Project Management Journal

Project
Management
Journal
The Professional Journal of the Project Management Institute
Volume 32, Number 2 | June 2001
From the Editor

Parviz F. Rad
Conflict Resolution Using Cognitive Analysis Approach

Hashem Al-Tabtabai, Alex P. Alex and Ahmed Abou-alfotouh
17
A Heuristic to Maximize the Net Present Value for Resource-Constrained

Project-Scheduling Problems
Ghaleb Y. Abbasi and Yasser A. Arabiat
25
The Dynamic Baseline Model for Project Management

Mark A. Seely and Quang P. Duong
37
A Statistical Project Control Tool for Engineering Managers

Garland T. Bauch and Christopher A. Chung
45
Developing a Risk Management Matrix for Effective Project Planning

An Empirical Study
Sumit Datta and S.K. Mukherjee
58
Cover to CoverBook Reviews

Kenneth H. Rose
61
Guidelines for PMJ Book Reviews
62
Calendar of Events
63
Notes to Authors
64
Index of Advertisers
Project Management Journal

PROJECT MANAGEMENT
JOURNAL EDITOR
Parviz F. Rad, Ph.D.
George Washington University
Book Review Editor
Kenneth H. Rose
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EDITORIAL REVIEW BOARD
PUBLICATION & MEMBERSHIP
Frank T. Anbari, PMP, The George Washington University; Bud Baker, Wright State University; Rick
Bilbro, The Innova Group, Inc.; David Christensen,
Cedar City, UT; David Cleland, University of Pittsburgh; Helen S. Cooke, Cooke & Cooke; Dan H.
Cooprider, Creative People Management; Jeffrey
Covin, Indiana University; Steven V. DelGrosso,
IBM; Deborah Fisher, University of New Mexico;
Vipul Gupta, Saint Josephs University; Kenneth O.
Hartley, PMP, Parsons Brinckerhoff; Francis T.
Hartman, The University of Calgary; Gary C.
Humphreys, Humphreys & Associates; Lewis Ireland, PMP, Project Technologies Corp.; Peter Kapsales, Bellcore; Tim Kloppenborg, Xavier University;
Lee R. Lambert, PMP, Lambert Consulting Group,
Inc.; Alexander Laufer, Technion-Israel Inst. of Technology; Bill Leban, Keller Graduate School of Management; Robert Loo, The University of Lethbridge;
Kenneth G. Merkel, University of Nebraska;
Fredrick Manzer, PMP, Stafford, VA; Michael D.
Okrent, Agilent Technologies Inc.; John B. Phillips,
Engineering Development Institute; Peggy C.
Poindexter, Great Falls, VA; Tzvi Raz, Tel Aviv University; Paul B. Robinson, The Eastern Management
Group; Arnold M. Ruskin, PMP, Claremont Consulting Group; Avraham Shtub, Tel Aviv University;
Larry A. Smith, Applied Management Associates;
Dwight Smith-Daniels, Arizona State University;
James Snyder, Springfield, PA; Robert G. Staples,
Monroe, VA; Paul J. Solomon, Northrop Grumman
Corp.; Charles J. Teplitz, University of San Diego;
Walter A. Wawruck, Vancouver, BC, Canada; Itzhak
Wirth, Saint Johns University; Janet K. Yates, San
Jose State University
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June 2001
From the Editor

Parviz F. Rad, Ph.D.
isk management is defined as the systematic process of
identifying, analyzing, and responding to projects unplanned events. A well-defined and well-executed risk management process will minimize the probability and
consequences of events adverse to project objectives, while
maximizing the probability and consequences of positive
events. I have noticed that there are three different categories
of risk events that tend to be included in risk management,
and that a particular risk management plan might address
risks that belong to more than one of these categories.
The first category of risks includes events that are totally
out of the control of the project manager, such as snow, tornado, flood, etc. In addition to these risk events, it is probably appropriate to include risk events that are not acts of
God, as floods and earthquakes are, but nonetheless they
are out of the control of the project manager. These risk
events include events such as labor strikes, sudden changes
in operating system by vendors, new laws restricting some
aspects of the project activities, bankruptcy of one of the
project stakeholders, and stock-market activities affecting
cash flow to the project.
The second category of risks was initially not treated as a
risk per se although it does have its roots in statistical analysis,
as does risk management. This category involves statistical
treatment of project duration, which has come to be known
as the PERT technique, and a close counterpart of this process
that is used in a statistical treatment of the estimate of project
cost, referred to as range estimating. In both of these techniques, reliance on one deterministic value for cost or duration is abandoned in favor of depending on a range of
possible values for the element at hand. Then, using statistical techniques, the probability of achieving a particular cost
or duration for the project is determined. Parenthetically,
both of these techniques are founded on the presumption
that project managers are inherently optimistic, and that it
is this optimism that drives them to make estimates that are
difficult or impossible to achieve. In the vast majority of statistical evaluations of project plans dealing with cost and
duration, the likely values that are derived through statistical treatment of the basic data tend to be higher than the
ones identified through the deterministic method. Notwithstanding, the values of cost and duration are bona fide risk
items because, during the early stages of the project, they are
based on sketchy and incomplete information. Therefore,
there is a very high likelihood that, with the evolution of the
details of the description of project objectives, the final
values of project cost and duration will be significantly different from their respective initial values.
June 2001
Recently, I have come across cases where project managers include the attributes of project deliverables in the risk
management plan. As such, the risk management plan
would incorporate the impact of possible flaws in the physical deliverable, or the impact of below-expectation performance of the deliverable. If one follows this approach, one
would consider, as a project risk, the possibility that the
system performance will fall short of expectation, or that the
software might contain major bugs, or that the physical capabilities of a certain aircraft will fall short of the specified
payload values.
This approach is philosophically very intriguing because
it includes all risks of malperformance regardless of whether
or not they are avoidable by the use of technical skills related to the projects technical discipline, or by the application of project management skills. In other words, this
approach is based on the premise that if it is likely to
happen, then it should be considered as a risk. However,
this approach is somewhat controversial, because it includes
as risk those items that are commonly accepted as being
within the full control of the project manager.
As always, on behalf of the PMJ Editorial Board, I encourage and invite our members to submit papers for publication in order to share their professional experiences,
scholarly viewpoints, and research results. We will be
pleased to review papers in all areas of project management
competency, including those dealing with planning for, and
managing, all categories of risk.
Conflict Resolution Using Cognitive

Analysis Approach
Hashem Al-Tabtabai, Kuwait University, College of Engineering and Petroleum, Civil Engineering
Department, PO Box 5969, Safat 13060 Kuwait
Alex P. Alex, Kuwait University, College of Engineering and Petroleum, Civil Engineering
Department, PO Box 5969, Safat 13060 Kuwait
Ahmed Abou-alfotouh, Kuwait University, College of Engineering and Petroleum, Electrical
Engineering Department, PO Box 5969, Safat 13060 Kuwait
egaprojects require extensive coordination of various activities, each with different degrees of complexity and with different participants. The elaborateness of interactions often produces conflict situations at various stages of the
project. The importance of studying the origin and effect of conflict is critical for
project participants, because the actions they take in response to conflicting issues
can influence the management of both their projects and their organizations. Conflict develops because of various factors. These factors may be classified simply as
either interpersonal or managerial. Interpersonal differences can be attributed
to contrasting values, perceptions, and methods. Managerial-level differences can
arise from unbalanced views of project goals, lack of coordination, and inefficient
communication among the project participants. Conflict at the management level
may also arise from differences in practices advocated by respective organizations
under individual managerial units.
Some may consider the effect of conflict to be constructive; it can lead to new
ideas, new information, and novel ways of approaching problems. Simply put: conflict helps rectify wrong beliefs and values. Others may consider conflict to be destructive; it may erode organizational performance, create disorder among project
team members, and even cause delay in decision-making or result in schedule shifts
and cost overruns (Verma, 1996). The ability of project participants to manage conflict for the benefit of their organization is a significant factor in ensuring project success. Each conflict situation should be closely examined so that underlying causes can
be recognized in order to achieve resolution as swiftly and completely as possible.
Literature reviews in the field of conflict management (Singh & Vlatas, 1991)
have identified five conventional approaches to the resolution of conflict. These
approaches, with their limitations, are classified as follows:
Forcing: This is a typical win-lose type of resolution. The viewpoint of an individual is exercised at the expense of the other, thus creating an apparent removal
of any conflict between them. This approach brings feelings of resentment and
causes deterioration in the relationship between the persons in conflict.
Withdrawal: In this approach, the individuals withdraw from the conflict issues. In actuality, the conflicting issues are avoided. This type of resolution is not
effective because the approach does not eliminate the conflict.
Abstract
Within the field of project management, research
in the subject of conflict analysis and resolution
has received considerable attention. This paper
presents the application of cognitive analysis,
based on the workings of human judgment
theorists, to the resolution of representative
conflict situations. The employed conflictresolution approach presents cognitive differences
between parties as a primary source of conflict.
However, it also presents feedback that provides
analysis of each individuals judgment and
comparisons with his or her counterparts
judgment. This feedback, termed cognitive
feedback, is used as a way to give insight to
people in conflict, providing them an opportunity
to resolve their conflicts acceptably. The objective
of this paper is to establish a systematic
methodology for analyzing and resolving conflict.
An actual case study of conflict resolution between
union and management personnel at a
petrochemical plant in Kuwait is used to illustrate
the methodology. Both self-understanding and the
understanding of ones counterpart were found to
be generally poor before receiving cognitive
feedback. The use of cognitive feedback for both
groups proved feasible and helped reduce conflict.
Keywords: conflict resolution; negotiation;

human judgment; cognitive analysis
2001 by the Project Management Institute
2001, Vol. 32, No. 2, 416
87569728/01/$5.00 per article + $0.50 per page
March 2001
Smoothing: The emphasis in smoothing is to focus on

similarities rather than on differences over issues. Like withdrawal, smoothing may not address the real issues; thus, the
differences remain under the surface.
Compromising: Bargaining and searching for a solution is
the basis of this approach. But a compromise is often attained at the expense of optimum results. This approach
often involves third-party intervention, negotiation, and even
voting. This resolution is influenced by the relative strength
of the parties.
Confrontation: This approach involves a rational problemsolving approach. Disputing parties solve their differences by
first focusing on the issues, then looking at alternative approaches, and finally selecting the best alternative. This
method can be time-consuming and is frequently inappropriate for most communication.
These traditional approaches were developed three
decades ago. Traditional models consider conflict between
individuals to reflect differing views of the Whats in it for
me? attitude prevalent during this period (Al-Sedairy,
1994). At some point in history, conflict was considered as
universally destructive, reflecting the belief that disagreement
universally bred contempt. Furthermore, these approaches
failed to examine the psychological aspects of conflict, and
for that reason have not helped the individuals engaged in
conflict to resolve the value differences arising out of the
conflict situation. Finally, none of these traditional methods
advocate any methodology for modeling the conflict in
terms of its intensity and magnitude (Verma, 1996).
Judgmental analysis studies by human judgment theorists
have argued that cognitive differences between persons are
the basis of conflict among individuals (Blake, Hammond, &
Meyer, 1975; Hammond, McClelland, & Mumpower, 1980).
Their research has produced several theories that study interpersonal conflict and methods to resolve it. These theories
differ with the earlier-mentioned traditional conflict-resolution theories for three reasons. First, traditional (motivational) theories have not sufficiently enhanced the ability to
analyze, manage, or reduce human conflict. Second, traditional theories require us to look for self-serving behavior in
the other person whenever conflict occursa process that is
divisive and aggravates conflict. Third, preoccupation with
differential gain as the prime cause of conflict diverts our attention from other possible causes.
The objective of this paper is to introduce a systematic
methodology for analyzing and resolving conflict situations,
based on the works of human judgment researchers. The
paper proposes an alternate conflict-resolution strategy,
which argues that cognitive differences among individuals are
capable of producing conflict. The proposed strategy, based
on the social judgment theory (SJT), argues that the nature of
human judgment is such that it provides a prime source of
conflict and that many, although not all, disagreements flow
from the exercise of human judgment. Consequently, even if
self-serving motives are eliminated, interpersonal conflict
will persist.
June 2001
Need for Clarification of the Human Judgment

Process
Research done by human judgment theorists (Brehmer, 1988;
Einhorn & Hogarth, 1981; Hammond, Stewart, Brehmer, &
Steinman, 1975) has indicated that, unaided, a person faces
difficulties in clarifying his or her judgment for the following
reasons.
Human judgment is a covert process. It is difficult for an individual to accurately describe his or her judgment process.
Introspection and observation of the judgment process and
guessing at the reasons for them are the only means of uncovering or explaining judgments. Subjective reports of ones
judgment process and the uninformed nature of guessing
often lead to inaccuracy.
Inaccurate Reporting. People often are unable to accurately
describe the principle by which they organize the data to
reach a judgment. Most explanations are incomplete at best
and misleading at worst. This is due to the variable nature of
subjective reporting on the process of judgment.
Inconsistency. Human judgment is neither a fully analytical nor an entirely controlled process. Even when people
do their best to be consistent, in identical situations they
will not necessarily draw identical judgments.
Based upon these statements, human judgment theorists
have argued that judgment does not always accomplish what is
required of it and that many, although not all, disagreements
flow from the exercise of human judgment. Human judgment
theorists, however, argue that methods can be applied to aid
decision-makers in making required judgments as well as improving their judgments in overcoming conflict situations.
Cognitive Analysis Approach as a Conflict-Resolution

Technique
The conflict-resolution technique presented here is based
on the assumption that human judgment is a cognitive
process (Hammond et al., 1975; Stewart, 1988). In this
process, an individual draws a conclusion or makes a judgment (Ys) about a distal or uncertain event (Ye) [depth variable]. The distal event is not visible; it is drawn from data or
cues (x , x x ) [surface variable] that can be perceived or
1
2
n
that represent information available for making a judgment.
Moreover, individuals do not have access to the distal variable about which they intend to make a judgment, but have
access only to the surface variable upon which to base their
inferences. This ambiguity between the depth variable and
the surface variable [cues] explains the cognitive differences
among persons who arrive at a conclusion (i.e., the difference in Ys for each individual). This cognitive difference can
be inferred to be the major source of conflict between individuals making differing conclusions about a common task.
This approach proposes to resolve the difference that is
appearing in the cognitive system, rather than simply concentrating on the difference in the outcome Ys (its difference
among individuals in conflict). In this technique, the cues
used and the importance attributed to each cue are analyzed
Step 1:
Identify the Major Domain and
Issues of Conflict
Step 2:
Generate Conflict Profiles
Step 3:
Exercise of Judgment
Step 4:
Judgmental Parameters
Step 5:
Communicating Cognitive
Feedback
Step 6:
Negotiation Among Conflicting
Parties
Compromise
No
Yes
Stop
Figure 1. Steps of the Conflict-Resolution Process

to perceive the real conflict that is inherent in the judgments
among individuals.
A Systematic Methodology to Conflict Resolution

The workings of human judgment theorists can be expanded
to construct a systematic approach to the resolution of conflict.
This proposed methodology involves identifying and measuring the cues, the distal variable, and the judgments, and
finding the relationships among these variables. The following
steps (illustrated in Figure 1) explain this methodology.
Step 1: Identification of the Conflict Domain. Acknowledgment and establishment of the conflict situation is
the first step in any conflict-resolution method. The domain
June 2001
to be resolved is identified and recognized by all parties in

conflict. Conflicting parties are requested to identify all the
main issues or cues that caused the conflict. These factors
are then sorted and categorized, resulting in a maximum of
eight cues. Large numbers of cues may lead to inaccurate
and inconsistent judgment on the individuals parts. This
step should ensure that the parties in conflict are informed
about the presence of conflict and its scope, and will not retain ambiguity about the conflict domain.
Step 2: Generation of Conflict Cases. Hypothetical
case profiles are developed, which consist of a mix of cue
values representing different conflict situations. The cues are
given random values that adequately describe a set of possible conflict situations.
Step 3: Exercise of Judgment. The concerned individuals indicate their judgments by rating several profiles on a
numerical scale. The practice of judgment may take into
consideration two sets of meetings, with the second set containing a number of cases similar to those shown in the
first. The objective is to test the reliability of an individual
judgment in more than one instance.
Step 4: Analysis of the Results. If the judgments a
person has made and the information (cues) upon which
these judgments were based are known, then a mathematical representation can be developed that relates the judgment to the information. An additive nonlinear polynomial
model formed by adding squared terms to the standard
linear regression equation (as follows) is adopted to analyze
the judgment of conflicting parties.
J = a + b1x1 + b2x2 + + bnxn + b1+n x12 +
b2+n x22 + + bn+n xn2
[1]
J is the judgment, xn is the nth cue variable, bn is the regression coefficient for the cue n, and b1+n is the regression
coefficient for the square value of cue n. The selection of this
additive curvilinear model is based on the assumption that
the contribution of any cue is independent of the values of
the other cues. The mathematical regression analysis of judgments helps to study the characteristics of each individual by
externalizing several judgmental parameters (as follows),
which are used to resolve the conflict situation.
Relative weight. Sources of disagreement between individuals could be due to the different weights they attach to various aspects of the conflict situation. The weights are based
on the standard regression weights adjusted total to 100.
The importance given to each cue by the individuals indicates the weight attributed by each judge on each cue to the
judgment task.
Function form. The relationship between the cues and the
judgments can be graphically represented as function forms.
A positive linear function indicates that the judgment value
increases as the cue value increases, while a negative linear
function form indicates that the judgments of desirability
are inversely related to that cue.
Consistency. The consistency value represents the efficiency of the model in representing the individual deci-
June 2001
sions. The judgmental models can be tested for consistency

in terms of the correspondence between the statistical
model and the actual predictions, and the amount of judgment variance accounted for by the judgment model by
measuring the multiple correlation coefficient (R) and the
squared multiple correlation (R2), respectively.
Reliability. Another measure of consistency is the reliability measure (the product-moment coefficient). This measure indicates the extent to which a person makes similar
judgments when the same information is presented on different occasions.
Agreement. The correlation between a set of judgments
made by two parties for the same case reflects the overall
agreement between them. The value of ra in the lens model,
which indicates the degree to which the judgment was correct, will be an index of overall agreement between the two
conflicting parties, which ranges from high degree of disagreement (ra = 1.0) to high degree of agreement (ra = +1.0).
Step 5: Communication of the Judgment Differences
(Cognitive Feedback). Once the judgment parameters are
externalized and analyzed for each of the conflicting parties,
a comparison between individuals and their counterparts in
conflict can be performed. Comparison of weights and
function forms will externalize the major source of conflict
among individuals, provided the individuals make the judgments consistently. All the conflicting parties are provided
with their own judgment characteristics, along with those of
their counterparts, and the individuals are encouraged to
understand the viewpoint of the other and to reduce, if not
eliminate, the conflict that exists among them. Once the
judgment differences are communicated, the individuals are
encouraged to revise their decisions on the conflict issue by
reducing the cognitive difference rather than by discussing
only the difference in outcomes.
Step 6: Negotiation Among Conflicting Parties. In
the negotiation phase, each individual in conflict attempts
to reach an agreement on the evaluation of cases that was
given to them in previous steps. Evaluation of the acceptability of all cases is requested in order to ascertain the degree to which mutual judgment policies can be developed,
based on the provision of the cognitive feedback in comparison to conventional verbal procedures.
An Example: Union vs. Management Negotiation

The proposed conflict-resolution strategy could be applied
to resolve the conflict that can exist between a labor union
and the company management, based on the assumption
that much of the above-mentioned argument is true. What
is at issue is the extent to which the externalization of the
parameters of the judgment process can be demonstrated to
be of potential value, not only to union-management negotiators, but also to specialists in conflict resolution. A conflict situation between the management and labor union of
the Kuwait National Petroleum Company (KNPC) was used
to apply the proposed resolution method. The situation was
(1) Number of Promotion Tests

None
Pass Interview
Pass Exam
Pass Interview & Exam
Outside the Dept.

