Project Management Fundamentals

PROJECT MANAGEMENT FUNDAMENTALS

Robert J Twiddy
Business Strategy Director, PSI Solutions, Bangkok

Thursday, 10 January 13

Course Scope

l This course does— l This course does not—
l Teach the fundamentals, of l Provide training sufficient to
project management sit for the PMP exam.
l Discuss the role of the However, all techniques,
project manager as well as tools, and terminology in
team members in managing this course are consistent
a project with the PMBOK Guide.
l Practice fundamentals of
project management

“PMP” is a certiﬁcation mark of the Project Management Institute, Inc., which is registered in
the United States and other nations.
“PMBOK” is a trademark of the Project Management Institute, Inc., which is registered in the
United States and other nations.

Unit 0/ Slide


Course Objectives
l By the end of this course, you will be able to—
l Describe the roles and responsibilities of project
managers across the project life cycle
l Understand the fundamentals of project management
l Being aware of case studies
l Know where to obtain further materials and training

l Note future support now:

l Project Management Institute - www.pmi.org
l PMI Bangkok Chapter: http://www.pmithai.org
l PMBOK: Project Management Body of Knowledge
l http://marketplace.pmi.org/Pages/default.aspx?
Category=PMBOKBooks

Unit 0/ Slide


Introduction to Project Management
ASML Worldwide
Project Management Methodology

INITIATING PLANNING EXECUTING CLOSING
Process Group Process Group Process Group Process Group

1.1 2.1 2.5 3.1
IDENTIFY THE PROJECT OR ESTABLISH THE PROJECT ALLOCATE PROJECT TRACK AND CONTROL THE 4.1
PRODUCT TEAM RESOURCES PROJECT CONDUCT PROJECT
HANDOVER

1 2.2 2.6 3.2
SET PROJECT ESTIMATE PROJECT MANAGE PROJECT 4.2
PROCEDURES AND COSTS CHANGE PREPARE LESSONS
PROTOCOLS LEARNED
READY-TO-INITIATE
B
1.2 2.3 2.7 3.3
DETERMINE DEVELOP WORK OPTIMIZE THE PROJECT MANAGE PROJECT RISKS 4.3
STAKEHOLDERS AND BREAKDOWN STRUCTURE PLAN PERFORM ADMINISTRATIVE
LEADERSHIP CLOSEOUT
C F

1.3 2.4 2.8 3.4
DEVELOP THE PROJECT CREATE THE PROJECT DEVELOP RISK MANAGE VENDORS AND
DEFINITION SCHEDULE MANAGEMENT PLAN CONTRACTS

D

1.4 2.9 3.5
PREPARE THE BUSINESS ESTABLISH THE PROJECT REPORT PROJECT
CASE BASELINE PERFORMANCE

A E

2 3 4

READY-TO-PLAN READY-TO-EXECUTE READY-TO-CLOSE

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Objectives

l By the end of this unit, you will be able to—
l Discuss key characteristics defining a project
l Explain the triple constraint that affects projects
l Identify the types of key stakeholders on the project
l Describe influences on a project, including project
organizational structure and common external factors
l Describe the dynamics of a project management life cycle
l Describe project processes that make up every project

Unit 0/ Slide


Why do we need project
management tools & techniques?
Because we live in a world of limited
resources and not enough time.
There will always be more to do than time
and resources will allow.
Project Management tool & techniques, if
used regularly & appropriately, help us
make more effective use of our time.


What does the term ‘project’
mean to you?

Class group exercise
• What does the term ‘project’ mean to you
and your group?
• What do you and your group think of or
associate with the term ‘project’?


