goal direct pro man4 aw:Layout 1 26/5/09 11:52 Page 1 4TH EDITION “Well argued and authoritative.” The Work Foundation “Well argued and authoritative… a very helpful approach to a subject which is central to the business of managing change in modern organizations.” G The Work Foundation O A “Racy and pragmatic… a worthwhile addition to the literature.” L European Management Journal D ERLING S ANDERSEN KRISTOFFER V GRUDE TOR HAUG Goal Directed Project Management (GDPM) is a unique methodology that has been developed and I R refined by the authors over 20 years. During this period, GDPM has been adopted as a standard E approach by organizations all over the world. C InGoal Directed Project Managementthe authors emphasize the need to develop people’s T E involvement and commitment to a project, which they refer to as “PSO” (people, systems and D organization). The book gives detailed and practical guidance on how to plan, organize and control these PSO projects effectively by presenting the methods and tools that will significantly increase the P probability of success. R This fully updated fourth edition includes a new chapter exploring the financial control of projects. The O authors present readers with an effective guide to designing a project budget based on cost-benefit J analysis, and they demonstrate how to report on and control the running project using their E GOAL milestone-related budget. The book also highlights the close relationship between managing change C 4TH EDITION and the key ideas of GDPM. The central focus of GDPM is to develop an understanding of, and T commitment to, managing successful and lasting change. M Software support, consulting and training is available for the method at www.gdpmservices.com and A DIRECTED www.gdpmsystems.com. N A Erling S Andersenis Professor of Project Management at BI Norwegian School of Management, G Oslo, Norway. He has written several books on project management, general management and E computer-based information systems. PROJECT M Kristoffer V Grude, a former Managing Partner of Coopers & Lybrand Consulting, Norway, has his own E consulting business, Euroconsult (www.euroconsult.no) and a joint venture with IT_Projectpartner N (www.itpp.no). He has an international profile in business development and project management. T MANAGEMENT Tor Haugis currently Senior Partner at Yamanu Group, specializing in IT strategies, re-engineering and project management. KRER ISL TOTOFING RF S £25.00 HER A US $49.95 AUG V GNDE Effective techniques RR Kogan Page Kogan Page US ISBN: 978-0-7494-5334-3 UDE SEN and strategies 120 Pentonville Road 525 South 4th Street, #241 London N1 9JN Philadelphia PA 19147 9 780749 453343 United Kingdom USA Business and management / www.koganpage.com Project management i GOAL DIRECTED PROJECT MANAGEMENT Effective techniques and strategies 4TH EDITION ERLING S ANDERSEN KRISTOFFER V GRUDE TOR HAUG London and Philadelphia ii Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and authors cannot accept responsi- bility for any errors or omissions, however caused. No responsibility for loss or damage occa- sioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or any of the authors. First published in Norway in 1984 by NKI – forlaget Hardback edition first published in Great Britain in 1987 by Kogan Page Limited (Translated from Norwegian by Roberta Wiig) Reprinted in paperback in 1988 Second edition 1995 Third edition 2004 Reprinted 2004, 2005, 2007, 2008 Fourth edition 2009 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accor- dance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: Kogan Page Limited Kogan Page US 120 Pentonville Road 525 South 4th Street, 241 London N1 9JN Philadelphia, PA 19147 UK USA www.koganpage.com © Erling S Andersen, Kristoffer V Grude and Tor Haug, 1984 © Erling S Andersen, Kristoffer V Grude and Tor Haug, 1987, 1988, 1995, 2004, 2009 The right of Erling S Andersen, Kristoffer V Grude and Tor Haug to be identified as the authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. ISBN 978 0 7494 5334 3 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Andersen, Erling S. Goal directed project management : effective techniques and strategies / Erling S. Andersen, Kristoffer V Grude and Tor Haug. -- 4th ed. p. cm. Includes bibliographical references and index. ISBN 978-0-7494-5334-3 1. Project management. 2. Strategic planning. 3. Management by objectives. I. Grude, Kristoffer V. II. Haug, Tor. III. Title. HD69.P75G62 2009 658.4904--dc22 2009000804 Typeset by Saxon Graphics Ltd, Derby Printed and bound in India by Replika Press Pvt Ltd iii Contents Preface vi 1 Introduction 1 Outline 1 About PSO projects 3 Goal Directed Project Management 6 2 Project characteristics 9 A unique task 10 Attainment of a specific result 11 Requires a variety of resources 12 Time constraints 13 Project management 14 3 Pitfalls in project management 15 Cracks in the foundation 15 Pitfalls in planning 20 Pitfalls in organizing 24 Pitfalls in controlling 27 Pitfalls in execution of project work 29 Avoiding pitfalls 31 4 Foundation of the project 33 Purpose and goals of the project 34 Mission breakdown structure 38 Stakeholders and stakeholder analysis 43 Project mandate 46 iv l Contents Division of responsibility between base and project: the principle responsibility chart 52 Small example: Project ‘Excellent physical work environment’ 57 5 Global planning – milestone planning 61 Principles of project planning 62 Segmentation of project 66 Practical milestone planning 70 6 Global organizing – milestone responsibility chart 87 Principles of project organization 87 Responsibility charts 94 Milestone responsibility chart – responsibilities for achieving milestones 99 Time scheduling and resource estimation at global level 103 Uncertainties of the project 110 7 Detail planning and detail organization 117 Principles of project activity planning 117 Activity planning 118 8 Project control 125 What is control? 