Through a
Committee
Outside the Dept.

Without Their
Opinion
(2) Selection of Section Head

Outside the Dept.
With Section
Consult.
Inside the Dept.
(3) Covering Period in Grade 7B

5
7.5
10
12.5
15
(years)
(4) Acting Period in Grades 8 & 10

3
12
15
18
(months)
Acceptability of Contracts
1
Strongly
Recommend to
Accept
Strongly
Recommend
to Reject
Figure 2. A Sample Profile

sufficiently controversial (70 days of strike had not relieved
the tension) and recent enough that the issues were still
clear to the negotiators.
Step 1: Identifying Major Issues of Conflict. Two of
the five management negotiators and two of the five union
negotiators who took part in the negotiation process agreed
to participate in the proposed conflict-resolution experiment. The four key issues under negotiation between the
labor union and management representatives, are as follows:
Issue 1: Promotion tests. The company conducted a variety
of certification and evaluation tests for promotion against
the wishes of the labor union, which wanted the promotions to be based on seniority.
Issue 2: Assignment of departments managers. The company wished to assign the department manager from outside that department, while the union preferred to have the
manager assigned from within the department.
Issue 3: Required years in service in Grade 7B. The number
of years necessary to serve in the Grade 7B level at KNPC in
order to be promoted to Grade 8 was an additional factor
under negotiation.
Issue 4: Required period in Grades 8 and 10. The duration,
in terms of months, that a worker should serve in Grades 8
and 10 was another factor under negotiation.
Time was spent with one management negotiator and
one union negotiator to discuss the issues involved in conflict in order to make certain that no issue of importance
was omitted.
Step 2: Generation of Hypothetical Profiles. Sample
negotiation contract scenarios were created, each repre-
senting a different combination of values for the four issues.

In order to ensure clarity and ease of evaluation, the first
and second cues were divided into four scale values (from
lowest to highest) and represented in graphic form, as
shown in Figure 2. The values for the first and second issues
are non-numerical, while the values for the last two issues
are numerical. The values for the first issue were: none, pass
an interview, pass a written exam, and pass both interview
and written exam. The values for the second issue were assignment: from inside the department, from outside the department after department consultation, from outside the
department through a committee, and without considering
the opinion of the department. The third issue was divided
into five scales (from 515 years), and the fourth issue was
divided into six scales (ranging from 318 months).
By using different combinations of the four issues, 480
different possible negotiation contracts were produced. To
facilitate the process of contract evaluation, 30 such possible
contracts were selected on a random basis as a representative
sample to illustrate the proposed conflict-resolution strategy.
A 7-point evaluation scale, ranging from strongly accept
the contract to strongly reject the contract, was designed
with the help of one union representative and one management representative. The aim was for the scale to simulate
the type of judgments made during actual negotiations.
Step 3: Collecting the Judgments. The participants
were given instructions and shown the 20 contracts for the
first time. Each participant judged each of the 20 contracts,
using the 7-point acceptance-rejection scale. Each participant
then made a subjective estimate of the weight (in terms of
June 2001
Issue
1
W=
5
=1
60
M2
W=
20
W=
W=40
W=10
U2
W=
40
10
W=
4
Note. The width of the line denotes the weights placed on each issue subjectively.
Figure 3. Example of How Differential Weights Attached to the Four Contract Issues Were Shown to the Negotiators
percentage) that he felt he would place on each of the four
issues. Then, after a one-hour break, 10 randomly selected
contracts, repeated from the first 20, and 10 new contracts
were shown to each participant. Each one judged them using
the scale. The purpose was to measure the reliability of a
person making judgments when the same information is
presented to that person on two different occasions. The authors supervised this training process of the participants, and
one of the co-authors was present during data-collection
phases to ensure that any questions were answered.
Each participant was paired with a member of the other
side, thus forming two pairs, coded U1-M1 and U2-M2
(where U = union, M = management). In both sessions,
each participant predicted what the counterpart would place
on each of the four issues.
Step 4: Externalization of Judgmental Parameters.
Following the collection of judgments (before the cognitive
feedback phase), the judgmental parameters of each negotiators contract were derived. These parameters were used to
show the participants, in pictorial form, the characteristics
of both their judgments and their counterparts judgments.
The purpose of presenting the results was to help the participants understand the sources of conflict.
Interactive computer software programs (a statistical
package entitled Policy PC and a spreadsheet in Microsoft
Excel) were used to provide key information for each of the
negotiators, in regard to that individuals judgment process
as well as that of the counterparts. Each negotiators contract judgment was analyzed in terms of a special form of
multiple regression statistics. The regression analysis was
computed separately for each union and management negotiator, using each participants judgment as the dependent
variable. The independent, or predictor, variables in the
June 2001
analysis were the values of the issues, and the squares of the
difference of these values, and the mean of each one. Thus,
there were eight independent variables in each regression
analysis. This procedure permitted the analysis of both
linear and quadratic components of judgmental variance.
The following judgmental parameters were externalized
during the data analysis.
1. Differential weighting system among participants. The
weight each participant had given to each issue was displayed graphically. Figure 3 provides an example, in pictorial form, of the differential weighting system, providing a
direct visual representation of one source of conflict. In this
figure, the largest difference occurs in connection with the
promotion issue (Issue 1), to which the union negotiator
assigned a higher weight than that assigned by the management negotiator.
2. Comparisons of own weighting system. Figure 4 illustrates
the extent to which an individual negotiator misunderstood
his weighting system. For example, in this figure, negotiator
M1, in making his contract judgments, underestimated the
weight system that he attached to the promotion issue. He
had subjectively estimated that issue to be 50% significant,
while the weight derived from his actual judgment was
found to be 34%.
3. Comparison with counterparts weighting system. The top
two bars in Figure 4 provide an example of self-misunderstanding, while the comparison between the bottom bar
and the top bar provides an example of how misunderstanding of ones counterpart is externalized. The counterparts actual weighting system (derived from the analysis of
his contract judgments) is compared with the negotiators
subjective weight estimates for his counterpart. For example,
comparison of the bottom bar and the top bar shows that
Model of M1
Model of U1
34
29
23
Subjective Estimate of M1
50
10
10
50
30
70
11
10
30
10
Subjective Estimate of M1 on U1
20
5 5
Model of M2
50
25
20
Model of U2
23
13
44
20
Subjective Estimate of M2
40
Top Bar: Weights Derived From

Practicing Own Judgments of
Contracts
19
60
40
30
44
32
Subjective Estimate of U2
Subjective Estimate of U2 on M2
50
17
Subjective Estimate of U1
Subjective Estimate of U1 on M1
15 5
25
47
14
20
10
10
Subjective Estimate of M2 on U2
10 10
40
Middle Bar: Subjective Estimate

of Own Weights
30
25
Bottom Bar: Subjective Estimate

of Counterparts Weights
Figure 4. Comparison Between Negotiators Subjective Report of Issue-Weighting System

With Actual Weighting System
the negotiator (M1) makes incorrect subjective weight estimates of his counterpart U1.
Data shown in Figure 4 represent the degree of misunderstanding that remained between the two negotiators,
even after several months of discussion during actual negotiations.
4. Function forms. The function forms used in relating the
judgment of each of the participants to each of the four issues were displayed graphically. Figure 5 provides an example of how function forms were shown to negotiators.
Opposing curvilinear function forms were found for Issue 1
(the promotion test), and both positive and negative nonlinear function forms were found for the issue, the department head (upper right). The notion of an optimal
settlement for both the union and management negotiators
for the department head issue in the intersection of their
function forms can be seen in Figure 5.
Step 5: Communicating the Judgmental Differences
(Cognitive Feedback). The feedback phase was administered one week after the judgment process. The purpose was
to provide cognitive feedback to all the negotiators. Feedback consisted of two parts. In the first part, each participant
was shown the data (externalized in Step 4) concerning the
negotiators own weights for each of the four contract issues,
as well as graphs showing the form (curvilinear) of relations
between each issue and his evaluations. After receiving this
form of feedback about his evaluation, each of the four ne-
10
gotiators (U1 and M1, U2 and M2) reevaluated the contracts

and estimated the weights that he used on this occasion.
In the second part of this phase, each negotiator observed his counterparts weights and graphs of the relations
between issues and judgments for each of the four issues.
Each negotiator then made new predictions of his counterparts evaluations of the contracts and predictions of his
counterparts weights. No discussion between participants
was permitted in this phase, thus ensuring that the feedback
was nonverbal.
Step 6: Negotiation Phase. A minimum bargaining was
suggested to achieve agreement on specific contracts. In the
negotiation phase, the conflicting parties were encouraged
to negotiate the issues based on the externalized judgment
parameters. Figures 7 and 8 provide examples of how function forms were shown to the negotiators. Figure 8 also
shows the settlement point reached by the conflicting parties. The illustration shows that negotiators can provide
such information, and indicates the form in which it can be
displayed. Such information could have been viewed directly by the participants, had they carried out their negotiations at a common site with interactive computer devices.
Instead, in our study, the graphs were reproduced separately
on paper and shown to the negotiators. Current growth in
information technology can be used to connect conflicting
parties situated at different locations, using local area networks or the World Wide Web.
June 2001
Issue 1
Issue 2
0
1
Inside
M1
U1
Issue 3
4
Outside Without
Section Opinion
M1
U1
Issue 4
2
0
0
5
7.5
M1
10
12.5
15
U1
10.5
M1
18
U1
Note. Scales from 1 to 3 indicate to accept, scale 4 indicates neutral, and scales 5 to 7 indicate reject.
Figure 5. Function Forms of the U1-M1 Negotiators Before Cognitive Feedback

Results of the Conflict Analysis
Degree of Union-Management Conflict. Table 1 and Figures 5 and 7 illustrate the degree of conflict between the
parties. Both groups initially were in wide disagreement.
The before cognitive feedback (BCF) phase data shows that
the first pair (U1-M1) were far apart in their judgments of
the acceptability of contracts when the correlation between
judgment evaluation was negative (0.1576). Further BCF
data also shows that the second pair (U2-M2) were very poor
in their judgments of the acceptability of contracts when the
correlation was near zero (0.0267).
Figure 5 indicates that U1-M1 is in wide disagreement for
the first, second, and third issues, while there is slight agreement in the fourth issue, during the BCF phase. In the after
cognitive feedback (ACF) phase (see Figure 6), the disagreement still existed in the second and fourth issues, but agreement about the first issue was achieved.
Figure 7 indicates that U2-M2 was in wide disagreement
for the third and the fourth issues, while there was considerable agreement for the first and second issues, during the
BCF phase. The situation could be improved after the feed-
June 2001
back, as shown in Figure 8; there was a total agreement in

the second and fourth issues, while a slight disagreement
still existed in the first and the third issues.
Self-Misunderstanding of the Weighting System. Negotiators did not accurately estimate the weight they had
placed on each issue. There were wide individual differences
among the evaluations of management negotiators with regard to their own weights. Compared to U2, the subjective
estimate of U1 was closer to the actual weighting system
adopted during the judgment process. However, evaluations
of both union negotiators were more closely grouped than
those of management. The union negotiators assumed that
they had placed a higher weight on the promotional examination issue than they in fact did when evaluating the contracts. They also estimated a lower weight for the department
head issue (cue 2) than they actually demonstrated when
evaluating the contracts (ACF phase).
Self-Understanding of Individual Judgment Policies.
Although both union and management representatives
agreed prior to the experiment that there were at least four
major issues, the judgments made by three of the four participants revealed that Issue 1 was in fact more significant than
11
Issue 1
Issue 2
0
1
Inside
M1
U1
Issue 3
4
Outside Without
Section Opinion
M1
U1
Issue 4
2
0
0
5
7.5
M1
10
12.5
15
U1
10.5
M1
18
U1
Figure 6. Function Forms of the U1-M1 Negotiators After Cognitive Feedback

the other issues. As listed in Table 1, Issue 1 (promotional examinations) was important to the union representatives and
one representative of management. While Issues 2 and 3 had
moderate significance to unions and management, Issue 4
(covering the period) is in fact less significant in both the BCF
and ACF phases among the conflicting parties.
The above results illustrate how poor the negotiators
self-understanding can be. The implications for negotiations
are clear: deficiencies in self-understanding lead to the unwitting communication of false information. An inaccurate
report of ones own position is, of course, a barrier to the
achievement of agreement, despite the best of intentions.
Misunderstanding Others. Table 2 shows the predictive
accuracy where ra indicates the degree of correlation between
predicted evaluation and actual evaluation by a counterpart. G
indicates the same value corrected for the inconsistency of the
predictor. Both sides proved to be inaccurate. Prior to the exchange of information, M2 and U2 were unable to predict the
judgments of the other side with a significant degree of accuracy
in both the BCF and ACF phases (see Table 2). The other negotiators a priori understanding of their counterparts, therefore,
was poor. They had an inaccurate understanding of the other
12
sides contract evaluation policy. After the feedback phase, the

three negotiators (M2, U1, and U2) accuracy improved in their
predictions. Although two of the negotiators (M1 and U2)
were generally inaccurate in their predictions of their counterparts evaluations, U2 improved his overall accuracy of
prediction between the BCF and ACF phases (see Table 2).
These findings illustrate one of the more important contributions of externalization. The negotiators were wrong in
being confident that they understood the policies of their
counterparts, a belief based on a long period of association
and negotiation. In order to improve accuracy, both the
target persons and the predictor would have to be much
more self-consistent. If the target person changed his evaluation policy before and after the feedback, his evaluations
would be more difficult to predict, as was the case with one
of the union negotiators. Although self-understanding before the feedback phase was poor, improvement in predictive accuracy appears to have been due largely to the
stability of the judgments of the target person at least as
much as to the utility of graphics feedback.
Intra-Union and Intra-Management Uniformity. A
correlation among each groups judgments was computed
June 2001
Issue 1
Issue 2
0
1
Inside
M2
U2
Issue 3
4
Outside Without
Section Opinion
M2
U2
Issue 4
2
0
0
5
7.5
M2
10
12.5
15
U2
10.5
M2
18
U2
Figure 7. Function Forms of the U2-M2 Negotiators Before Cognitive Feedback

to learn the level of agreement among each group (see
Table 3). A high degree of uniformity existed among union
negotiators. Comparisons between the evaluations of
union negotiators produced fairly high indications of
agreement, especially in the ACF phase. When corrected for
inconsistency (see column labeled G-ACF in Table 3), it
is clear that the union negotiators were in agreement with
one another. Union negotiators could have readily substituted for one another without affecting contact evaluations.
On the other hand, non-uniformity existed among management negotiators. The correlation between management
evaluations was negative, which shows that management
negotiators were in wide disagreement among themselves
in both the BCF and ACF phases, even when corrected for
inconsistency.
Self-Consistency. Consistency of contract evaluations
would make negotiation much easier, while inconsistency
of contract evaluations implies that policies change from
the evaluation of one contract to the next. The consistency
of each participants judgment model was examined by the
coefficient of multiple regression (R) and the square multiple correlation coefficient (R2), as shown in Table 4. Self-
June 2001
consistency was generally high. The participants were quite

self-consistent at the BCF phase; however, all negotiators
were less consistent in the ACF phase.
Reliability. The reliability test, which is a measure of
consistency, was computed by presenting the participants
with two pairs of similar case profiles on two different occasions. The reliability measures of these persons are reported
in the last column of Table 4. The reliability measures of the
negotiators indicate reliability ranges from very good (R =
0.9323) to poor (R = 0.5343).
Changes in Policy. Changes occurred in the evaluation
policy. The models of all participants exhibited some
changes before and after the feedback periods, as shown in
Table 1. The change can be attributed to the role of feedback
in terms of both sides judgmental parameters. Access to
such information made a change on the part of the management negotiators that led to increased agreement. Another example in the changes in policy can be found by
comparing Figures 7 and 8. Function forms of U2 and M2
were opposite in nature at the BCF phase, while they
showed higher agreement after receiving cognitive feedback
in the ACF phase.
13
Issue 1
Issue 2
0
1
Inside
M2
U2
Issue 3
4
Outside Without
Section Opinion
M2
U2
Issue 4
2
0
0
5
7.5
M2
10
12.5
15
U2
10
M2
18
U2
* Indicates the values of final agreement
Figure 8. Function Forms of the U2-M2 Negotiators After Cognitive Feedback