What Is a Project?

l “[A] temporary endeavour undertaken to create a unique
product, service, or result”

Source: PMBOK® Guide, p. 5

Unit 0/ Slide


Types of Projects

New Development

Process
Infrastructure
Improvement

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What Is Project Management?

l Project management is—
l “[T]he application of knowledge, skills, tools and
techniques to project activities to meet project
requirements”*
l Accomplished through the application and integration of
the project management processes of initiating, planning,
executing and closing
l Achieving desired outcomes in a context of conflicting
expectations and changes, using other people’s
resources, and having limited authority
l Sound project management helps ensure project
success

*Source: PMBOK® Guide, p.
8

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Features of a project


Features of a project
• A start and a finish
• Is a unique activity with a visible output
• May involve uncertainty and risk
• Involves a team coming together specifically for the
project
• A budget
• Non repetitive tasks, sequential order
• Use of resources (including human resources)
• A single point of ultimate responsibility
• Clearly defined team roles
• Clear aims, objectives, goals


The Triple Constraint

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Managing Projects Using the Triple Constraint

l Balancing the three “sides” while managing the project
l Combining art and science
l Ongoing effort to define, refine, and re-refine project
l Based on a foundation of process management

Process

Management

Unit 0/ Slide


A Note on Senior Management’s Expectations
and the Triple Constraint

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Project Life Cycle

l Projects are usually divided into phases
l Beginning - Middle - End
l Collectively, these phases make up the project life cycle
l Different project-types have different life cycles!
l Development
l Infrastructure
l Process Improvement

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Project Life Cycles Examples

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Project Management Processes

l Project management processes provide
l A tool-box of processes to accomplish specific
deliverables
l An iterative approach to creating and maintaining project
documents
l Living documentation that is continually refined during
project life cycle
l For use whenever necessary during life of project

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Project Process and Content Processes

Unit 0/ Slide


What can go wrong !


21 Common Project Management Process Steps
ASML Worldwide
Project Management Methodology

INITIATING PLANNING EXECUTING CLOSING
Process Group Process Group Process Group Process Group

1.1 2.1 2.5 3.1
IDENTIFY THE PROJECT OR ESTABLISH THE PROJECT ALLOCATE PROJECT TRACK AND CONTROL THE 4.1
PRODUCT TEAM RESOURCES PROJECT CONDUCT PROJECT
HANDOVER

1 2.2 2.6 3.2
SET PROJECT ESTIMATE PROJECT MANAGE PROJECT 4.2
PROCEDURES AND COSTS CHANGE PREPARE LESSONS
PROTOCOLS LEARNED
READY-TO-INITIATE
B
1.2 2.3 2.7 3.3
DETERMINE DEVELOP WORK OPTIMIZE THE PROJECT MANAGE PROJECT RISKS 4.3
STAKEHOLDERS AND BREAKDOWN STRUCTURE PLAN PERFORM ADMINISTRATIVE
LEADERSHIP CLOSEOUT
C F

1.3 2.4 2.8 3.4
DEVELOP THE PROJECT CREATE THE PROJECT DEVELOP RISK MANAGE VENDORS AND
DEFINITION SCHEDULE MANAGEMENT PLAN CONTRACTS

D

1.4 2.9 3.5
PREPARE THE BUSINESS ESTABLISH THE PROJECT REPORT PROJECT
CASE BASELINE PERFORMANCE

A E

2 3 4

READY-TO-PLAN READY-TO-EXECUTE READY-TO-CLOSE

Unit 0/ Slide


Exercise

Class group exercise
• Please work as a team to select the project for your
table group to use for the remainder of the class

l At this point the participants will choose a project to use
in the creation of the various project management
templates that are discussed in the remainder of the
course


Key Messages

l “A project is a temporary endeavour undertaken to
create a unique product, service, or result”*
l “Project management is the application of knowledge,
skills, tools and techniques to project activities to meet
project requirements”
l Every project has a life cycle with identifiable phases
and activities
l The triple constraint of time, cost, and scope underlies
every project
l Core Values of Customers, People, Quality and
Entrepreneurship are an integral part of every project

Unit 0/ Slide


Learning Objectives
 Describe the five project management (PM)
process groups, the typical level of activity for
each, and the interactions among them.

 Understand how the PM process groups relate to
the PM knowledge areas.

 Discuss how organizations develop information
technology PM methodologies to meet their
needs.

2
Tuesday, 8 January 13

Learning Objectives
 Review a case study of an organization applying the
PM process groups to manage an information
technology project, and understand the contribution
that effective project initiation, project planning,
project execution, project monitoring and controlling,
and project closing make to project success.

