer is
satisfied. If the performance exceeds expectations (ratio
> 1), the customer is very satisfied or even delighted.

34. Dr.AtifShahzad
12–34
Managing Customer Relations
(cont’d)
 Managing Customer Expectations
¤ Don’t oversell the project; better to undersell.
¤ Develop a well-defined project scope statement.
¤ Share significant problems and risks.
¤ Keep everyone informed about the project’s progress.
¤ Involve customers early in decisions about project development
changes.
¤ Handle customer relationships and problems in an expeditious,
competent, and professional manner.
¤ Speak with one voice.
¤ Speak the language of the customer.

35. Dr.AtifShahzad
12–35
Project Roles, Challenges, and
Strategies
TABLE 12.3
Project Manager Roles Challenges Strategies
Entrepreneur Navigate unfamiliar
surroundings
Use persuasion to influence
others
Politician Understand two diverse
cultures (parent and client
organization)
Align with the powerful
individuals
Friend Determine the important
relationships to build and
sustain outside the team
itself
Identify common interests
and experiences to bridge
a friendship with the client
Marketer Understand the strategic
objectives of the client
organization
Align new ideas/proposals
with the strategic objectives
of the client organization
Coach Motivate client team
members without formal
authority
Provide challenging tasks
to build the skills of the team
members

36. Dr.AtifShahzad
12–36
Key Terms
Best alternative to a negotiated agreement (BATNA)
Co-location
Escalation
Met-expectations model
Outsourcing
Partnering charter
Principled negotiation

37. Dr.AtifShahzad
Remember
 Contracting is not limited to large projects.
 Many outsourced projects operate in a virtual environment in which people
are linked by computers, faxes, computer-aided design systems, and video
teleconferencing.
 This can be problematic when you have firms with more advanced project
management systems working with less developed organizations.
 What is obvious to you is not necessarily obvious to your partner.
 Companies that treat contractors as partners consider continuous
improvement as a joint effort to eliminate waste and pursue opportunities
for cost savings. Risks as well as benefits are typically shared 50/50
between the principals, with the owner adhering to a fast-track review of
proposed changes.
 The art of negotiating says “Project management is NOT a contest.”
 Bad news travels faster and farther than good news.

39. Dr.AtifShahzad
12–39
Procurement Management Process
1. Planning purchases and acquisitions
2. Planning contracting
3. Requesting seller responses
4. Selecting sellers
5. Administering the contract
6. Closing the contract

40. Dr.AtifShahzad
12–40
Contract
 A formal agreement between two parties wherein the contractor obligates
itself to perform a service and the client obligates itself to do something in
return.
¤ Defines the responsibilities of the parties, spells out
the conditions of its operations.
¤ Defines rights of the parties to each other.
¤ Grants remedies to a party if the other party
breaches its transactional obligations.

41. Dr.AtifShahzad
12–41
Types of Contracts
 Fixed-Price (FP) Contract or Lump-sum Agreement
¤ The contractor with the lowest bid agrees to perform all work
specified in the contract at a fixed price.
¤ The disadvantage for owners is that it is more difficult and more
costly to prepare.
¤ The primary disadvantage for contractors is the risk of
underestimating project costs.
¤ Contract adjustments:
 Redetermination provisions
 Performance incentives

42. Dr.AtifShahzad
12–42
Types of Contracts (cont’d)
 Cost-Plus Contracts
¤ The contractor is reimbursed for all direct allowable costs
(materials, labor, travel) plus an additional prior-negotiated fee
(set as a percentage of the total costs) to cover overhead and
profit.
¤ Risk to client is in relying on the contractor’s best efforts to contain
costs.
¤ Controls on contractors:
 Performance and schedule incentives
 Costs-sharing clauses

43. Dr.AtifShahzad
12–43
Contract Type versus Risk
FIGURE A12.1

44. Dr.AtifShahzad
12–44
Contract Changes
 Contract Change Control System
¤ Defines the process by which a contract’s authorized
scope (costs and activities) may be modified:
 Paperwork
 Tracking systems
 Dispute resolution procedures
 Approval levels necessary for authorizing changes
¤ Best practice is the inclusion of change control system
provisions in the original contract.

45. QUESTIONS

46. THANK YOU FOR YOUR INTEREST