The Use of Cognitive Feedback as an Aid to Reduce
Conflict
It can be concluded that the use of feedback can lead to
better agreement. The purpose of cognitive aid is to provide
each individual the opportunity to modify the judgment
values if he or she desires to do so after viewing a complete
judgment analysis of his or her own judgment and that of a
counterpart. Cognitive aid also allows for a comparison of
actual judgments made against the predicted judgments.
The feedback helps the persons in conflict to understand
their judgment process, how they arrived at a decision, and
also how colleagues perceive the same situation. Table 1 illustrates that the second pair (U2-M2), after receiving feedback, achieved a better agreement level. The results indicate
that the use of the proposed methodology and procedures
led to more agreement among conflicting parties.
The conflicting parties, based on the negotiations, arrived
at a final compromise on the issues. The negotiated settlement was to (1) conduct an exam and an interview for promotion, (2) select a department head from within the
department, (3) make the covering period in Grade 7B three
14
to five years, and (4) make the acting period in Grades 810
10 months. Figure 8 also shows the above settlement points
marked for each of the cues.
Discussion and Concluding Observations

The aim of this research was to establish a methodology for
externalizing the judgment process of conflicting parties.
The cognitive-analysis approach is applied to reduce the
conflict found between the parties. The identified conflicting issues were classified into four broad factors to act as
cues. The possible ranges of each of the cues were fixed after
discussions with the conflicting parties. Judgments were collected and analyzed with multiple regression techniques.
The function form of each cue for each of the participants,
along with the weight attached for each cue as perceived by
each, was computed. The judgmental analysis results (i.e.,
the variation in the weights produced, the participants different function forms for each issue, and the consistency
measures) provide evidence of conflict among individuals.
It also provides insight about the cognitive differences be-
June 2001
Negotiator
Cue 1
Cue 2
Cue 3
Cue 4
M1
M2
50
15
34
23
10
5
29
44
10
40
23
13
30
40
14
20
U1
U2
50
60
47
44
10
20
25
5
30
10
17
19
10
10
11
32
M1
M2
50
10
49
28
20
40
33
28
15
20
12
24
15
30
6
20
U1
U2
50
60
14
24
10
10
24
33
20
10
44
33
20
20
19
10
BCF
ACF
BCF = Before Cognitive Feedback
ACF = After Cognitive Feedback
Table 1. Comparison of Subjective (S) and Objective (O) Weights (in percent) for Each Negotiator for Each Issue
ra
Predictor
BCF
ACF
BCF
ACF
M1
M2
0.4186
0.8833
0.5488
0.0086
0.5809
0.9898
0.6051
0.0132
U1
U2
0.8109
0.3914
0.7060
0.5869
0.9230
0.4718
0.7942
0.6429

ra = Degree of Correlation
Table 2. Predictive Accuracy
ra
Management Pair
M1M2
Union Pair
U1U2
BCF
ACF
BCF
ACF
0.3794
0.2073
0.470427
0.25704
0.5442
0.8734
0.63716
0.9779

ra = Degree of Correlation
Table 3. Intra-Union and Intra-Management Uniformity

tween the parties. An attempt is made to reduce, if not eliminate, the conflict among the participants by giving cognitive feedback about their judgments and the judgments of
their counterparts. The conflict developed between the
union and management could be analyzed by the proposed
cognitive-analysis approach.
The results of this research show that the proposed
methodology could be useful for negotiation and resolution
June 2001
of conflict. Exchange of cognitive feedback among the labor

union and management participants has enabled them to
achieve a modest amount of agreement. It is important to
observe that the criterion for agreement used here is far more
stringent than that applied to ordinary negotiation. Cognitive feedback helps conflicting parties gain insight about the
tradeoffs among different cues, weights, and function forms,
relating cues to judgment and consistency in exercising their
15
Negotiator
R2
Reliability
BCF
ACF
BCF
ACF
M1
M2
0.721
0.869
0.907
0.653
0.519
0.755
0.823
0.426
0.7597
0.8792
U1
U2
0.879
0.830
0.889
0.913
0.772
0.688
0.791
0.834
0.9323
0.5343
Table 4. Consistency of Contract Evaluations

judgments. This feedback helps them to refine their judgment skills, and also to modify different values and beliefs
they had about the conflict domain. Cognitive feedback provides maximum information on the reasons why the parties
are in conflict, as well as areas that need to be negotiated to
reach an agreement.
The proposed cognitive analysis approach helped the
project participants involved in conflict to concentrate on
the real differences that triggered the conflict among their
colleagues and themselves, rather than only discussing the
effects of the situation under conflict. The proposed conflict-resolution technique can be effectively applied when
important decisions have to be reached by project team
members of different domains, such as a construction contractor and a consultant.
References
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Brehmer, B. (1988). The development of social judgment theory.
In B. Brehmer & C.R.B. Joyce (Eds.), Human judgment: The SJT view
(pp. 1340). Amsterdam: North-Holland.
Einhorn, H., & Hogarth, R. (1981). Behavioral decision theory:
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Hammond K.R., McClelland, G.H., & Mumpower, J.M. (1980).
Human judgment and decision making: Theories, methods, and procedures. New York: Praeger.
Hammond, K.R., Stewart, T.R., Brehmer, B., & Steinman, D.O.
(1975). Social judgment theory. In M. Kaplan & S. Shwartz (Eds.),
Human judgment and decision processes (pp. 271312). New York:
Academic Press.
Singh, A., & Vlatas, D.A. (1991). Using conflict management for
better decision making. Journal of Management in Engineering, 7 (1),
7082.
Stewart, T.R. (1988). Judgment analysis: Procedures. In B.
Brehmer & C.R.B. Joyce (Eds.), Human judgment: The SJT view (pp.
4174). Amsterdam: North-Holland.
Verma, V. (1996). Human resources skills for the project manager.
Upper Darby, PA: Project Management Institute.
Hashem Al-Tabtabai, Ph.D., is an associate professor of

the Civil Engineering Department at Kuwait University. He
received B.S. and M.S. degrees in civil engineering from
North Carolina State University and a Ph.D. from
Colorado University at Boulder. His research focuses on
advanced information technology in project management, project
control, cost estimation, cost management, and cost control. He is a
member of PMI.
Alex P. Alex received his B.E. degree in civil engineering

and M. Tech degree in engineering management from
Manipal Institute of Technology, Mangalore University,
India. He is currently an engineer at the Civil Engineering
Department, Kuwait University, and is also affiliated with
many private-sector firms in Kuwait offering professional construction
management services. His research interests are in modeling and
optimizing complex decision systems in project management, cost
estimation, project scheduling, resource allocation, and risk
management using computational intelligence techniques.
Ahmed Abou-alfotouh received B.S. and M.S. (honors)

degrees in electrical engineering from Kuwait University.
He is currently a research and teaching assistant at
Kuwait University. His research interests are in project
management, artificial neural networks, and power
systems.
This article is copyrighted material and has been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited.
A Heuristic to Maximize the

Net Present Value for
Resource-Constrained
Project-Scheduling Problems
Ghaleb Y. Abbasi, University of Jordan, Faculty of Engineering and Technology, Industrial
Engineering Department, Amman, 11185 Jordan
Yasser A. Arabiat, Public Security Directorate, Project Management Department, Amman,
Jordan
cheduling is often the major focus of project management. The main purpose
of scheduling is to allocate resources so that the overall project objectives are
achieved within a reasonable time span. Project objectives are generally conflicting in nature. For example, minimization of the project completion time and
minimization of the project cost are conflicting objectives. Therefore, project
scheduling is a multiple-objective decision-making problem.
Most day-to-day investment decisions involve choosing the least-cost solution
and project duration without considering time/money relationships. More recently, discounted cash flows and focuses on the maximization of the projects net
present value (NPV) have been considered as the more appropriate objectives.
This preference increases with the project duration. Generally, a series of cash
flows may occur over the course of a project in two forms: cash outflows and cash
inflows. Cash outflows include expenditures for labor, equipment, materials, etc.,
which occur at the early start time of the activity. Cash inflows occur in the form of
income payment at the end of the work, and, perhaps, a future stream of cash.
This research considers a deterministic condition where activity duration is determined, and amount and timing of cash flow is also known.
Solution of the resource-constrained project-scheduling problem requires determination of the economic consequences of using different heuristics to
schedule projects under resource constraints. This result can be achieved using the
NPV and duration as performance measures. The activities are under logic and resource constraints (the resources are limited). Project activities are of finish-tostart (FS) type with zero lags, and no activity preemption is allowed (activities
have to be completed once started).
Abstract
The objective of this research was to schedule
project activities based on maximum net present
value (NPV) and minimum duration. A new hybrid
heuristic based on the combination of minimum
late start (MLS) and shortest processing time
(SPT) priority-rules heuristics was developed. The
new late start and shortest processing time
(LSSPT) heuristic was tested using 60 problems of
the Patterson set, and results compared with 4
other heuristics. To test all 5 previous heuristics, 5
computer programs were developed. Statistical
analysis was performed. Results indicate that the
new heuristic produced better and encouraging
results.
Keywords: resource-constrained project

scheduling; net present value; heuristics; activity-on-arrow
2001, Vol. 32, No. 2, 1724
June 2001
Literature Review
Several researchers have considered the project-scheduling problem and studied it
under different objectives. Most of the contributions assume completely deterministic
17
project-scheduling settings, in which all relevant problem data,

including various cash flows, are assumed known from the
outset. Research efforts have led to optimal procedures for the
unconstrained project-scheduling problem, where activities are
subject to precedence constraints, and optimal or heuristic solutions have been provided.
Davis and Patterson (1975) reached the conclusion that the
temporal-related heuristics produce schedules with low project
delays, and that resource-related heuristics schedule the resource efficiently at the expense of large delays in project durations. It was shown that the minimum slack (MSLK) priority
rule was the most effective by criterion of total project delay.
Russell (1986) was the first to test the performance of
heuristics for the resource-constrained max-NPV problem. He
assumed activity-on-arrow (AOA) network, taking an eventbased view, assuming positive and negative cash flows associated with the network events. He conducted an experiment in
which six heuristic scheduling rules were tested on 80 different problems. The MSLK rule performed best on the largescale problems when resource constraints were not tight.
Smith-Daniels and Aquilano (1987) considered the resource-constrained max-NPV problem, assuming activityon-node (AON) networks where cash outflows occurred at
the beginning of the activity and a single lump-sum payment received at completion of the project. The authors
concluded that a heuristically determined right-shifted
schedule (derived from an early-start schedule by rightshifting the activities) yielded a higher NPV and lower average duration than schedules derived from heuristics that
schedule each activity as early as possible. In addition, while
the late-start schedule, on average, was significantly longer
than the optimum duration resource-constrained schedule,
a considerable difference occurred in the average NPV of the
two scheduling methods.
Herroelen, Van Dommelen, and Demeulemeester (1997)
provided a guided tour through the important recent developments in the expanding field of research on deterministic
and stochastic project network models with discounted cash
flow. They provided proper attention to NPV maximization
models using optimal- and heuristic-scheduling procedures
with various types of resource constraints.
Pinder and Marucheck (1996) presented a wide statistical
evaluation on 17 scheduling heuristics, 10 of which they developed. The performance of these heuristics was rated based
on maximization of the projects NPV and minimization of
project duration. Two of the new heuristics were significantly
better than the standard heuristics considering the projects
NPV. These two heuristics also performed well at reducing
project duration. Shortest processing time (SPT) and MSLK
priority rules that performed well in previous studies were
poor performers at maximizing NPV.
Many researchers have tested the performance of the previously mentioned heuristic on several criteria: project duration, resource idle time, computer processing time, and
NPV (Baroum & Patterson, 1996; Brucker, Drexl, Mohring,
Neumann, & Pesch, 1999). The temporal-related heuristics
18
produced schedules with low project delays. Resource-related heuristics schedule resources efficiently at the expense
of large delays in project durations. It was shown that the
MSLK priority rule turned out to be most effective by criterion of total project delay.
The Newly Developed Heuristic

The design of any heuristic algorithm has to take into consideration three main concerns: logic, simplicity of application, and computer orientation. The newly developed
heuristic is based on a hybrid of the minimum late start
(MLS) and the SPT heuristics. The name of the newly developed heuristic is abbreviated from the two heuristics, MLS
and SPT, producing the name, late start and shortest processing time (LSSPT) heuristic.
The basic idea is to schedule the SPT activity before the MLS
activity is started. If the SPT activity can be finished before the
MLS activity in the eligible set, then we can schedule the SPT
activity. If not, then schedule the MLS activity. This can be
achieved by computing the variable Fij = T + dij, where T represents the clock time of scheduling, dij represents the activity duration, and Fij represents the finish time of activity ij if
scheduled in time, T. Then, compare this value with the MLS
date of all the eligible activities; if it is less than the MLS date,
then it could be scheduled without delaying any activity beyond its late-start date. Else, schedule the MLS date activity. In
the middle of the process of scheduling, the project due date
will be delayed, and the start dates may be different, accordingly. The static late-start value will be always less than Fij = T +
dij. So in order to consider this case, we compute the dynamic
value of the MLS for comparison. Following are the LSSPT
steps:
Step 1: Using traditional network computations, determine for each activity the late and early activity dates (ES,
EF, LS, and LF), total float and free float, and resources requirements.
Step 2: Start the clock at T = 1.
Step 3: Determine the eligible activity set (EAS) to be
started based on precedence relationship.
Step 4: Identify the dynamic late-start (DLSij) date of each
activity in the EAS by computing the maximum delay of scheduled activities, and add it to the LSij date computed in Step 1.
Step 5: Compute the finish time of each activity as it is
scheduled now at this time (Fij = T + dij).
Step 6: Compare the finish time with the DLSij date of
each activity; if the finish time is less than the DLSij date,
then parameter Zij = Fij will be the date to compete with on
other activities.
Else, the DLSij date is the priority number to compete
with on other activities (Zij = DLSij).
Step 7: Sort the activities in the EAS to be scheduled, in
ascending order of Zij values.
Step 8: If the resources are sufficient, schedule the first
ranked activity in the priority list (minimum Zij) and update
the resources remaining.
June 2001
Start
T=1
All the Activities

Scheduled
T=T+1
Define Eligible
Activity Set
Update LS
Based on
Scheduled
Activities
No
No
T=1
Yes
For Each Activity in EAS

Zij = DLS
Fij=T+dij
Fij< Zij
Yes
Yes
Zij=Fij
No
Sort Activities Based

on Zij Values
Sufficent Resources
Yes
Assign First Orders

Priority Activity
Update Priority
Order
Compute NPV
Finish
Figure 1. Flow Chart for the LSSPT Heuristic

June 2001
19
10
2
(2, 1, 1), (54)
(5, 3, 4), (1350)
(1
,0
8
(2, 1, 1), (432)
(2, 3, 3), (432)
4
5
,(
)
2
3
7
1
(4, 2, 3), (108)
(5, 2 ,0), (405)
(7, 3, 2), (567)
(3 ,
5,
10
(0, 0, 0), (8950)
10
3)
,(
10
)
7
4
6
4
(3, 1, 0), (405)
0
9
(4, 0, 2), (756)
(9, 2, 2), (972)
Key
Duration
(4, 1, 1), (540)
(Resources), (Cash Flow)
Figure 2. AOA Network for the Numerical Example

Step 9: If there are sufficient resources, then schedule the
next activity in the prioritized EAS, and continue until all
activities in the EAS are scheduled. Minimum activity
number breaks the ties. Else, T = T + 1 and go to Step 3.
Step 10: Schedule all the activities.
Step 11: Compute the NPV.
Figure 1 represents the flow chart for the LSSPT heuristic.
Continuous compounding for NPV calculations and an

interest rate equal to 1% monthly and the duration of the
project is assumed in months.
Each activity can require up to three different resource
types.
Numerical Example
Assumptions
The following is assumed:
Deterministic single-mode case project scheduling is considered, where the activity has one resource-duration combination called single-mode activity, and the activity has more
than one resource-duration combination called multimode
activity.
Activity relation is of the FS type with a time lag of zero;
i.e., an activity can start as soon as all its predecessor activities
have finished.
Activity durations are assumed to be known, and activity
preemption is not allowed (activities have to be completed
once started).
Both the amount and timing of cash flows are known; we
assume that the only positive cash flow occurs at project
completion. The total project cash inflows are at least 30%
larger than the outflows to avoid a situation in which the
network has a net negative present value, and thus is not
profitable to complete. The cash outflows occur at the beginning of each activity as one single payment at time zero
of the activity duration (activity-oriented cash flow).
20
The AOA network for the numerical example is depicted in

Figure 2, while Table 1 shows the necessary data for the numerical example. Table 2 shows the basic traditional network computations required for scheduling. Based on these
computations, the project duration is 27 time units.
Activity cost is calculated based on its resource cost,
usage, and activity duration. The resource cost is randomly
generated. The end payment equals the sum of the cash
flow of all activities multiplied by a factor representing the
30% profit for the project. A maximum available resource is
10 units.
The computational procedure is demonstrated using the
newly developed heuristic in Figure 3. The project duration
has increased from 27 to 33 time units.
The project duration and NPV obtained using other priority rules are shown in Table 3. Note that LSSPT produced
better results than MSLK, MLS, and SPT.
Computational Experience
Sixty networks from the Patterson problems were used to
test the LSSPT heuristic and compare it with the other four
June 2001
Activity Duration
(i j) (Time Units)
12
13
14
2 5
35
36
3 7
46
49
58
67
79
89
910
Resource Requirement
5
4
3
2
1
3
7
9
4
2
4
5
2
0
10
1
5
1
2
10
3
4
5
8
7
3
8
0
3
2
1
1
0
5
3
2
1
3
0
2
1
0
4
3
0
1
2
3
2
2
1
3
2
0
1
0
Cash Flow
($)
1350
108
405
54
54
810
567
972
540
432
756
405
432
8950
Table 1. Data for the Numerical Example
Activity Duration
(i j) (Time Units)
12
13
14
2 5
35
36
3 7
46
49
58
67
79
89
910
10
1
5
1
2
10
3
4
5
8
7
3
8
0
ES
EF
LS
LF
TF
FF
0
0
0
10
1
1
1
5
5
11
11
18
19
27
10
1
5
11
3
11
4
9
10
19
18
21
27
27
0
6
8
10
9
7
21
13
22
11
17
24
19
27
10
7
13
11
11
17
24
17
27
19
24
27
27
27
0
6
8
0
8
6
20
8
17
0
6
6
0
0
0
0
0
0
8
0
14
2
17
0
0
6
0
0
ES = Early Start Date, EF = Early Finish Date, LS = Late Start Date, LF = Late Finish Date,
TF = Total Float, FF = Free Float
Table 2. Basic Network Computations

classical heuristics (Patterson, 1984). These problems ranged
in size from 7 to 51 activities, with up to three different resource types per activity. The original Patterson networks did
not have cash flow associated with each activity, so that the resource cost per one unit of time, using uniform distribution,
was randomly generated. The total revenue for each project
was determined. Five computer programs were developed to
facilitate the comparison of LSSPT with MSLK, MLS, MLF, and
SPT. These programs were written in Turbo-Basic Language.
Table 4 illustrates the performance of the five heuristics.
Statistical Analysis for the Project Duration. The most
helpful statistical tool for drawing a practical conclusion
about the influence of LSSPT is experiment design. We can
define experiment design as a test or series of tests in which
June 2001
purposeful changes are made to the input variables of a

process to observe and identify corresponding changes in the
output responses. In order to test and validate the LSSPT
heuristic, statistical analysis was performed for the data results from the newly developed heuristic and other heuristics.
For the duration performance measure, the duration deviations for the five heuristics from optimal mean were computed. Using the single factor design of experiment to test if
there are significant differences between the mean deviations
from optimal mean, the null hypothesis (H0: m1 = m2 = m3 =
m4 = m5) was tested against (H1: m1 m2 m3 m4 m5). With
five heuristics (number of treatments), and 60 problems
(replicates), = 0.01, and F,a1, Na = F0.01,4,295 = 3.38, the
ANOVA results are shown in Table 5.
21
T=1
T = 17
EAS
1-2
1-3
LS
0
6
F
10
1
P
1
2
Schedule activity 1-2
U= 10-5-4 = 1
1-4
8
5
3
EAS
3-7
4-6
LS
21
13
F
19
20
P
2
1
No sufficient res. to schedule 4-6
T=2
EAS
LS
F
P
T = 20
1-4
8
6
3
3-6
7
11
4
3-5
9
3
1
3-7
21
4
2
EAS
4-6
LS
13
F
23
P
1
8-9
19
27
2