3

Project Management Process
Groups
 A process is a series of actions directed toward a particular
result.
 Project management can be viewed as a number of
interlinked processes.
 The project management process groups include:
 Initiating processes
 Planning processes
 Executing processes
 Monitoring and controlling processes
 Closing processes

4

Level of Activity and Overlap of
Process Groups Over Time

5

What Went Wrong?

Philip A. Pell, PMP, commented on how the U.S. IRS
needed to improve its project management process. “Pure
and simple, good, methodology-centric, predictable, and
repeatable project management is the SINGLE greatest
factor in the success (or in this case failure) of any
project…The project manager is ultimately responsible for
the success or failure of the project.”*

*Pell, Phillip A., Comments posted on CIO Magazine Web site on article “For
the IRS, There’s No EZ Fix” .

6

Media Snapshot
 Just as information technology projects need to follow the project
management process groups, so do other projects, such as the
production of a movie.
 Processes involved in making movies might include screenwriting
(initiating), producing (planning), acting and directing (executing),
editing (monitoring and controlling), and releasing the movie to
theaters (closing).
 Many people enjoy watching the extra features on a DVD that
describe how these processes lead to the creation of a movie…This
acted “…not as promotional filler but as a serious and meticulously
detailed examination of the entire filmmaking process.”*
 Project managers in any field know how important it is to follow a
good process.

*Jacks, Brian, “Lord of the Rings: The Two Towers Extended Edition (New Line),” Underground
Online (accessed from www.ugo.com ).
7

Mapping the Process Groups to
the Knowledge Areas
 You can map the main activities of each PM process
group into the nine knowledge areas by using the
PMBOK® Guide

 Note that there are activities from each knowledge area
under the planning process group.

 All initiating activities are part of the project
integration management knowledge area.

8

Relationships Among Process Groups
and Knowledge Areas

9

Relationships Among Process Groups
and Knowledge Areas (cont’d)

10

Developing an IT Project
Management Methodology
 Just as projects are unique, so are approaches to project
management.
 Many organizations develop their own project
management methodologies, especially for IT projects.
 BlueCross BlueShield of Michigan used the PMBOK®
Guide to develop their IT project management
methodology.
 Six Sigma projects and the Rational Unified Process
(RUP) framework use project management methodologies.

11

What Went Right?
• Jordan Telecom (JT), Jordan’s only telecom operator,
introduced new customized project management
processes to improve efficiency and reduce costs in its
Information Technology department…

• JT created three lines of processes based on the size
of the project: high, medium, or low...

• Rula Ammuri, JT’s Chief Information Officer,
believes this new methodology will result in a 40-50
percent increase in productivity.*

Al-Tamimi, Fairooz, “Jordanian Company Uses PMI Methods to ‘Go Global’,
Improve Productivity,” PMI Today .
12

Case Study: JWD
Consulting’s Project
 This case study provides an example of what’s
involved in initiating, planning, executing, controlling,
and closing an IT project.
 This case study provides a big picture view of
managing a project.

13


14

Project Initiation
 Initiating a project includes recognizing and starting a new
project or project phase.
 Some organizations use a pre-initiation phase, while others
include items such as developing a business case as part of the
initiation.
 The main goal is to formally select and start off projects.
 Key outputs include:
 Assigning the project manager.
 Identifying key stakeholders.
 Completing a business case.
 Completing a project charter and getting signatures on it.

15

Project Initiation Documents
 Business case: See example

 Charter: See example

 Every organization has its own variations of what
documents are required to initiate a project. It’s
important to identify the project need, stakeholders,
and main goals.

16


19

Project Planning
 The main purpose of project planning is to guide
execution.
 Every knowledge area includes planning information (see
example).
 Key outputs included in the JWD project include:
 A team contract.
 A scope statement.
 A work breakdown structure (WBS).
 A project schedule, in the form of a Gantt chart with all
dependencies and resources entered.
 A list of prioritized risks (part of a risk register).
 See sample documents

20

JWD Consulting Intranet Site
Project Baseline Gantt Chart

21

List of Prioritized Risks

22


23

Project Executing
 Project execution usually takes the most time and resources.
 Project managers must use their leadership skills to handle
the many challenges that occur during project execution.
 See example lists the executing processes and outputs. Many
project sponsors and customers focus on deliverables related
to providing the products, services, or results desired from the
project.
 A milestone report (see example on page 100) can keep the
focus on completing major milestones.