125 Principles of project control 127 Controlling activities 130 Controlling milestones 138 9 Financial control of projects 145 Cost–benefit analysis 145 Cost–benefit and financial control 152 Project budget 153 Financial reporting and control 162 10 Quality in project work 169 Significance of project quality 169 Procedures to increase quality 171 Quality of planning documents 173 Contents l v 11 Project culture 177 A good project culture 177 Top management 180 Line management 181 Project owner 183 Steering committee 184 Project manager 192 Elected representatives 199 A projectivity programme 201 12 Goal Directed Project Management – example and summary 205 Forms 205 IT support 206 Example project ‘New possibilities in new premises’ 207 Is the ‘requirement specification’ fulfilled? 240 Final comments 245 Sources 249 References 255 Index 259 vi Preface to the third English edition In his preface to the second edition, Terry Gibbons of Coopers & Lybrand wrote: ‘Goal Directed Project Management(GDPM)is probably the most influential book ever written on the subject of project management’. We are pleased to provide the third edition of this book. GDPM offers a valuable perspective on project management. It does not, for example, dwell upon activity planning such as PERT or CPM as many current texts do. Instead, it offers effective ways for teams to collaborate in the achievement of projects with comprehensive goal sets. The authors developed the philosophy and method of GDPM, and each author has made his individual mark on it. Development has taken place over a long period of time. Work started in the early 1970s, and the book was first published in Norwegian in 1984. For the last 20 years we have advised and trained Norwegian businesses in GDPM and taught the method at different educational institutions. The method has been disseminated to other countries. We are proud that the book has been published in many languages: Swedish, Danish, Dutch, English, German and Italian. We continue to advocate the central concepts of milestones and responsibility charts in project management. In addition, we focus on how teams can achieve high quality in project work and develop a good project culture within an organization. In this third edition, we increase the focus on clarifying the purpose of projects. We introduce the Mission Breakdown Structure as a tool to support this task. We also give increased attention to the Preface to the Third English Edition l vii environment of the project through both Stakeholder Analysis and Uncertainty Analysis. Excellent IT tools are now available to support GDPM. In Chapter 11 we present computer software called ‘Goal Director’ by GDPM Systems Ltd, to make GDPM plans and reports for an example project. A download demo of Goal Director may be obtained at the web site www.gdpm.no. An introduction and helpfile may be accessed at http://help.goaldirector.com. This edition has been edited by Mike Katagiri (USA) and Rodney Turner (UK). We are very grateful to both of them. Mike has significantly improved the language and the presentation of the text. Rodney played a prominent role in the publishing of the first English edition of the book, and in this edition, he has given good advice on terminology and structural matters. GDPM continues to gain in popularity, and as always, we value your suggestions and opinions on its continual refinement. PREFACE TO THE FOURTH ENGLISH EDITION The basic methods in GDPM have remained unchanged for more than 20 years. The continuous use of GDPM as an overall manage- ment philosophy and technique all over the world proves the resilience of the method. This edition incorporates financial control of projects based on the method, as well as a few other minor updates. The work has mainly been done by two of the original authors, Erling S Andersen and Kristoffer V Grude. Both have a substantial background in this area. We hope that the tools development in the coming year will follow up more aspects of the method. A joint venture (www.GDPMServices.com) with the Egyptian company Linkegypt has been formed with the purpose of developing new versions of the software. Linkegypt is one of the main service providers in the Middle East. We also hope that this endeavour will contribute to cultural understanding between east and west. Erling S Andersen, Kristoffer V Grude and Tor Haug viii THIS PAGE IS INTENTIONALLY LEFT BLANK 1 1 Introduction OUTLINE This book deals with project management and presents the require- ments for successful projects. We show you how to use proven methods and tools to guide your projects towards their goals, thereby significantly increasing your probability of achieving project success. The book is written for project managers and everyone partici- pating in projects. Throughout the book we use ‘he’ and related words purely for convenience. There are many female project managers and, therefore, ‘she’ is implied equally throughout. The book requires no special previous knowledge of project work. Much of project literature features the technical aspects of projects such as the development of software, construction of bridges, roads, airports or oil platforms. We assert that project professionals need a broader ‘PSO’ perspective. PSO stands for People, System and Organization; PSO projects simultaneously develop a ‘system’ (for example, a physical product or object), develop people and develop the organization. Projects failing to address these objectives will find implementation difficult. Therefore it is wise for project professionals to develop a ‘PSO way of thinking’. We discuss PSO projects in this chapter. In Chapter 2 we look at characteristic features of a project and conditions that make project work a unique business process requir- ing special methods and tools. A discussion of these dissimilarities