U=10-5-1-3 = 2
T = 24
T=7
EAS
LS
F
P
3-6
7
16
1
4 -6
9
10
2
4-9 3-7
18 17
11
9
3
4
EAS
6-7
8-9
LS
17
19
F
30
31
P
1
2
Schedule activities 6-7, 8-9
Schedule activity 3 6
U= 10-5-3 = 2
T = 31
T = 11
EAS
LS
F
P
EAS
3-7
21
19
4
4-6 4-9
13
22
11 15
2
3
2-5
10
11
1
7-9

T = 33
T = 12
EAS
EAS 4-6 3-7 5-8
LS
13 21
11
F
15 14
19
P
2
3
1
9-10
F = T + activity time-1, P = priority order, res. = resources, U = remaining resources.
Figure 3. The Computational Procedure
22
June 2001
Heuristic
Project
Duration
NPV
LSSPT
MSLK
MLS
SPT
33
41
41
38
304
36
46
34
Table 3. Performance of the Example Problem

Compared to Other Heuristics
Priority
Rule
Mean of
Difference
Standard
Deviation
No. of
Optimal
Solutions
SPLT
MSLK
MLS
MLF
SPT
1.75
2.62
1.6
2.17
4.43
1.85
2.58
1.75
1.86
3.2
20
14
21
16
9
Table 4. Performance of the Five Heuristics
Source of Variation
Sum of Squares (SS)
Degrees of
Freedom
Between Heuristics
Error
Total
SS treatment = 315.88
SS error = 1583.1
SS total = 1899
4
295
299
Mean Squares
MS treatment = 79
MS E = 5.366
F0
14.715
Table 5. ANOVA Table
Heuristic
No. of Maximum NPVs
Proportion
LSPT
31
0.5167
MSLK
19
0.3166
LS
18
0.3
LF
19
0.3166
SPT
10
0.1667
Table 6. NPV Results
Heuristic Comparison
LSSPT vs. MSLK
LSSPT vs. MLS
LSSPT vs. MLF
LSSPT vs. SPT
Proportion
Z0
0.41667
0.40833
0.41667
0.34166
2.22
2.41
2.22
4.04
Table 7. Proportions Hypothesis Testing

From Table 5, we can conclude that there are significant
differences between the mean deviations of these heuristics
from optimal mean, but the exact nature of the differences
is not specified. In this situation, further comparisons
among groups of treatment means might be useful. So to
test all possible pairs of means, the Duncan Multiple Range
Test (Walpole & Myers, 1993) was used. The test showed
that heuristics MLS, LSSPT, and MLF had no significance between their means. The MSLK had the fourth rank, while the
last rank was for the SPT.
Statistical Analysis for the NPV. The five heuristic
results corresponding to NPV maximization are listed in
Table 6.
The test of hypothesis for two proportions was performed to see if the LSSPT has a significant difference over
June 2001
the other heuristics when considering the NPV maximization. The null hypothesis (H0 :P1 = P2 ) against (H1 : P1 > P2)
with a = 0.05 and Z 0.05 = 1.645. The null would be rejected
if Z 0 > Z a. The results of Table 7 show that the LSSPT has
a significant difference over the other heuristics.
Since all Z 0 values are greater than Z 0.05, LSSPT produced better NPV results and has a significant difference
over the other four heuristics.
Discussion
Project scheduling with limited resources is a challenging
problem, even though it may be easy to state or visualize.
Heuristic procedures have been utilized to gain reasonably
good solutions; different heuristic rules have been thoroughly
23
examined and tested for performance. No existing heuristic

performed consistently best on all project-scheduling problems. The newly developed heuristic, LSSPT, presents effective
results compared to the MSLK rule and other priority rules.
One advantage of using LSSPT in scheduling the minimum processing time activity before the MLS date activity is
that it will consequently lead to scheduling activities without
delaying the project deadline and increasing the utilization
of resources. Another advantage is that most of the activity
durations are dependent on the resource committed to it
and so consequently on the cash flow that is dependent on
the resources. Therefore, an activity with a SPT will have a
small cash flow and a small resource usage. Respectively, this
will lead to scheduling the small cash-flow activities first and
delaying the scheduling of large cash-flow activities as to not
affect the project dead line. This notion coincides with the
concept of delaying the large cash outflow as long as possible, and making the cash inflow happen faster, which will
result in higher NPV.
Conclusions
A detailed analysis of the newly developed heuristic called
LSSPT was introduced. Computational study of the LSSPT
and the other four heuristicsMSLK, MLS, MLF, and SPT
were analyzed. The results showed that the LSSPT heuristic
performed better than the three priority rulesMSLK, MLF,
and SPTand produced close results with the MLS priority
rule when considering duration minimization, even though
the statistical analysis showed that there is no significant
difference between MLS, LSSPT, and MLF.
The statistical analysis showed that the LSSPT heuristic
produced a higher NPV with a significant difference in its
mean over the other four heuristics. Even when the project
duration results from the different heuristics were the same,
the LSSPT produced greater NPV.
The LSSPT procedure tends to minimize the project duration, which is very important in meeting the project due
date, avoiding delay penalties, and maximizing NPV. The
LSSPT heuristic is a useful tool in project scheduling with
constrained resources.
Patterson, J.H. (1984). A comparison of exact approaches for

solving the multiple constrained resource, project scheduling
problem. Management Science, 30 (7), 854867.
Pinder, J.P., & Marucheck, A. (1996). Using discounted cash flow
heuristics to improve project net present value. Journal of Operation
Management, 14, 229240.
Russell, R.A. (1986). A comparison of heuristics for scheduling
projects with cash flows and resource restrictions. Management Science, 32 (10), 12911300.
Smith-Daniels, D.E., & Aquilano, N.J. (1987). Using a late-start
resource-constrained project schedule to improve project net present value. Decision Sciences, 18 (4), 617630.
Walpole, R.E., & Myers, R.H. (1993). Probability and statistics for
engineers and scientists. Maxwell MacMillan International Edition.
Ghaleb Y. Abbasi is the director of the Outreach

Consultation Unit at the University of Jordan, Faculty
of Engineering and Technology, and an associate
professor in the Industrial Engineering Department.
He holds a D.Sc. in engineering management, an M.E.A.
in construction management from The George Washington University,
Washington, DC, and a B.S. in civil engineering from Cairo University,
Egypt. He is involved in training and development programs, especially
in the area of project management, and is the author of two books in
that area.
Yasser Arabiat is the head of the Project Management Department

in the Public Security Directorate. He has an M.S. in industrial
engineering from the University of Jordan in Amman, and a B.S. in
mechanical engineering from The Jordan University of Science and
Technology in Irbid.
References
Baroum, S.M., & Patterson, J.H. (1996). The development of
cash flow weight procedures for maximizing the net present value
of a project. Journal of Operation Management, 14, 209227.
Brucker, P., Drexl, A., Mohring, R., Neumann, K., & Pesch, E.
(1999). Resource-constrained project scheduling: Notation, classification, models, and methods. European Journal of Operation Research, 112, 341.
Davis, E.W., & Patterson, J.H. (1975). A comparison of heuristic
and optimum solutions in resourceConstrained project scheduling. Management Science, 21, 944955.
Herroelen, W., Van Dommelen, P., & Demeulemeester, E.L.
(1997). Project network models with discounted cash flows: A
guided tour through recent developments. European Journal of Operation Research, 100, 97121.
The Dynamic Baseline Model for

Project Management
Mark A. Seely, PMP, University of Ottawa Centre on Governance, Vanier Hall, University of
Ottawa, 11 Marie Curie, Ottawa, Ontario K1N 6N5 Canada
Quang P. Duong, University of Ottawa Centre on Governance, Vanier Hall, University of Ottawa,
11 Marie Curie, Ottawa, Ontario K1N 6N5 Canada
well-publicized statistic from the Standish Group study of software projects in

the public and private sectors indicates that nearly 90% of the studied projects failed, with more than one-third canceled before they were completed. This
record of failure is interpreted by most as evidence that project management tools
and techniques have not been effectively applied; this in turn has led to a call for
further research in developing new techniques and in educating and certifying
more project managers in the associated skills. Increasing our capability to deliver
projects is perhaps the most convenient response to the situation. The more fundamental issue of whether or not classical project management concepts still
apply and the extent to which they fit with the new realities is a more complex
subject area; one requiring much debate and entailing a lot of controversy. To
focus the debate, we must first explore a more simple questionwhether or not
projects can be classified by their propensity to failand obvious corollariesthe
degree to which this propensity would be dependent on the capability of the
project team or perhaps the project commodity type (information technology,
systems engineering, buildings, etc.), or whether or not this propensity can be
linked to some more appropriate indicator.
The Dynamic Baseline Model (DBM) (Seely & Duong, 1999) provides a
framework for addressing these types of questions. Using a set of graphical depictions, constructs, and terminologies, the DBM explores the evolution of project
management behaviors, establishes realistic levels of project complexity and expectations, and provides a linkage, or matching, between the behavior and the
project complexity level.
The model provides the context for discussion, helping us to ask the right
questions, to address the courses of action necessary for improving our performance, and to identify learning requirements appropriate for todays projects.
Abstract
This paper describes the Dynamic Baseline
Model (DBM) as a framework for analysis of the
project management learning process and an
indicator of the expected success of a project. By
matching project complexity with the appropriate
project management approach, the DBM identifies
individual learning needs and the appropriate
response to the challenges of todays projects.
As project management tools and techniques are
more and more applied as a one-size-fits-all
solution, there is a need to explore beyond these
tools and techniques. The DBM suggests that our
ability to create solutions is bounded by our
current learning horizon, which may be too
restrictive for the needs of a project. The model
helps us find suitable solutions by enabling us to
ask the right questions.
Keywords: dynamic baseline model; project

management learning process; project
complexity; learning horizon
2001, Vol. 32, No. 2, 2536
June 2001
Project Management Learning

There are two sides to the model, the people side and the project side. The model is
introduced starting with a cursory overview of the people side in order to establish the necessary context for the ensuing project discussions.
Under the DBM, the project management learning curve (see Seely, 1996) has
the following four levels, as depicted in Figure 1.
25
Progress
Values
Objectives
Methods
Rules
11
15
Years of Project Experience
Figure 1. A Four-Level Project Management Learning Curve

Level 1: Management by rules (MBR) behavior is the first
level of learning. MBR is an indoctrination into the official
operations for an organization. Employees are encouraged
to develop a strong sense of affiliation with the institutional
framework that defines the organizationrules, regulations, policies, procedures, directives, laws, acts, etc. At this
level of learning, an employee is taught how to apply existing rules to conduct business, and, on occasion, to interpret rules in some new way for the purpose of addressing
project issues not readily covered in the existing framework.
Level 2: Management by methods (MBM) behavior is the
next level of learning in which those proficient in MBR build
on their knowledge base with customized project management processes and procedures. At this level, practitioners get
acquainted with, and become proficient in the use of, standard project management tools, frameworks, and templates.
The work breakdown structure (WBS), the responsibility
assignment matrix, scheduling techniques, cost/schedule
performance control, and monitoring and configuration
management are the hallmarks of Level 2 learning. At this
level, an employee has the capacity to use the tools to analyze project performance data and to make recommendations for corrective actions accordingly.
Level 3: Management by objectives (MBO) is the next level
of learning. MBO is all about establishing and maintaining
the project objectives as the reference point, and managing
and manipulating the methods at Level 2 and the rules at
Level 1 as appropriate to that horizon. The graduated
learning process is important in this regardthese manipulations require a strong grounding in the methods and the
rules, knowledge of the tools and their limitations, knowing
which rules to break, and the implications of doing so. At
this level, an employee is expected to make the decisions
and tradeoffs that will help the project meet its objectives.
Level 4: Management by values (MBV) is the next level of
learning. At this level, an employee has the capacity to manipulate and evolve the objective throughout the project life
cycle as appropriate to the overarching corporate values.
MBV practitioners are expected to revisit and adjust project
objectives with their attention focused on the corporate-
26
values horizon. In turn, this requires the capacity to manipulate the tools and the rules with the knowledge and experience to understand the implications, as per Level 3.
The learning circles at each phase in the graduated process
are inclusive; i.e., it is recognized that proficiency in any one
level requires a thorough grounding in the knowledge of the
lower levels. Graduation from one level to another generally
comes from trial-and-error application of each behavior
phase within successively more complex project types.
Simply put, when a behavior level does not apply, we seek
the bigger picture. The best way to force learning is through
progressively more challenging project assignments where
one can attempt to apply Level 1 logic in a Level 2 environment, Level 2 logic in a Level 3 environment, and Level 3
logic in a Level 4 environment. It should also be noted that
the learning curve, as depicted in Figure 1, has distinct steps
or horizons (like a stairway). This is to signify that graduation
from one level to another is a marked event. The broader behavior comes as somewhat of a revelation, a sudden awareness of the new horizon and, with that, a substantially new
manner of thinking. To be effective, training should target
one level above an individuals current horizon.
Many of us have a natural inclination or preference for
one level over another and may be inclined to gravitate to,
and remain within, certain roles in the four-step process. It
is logical that such a preference be taken into account in career planning and in assessing learning needs. However, we
need to ensure that it is the needs of the project and not the
natural inclinations and preferences of the people that is
driving our approach to project management for a given
project. Thus, the principle of matching is very important,
ensuring that Level 1 projects are undertaken with an MBR
competency, Level 2 projects with a MBM competency, Level
3 projects with a MBO competency, and Level 4 projects
with a MBV competency.
Project Classification
The DBM also features a four-level project classification based
on what we call the project lowest static baseline (LSB). Using
June 2001
MBR
MBM
MBO
MBV
Values
Objectives
Requirements
Procedures
Figure 2. Dynamic (D) and Static (S) Baselines

the flow down of organizational objectivesfrom corporate
values to project objectives to functional requirements to
product designthe LSB is the lowest level that is relatively
fixed for a given project, and is therefore readily baselineable (see Figure 2). The DBM is the foundation upon which
a project is positioned. A project can only be expected to
meet its LSB, and therefore, success or failure should only realistically be measured relative to that baseline.
Another direct conclusion of this model is that our capacity to deliver a project is directly linked to our record of
achievement in projects with similar LSBs. If this were true,
then we could look beyond the stereotypical labels associated with commodity type, and consider the LSB as a determining factor in predicting a projects success.
MBR
For Level 1 projects, the LSB is the product design baseline,
illustrated in Figure 3. These projects are referred to in the
DBM as production. For production projects, the art and science of project management is in selecting and manipulating alternative procedures to implement the design with
optimal efficiency; i.e., the procedures form a dynamic baseline. The corresponding project management behavior appropriate to a Level 1 environment is MBR.
The Project. A typical MBR application would be a
build-to-print type initiative having a tangible product
and a stable proven design. The operation would be highly
routine and systematized. This level would arguably not
even be a project under the PMBOK Guides (1996) definition of a project. The typical organizational structure would
be a functional line operation.
The People. The ideal MBR behavior features a highly dependable, reliable individual with a strong affiliation with the
official operations of the company. With a focus on detail, the
career-long MBR practitioner would be a Myers-Briggs ISTJ
(Introverted/Sensing/Thinking/Judgmental) or Inspector,
representing approximately 10% of the population.
The project management training syllabus for MBR includes subjects such as:
Life-cycle costing
Material requirements planning
June 2001
Process control
Procurement practice
Quality assurance
Quality control
Queuing theory
Scheduling (Gantt, PERT, CPM, Line of Balance)
Design specifications.
MBM
At Level 2, the LSB is the requirements baseline, illustrated
in Figure 4. These projects are referred to in the DBM as construction. For construction projects, the art and science of
project management is in selecting and manipulating alternative design approaches to implement the requirements
with optimal efficiency; i.e., the design is a dynamic baseline. The corresponding project management behavior appropriate to a Level 2 environment is MBM.
The Project. A typical MBM application would be an
implement-the-requirement scenario having a tangible
product, evolving design, stable technology, and low integration. In fact, the requirements of an MBM project are
generally sufficiently stable that the tendering process is
often used to position the implementation with a contractor. The project management organizational structure
would be a dedicated or projectized organization.
The People. The ideal MBM behavior features a high aptitude for the mastery of tools. The career-long MBM practitioner would be a Myers-Briggs ISTP (Introverted/Sensing/
Thinking/Perceptive) or Crafter, representing approximately
10% of the population.
The project management training syllabus for MBM includes subjects such as:
Configuration management
Contingency
Desk books
Earned value management
Matrix management
Pareto diagram
Procurement template
Requirements assignment matrix
Resource-leveling statement of work
27
MBR
Static Design Baseline
Figure 3. Static Design Baseline
MBM
MBR
Static Requirements Baseline
Figure 4. Static Requirements Baseline
MBO
MBM
MBR
Static Objectives Baseline
Figure 5. Static Objectives Baseline
Risk management
Systems engineering framework
Software tools (MS Project, Primavera)
Trend analysis, regression
WBS.
MBO
At Level 3, the project LSB is the objectives baseline, illustrated in Figure 5. These projects are referred to in the DBM
as development. For development projects, the art and science
28
of project management is in selecting and manipulating alternative requirements approaches to implement the objective with optimal efficiency; i.e., the requirements are a
dynamic baseline. The corresponding project management
behavior appropriate to a Level 3 environment is MBO.
The Project. A typical MBO application would have
evolving requirements and a containable total system responsibility or TSR obligation. MBO work entails closed systems engineering with significant internal integration risk. It
would feature a semitangible product (combination of hardware and software) and leading-edge technology. MBOs have
June 2001
MBV
MBO
MBM
MBR
Static Values Baseline
Figure 6. Static Corporate Values Baseline

a distinct advantage over higher-level projects in being able
to operate covertly due to the TSR. Because the bureaucracy
associated with MBR does not suit the highly unique nature
of MBO projects, they must be insulated from the routine
line-operations protocol described in the company rulebook. Hence, they do not only operate in a projectized environment; it is generally difficult to establish status
information such as cost/schedule performance for outside
stakeholders.
The People. The ideal MBO behavior features a highly
goal-oriented individual, strong-willed, with high leadership
skills. A MBO practitioner would be a Myers-Briggs ENTJ
(Extroverted/iNtuitive/Thinking/Judgmental) or Field-Marshal, representing 2% of the population.
The project management training syllabus for MBO includes subjects such as:
Conflict resolution
Crashing
Decision theory
Effective meetings
Fast tracking
Human resources (McGregor, Ouchi, McClelland,
Maslow, Hertzberg, etc.)
Management reserve
Motivational theories
Negotiation
Project charter
Project procurement management
Utility theory.
The corresponding project management behavior appropriate to a Level 4 environment is MBV.