24

Part of Milestone Report

25


26

Project Monitoring and
Controlling
 Involves measuring progress toward project objectives,
monitoring deviation from the plan, and taking corrective
action to match progress with the plan.

 Affects all other process groups and occurs during all
phases of the project life cycle.

 Outputs include performance reports, requested changes,
and updates to various plans.

27

Project Closing
 Involves gaining stakeholder and customer acceptance
of the final products and services.
 Even if projects are not completed, they should be
formally closed in order to reflect on what can be
learned to improve future projects.
 Outputs include project archives and lessons learned,
which are part of organizational process assets.
 Most projects also include a final report and
presentation to the sponsor or senior management.

28

Chapter Summary
 The five project management process groups are
initiating, planning, executing, monitoring and
controlling, and closing.
 You can map the main activities of each process
group to the nine knowledge areas.
 Some organizations develop their own information
technology project management methodologies.
 The JWD Consulting case study provides an example
of using the process groups and shows several
important project documents.

29

Roles in projects – who is
responsible for what?


One of the the benefits of project management
techniques is the opportunity to clarify roles.


• Project sponsor – person who’s paying for it


• Project champion - person who wants to see it
happen


happen
• Project manager – will ensure it happens


happen
• Project team – will make it happen


happen
• Stakeholders – those affected by it and with an
interest in it, but not necessarily part of it.


happen
• Stakeholders – those affected by it and with an
interest in it, but not necessarily part of it.
• Audience – we’ll consider them later!


Attributes of an effective project
manager
Group exercise
• What you think are the attributes/qualities
required to be an effective project manager?


manager – typically are


• Excellent time management skills


• ‘Can do’ proactive attitude


• Adaptable, flexible.


• Fair – respecting different people’s viewpoints


• Committed to the team and the project’s goals


• Decisive and realistic


• Excellent communication skills


• Leadership


• Leadership
• Assertiveness


• Be prepared to ‘roll up their sleeves and get
their hands dirty’
• Foresight
• Planning skills
• Knowledge of the subject / area of work
• Be prepared to walk, if necessary i.e. leave!
• A sense of humour ?


The tools of & for project
management
• There are numerous tools which can be for
managing projects, some of them complex,
some of them simple.
• We will look at over a dozen tried and tested
tools and techniques which can be used for
effective project management.


Our tools for today
• QUAD Chart analysis
• The QUAD chart is a very simple yet
extremely effective tool. Project scoping –
enables you to define what you do before
you start.
• Stakeholder analysis – simple version helps
you understand and manage the different
relationships that matter to the project.


The QUAD chart
• A very simple yet powerful tool.

• Used to help us clarify exactly what our
project is all about.


Quad Chart


Project Management
Simulation Exercise
• We will carry out a simulated project


Project Management
Simulation Exercise
“The Gourmet Breakfast”

• We are going to use a relatively simple
example of something that you should be
familiar with in order for you to be able to
understand and practice on a real life
project.


The Problem


The Problem
• Just got up?
• Feeling kind of hungry?
• Fancy a nice breakfast ?
• What choice do we have?


Decisions, Decisions


Let’s make a full cooked English
breakfast


Class exercise - Your Mission


• To produce a simple project plan for producing a
full English Breakfast.


• To produce a simple project plan for producing a
full English Breakfast.

• We will be using this project to illustrate the use of
the following:
– Quad Chart Analysis including
• Project Scoping
• Stakeholders and Stakeholder Analysis
• Desired Outcomes (Critical Success Factors)
• Secondary benefits


Why a breakfast?
• We will use the Breakfast as it’s a simple example
of something where you should all have a similar
level of basic knowledge.

• Let’s view making the breakfast as a project in its
own right.