The Project. For a typical MBV application, the issues are
intangible. As is typical of the information technology projects,
the end product deeply touches many end usersaffecting the
fundamental way in which they conduct their business and,
with that, their ability to achieve their objectives. Evolution
projects are not TSR. The work must simultaneously consider
project issues and the severe implications to the routine business operations of the organization.
The People. The ideal MBV behavior features a very high
affinity for ambiguitythe ability to deal with evolving and
competing objectives. Part of this personality would be a
very high emotional quotient (EQ) (Goleman, 1995). MyersBriggs would identify the individual capable of MBV as an
ENFP (Extroverted/INtuitive/Feeling/Perceptive) or Champion,
representing 3% of the population.
The project management training syllabus for MBV includes subjects such as:
Governance issues
Analytical hierarchy process
Capability snapshot
EQ
Diplomacy
Organizational performance management
Myers-Briggs
Partnering
Principles (Covey, 1989)
Program management
Statement of operational objectives
Strategic analysis.
MBV
At Level 4, the project LSB is the values baseline, illustrated
in Figure 6. These projects are referred to in the DBM as evolution. For evolution projects, the art and science of project
management is in selecting and manipulating alternative
objectives to achieve fundamental corporate values with optimal efficiency; i.e., the objectives are a dynamic baseline.
June 2001
Lowest Management Level

The lowest management level (LML) is the control point for
a project. It represents the level at which the project must be
managed on an ongoing basis in order to deal effectively
with the dynamic issues below the LSB.
29
1950s
1960s
1970s
1980s
1990s
Globalization
Cold War
Automation
Industrialization
BPR
Transistor
Integrated
Circuit
PERT/CPM
PMI
Countermeasures
Microcomputer
Internet
DOD PM Stds.
C/SCS PMP
SEI
Figure 7. The History of Project Management

For a production project, the LML is the supervisor level.
A supervisor is the lowest management level with sufficient
capacity and authority to deal effectively with a dynamic procedures baseline.
For a construction project, the LML is the manager level.
A manager is the lowest management level with sufficient capacity and authority to deal effectively with a dynamic design
baseline.
For a development project, the LML is the director level.
A director is the lowest management level with sufficient capacity and authority to deal effectively with a dynamic requirements baseline.
For an evolution project, the LML is the owner level.
The project owner is the lowest management level with sufficient capacity and authority to deal effectively with a dynamic objectives baseline.
order to come out ahead on cost and schedulean expected efficiency of slightly over 100%. For MBM, a dynamic design baseline yields a typical overrun of up to 10%.
In MBO projects, a dynamic requirements baseline yields a
typical overrun in the range of 50%. In MBV projects, a dynamic objectives baseline yields a 90% failure rate.
The DBM would suggest that when high-level baselines
are left in a state of ambiguity, the inclination to adopt classical (Level 2 or MBM) project management practices as the
response would not be appropriate. Therefore, to move forward with todays projects, classical project management approaches are not enough. For the 90% of IT projects that
fail, we need to either stretch conventional thinking in
project management to include principles appropriate to
evolving objectives (MBV), or marginalize project management practice and develop something new.
Expectation of Success
Extrapolation of the Model
We know that there is a fundamental difference in project

risk when, say, building a skyscraper versus building a battleship versus automating a financial system; but it is interesting that some construction projects go completely out of
control, and the odd information technology project
achieves its objectives. It is suggested that this is more than
simply randomness or hit and miss. The DBM would explain this in terms of the position of the LSB, regardless of
the commodity type.
In the case where the LSB is the product design (i.e.,
MBR), it is not only anticipated that the project will be completed on time and on budget, but also expected that gains
in efficiency will be realized through repeat applications in
As suggested in the introduction of this paper, the focus of

management and project management has been evolving.
Throughout recent history, project management has followed a trend from MBR to MBM to MBO to MBV, as illustrated in Figure 7.
The MBR mindset was important to the growth in business infrastructure, prominent from 1930 to 1960. During
this period, the focus was on institutionalizing business
practices, and with that came the development of rules, regulations, policies, procedures, directives, laws, acts, etc.
During the post-war period of industrial growth, MBM approaches became the major focus. Modern project management practice was born with the development of the classical
30
June 2001
Level 5
MBR
MBM
MBO
MBV
MBP
S
Values
Objectives
Requirements
Design
Figure 8. Extrapolation of the DBM

scheduling techniques such as the Gantt chart, PERT, and CPM
developed in the 1950s (Moder, Phillips, & Davis, 1983).
With the proliferation of the transistor in the 1950s and
the integrated circuit shortly thereafter, projects became
more complex. With the development of sophisticated engineering systems, the objective was now to bring mechanics to life. The Department of Defense (U.S.) was a
major driver of MBO. The advent of the cold war in the
1960s created demand for countermeasures that, as a matter
of public security, pushed the envelope of technology, and
drove project management into MBO. This was the era of
cost/schedule control. The Project Management Institute
(PMI) was born in 1969, and the Project Management Professional (PMP) certification started shortly thereafter.
With the proliferation of the microcomputer came the
information age. The cold war ended, and the project management focus once again shifted, this time to MBV. As companies automated their business processes for the purposes
of reducing cost and enhancing availability of information,
the terminology changed with terms like CASE tool, business process reengineering (BPR), and Internet.
The future should be interesting with the approach of the
next levelLevel 5. An extrapolation of the model, as illustrated in Figure 8, would lead to a management approach
where the essential values of the corporation are a dynamic
baseline. This would entail dealing with some higher-order
issuesperhaps management by politics (MBP), wherein
project managers would contend with harmonizing various
corporate agendas. With the current record number of acquisitions and mergers around the globe, perhaps this is
Level 5 in action; however, if project management principles
were to be employed in this effort, an extrapolation of the
model would indicate an extremely low chance of success.
A Level 5, MBP would deal with an intangible product
with a focus on governance issues. The LML at Level 5 would
be, in essence, a politician. Such an individual would require
a high affinity for ambiguity, a high EQin Myers-Briggs
this would be an ESTP (Extroverted/Sensing/Thinking/Perceptive) or Promoter, representing approximately 3% of
the population at large.
June 2001
Learning Needs
The project management learning curve was addressed in
the introduction of this paper. Having established the principles and terminology of the DBM, we can now use the
model to address how best to move project practitioners up
through the competency hierarchy from MBR to MBM to
MBO to MBV, and perhaps beyond, as appropriate to their
interests and aptitudes.
The people side of the DBM portrays the behavior pattern that is natural to each level, using the Myers-Briggs
framework. Not everyone in project management aspires to
take the lead on a project. As exemplified in project management conferences and training programs, there are those
that are drawn to the development and use of project management tools, and others that seem naturally inclined to
focus on the issues. It should be noted that, although the
character profiles are treated very lightly in this paper,
human behavior is a very complex subject area, and, as
such, attempting to categorize people in some neat pattern
to suit the model would be a tricky and perhaps dangerous
exercise. Nonetheless, these profiles are important for the
sole purpose of establishing the framework for discussion.
We should expect that throughout their career, there are
those that stay within the MBR mindset and develop their
expertise on that basis. There are others that will feel more
comfortable with the methods and stay with the tools and
methodologies, and so on. For those who have the interest
in, and aptitude for, harnessing the bigger-picture challenges, there needs to be the encouragement, recognition,
and training to enable their progression.
An important issue is ensuring that good candidates for
MBO and MBV are not eliminated for lack of an adequate
performance record at the lower levels. For example, it may
not follow that the best MBO and MBV candidates should
necessarily be selected from the pool of top MBR or MBM
performers (see Figure 9). Myers-Briggs seems to indicate
that peoples natural behavior inclinations would be an important factor.
Among the learning optionsteaching the terminology,
training in tools, lecturing on issues, and mentoring in real
31
MBV
MBO
MBM
MBR
5 Years
Novice
10 Years
15 Years
Expert
Figure 9. Four Project Management Career Paths
1 2 3 4
1 2 3 4
1 2 3 4
1 2 3 4
1 2 3 4
1 2 3 4
1 2 3 4
1 2 3 4
1 2 3 4
Integration
Scope
Time
Cost
Quality
HR
Com.
Risk
Proc.
Figure 10. Comparison to the PMP

timeeach of the DBM levels has unique learning needs.
Teaching works well for MBR; training is an important addition for MBM, to gain a mastery of the tools such as packaged software applications; MBO requires a high degree of
experience, the battle scars and the eventual confidence of
a tried and proven track record; MBV requires the combined
bottom-up project experience of MBO, as well as a high level
of experience in the specific business operations associated
with the project. Finding a candidate with a proven track
record in both is a clear problem for Level 4 and above.
With regard to PMIs PMP certificationthe PMBOK
Guide is largely at the MBM level (covering the Level 1 and
Level 2 components illustrated in Figure 10), with much
focus on project terminologies and frameworks. Those
preparing practitioners, or considering certification require-
32
ments, for MBO and MBV can perhaps use the PMP certification exam as the foundation, and add custom programs
as appropriate. The shift from MBM to MBO requires additional concentration on the soft skillshuman resources,
communication, and integration. These additions need to
be magnified for MBV preparations.
Conclusion
This paper establishes graphical depictions, constructs, and
terminologies to enable efficient dialog on complex project
issues for the DBM. It identifies project Level 1 production, Level 2 construction, Level 3 development, and
Level 4 evolution. The commensurate people approaches
are MBR, MBM, MBO, and MBV, respectively. The LSB is
June 2001
suggested as the best indicator of the probability of success,

and the concept of a control point or the LML is identified
for each. It is suggested that these terms can be added to the
current lexicon of project management terminology for
more effective analysis of todays project issues.
The DBM portrays project management learning as a
building process through successive learning horizons. According to the mathematician John Allen Paulos (1998),
there is a limit to a persons ability to process and understand
information; this limit is defined by what Paulos calls our
complexity horizon. In the project management context,
up to the complexity horizon, advancing project management solutions for a given project means exercising the
wisdom of knowledge and experience. Attempting a project
beyond our horizon means exercising faithtwo or more
levels representing a leap of faith. The DBM, by identifying
the knowledge horizons, enables us to distinguish knowledge
from faith so that we can identify when our project investments are in good hands and when they are left to chance.
This distinction between knowledge and faith is important. Extending Paulos hypothesis, it is suggested that,
when managing beyond our horizon, we tend to embrace
and seek comfort within that which is familiar, employing
project approaches that are within our knowledge horizon.
The resulting under-targeting of solutions amounts to
forcing the problem to accommodate the solution, and not
the other way arounddiverting our attention from the
true issues.
The DBM does not provide solutionsthats where the
reader comes in. Five sample paradoxes are discussed in the
appendix to illustrate the complexity of todays issues and
to demonstrate the need for a discussion framework to expand our thinking. The DBM provides a map for navigating
to new learning horizons, to assist in our quest to conquer
todays project management.
Seely, Mark, & Duong, Quang. (1999). The dynamic baseline

model. Unpublished manuscript.
Moder, Joseph J., Phillips, Cecil R., & Davis, Edward W. (1983).
Project management with CPM, PERT and precedence diagramming,
3rd ed. Van Nostrand Reinhold.
Mark A. Seely, PMP, PEng, is a professional engineer

with extensive experience helping managers deal with
issues associated with large-scale complex projects in
the private and public sectors. He received an MBA from
the University of Ottawa (Canada) and is actively involved
with the Project Management Institute (PMI), holding various board
positions, lecturing on project management, and providing PMP
certification training. He is currently a Fellow at the Centre on
Governance, University of Ottawa.
Quang P. Duong obtained his Ph.D. in statistics from

the University of Western Ontario (London, Canada). His
areas of research include the application of statistical
methods to solve project management issues. He was
with the Management Sciences group at Bell Canada
where he applied statistical and operations research techniques to a
wide range of business problems, in addition to lecturing at various
universities. He is currently a Fellow at the Centre on Governance,
University of Ottawa.
Acknowledgments
The authors would like to thank the referees and the editor
for comments that have improved both the content and presentation of the paper. Comments on the earlier version of
the paper by Jean G. Roy and Rick M. Trites are also greatly
appreciated. The positions expressed remain the personal
opinions of the authors only.
References
Covey, Stephen R. (1989). The 7 habits of highly effective people:
Restoring the character ethic. New York: Simon and Schuster.
Goleman, Daniel. (1995). Emotional intelligence: Why it can
matter more than IQ. New York: Bantam Books.
Paulos, John A. (1998). Once upon a number: The hidden mathematical logic of stories. Basic Books.
Project Management Institute. (1996). A guide to the project management body of knowledge (PMBOK guide). Upper Darby, PA:
Project Management Institute.
Seely, Mark. (1996). Thinking beyond the rules. Unpublished
manuscript.
June 2001
33
The Customer Service Paradox
APPENDIXFIVE PROJECT MANAGEMENT

PARADOXES
in striving to accommodate user needs, we jeopardize

the solution that we are providing on their behalf
The Planning and Control Paradox

more and more we demand that which applies less
and less
Projects of the information age, the MBVs and MBPs, encounter dynamically changing objectives and values baselines. This means two things:
The number of people touched by the product and implicated in the project delivery is increasing geometrically.
As the growth in PMI membership will indicate, the interest
in project management throughout the world is virtually exploding at this point in time. These people are craving the
PMBOK Guide knowledge base.
The projects causing the growth in interest are not readily
baseline-able at the levels contemplated by the PMBOK
Guide. The challenging part of MBV is in harnessing the diversity of end users toward a common business purpose
i.e., managing a dynamic associated with having multiple
competing objectives.
Each of the DBM levels has an associated classical area of
study. For MBR, it is classical production management; for
MBM, it is classical project management; for MBO, it is classical engineering management; for MBV, it is classical business
administration, and for MBP, it is classical public administration (see Figure A1).
When looking for solutions to todays project challenges,
we need to ensure that we are not spending too much time
turning over the wrong rocks. Classical project management
principles are appealing, but the issues may very well lie in
another domain.
Classical
Project
Management
Classical
Business
Administration
DBM
Classical
Production
Management
Classical
Engineering
Management
Classical
Public
Administration
Figure A1. Related Areas of Study
34
Undertaking an MBO project with a fixed set of objectives

to deal with is one thing; having to please a multitude of
end users en route per MBV is another. For the information
age, and the projects that are part of it, connectivity is the
key. Using the number of lines of communication as an indicator, the degrees of freedom among the various end users
implicated in the system follows the formula n(n1)/2. Further, as we form end-user groups with various interests, the
potential combinations go through the roof: n(2n/2+n1);
i.e., 10 people can come at you in 5,210 ways (see Figure
A2).
10,000,000
1,000,000
100,000
10,000
1,000
100
10
1
2
9 10 11 12 13 14 15 16 17 18 19
Figure A2. Communications Explosion

Our capacity to deal with projects changes dramatically
as the LSB moves back through the project life cycle. Although we (the project management community) are particularly adept at handling MBR and MBM, MBOs remain a
challenge, and the MBVs seem to be largely beyond our
grasp.
In order to have a reasonable chance at success in todays
MBVs and MBPs, it would seem that we have a responsibility
to stakeholders to do one of two things: improve our capacity
to manage, or simplify the requirement (see Figure A3).
The former is the subject of a diverse number of groups
looking for the right project management certification
formula.
The latter is more complex. It involves addressing tradeoffs, freezing platforms, and imposing standards through
some central authority with far-reaching implications to
end-user authority and accountability.
As we search for the solution, one thing is certain:
notwithstanding our best intentions, there is no point in
proceeding if the ambition with which we undertake a
project outweighs our capacity to deliver.
June 2001
MBP
Change Requirement
Change PM Capacity
MBV
MBO
MBR
MBM
Figure A3. Our Capacity to Repeat Success
Without the project background, an inexperienced

project manager is destined to start at the beginning of the
project management learning curve, MBR, or at best, MBM.
Imparting MBR solutions in an MBV environment can be
particularly disconcerting for subordinate MBO and MBV
practitioners. By the same token, trying to ensure bottomup project managers have a sufficient grasp of the corporate
agenda can be particularly stressful to senior management.
It is generally at the MBV level that this detachment between the necessity for bottom-up project experience and
top-down corporate experience becomes an issue. Improperly managed, the compromise tends to be a top-down direction with the injection of project management practices
that are not really harmonized with the work in progress.
The Partnering Paradox
The Project Leader Paradox

the leader must have the capacity to rise above the issues while remaining grounded in the project realities
The LML is an important component of the DBM. In order

for a project manager to deal with real-time issues associated with lower baseline tradeoffs, it is vital to the success of
the project that a sufficiently senior individual be appointed. For MBV, this means the owner level (vice president or equivalent). It has also been established within the
DBM that the project manager must have the appropriate
project management acumen to deal with the project complexities. A situation where the sufficiently senior representative has not had the bottom-upMBR to MBM to MBO to
MBVcareer path raises a serious dilemma (see Figure A4).
Politician
Owner
Director
Manager
Supervisor
Figure A4. The Lowest Management Level

At the MBO level, this is not an issue. Project managers
are generally developed from the bottom up. MBV, however,
represents a significant departure from this rule. The LML
for an MBV (or above) project is generally assigned on the
basis of a sound understanding of the business, not for his
or her project management skills.
June 2001
success in a common purpose requires severability of

cause and effect
Globalization is creating a reconfiguration of business enterprises internationally. The objective these days is to be the
most efficient at producing a good or service and, when it is
more efficient to do so, engage the services of others as a
partner toward the desired outcome. The notion of partnering suggests two or more business entities sharing a
common purpose. The parties therefore work together: each
contributing to its best advantage for the overall greater
good. What can be lost in the enthusiasm of cooperation
are the entitlements of each party: partnering, the spirit of
working together versus a partnership, being jointly and
distinctly liable.
In the MBR, MBM, and some MBO environments, the
causation, or attribution of cause and effect, to one of the
parties is determinable due to TSR (illustrated in Figure A5).
In MBV, however, the partnership is much closer, and the
causation is less clear. With an information technology
system, for example, Party A may attempt to transfer the
obligation for implementing of a system to Party B through
a clearly defined contract document. However, as long as
Party A continues to control and influence the environment
within which Party B must implement its part of the bargain, the causation is obscured. Notwithstanding best intentions to draw a boundary between their respective
obligations at the outset with a carefully drafted contract instrument, maintaining a privity of contract is dependent on
this causation more than on the printed word.
35
TSR
Not TSR
Figure A5. Total System Responsibility (TSR)

For MBVs, the obscuring of influence over the destiny of
the work is by and large the determining factor (illustrated
in Figure A6). The danger for MBV is that once two parties
are engaged in a true legal partnership, both parties become
liable, and seemingly neither is responsible.
Low
Partnering
X
given to the seemingly whimsical desires of end users. His

or her solution would amount to imposing constraints to
maintain the objective.
An important part of project management learning is understanding that there is always a higher level or bigger picture. Level 4 problems require Level 4 solutions. Thats not
to say that there is no place for fixed objectives, tools, and
rules at Level 4, but rather that the corporate values have to
be the guiding force. A Level 4 approach would keep the
corporate values as the target horizon. The MBV practitioner, rather than remaining intransigent to the original
objective, would know the optimal point at which to allow
a change, and would let it evolve in a controlled fashion.
When teaching project management, practitioners generally want to learn one level ahead of their current position,
the next horizon, as illustrated in Figure A7. Two or more
levels ahead would be too confusing and not well received.
Because we dont know what we dont know, our tendency
is to be complacent with our level of understanding. We run
the risk of advancing solutions that do not apply to a given
situation. It appears that the way to sensitize people to the
need for a higher learning is to give them the responsibility
for projects, and hold them accountable for the results. An
alternative approach is to map the course from the outset,
so that people can identify with a broader context.
Predictability
High
Expressed
Terms
Liability
Severable
MBV
Causation
MBO
Partnership
MBM
Figure A6. Level 4 Partnerships
MBR
The Learning Paradox

Figure A7. Learning in the Next Horizon
to learn effectively we need to understand what we
dont know
The theory of the DBM would imply certain levels of understanding within the various horizons. When applying the
DBM, if you asked an MBR for an analysis of a Level 4
problem, he or she would have the capacity to recite the various infractions to the corporate rules and regulations. If application of the rules were not apparent, then he or she
would probably create some new rules for you to follow as
the suggested solution. If you gave an MBM the same task,
he or she would have the capacity to identify where the
project strayed from the various tools, templates, and
methodologies set as the guiding framework for the project.
To correct the problem, he or she would create and provide
some new tools for you to follow. If you gave an MBO the
task, he or she would point to areas where the objective has
been compromised because too much latitude has been
A Statistical Project Control Tool for

Engineering Managers
Garland T. Bauch, NASA-Johnson Space Center, 1619 Antigua Lane, Nassau Bay, Texas
77058 USA
Christopher A. Chung, University of Houston, Department of Industrial Engineering, 4800
Calhoun St., E213-D3, Houston, Texas 77204-4812 USA
roject management continues to play an increasingly larger role in industry.

As the demand for more unique products increases and life cycles decreases,
organizations are turning to project management techniques (Pinto & Kharbanda, 1996; Shenhar, Levy, & Dvir, 1997). With the increase in use of project
management techniques, approaches for assessing project outcome have become
extremely important to project stakeholders (Cleland, 1986; Kerzner, 1994). Unfortunately, many studies on project assessment indicate high rates of failure with
respect to time, cost, and technical performance project parameters (Morris, 1988;
Morris & Hough, 1987; Tishler, Dvir, Shenhar, & Lipovetsky, 1996). In order to
improve the rate of project success, significant effort has been directed toward
identifying what factors or practices can influence project performance. Most of
these approaches focus on developing statistically significant models using final
project parameter performance data.
This paper introduces a new technique designed to provide dynamic real-time
monitoring of time, cost, and technical performance-related project parameters.
The Statistical Project Control Tool (SPCT) is designed to assist project managers
in determining the ongoing health of different projects. Historical project parameter data is used to develop the central line, upper control limits (UCL), and
lower control limits (LCL) for a set of statistical project control (SPC) charts. The
real-time parameter performance of a project is then plotted on the chart. The
project manager uses modified SPC pattern-analysis rules to determine whether
or not the project is in statistical control. If variation develops as a result of special
causes, the chart will indicate that the project is going out of control. Once alerted
to such a possible situation, the project manager can investigate and take corrective action as necessary.
Abstract
This paper describes the development and
application of a Statistical Project Control Tool
(SPCT) for engineering project managers. This tool
consists of a set of modified Shewart statistical
process control (SPC) charts. The fundamental
purpose of these charts is to determine whether or
not a project process is under statistical control.
The SPCT includes charts that monitor time, cost,
and technical performance-related project
parameters. With the SPCT, project managers can
be alerted to developing situations and take
corrective action before project failure occurs.
Chart validation indicates that the SPCT chart
methodology possesses the capability to detect
out-of-control situations.
Keywords: statistical project control; statistical process control; dynamic benchmarking;

quantitative decision-making tool
2001, Vol. 32, No. 2, 3744
June 2001
Literature Review
A literature review was conducted to identify past relevant efforts for the measurement of project success and the development of SPC charts. The administration of qualitative surveys to experienced project managers is one of the most
common methods for determining project success factors. These types of studies
typically result in the development of a model with statistically significant project
factors or techniques. Major examples of these types of studies include Davis
(1974, as cited by Elsayed & Boucher, 1994), Might (1981), Balachandra and
37
Upper Control Limit (UCL)
+3S
Zone A
+2S
Value
Zone B
+1S
Zone C
Target
Zone C
1S
Zone B
2S
Zone A
3S
Lower Control Limit (LCL)
Figure 1. Traditional SPC Chart Components

Raelin (1984), Might and Fischer (1985), Pinto and Prescott
(1988), Ashley, Lurie, and Jaselskis (1987), Pinto and Covin
(1989), Larson and Gobeli (1989), Christian (1993), Kharbanda and Pinto (1996), and Tishler et al. (1996). A major
weakness of many of these studies is the subjective manner
in which survey data was collected. Although most of these
studies do result in a statistically significant model of
project success factors, few result in the development of
useful predictive or diagnostic tools for the project manager.
One notable exception to this trend is the Project Implementation Profile (PIP) developed by Slevin and Pinto
(1986). The PIP is based on a series of subjective surveys
given to experienced project managers. It offers project
managers the opportunity to assess individual project technique use with other successful projects. A second study,
which also resulted in a particularly useful tool, was performed by Russell and Lawrence of the Construction Industry Institute (Lawrence, 1995). This effort compiled
primarily objective construction industry percentile project
parameter performance data. By comparing ongoing project
parameter performance, Russell and Lawrences Continuous
Assessment of Project Performance (CAPP) tool can assess
the relative health of the project to historical project parameter percentiles.
Objective. The objective of the research, described in
this paper, was to develop a SPCT to aid in project manager
decision-making and help guide the project on the path to
success. This tool possesses particular advantages over previous research in that it is quantitatively based, provides
real-time feedback, and is practitioner-oriented.
Research Methodology
This section reviews traditional SPC charts, identifies SPCT
chart modifications, outlines the chart development
process, and specifies chart validation procedures.
Traditional SPC Charts. SPC charts were originally developed by Dr. Walter A. Shewart of Bell Telephone in 1924.
A conceptual description of a typical SPC chart is shown in
Figure 1. The chart components consist of a central line, UCL
38
and LCL lines, and six zones. One of the most common types
of SPC charts is the x bar chart. This chart tracks the mean
value of a small sample over a period of time. For the x bar
chart, the central line is the x bar bar or the mean of sample
means calculated from historical process performance. The
UCL and LCL lines are generally plus or minus three standard
deviations of the sample means from the central line. The
zones are the regions formed by plus or minus one, two, and
three standard deviations from the central line.
The chart is used by plotting ongoing sample means
from the production process. As the sample means are
plotted, the patterns of the plots are analyzed. If the plots
exhibit certain patterns, then the variation in the process is
most likely the result of some special cause needing investigation. With typical SPC charts, six accepted patterns indicate that the process is out of statistical control.
SPC Rule 1One point beyond Zone A
SPC Rule 2Nine points in a row in Zone C or beyond
SPC Rule 3Six points in a row steadily increasing or decreasing
SPC Rule 4Fourteen points in a row alternating up and
down
SPC Rule 5Two out of three points in a row in Zone A
or beyond
SPC Rule 6Four out of five points in a row in Zone B
or beyond.
If any of these patterns are observed, a typical response
would be to investigate the manufacturing process for potential problems. Once the source of the variation is corrected, the process should return to being under control. For
a more detailed description of SPC charts, readers are directed to Johnson (1994).
SPCT Chart Modifications. The typical SPC chart is designed to monitor a stable manufacturing or service process,
where the measured parameter is expected to remain relatively constant. Conversely, the SPCT chart is designed to
monitor a constantly progressing project process. These differences require a number of modifications in the design
and use of the SPCT chart in comparison to a typical SPC
chart. These modifications involve the central line, the UCL
June 2001
Actual Normalized Values
+3S
+2S
A
B
+1S
1S
2S
3S
B
A
10
15
20
Time Periods
Figure 2. Conceptual SPCT Chart Components

and LCL lines, zone calculations, axes normalization, and
the pattern-analysis rules.
The first modification involves the use of historical sample
data to calculate the central line, the UCL and LCL lines, and
the zones. In a typical SPC chart, historical data might be
based on a set of sample measurements from a single production process. Each individual measurement in a sample
set is taken immediately after the other in order to capture the
process performance at a specific point in time. Different sets
of samples are taken repeatedly over at least 20 consecutive
production periods (Johnson, 1994). The historical data is
then utilized to calculate the chart components. With individual projects, the concept of a set of sample measurements
has no practical counterpart. The measurement of a given
project parameter, such as cost, at a specific point in time,
yields a single value shown as X in Figure 2. Yet, the observed project parameter must be compared to some other
values to determine its relative health. With SPCT charts, this
issue is solved by basing the historical parameter data on at
least 20 different similar projects over time. This approach is
related to the chart of individuals for manufacturing
processes, described by Montgomery and Runger (1999).
The second modification involves the project time
plotted on the x-axis. Most projects possess unique time
lengths. In order to rationally compare the progression of
the project parameter data, some conversion of the length
of the individual projects is necessary. This is accomplished
by normalizing the differing time lengths of each project
into a consistent number of time periods. For the purposes
of this paper, all of the projects were normalized into 20
time periods. This number of time periods was primarily selected in order to obtain a reasonable number of time periods to allow for pattern-analysis observation.
The third modification involves the parameter values
plotted on the y-axis. Traditional SPC charts plot actual mea-
June 2001
surement values. Each point on the chart is intended to reflect

the current state of the system. This approach is necessary to
instantaneously detect changes in the normally stable
process. Conversely, the period-to-period performance of a
project would normally be increasing. An example of this is
the percentage of project design complete. Accordingly, the
SPCT chart plots cumulative project parameter values. Thus,
the SPCT chart focuses on significant trend changes rather
than on minor periodic fluctuations in parameter performance. As a result, the central, UCL, LCL, and zone boundary
lines become nonstationary. The use of dynamic lines, limits,
and zones for expected process changes was addressed by
Grant (1952) for charting tool wear.
The resulting central line, UCL and LCL lines, and zones
are based on the mean and standard deviations of the cumulative individual project parameter values for at least 20
projects over 20 normalized time periods. The chart points
consist of individual cumulative project parameter values
for an individual project. Figure 2 conceptually illustrates
the chart components for a typical SPCT chart.
The fourth major modification to the traditional SPC
chart involves changes to the pattern-analysis rules. These
changes are required in order to account for the fundamental differences between dynamic project parameter performance and stable manufacturing process measurements.
SPC Rule 1 identifies one point beyond Zone A as being
out of control. However, it is not unusual for a large subcontract expenditure to occur at the very beginning of a major
construction project. An example of this would be up-front
architectural costs prior to the beginning of the project.
SPC Rule 2 is concerned with nine points in a row in
Zone C or beyond. This is intended to identify a small, but
permanent shift in the process. However, with a project
process, it is not necessarily damaging to be slightly below
cost, schedule, or technical performance early in the cycle.
39
Similarly, it is not necessarily harmful to be slightly above

technical performance late in the cycle.
SPC Rule 3 identifies six points in a row steadily increasing or decreasing representing an out-of-control situation. However, this is not necessarily a problem with a
project if the technical performance is constantly increasing
early in the life cycle, as more resources are initially assigned
to the project. Likewise, a slightly decreasing pattern in technical performance might be acceptable toward the end of a
project, as resources are reassigned. These situations would
represent a typical S-curve pattern. Rules 4, 5, and 6 remain the same. A final list of the modified SPCT patternanalysis rules is listed below:
SPCT Rule 1One point beyond Zone A, except when
early in the project life cycle
SPCT Rule 2Nine points in a row in Zone C or beyond,
except when below the CL early in the project life cycle for
cost, schedule, or technical performance; or slightly above
the CL for technical performance
SPCT Rule 3Six points in a row steadily increasing or
decreasing, except for steadily increasing technical performance early in the cycle or steadily decreasing technical performance late in the cycle
SPCT Rule 4Fourteen points in a row alternating up
and down
SPCT Rule 5Two out of three points in a row in Zone A
or beyond
SPCT Rule 6Four out of five points in a row in Zone B
or beyond.
SPCT Chart Development Process. The following section describes the chart input data, data transformation
process, chart component calculations, and a check for violation of assumptions.
Input Data. The input data for this paper was the same
data set utilized by Russell and Lawrence of the Construction Industry Institute (Lawrence, 1995; Russell, Jaselskis,
Lawrence, Tserng, & Prestine, 1996). Russell and Lawrence
collected the data from 54 construction-related projects. The
data consisted of project profile data and a total of 76 timedependent project parameter performance variables. This
database was particularly suitable for developing the SPCT
chart concepts, since it contained more than 20 different
similar projects with objective time-dependent data. Four
variables were originally selected for analysis. These were:
actual owner expenditure, actual percent design complete,
actual percent construction complete, and actual cost of
change orders. Actual owner expenditure represents cost.
Percent design complete and percent construction complete
represent schedule. Actual cost of change orders represents
product reliability, process performance, and whether initial
requirements are met. For the purposes of this paper, only
actual owner expenditure will be presented to demonstrate
the SPCT methodology.
Data Transformation Process. Prior to calculating the SPCT
chart components, the raw data must undergo a transformation process. These transformations are necessary to en-
40
sure that the project data is normalized with respect to one

another. By normalizing the data, the SPCT chart can determine if a given project is out of control in comparison with
other normalized projects. Two different types of normalization are required for developing and using SPCT charts.
The first type of normalization involves converting the raw
data into a cumulative format. The second type of normalization is with respect to time.
A cumulative normalization process was used to normalize the variable values. This ratio is determined by dividing the maximum total cumulative variable value by the
specific total cumulative variable value being adjusted.
Other methods analyzed to normalize the variable value
were moving average, exponential smoothing, percent cumulative, cumulative percent cumulative, and moving average of the cumulative percent cumulative. All of these
methods produced control charts that did not allow pattern
analysis. For example, the percent cumulative approach resulted in a banana effect on the end time points of 0 and
1 where there is no variability. The cumulative percent cumulative approach resulted in better data representation,
but the control limit lines were divergent relative to the
central line. The diverging lines are related to the technique
because the percent cumulative that increases with time is
being cumulated. Converging or diverging sigma lines relative to the central line cannot be used for control charts.
Therefore, they were discarded in favor of the simple ratio
method selected. The results validated the control charts.
The second data treatment involved normalization with respect to time. This enabled the charts to compare the project
performance at the same relative point in the project. All
project lengths were normalized into 20 equal time periods.
Normalizing the time compresses or expands the plot of the
variable value relative to the original project length. The normalization to 20 time periods usually requires interpolation
of the data between two actual reporting periods. For example,
suppose a project actually lasted 10 months, and reports were
only provided on a monthly basis. In this case, every other
time period value would be an interpolated value between the
actual monthly reported values. Conversely, if the project ran
for 40 months with monthly reports, only every other actual
reported value would appear in the SPCT chart. A simple
linear interpolation approach was utilized to normalize the
data with respect to time. If possible, the data set size should
be increased as an inverse function of the variation in duration of projects within the common data set.
Chart Component Calculations. The normalized historical
data from the 20 projects was utilized to calculate the central line, the UCL and LCL lines, and the zone boundaries.
The central line consists of the mean parameter value of
the 20 projects for each of the individual 20 time periods.
The mean parameter value of the 20 projects for each time
period is calculated by:
20
xij
x bar j = i =1
20
[1]
June 2001
Normalized Actual Owner Expenditure vs. Time Periods

Project 23-2S
Actual Owner Expenditure
120000
100000
80000
60000
40000
20000
0
20000
40000
60000
0
10
15
20
25
Time Periods
Figure 3. Actual SPCT Chart for Owner Expenditures

where i = projects 1, 2, 3 20 and j = time periods 1, 2, 3
20.
The sample standard deviation for each time period is
calculated by:
20
j =
( xi xbari )
i= 1
20 1
[2]
where i = projects 1, 2, 3 20 and j = time periods 1, 2, 3
20.
The UCL and LCL lines for the SPCT chart are computed
from the x-bar target values, by adding plus or minus 3
as follows:
UCLj = x barj + 3j
[3]
LCLj = x barj 3j
[4]
where j = time periods 1, 2, 3 20.