• It meets most of the criteria for/attributes of a
project doesn’t it? Does it? Let’s check


Attributes of a project
• A start and a finish
• Is a unique activity
• May involve uncertainty and risk
• Usually involves a team coming together specifically for
the project
• A budget
• Non repetitive tasks
• Use of resources (including human resources)
• A single point of ultimate responsibility
• Clearly defined team roles


The Quad Chart


Guided Tour


Guided Tour
TITLE OF PROJECT – SNAPPY ACRONYM DESCRIPTOR


Guided Tour

WHY IS PROJECT BEING DONE?
WHAT FOR?
WHAT IS THE RESULT?


Guided Tour

WHY IS PROJECT BEING DONE? WHO IS PROJECT FOR?
WHAT FOR? WHO WILL BENEFIT (OR NOT)?
WHAT IS THE RESULT? WHO WILL IT INVOLVE?


Guided Tour


GOALS!
WHAT MAKES THE
PROJECT A SUCCESS?


Guided Tour


WHEN ARE WE FINISHED?
GOALS!
WHAT CAN BE MEASURED?
WHAT MAKES THE
PROJECT A SUCCESS? HOW DO I
MEASURE SUCCESS?


First a simple example for making a
cup of tea.
Our first QUAD chart could look
something like the one on the next
slide


Example - Make A Cup of Tea



1. To make a cup of tea


To make a cup of tea!

1. To make a cup of tea



1. To make a cup of tea 1. The tea maker



2. The tea drinkers



2. To quench the thirst 2. The tea drinkers
3. To stimulate the mind


To make a cup of tea to quench the thirst and stimulate the mind





1. Made an acceptable cup of tea
2. Quenched the thirst
3. Stimulated the mind




1. Made an acceptable cup of tea 1. Audible noises of satisfaction from
2. Quenched the thirst drinkers. Requests for a second cup
3. Stimulated the mind




1. Made an acceptable cup of tea 1. Audible noises of satisfaction from
2. Quenched the thirst drinkers. Requests for a second cup
3. Stimulated the mind 2. Increased conversation
Absence of snoring or yawning


But first another technique


Tool and Technique
BRAINSTORMING


Brainstorming


Brainstorming
• Brainstorming was coined in the 1940s by Alex
Osborne a US advertising executive.


Brainstorming
• Brainstorming was coined in the 1940s by Alex
Osborne a US advertising executive.
• It works by temporarily removing the social
blocks which we all have which prevent us from
being creative. Blocks such as:
– Feeling our ideas will be ridiculed
– Feeling we don’t know enough to voice an opinion
– Focusing on simple solutions rather than taking a risk


Brainstorming
• Brainstorming is essentially a method for
being creative in groups, particularly useful
for creative problem solving.

• ‘Popcorning’ is the new name for
brainstorming


The rules of brainstorming
• No judgement or criticism of an idea
• Quantity of ideas is more important than quality
• Freewheeling - rapid a spontaneous ideas
• Mutating and combining ideas – one person’s idea
stimulates ideas from another person
• No answer or idea belongs to a person, they
belong to the group
• Answers and ideas must be produced rapidly


Brainstorming how to do it
• 1 question or problem is posed
• 2 people in a group take turns to answer
• 3 each suggestion is written down by a note
taker
• 4 repeat the process until the group run out
of ideas
• 5 Select, filter and choose the most
appropriate ideas.


Your Mission


Your Mission
• Class exercise

• To produce a simple project plan QUAD and
associated List of Assumptions for approval by
Andrew for producing a full English Breakfast.


Or
• You can try one of the following projects if
you prefer.
• Organise a stag do or hen party night out
• Plan a staff away day social event
• Plan a family holiday


Guided Tour
PROJECT NAME SNAPPY ACRONYM


Guided Tour

WHY IS PROJECT BEING DONE?
WHAT FOR?
WHAT IS THE RESULT?


Guided Tour



Guided Tour


GOALS!
WHAT MAKES THE
PROJECT A SUCCESS?


Guided Tour


WHEN ARE WE FINISHED?
GOALS!
WHAT CAN BE MEASURED?
WHAT MAKES THE
PROJECT A SUCCESS? HOW DO I
MEASURE SUCCESS?