The outer boundaries of the A zones are formed by the
UCL and LCL lines. The outer boundaries of the C zones are
the central line plus or minus one standard deviation. Similarly, the outer boundaries of the B zones are formed by the
central line plus or minus two standard deviations. The following equations can be used for these calculations:
Upper C Zone Boundaryj = x barj + j
[5]
Lower C Zone Boundaryj = x barj j
[6]
Upper B Zone Boundaryj = x barj + 2j
[7]
Lower B Zone Boundaryj = x barj 2j
[8]
where j = time periods 1, 2, 3 20.

Figure 3 illustrates the chart components for an actual expenditure SPCT chart.
Check for Violation of Assumptions. A basic requirement for
the development of a SPC chart is normally distributed data.
If the data is not normally distributed, then the statistical
June 2001
basis for the pattern-analysis rules becomes suspect. In order

to ensure that assumption of normality was not violated, a
chi-square goodness of fit test was performed on the parameter data. Of the four variables, three consistently demonstrated normal distribution. The fourth variable involving
change orders exhibited some evidence of nonnormality.
Chart Validation. In order to determine if the SPCT
chart development methodology was an effective means of
monitoring projects, the concept underwent a validation
process. This process consisted of plotting a variety of ownerdefined successful and unsuccessful projects on one of the
SPCT charts developed from the CAPP database. First, the
SPCT charts had to demonstrate the ability to determine that
successful projects were continuously in control. Second, the
SPCT charts had to demonstrate the ability to detect at least
one out-of-control situation with the failed projects. The
SPCT charts were originally validated by plotting data from
three successful and three unsuccessful projects from the
CAPP database that were not utilized to calculate the original chart components. The project management individual
project-plotting data used for validation must be normalized
to plot on the control chart. For the purposes of this paper,
the validation process will be presented for one successful
and one unsuccessful project.
Figure 4 illustrates a validation plot of owner expenditures for a successful project. Notice that the real-time plot
of the successful project fluctuates around the central line,
but does not violate any of the pattern-analysis rules. This
chart indicates the ability of the SPCT chart methodology to
assess a successful project as being in control.
Figure 5 illustrates a validation plot of owner expenditures for an unsuccessful project. In this plot, the project is
originally under control. After the third time period, the
project expenditures begin to increase rapidly, going out of
control for several points with respect to SPCT Rule 1. The
project also goes out of control at the 14th time period.
41

Project 23-2S
120000
100000
80000
60000
40000
20000
0
20000
40000
60000
0
10
15
20
25
Time Periods
Figure 4. Successful Project Chart Validation

Project 76-4F
120000
100000
80000
60000
40000
20000
0
20000
40000
60000
0
10
15
20
25
Time Periods
Figure 5. Unsuccessful Project Chart Validation

Here, four out of five points are beyond the lower C Zone.
This violates SPCT Rule 6. This chart indicates the ability of
the SPCT chart methodology to detect out-of-control situations with failed projects. Under normal conditions, when
the unsuccessful project began demonstrating an out-ofcontrol pattern, the project manager would have immediately instituted corrective actions, as will be discussed in the
following section.
Monitoring Procedures and Decision-Making

A typical monitoring procedure would consist of the following steps. As the project proceeds from the project start at
time period 0, the project manager will begin plotting data
points on the SPCT chart. The project manager will monitor
the data-point plot for behavior identified in the six SPCT
42
pattern-analysis rules. The project manager has the choice of

either taking action when an actual pattern develops, or
taking action when a pattern appears to be developing, but is
not yet fully formed. In the case of SPCT Rule 1, with one
point outside of Zone A, the project manager has no choice
but to take action. However, with SPCT Rules 2 through 6,
the project manager may take a proactive position and begin
investigating for special causes of the variation prior to the
rule actually being violated. For example, with SPCT Rule 2,
the project manager may choose not to wait until a total of
nine points in a row have been observed in Zone C above
the central line at the beginning of the project in a cost parameter SPCT chart. By investigating this overbudget condition
before Rule 2 is actually violated, the project manager may
be able to bring the project back in control before it actually
goes out of control with respect to Rule 2.
June 2001
Discussion
The SPCT validation plots indicate that the methodology has
the capability to detect out-of-control situations that can lead
to project failure. These charts work on the principle that a
similar class of projects executed in similar environments
should exhibit about the same normalized variable and time
indicator values. However, since by definition all projects are
unique, it is difficult to find a completely common set of at
least 20 similar projects. A common data collection scheme
must also be used to ensure the same content in the data variables. The projects used as base data must be very similar in
terms of scope, duration, and environment. Some adjustments to the individual projects may be made, for size and
length, by normalizing processes. The SPCT is more applicable to projects with similar processes, such as information
systems that operate according to industrywide standards.
Control charts have three basic applications: to establish a
state of statistical control, to monitor a process and signal
when the process goes out of control, and to determine
process capability. Process capability is the capability of the
process to meet specifications. Specifications are equivalent
to the benchmark or central line for similar successful projects. A process is in statistical control if the variation in the
process is due to common causes alone. When special causes
are present, the process is deemed to be out of control. Process
improvement is based on reducing common cause variation;
process control is the approach for identifying and eliminating
special causes of variation.
Future Research
One potential area of future research is to attempt a
weighted combination of the time, cost, and technical performance parameters into a single overall project measure.
Research conducted by Might and Fischer (1985) indicates
the relative importance of each of these parameters to overall
project success. Perhaps their results could be a starting point
for developing an overall SPCT chart. A second area of possible future research involves the use of this methodology
outside of the construction industry. For example, these techniques could be applied to research and development projects, or even to the introduction of new projects in the
marketplace, where sufficient data is available to reduce the
variance. Applying the SPCT to the marketing process is also
viable, since this process tends to be common for similar
products. A final possible area involves an examination of
lower-level operational parameters within each project.
Lower-level control charts may more closely identify where
special causes of variation are occurring in the project.
Limitations
One significant limitation of this methodology involves the
historical data necessary to calculate the charts central line,
UCL and LCL lines, and zones. In order for a useable chart
to be developed, appropriate and consistent historical para-
June 2001
meter data must already be in existence. Otherwise, the

project manager must be willing to delay operational use of
the method until sufficient historical parameter data is collected. Since many projects may take years to complete, the
lack of sufficient historical parameter data may represent an
insurmountable problem.
A second potentially serious limitation to the SPCT
methodology may arise as a result of the actual definition of
a project. Cleland (1994) defines a project as an organizational effort to create something that did not previous exist
and that supports the organizations mission, objectives,
goals, and strategies. Thus, by definition, a sufficient number
of reasonably similar projects may not already be in existence
or likely to be undertaken in a reasonable amount of time.
While the normalization process does result in some level of
parameter consistency, it would be inappropriate to attempt
to normalize significantly dissimilar types of projects for use
in a single SPCT chart. Therefore, it is important to study the
project types to which the model may be applied.
Conclusions
This paper presents a new and powerful technique to assist
project managers in implementing successful projects. The
SPCT chart methodology has a major advantage over previous efforts as it is objectively based, provides real-time
monitoring, and is easily implemented if the project contract
requires consistent data collection according to industry standard. If historical project parameter data exists on similar
projects, then the project manager can develop a set of SPCT
charts by calculating the central line, UCL and LCL lines, and
zone boundaries. By plotting real-time project parameter
data, project managers can determine if a project is under statistical control. Out-of-control situations are determined according to a set of modified SPCT pattern-analysis rules. If the
project goes out of control, then the project manager may
have the opportunity to investigate causes of variation prior
to project failure. Chart validation indicates that the methodology has the ability to illustrate that successful projects remain in control and that unsuccessful projects demonstrate
out-of-control patterns. Therefore, the SPCT is proposed as a
dynamic quantifiable technique that the project manager can
use for decision-making during project accomplishment.
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Garland T. Bauch, Ph.D., is a technical manager at the

NASAJohnson Space Center, Houston, Texas. He
received his B.S. and M.S. degrees in mechanical
engineering from the University of TexasAustin, and his
Ph.D. in industrial engineering from the University of
Houston. During his 39-year aerospace career, he has worked as an
aerospace engineer in design, flight mechanics, cost, schedule
integration, flight manifest, mission integration, system effectiveness,
and configuration management.
Christopher A. Chung, Ph.D., is an assistant professor

at the University of Houston. He received his B.E.S. from
John Hopkins University, and his M.S.I.E. and Ph.D. from
the University of Pittsburgh, Pennsylvania. His research
focuses on management and operations training
simulators, air transportation operations, and project management. He
was also a U.S. Army bomb disposal officer and a manufacturing quality
engineer for Michelin Tire Corporation.
Developing a Risk Management

Matrix for Effective Project
PlanningAn Empirical Study
Sumit Datta, Management Training Institute, Steel Authority of India Limited, Doranda, Ranchi,
Bihar, 834002 India
S.K. Mukherjee, Birla Institute of Technology, Mesra, Ranchi, 835215 India
Abstract
This paper presents a risk management matrix for
effective planning of industrial projects. A
schematic view of the project environment has
been suggested to systematically identify the
effects of various project environments, and
thereby take a holistic view of risks arising out of
immediate and external environments. Various
subfactors within each risk element are presented.
A process to quantify the immediate and external
risks for industrial projects using a weighted
probability method is proposed. To derive a useful
interpretation, a risk management matrix is also
proposed. The results of empirical validation of the
model in two recently concluded large industrial
projects are also presented. The risk management
matrix model can be used to identify a number of
policy alternatives at the planning stage.
Keywords: risk management matrix; project

management planning
2001, Vol. 32, No. 2, 4557
June 2001
lanning in project management begins almost immediately after the need for
the project is felt. Planning starts with the selection of the project and spreads
throughout its duration. The managerial decisions while managing projects can be
viewed as having three distinct levels. At the first level, the major decision concerns
whether the project is in the best interest of the companys business, or in other
words, whether project objectives are compatible with the companys overall business objectives. The decision for project selection will have a profound bearing on
the projects future viability and will also determine its success to a large extent. The
next level concerns the strategic alternatives while planning the project. Although
the objectives would be to complete the project within time, cost, and desired performance within the acceptable organizational norms, there are many ways of
achieving them. At the third level, decisions are mostly concerned with meeting
milestones, activity schedules, resource allocation, defect liquidation, and so on. It is
extremely difficult to revisit the decisions taken in the first two levels when the
project is under implementation. Decisions at the early stage of the project are therefore of great significance, and should take into account most likely consequences.
Industrial projects by nature are exposed to various factors arising out of their
environment. Decisions and risk associated with them should therefore consider
the effect of these factors. A Guide to the Project Management Body of Knowledge
(PMBOK Guide) (1996) suggests that the project risk management system would
include risk identification, risk quantification, risk-response development, and
risk-response control. Although there are a number of tools and techniques available in each of these processes, there seems to be a requirement for a more
holistic view while considering project risks in light of the environment. Moreover, effective decisions at the early stages of the project demand that various risks
be viewed together rather than in isolation. The BS 6079:1996 (British Standard
Institute, 1996) suggests that by using a structured risk management process, the
project manager should ensure that as many risks as possible are identified. This
will enable action to be initiated with regard to categorization of risk, assessment
of the probability of the occurrence and potential impact, and application of suitable risk-response measures and subsequent actions. The absence of a comprehensive method for identifying the various risks and assessing them in a total
project perspective have largely limited the use of this technique.
45
particular project. In practice, therefore, project managers

need to focus mostly on those key aspects that are important to a particular investment. For example, a modernization project for enhancing production capacity and quality
customer products and a pollution control project for statutory requirement must be viewed differently from the significant factors point of view.
Figure 1 is not only meant to view the project in light of its
environment, but also, more importantly, can be a helpful
guide to project managers to structure their thinking, visualize the various sources of risk, and thereby arrive at a more
exhaustive list of relevant risks.
Project
Organization
Immediate Environment
External Project Risks
Significant Factors
External Environment
Figure 1. Sources of Risk vis--vis Levels of Environment

This paper proposes a methodology through which a
project manager can take a holistic view of risk at an early
stage, quantify such risks, and then interpret the result for
making a judicious decision. A two-dimensional risk management matrix is proposed based on which the decision
can be taken. This model of project risk management has
been tested in two recently concluded large industrial projects, the findings of which are also presented.
The Project Environment

An industrial project is influenced by an immediate and an
external environment. A schematic diagram presented in
Figure 1 makes this distinction explicit.
The project takes place inside the organizations boundary,
and is surrounded by the immediate environment. The immediate environment refers to the investors, customers, suppliers,
consultants, and contractors that constitute an organizations
immediate environment. This environment is more or less
specific to a project.
However, the difficult and most complex area affecting
an organization and its project is the general environment
or macro-environment. To make the project successful, the
organization must analyze the social, political, technological, legal, and economic environments and their implications on the project. Likely changes in these environments
during the life of the project are certainly going to influence
some of todays decisions. Detailed analysis of all such
sources of risk can be expensive and time consuming. Therefore, an optimal solution can be to consider a subset of risk
sources that are likely to have a significant effect on the
project. Thus, significant factors is defined as the boundaries
of the general environment that are most significant to a
46
Analysis of external project risks in the early stages of the

project is important because, in most cases, they cannot be
liquidated while the project is already on. An early identification of these risks and determining their probability of occurrence will help in quality decision-making, better
preparedness, and being ready with contingency plans.
While addressing external project risks, it is necessary to discuss them in the context of significant factors. Analysis of
these risks will lead to an understanding of both current
and potential changes taking place in the external environment. This should cover a time frame from short term to
long term, so that an organization can also prepare for actions that need to be taken during the life of the project. The
risks that are external to the project and are of great significance are discussed next.
Technological Risks. The technological risks to the
project manager can be interpreted as a technical goal not
achieved or a device, component, or system that has a chance
of not attaining the desired level. Steele (1989) proposed that
utilizing technology involves a spectrum of risk, as shown in
Figure 2. At one end is the application of the state of the art,
where the technological risk is quite low. At the other end,
new technology generates the greatest uncertainty.
The spectrum shown in Figure 2 represents the range of
options from which managers must choose the technology
for the project. As risk increases, the project manager, while
selecting the project, must ascertain where the chosen technology is placed in the spectrum, and the associated risk of
this technology vis--vis the projects requirement.
Political Risks. Moore (1983) suggested that for investments, political risks are associated with political stability
both at home and abroad. A large investment may require
looking ahead 15 years from the time the investment is
made. This may mean at least three full parliaments, during
which economic policy can change several times. Political
instability within the country, resulting in midterm change
in the government, can take things even further. Political
events abroad, such as disintegration of the erstwhile USSR
or the 1979 Iranian revolution, proved to be disastrous for
large projects. For example, the Blast Furnace project at Durgapur Steel Plant, India, where the main contractor was
June 2001
Application of
State of Art
Evolutionary
Improvement
External
Technology
New Technology
To Supplant Old
Low Risk
New Technology
For New Function
High Risk
From: Lowell W Steele. (1989). Managing Technology.
Figure 2. Spectrum of Technological Risk

from Russia and major equipment supplies were to come
from the former USSR, suffered massive project delays due
to the disintegration of the USSR. Similarly, the 1973 Iran
crisis certainly benefited some firms involved in North Sea
Oil; but firms that made capital investments in Iran were exposed to higher risks.
Other relevant risk factors are associated with any evidence of an arms race or incidence of conflict with neighboring countries. However, despite being alert, some
political developments are so spontaneous that they cannot
be predicted. Nevertheless, a substantial political risk
should not necessarily imply an insurmountable obstacle to
going ahead with the project. Although these risks can never
be eliminated in totality, their systematic assessment and
careful management can reduce their impact.
Risks Associated With Economic Climate. Shen, Li,
and Love (1998) mentioned that uncertain inflation rates,
changing currency rates, etc., will affect the implementation
of a construction project in terms of cash flow, costs of materials, costs of salaries, and so on. A forecast of the relative
valuations of currencies can be relevant for industries with
multinational competitors and project partners. Thus, an
analysis of balance of payments and other factors affecting
currency valuations might be needed. Investment in a capital-intensive industry might need to be timed to coincide
with a strong economy in order to avoid a possibly damaging period of losses. However, it is necessary to look beyond the general economy to the health of individual
industries. For example, an investment in the steel sector
has to consider the status of that particular industry also.
In addition, growth in infrastructure, changes in the government policies with regard to globalization, competition
from overseas manufacturers, historical rate of inflation, pattern of balance of payments deficits, external debt levels, etc.,
can influence the profitability of an investment. The risks associated with government intervention in the economy also
need to be assessed.
Risks Associated With Domestic Climate. The variables
that need to be considered here for risk assessment include
the levels of physical violence, the existence of extremist tendencies among political parties, the local governments; attitudes and policies toward trade and investment, and any
recurring governmental crises. The enforcement of new pollution-control measures may force the project managers to rethink the technology selection. Similarly, changes in local
June 2001
government policies regarding taxation and investment can

influence project planning much before the actual construction has been undertaken.
Social Risks. Analyses of the social environment need to
focus on the key aspects of the social environment that are
most relevant to the particular project. They consist of the
demographics, lifestyles, and social values of the population
at the setting of the project. Analysis of social values helps to
understand how local people feel about major social issues
like preservation of environment, etc. This will also reveal
the publics acceptance of a project. Instances abound of
major projects that had to be aborted after an investment
decision had been made due to resistance from the local
population. For example, there are instances when the local
community has not allowed overseas construction workers
(Shen, Li, & Love, 1998).
Immediate Project Risks