Assumptions
• If we assume too much then we make an ass of
you and me (ass u me)

• So….make a list of assumptions which go with
your QUAD chart. Then we can be sure that we,
as project manager, have the same base set of
assumptions and understandings as everyone else
involved in the project.


Mind your Language !
“The project is structured around a multifaceted incremental
work plan combining novel content design based on new
pedagogical paradigms blended with the e-learning
environments to facilitate hybrid mode of delivery”
Extract from GENIUS project based at Reading University –
one of nominees for a Golden Bull award for
gobbledygook from Plain English campaign 2005
Make sure you use appropriate language – Plain English is best

http://www.plainenglish.co.uk/goldenbull.html
Plain English web site also has free guide on alternative words to use


Stakeholder - definition


Stakeholder - definition
A stakeholder is, for our purposes at the
moment, “a person or organisation who is
affected by or impacted by what you are trying
to do”
– This may of course be negatively as
well as positively!
– It includes the members of the Project Team
and the Customer(s)


Stakeholders
4 things to do with them


Stakeholders
• List them


Stakeholders
• List them
• Try to understand their likely perspective -
how might they react to the project?


Stakeholders
• List them
• Assess their relative importance


Stakeholders
• List them
• Assess their relative importance
• Act appropriately with the stakeholder
throughout the project – identify and decide
what action you may need to take


Stakeholders
• In the next session we will look at
stakeholders in more detail – and compare
stakeholders with audiences

• Taking account of them and their views is
important to the success of your project.


Group exercise
• Produce a stakeholder analysis chart, using
the simple version on the next slide, or the
handout.


One version of the stakeholder
analysis


Website has other versions
• www.hull.ac.uk/workbasedlearning/


Where Have We Been?


Were might we go ?


Were might we go ?

SECONDARY BENEFITS
(UNMEASURABLE)


Were might we go ?

VALUES

WHAT IS THE
MOTIVATION?
PASSION ETHICS

SECONDARY BENEFITS
(UNMEASURABLE)


What if you can’t think of a project?

• Make up a realistic scenario.
For example:
• Cleaning and servicing your car.
• Installing a bathroom suite
• Marketing a new product
• Digging up and concreting over the garden
• The choice is yours……


Questions ??
rtwiddy@coepm.net
0904 212 043


World’s Largest Gas Separation Plant Finished On Time and Under Budget

CASE STUDY

World’s Largest Gas Separation Plant
Finished On Time and Under Budget
Samsung Engineering Co., Ltd. Uses Knowledge Areas from PMI’s A Guide
to the Project Management Body of Knowledge (PMBOK® Guide) to
Implement Integration Methods in Construction Project

Background
In September 2007, PTT Public Company Ltd. (PTT) commissioned Samsung Engineering Co., Ltd. (SECL) to build
the PTT Gas Separation Plant #6 (GSP-6) in Rayong, Thailand. The plant, which was valued at US$630 million,
powers Thailand’s growing petrochemical, commercial, domestic and transport markets. In particular, the plant
recovers ethane, propane, and other components from natural gas.

Samsung Engineering’s project team handled the project management, engineering, procurement, construction and
commissioning work on a lump-sum turn-key basis.

Challenges
The project, which was honored as a 2011
recipient of the Project Management Institute
Distinguished Project Award, faced substantial
challenges. With approximately 300 tie-in
points among existing plants within the PTT gas
complex area, there had to be a large degree
of sensitivity in coordination from the planning
stage through completion.

Another challenge occurred in September 2009
when the Supreme Court of Thailand issued an
injunction to suspend the GSP-6 project—along
with 65 other projects in the region—for an
environmental and health assessment. This
resulted in an 11-month hiatus. All the while,
Samsung Engineering president and CEO Park Ki-Seok with PMI president
Samsung Engineering was working on several
and CEO, Mark A. Langley other high-profile projects in Thailand that
required extensive resources.

World’s Largest Gas Separation Plant Finished On Time and Under Budget

Solutions
The GSP-6 project team overcame these challenges by applying concurrent engineering techniques to shorten the
engineering process, which enabled them to start construction early. Leveraging all nine Knowledge Areas from
A Guide to the Project Management Body of Knowledge (PMBOK® Guide), the team also implemented the following
integration methods:

■■ Combined the project teams from the GSP-6 project and other projects to minimize interfacing discrepancies,
which are common when dealing with multiple adjacent projects.

■■ Integrated multiple construction contracts and subcontractors, including shared equipment, fabrication yards
and manpower to increase efficiency.

■■ Integrated the construction workforce with the facility’s operational staff to form a task force that allowed
uninterrupted operations of the adjacent facilities during the construction period and during the pre-
commissioning and commissioning phases.

Results
The GSP-6 project was successfully completed on 25 January 2011, on time and under budget, after 19,304,700
accident-free hours. The plant is now the largest gas separation plant in the world in terms of the number of
production through-fractionation units.

Samsung Engineering cited project risk management, project communications management and project human
resources management as instrumental in the successful delivery of this project. The techniques, processes and
lessons learned from the project were recorded and reviewed to ensure the same best practices are applied to
achieve success in future projects. With a strong foundation of PMI’s project management practices, Samsung
Engineering has been able to build a strong track record of projects in Thailand and raise its profile in the region.

“The project’s ambitious timeline, along with challenges like resource shortages, working around existing plants
and government delays, forced us to look beyond traditional project management practices,” said Samsung
Engineering’s president and CEO, Park Ki-Seok. “With the help of PMI’s standards, which led to successful
implementation practices—particularly regarding risk management, communication management and human
resource management—the project team continually surpassed expectations.”

© 2012 Project Management Institute, Inc. All rights reserved. “PMI” and the PMI logo are marks of Project Management Institute, Inc.
2 For a comprehensive list of PMI marks, contact the PMI Legal Department. ORG-6035-2012(06-2012)

PROJECT MANAGEMENT IMPROVES LENOVO’S STRATEGY
EXECUTION AND CORE COMPETITIVENESS

I. Background

In recent years, the personal computer (PC) industry has been developing by leaps and
bounds. Global sales of PCs totaled 230 million units in 2006, representing a 9 percent
increase over the previous year. Lenovo has a product line that includes everything from
servers and storage devices to printers, printer supplies, projectors, digital products,
computing accessories, computing services and mobile handsets, all in addition to its
primary PC business, which made up 96 percent of the company’s turnover as of the
second quarter of 2007.

Since its acquisition of IBM’s Personal Computing Division in May 2005, Lenovo has been
accelerating its business expansion into overseas markets. The company transferred its
corporate headquarters from Beijing, China to Raleigh, North Carolina, USA. Today, the
group has branch offices in 66 countries around the globe. It conducts business in 166
countries and employs over 25,000 people worldwide. Lenovo is organized into four
geographical units: Greater China, America, Asia-Pacific, Europe, and the Middle East and
Africa (EMEA). Within each unit there are functional departments that include production,
transportation, supply chain management, marketing and sales. Sales outside of Greater
China compromised 59 percent of the company’s total turnover in the second quarter of
2007.

II. Challenges

Before 2004, multinational PC makers like Dell and HP were experiencing difficulties
localizing their business in the Chinese market and thus did not pose a serious competitive
threat to Lenovo. However, their operations began to have a major impact on Lenovo
market share in 2004, particularly among key accounts—mandating better execution and
core competitiveness in order to increase market share and improve business
performance.

III. Solutions

In order to address these challenges, Lenovo proposed substantial changes to its business
model and strategy in 2004, employing a project-focused approach to develop its
corporate strategy. Specific steps taken were:

Implementing project management as the tool for executing corporate strategy

1. After confirming the company’s overall corporate strategy, Lenovo set about
organizing priority tasks that required multi-department cooperation into projects,
referred to as strategic projects. Strategic projects differ from R&D projects in that

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time and cost cannot be used as yardsticks for success. Such projects may be about
expanding into new markets, solving underlying problems, enhancing organizational
efficiency, integrating strategic resources or improving employee satisfaction or
capabilities. In the past, some strategic planning had not been followed up on
sufficiently but the application of strategic project management solved this problem;
strategic projects began to actually be executed and generated results.

2. Lenovo also established a Project Management Office (PMO) to coordinate strategic
projects. Beginning in 2004 and early 2005, Lenovo put in place the processes and the
organizational structure for its PMO. It also formalized the relationships between
strategic leaders and the PMO and budgeted resources for the office. Subsequently, all
of Lenovo’s other departmental regulations needed to conform to PMO regulations,
with detailed regulations being outlined by specific business departments. However,
Lenovo’s PMO did not interfere with projects administratively; rather it offered training
and established standardized procedures. Lenovo employees see the PMO as a kind of
resource rather than an administrative facility. Designating a PMO as an administrative
facility is one of several things that have doomed such offices in the past, but Lenovo’s
office has thrived, winning the company’s excellent team award. The company
believes that certain conditions must exist in order to successfully utilize project
management: First, a company must face a challenge (i.e. an external factor that
demands it to do so); second, the office must be prioritized by the company leadership;
third, the office must be led by a professional team in order to guarantee that
company-specific systems are developed; and finally, it must conform with the
company’s organizational culture and be appreciated. Otherwise it’s hard to execute.

3. Lenovo also earmarked money for strategic implementation. Previously, completed
strategic plans were not financially supported. But with the strategic shift, the
leadership set aside additional money to execute projects outside of the original
budget and to provide bonuses for those involved—paving the way for the successful
execution of strategic plans.

Valuing project management professionals

1. Lenovo sent its top talent in project management to take the PMP® certification
exam and apply project management standards. PMP® certification is developed and
managed by Project Management Institute (PMI) which is the largest professional
project management institute in the world. The PMP certification is the most
authoritative and influential of its kind and is the only certification genuinely
recognized and accepted globally within the project management discipline. PMP®
certification conforms to A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), the standards issued by PMI. The PMBOK® Guide is also recognized
and accepted internationally by premier authorities in standards. After Lenovo’s
acquisition deal with IBM’s PC business, Lenovo project managers needed a shared
platform to communicate with and manage teams in different countries. As the de-

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facto global standard for project management, the project management standards of
PMI helped Lenovo standardize its processes. Starting from its functional departments
(e.g. R&D, supply chain management, etc.) Lenovo selected a group of key
professionals to receive training in project management and sit for the PMP®
certification. The returning professionals catalyzed project management in their
respective functional departments and trained other team members.

2. A hierarchy of project management positions was introduced within the company,
in line with the position structure set up by the company’s human resources
department. Lenovo Corporate Research & Development introduced this position
structure between 2000 and 2001. Different levels for engineers included assistant
engineer, deputy engineer in charge, engineer in charge, managing engineer etc.
Professionals were appraised by experts annually on two fronts: First, based on their
knowledge base, namely their background and relevant understanding; second, based
on their performance, for example their ingenuity in R&D. In 2006, Lenovo kicked-off
a global reshuffling of its positions. As an example, the company’s sales division is
broken up into sequential levels such as assistant salesperson, sales manager and
consultant. Positions are associated with salaries, but company regulations limit the
percentage of employees at each level. For example, top-level positions can only
occupy five percent of a given team. Full-time project managers can advance within
the company’s project management hierarchy. There are over 100 full-time project
managers in Lenovo, but nearly all staff of lenovo have participated in some projects.
The hierarchy builds a professional ladder for project managers, serving as a channel
for project management career development.

IV. Major Achievements

Lenovo’s experimentation in project management significantly advanced the
transformation in its corporate strategy and improved its business model. The company’s
project-oriented approach improved teamwork and leveled the playing field; team culture
and corporate culture have been promoted; an innovative spirit has been instilled; and
international integration has been improved. In terms of the market results, Lenovo’s
adaptation of project management has improved the company’s core competitiveness with
improved delivery and customer satisfaction. In turn, distinctive performance was
delivered: In 2006, the company had a market share of seven percent in the global PC
market, led only by Dell and HP. Its total turnover was USD 14.6 billion, a rise of 10 percent
over the previous year.

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