Successful project completionwithin budgeted time, budgeted cost, and perceived parametersdepends to a great
extent on the early identification of immediate risks. The
most common immediate project risks are associated with
the complexity of a project: conceptual difficulties, external
agencies as project managers, mode of contract, and contractor failures.
Large and Complex Project Risks. Large and complex
projects usually call for multiple contracts, contractors, suppliers, outside agencies, and complex coordination systems
and procedures. Complex coordination between the subprojects is itself a potential risk, as a delay in one area can
cause a ripple effect in other areas. Risks associated with
one-time massive investment must be weighed against benefits accrued through continuous but relatively smaller investments in technology up-gradation or modernization.
Kerzner (1987) mentioned that large and complex projects
may have a different set of rules and guidelines from those
of smaller and simpler projects. The difficulty in managing
large and complex projects may also stem from resource
constraints. As a result, the company immediately assigns its
best resources to the large project, thus creating severe risks
for relatively smaller and simpler projects. As the project
schedule slips, management employs additional resources
to support the project. By the time the project is finished,
the organization is overstaffed, and this creates a potential
47
problem for the organization. Availability of facilities, expertise, resources, and management know-how are a few
potential sources of risks associated with complex and large
projects.
Risks Associated With Conceptual Difficulty. Turner
(1993) stated that the project is defined at the strategic level
through the purpose: the problem to be solved, the opportunity to be exploited, or the benefit to be obtained. A project
may fail if the basic premise from which it was conceived
was faulty. For example, if an investment is planned to remove some of the operational or maintenance bottlenecks
ignoring market requirements, the risk of such a project not
yielding desired financial benefits is extremely high. A
survey conducted by Black (1996) showed that the main
reason for project failure was that projects were not adequately defined at the beginning. He recommended that
various stakeholders of the project be included in a very
thorough planning process, thereby maximizing the input
from the various vested interests and broadening the understanding of the project manager and team members.
Risks of Managing Projects by an External Agency.
Appointing an external agency as project manager without
creating a large project organization may not ensure the
kind of ownership required for successful implementation
or the liquidation of defects that the client can visualize
through an earlier experience of operating the facilities.
Moreover, the client may not become aware of the impact of
decisions taken by other external agencies like consultants
and plant and equipment suppliers. Thus, risks associated
with the appointment of an external agency as project manager must be considered before a decision is made. The earlier performance and experience of such agencies in similar
kinds of projects need to be ascertained before a decision is
arrived at.
Risks Associated With Mode of Contract. Choudhuri
(1994) argued that although a contract is considered to be an
instrument to transfer the risk from the owner to the contractor, the contractor risks only her fees, whereas the owner
runs the risks of not having the plant at all. Although the
principles of contract management have evolved over the
years and have been streamlined, there are problems in operating the contract management systems effectively. The management of the contract will depend largely upon its mode.
Although there are many modes availablelike multiplesplit contracting, turnkey, engineering-procurement-construction-commissioningnone of these come without risks.
Since it may not be possible to get a single contractor with a
wide range of expertise and experience to handle a massive
project, a consortium of contractors is another option that is
becoming increasingly popular. However, with a consortium,
the capabilities of all its members must be considered, as
others would have to cover for an individual contractors
failure. Delay in mobilization of resources by some of the
members can slow the execution process. Moreover, having
one experienced leader with some of the inexperienced members only enhances the risks. There are instances when the
48
consortium leader is made responsible, but without commensurate authority to reward or punish the other members.
Lack of intra-consortium coordination leading to disputes regarding scope of work and commercial matters also leads to
project delay. All these add to the risks and, therefore, must
be ascertained before a decision is made.
Risks of Failure by Contractors. Jannadi (1997) showed
various reasons why contractors experience business failure.
Major risk of contractor failure may originate from the lowestcost syndrome, lack of ownership, financial soundness, inadequate experience, etc. In the face of immense competition, the
contractor squeezes his profit margin to the maximum just to
stay in the business. Contractors sometimes siphon mobilization advance to other projects in which they have greater business interest. If a contractor has difficulty with cash flow, then
the project suffers.
The Risk Management Matrix

In order to have a holistic view of the project in the context
of various risks arising out of the environment, as presented
in Figure 1, a two-dimensional risk management matrix is
proposed. As presented in Figure 3, the weighted probability of immediate project risks and external project risks
form the two dimensions of the matrix. The external project
risk dimension is based on as many significant factors as is
appropriate in a given context. Five factors that could be
used are technological risks, political risks, risks associated
with economic climate, risks associated with domestic climate, and social risks arising out of the social factors where
the project is being undertaken. Immediate project risk dimension would be a combination of factors such as risks associated with large and complex projects, conceptual
difficulty, managing projects by an external agency, mode of
contract, and failure by contractors. However, these immediate and external risks are indicative and by no means exhaustive. Other risks, depending on the project, can be
added or deleted.
Each dimension is on a scale of 0 to 100. The total scale
of 100 is the weight assigned to the combined risk associated with that dimension, and is to be distributed among
the various appropriate risks identified for that dimension
on the basis of their relative importance to the project. The
figure of 100 is convenient both for the point of calculations
and also for distribution to a large number of risks. Each
risk also has a probability of occurrence. However, even if a
risk is not very important, its probability of occurring may
be high. An accurate picture of the risk can be obtained if
the weighted probability is considered. The combined risk
on a particular dimension is the sum of the weighted probability of each of the appropriate risks on that dimension.
Stated mathematically, the total risk on each dimension will
be:
Tx = Wn Pn
[1]
June 2001
High
Segment II
Segment III
Medium
Segment IV
Segment V
Segment VI
Low
External Project Risk (TER)
Segment I
Segment VII
Segment VIII
Segment IX
High
Medium
Low
Immediate Project Risk (TIR)
Figure 3. The Risk Management Matrix
where x = total external risk or total immediate risk, n varies

from 1 to the number of various risks on the particular dimension, W = weight assigned to each risk factor on a scale
from 0 to 100; sum of weights of all risks in the dimension
being 100, and P = probability of corresponding risk factor
occurring.
Next, since respondents biases may affect their responses, fuzziness in the obtained data can be introduced to
reduce the possibility of such influences. The transformation equations for this purpose are:
An = (Wn) + (Wn)*R
[2]
Bn = (Pn) + (Pn)*R
[3]
where n varies from 1 to the total number of appropriate

risks on the particular dimension, A = weight after introducing fuzziness, B = probability after introducing fuzziness, W = weight assigned to each risk factor by respondents
on a scale of 0 to 100; sum of weights of all risks in the dimension being 100, P = probability indicated by individual
respondents against a risk factor, and R = random number.
The total risk in each dimension after introducing fuzziness is calculated by using An and Bn in Equation 1, which
thus becomes:
Tx = An Bn
[4]
In order to interpret the value of total risk on each dimension as obtained from Equations 1 or 4, as the case may
be, each dimension of the matrix is divided into three parts:
June 2001
low, medium, and high. Thus, nine segments can be

formed, representing various combinations of both dimensions. Depending on a particular combination, the total risk
profile of the entire project can be interpreted.
Conceiving the risk management matrix in this form can
thus be a tool to consider all the appropriate risks together
in a holistic manner. It is a formal, structured way to establish the risks associated with a given project and its placement in the overall matrix will determine its attractiveness
vis--vis strategies to be adopted. Segments I, II, and IV can
be conceived as projects with risks higher than those in Segments VI, VIII, and IX.
Methodology
A case study method was used to test the risk management
matrix. Two recently concluded large industrial projects were
studied for this purpose (Datta, Sridhar, & Bhat, 1998; Datta
& Sridhar, 1999). Being very large in size, both projects presented complex interactions with their environments. An
extensive study of the various documents, such as board
notes, public investment board (PIB) Notes, progress reports,
detailed project reports (DPR), etc., were made to obtain secondary data.
Primary data was collected in two stages. In the first
stage, unstructured interviews were carried out with a
sample of the managers involved in the projects to ascertain
the risk factors in their respective immediate and external
environments. Next, a structured questionnaire, supported
49
External Risk Factors and

Relative Weights
Respondent
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
TE
PO
EC
20
10
10
40
50
15
30
10
15
20
25
20
15
20
10
10
40
50
70
70
12
5
20
15
10
10
20
50
40
30
20
10
15
30
40
20
40
10
5
5
34
40
30
25
20
35
30
25
25
10
40
50
25
30
20
35
10
20
10
10

Probability of Occurrence
Total
External
Risks
p(TR)
p(PR)
p(ER)
p(DR)
p(SR)
TER
30
0.1
4
5
40
0.05
20
0.2
20
5
15
0.2
10
0.9
10
5
35
0.1
5
15
0.6
5
10
0.1
10
10
0.2
10
0.25
30
5
0.9
10
10
0.2
10
5
0.3
40
10
0.3
10
0.25
10
20
15
0.1
20
5
5
0.5
0.5
10
10
5
0.6
10
5
0.5
10
Average Total External Risks
0.01
0.01
0.7
0.1
0.1
0.05
0.4
0.5
0.9
0.9
0.25
0.1
0.3
0.6
0.25
0.15
0.5
0.1
0.05
0.1
0.2
0.4
0.7
0.5
0.9
0.5
0.2
0.5
0.5
0.1
0.15
0.5
0.4
0.2
0.5
0.2
0.5
0.3
0.2
0.2
0.1
0.8
0.2
0.4
0.1
0.7
0.2
0.1
0.1
0.9
0.5
0.5
0.6
0.2
0.5
0.15
0.1
0.2
0.05
0.5
0.01
0.05
0.2
0.1
0.1
0.1
0.01
0.1
0.1
0.1
0.5
0.2
0.1
0.1
0.25
0.15
0.1
0.1
0.1
0.1
11.96
48.8
45
28.5
66
44.5
35.05
40
53.5
61
41
37
43.5
33
35
16.25
46
35
45.25
43
DC
SO
40.47
TE, PO, EC, DC, SO are the weights of technology, political, economic, domestic, and social factors, respectively; p(TR), p(PR), p(ER), p(DR), p(SR) are
the probabilities of technological, political, economic, domestic, and social risks occurring in the project, respectively.
Table 1. Summary of Project Risk Information on External Risk Factors (Case 1)

by a checklist (see Appendix), was prepared and tested on a
few potential respondents. It was then administered to the
same samples covered during the unstructured interviews to
ascertain the weights and probabilities of the risks, as perceived by each respondent. The responses were averaged to
calculate the weights and probabilities in each case. The
sample sizes were 20 and 13 for Case 1 and Case 2, respectively. A brief description of the two cases is presented next.
Case Study 1
Case 1 was a study of the modernization of an integrated
steel plant in India. The plant was established in 1959, with
an installed capacity of 1.0 million tons of liquid steel per
annum and was expanded to 1.6 million tons in the late
1960s. The plant could never achieve the enhanced rated capacity, and several studies by various consultants indicated
the necessity to invest in its modernization. After examining
several schemes, a decision was made on 20 February 1989
to invest Rs. 266.76 million, inclusive of a foreign exchange
component of Rs. 68.5 million, to modernize the existing
facilities and also enhance the rated capacity to 1.876 million
tons of liquid steel per annum. The major facilities included
a state-of-the-art raw-materialhandling complex, a sintering
plant, a blast furnace complex, a basic oxygen furnace com-
50
plex, continuous plant, and up-gradation of some of the existing facilities. The project was completed at a total cost of
Rs. 437.614 million by April 1997 against the completion
schedule of March 1993.
Case Study 2
This was a study of the modernization of an integrated steel
plant in India commissioned in 1978, with an installed capacity of 1.7 million tons of ingot steel per annum. The
plant was expanded in phases to 4.0 million tons of ingot
steel capacity by 1990.
This study was made on the modernization project to install a continuous casting facility, reconstruction of a steel
melting shop, up-gradation of the hot strip mill, and some
other allied facilities. These new facilities were expected to reduce production costs by increasing yield and lowering energy consumption, and also improve the quality of hot and
cold rolled products. The overall objective was to retain competitiveness in a fast-changing market. The entire project was
estimated to cost Rs. 164.948 million, inclusive of a foreign
exchange component of Rs. 27.995 million, with a commissioning schedule of 48 months from 24 July 1993. The
project would be completed by June 1999 at a total cost of
Rs. 220 million.
June 2001
Immediate Risk Factors and

Relative Weights
Respondent
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Total
Immediate
Risks
PL
PC
PM
TC
CF
p(SR)
p(CO)
p(MR)
p(CR)
p(FR)
TIR
12
10
10
30
10
15
30
10
20
30
20
10
25
20
10
30
15
50
20
10
25
15
30
20
40
10
20
5
15
10
30
30
15
15
20
20
10
10
10
20
25
55
15
25
30
50
10
50
40
20
10
10
25
25
20
15
15
10
10
10
13
15
20
10
15
15
10
25
10
10
10
10
15
20
10
20
30
20
20
20
25
5
25
15
5
10
30
10
15
30
30
40
20
20
40
15
30
10
40
40
0.1
0.05
0.5
0.2
0.1
0.1
0.4
0.3
0.4
0.9
0.5
0.1
0.2
0.8
0.5
0.25
0.5
0.5
0.2
0.1
0.1
0.05
0.8
0.2
0.9
0.1
0.3
0.2
0.3
0.2
0.8
0.4
0.2
0.5
0.25
0.2
0.3
0.1
0.05
0.2
0.1
0.5
0.5
0.3
0.5
0.5
0.3
0.8
0.8
0.9
0.1
0.2
0.6
0.6
0.25
0.1
0.1
0.1
0.05
0.1
0.1
0.2
0.7
0.15
0.8
0.2
0.3
0.5
0.2
0.2
0.3
0.2
0.5
0.7
0.25
0.2
0.4
0.2
0.1
0.2
0.4
0.1
0.8
0.15
0.2
0.3
0.8
0.2
0.2
0.9
0.9
0.5
0.7
0.4
0.5
0.1
0.6
0.2
0.6
0.4
17.5
32.25
70.5
21.25
65
31
48
58.5
49.5
76
68
35
44.5
60.5
37.5
18.5
42
33
31.5
26
Average Total Immediate Risks
43.3
PL, PC, PM, TC, CF are the weights of project size, concept, external project manager, contract mode, and contractor failure factors, respectively;
p(SR), p(CO), p(MR), p(CR), p(FR) are the probabilities of project size and complexity, concept, project manager, contract mode, and contractor failure
risks occurring in the project, respectively.
Table 2. Summary of Project Risk Information on Immediate Risk Factors (Case 1)

Data Analysis, Interpretations, and Implications
The total immediate risks and total external risks, as indicated by each individual respondent, was calculated using
Equation 1, and the average of all these scores in each dimension was calculated. Computer-generated random
numbers between () 1 and (+) 1 were used to introduce
fuzziness, using Equations 2 and 3.
The weighted probability estimates of immediate and external risks for Case 1 are presented in Tables 1 and 2, respectively. Tables 3 and 4, respectively, represent total external risk
and total internal risk after introducing fuzziness. Similar estimates in Case 2 are presented in Tables 5, 6, 7, and 8, respectively.
Plotting these immediate and external risk scores for Case
1 on the risk management matrix finds the project in Segment
V. This segment represents the risks at a medium level, and
shows that the project had built-in risks at the medium level
on both dimensions. This could explain the reasons for major
problems like lack of ownership on the part of the external
project manager, inordinate delay in the supply of plant and
equipment, contractor failures, and difficulties in operating
the contract while the project was under implementation. The
project also encountered many adversities resulting from new
technologies, political disturbances in the country of the main
plant and equipment supplier, resistance from local political
parties, etc. The inability on the part of decision-makers to
June 2001
correctly analyze these risks and take appropriate actions resulted in massive time and cost overrun, and also the problems the company is currently facing in marketing its
products. As a matter of fact, all the executives in the sample
felt that they could have averted many of the failures by rethinking some of their strategic decisions, had this model
been available to them at the project formulation stage.
For Case 2, the total external risks and total immediate
risks calculations put the project in Segment VIIIthe
segment that represents immediate project risk at medium
level and external project risk at low level. Even after bringing
in homogeneity in the data, the project stays in Segment VIII.
Unlike the earlier one, this project did not encounter many
problems in the technological, political, economic, domestic,
and social areas. Its problems came mostly from the immediate environment, such as contractors failures, delays in
payments by the owner due to poor money supply, frequent
stoppages of work by subcontractors, difficulty in operating
the contract for the best interest of the project, etc.
Medium-level risks thus give cautionary signals that
more analysis is required to understand the nature of the
risks and plan for alternatives. As it actually happened, the
project in Case 1 went through a number of decision blunders, and, ultimately, resulted in a massive time and cost
overrun. In Case 2, the total immediate risk dimension was
placed at the medium level. Also, in this case, the project
51
R. No
20
14
3
1
19
13
16
8
11
12
7
18
2
15
4
6
17
10
9
5
TE(f)
19.81
39.85
5.61
33.66
30.99
6.16
1.09
18.44
11.66
21.45
12.55
49.29
16.96
4.78
33.28
16.48
40.61
17.85
24.06
81.8
PO(f)
9.38
3.33
22.41
22.26
0.83
22.7
22.05
30.45
12.1
18.25
29.16
8.83
6.5
29.91
17.22
6.03
49.96
6.66
67.08
3.86
EC(f)
9.41
11.69
8.22
3.26
10.56
13.97
2.7
4.38
10.44
16.34
25.44
31.02
47.71
0.3
42.63
6.75
17.46
9.16
26.25
23.34
DC(f)
0.65
2.79
11.67
18.42
8.91
1.83
31.58
16.07
8.58
16.68
9.76
18.6
12.09
35.77
26.63
44.21
5.72
56.77
6.2
0.85
SO(f)
5.21
4.52
15.52
3.16
1.72
4.98
25.1
6.74
0.09
12.2
3.25
8.67
8.04
13.68
0.57
1.74
7.85
10.75
11.28
11.82
Average
pf(TR)
0.11
0.14
0.3
0.19
0.32
0.21
0.2
0.05
0.83
0.3
0.51
0.36
0.1
0.11
0.38
0.16
0.69
0.14
0.22
0.89
pf(PR)
0.05
0.3
0.01
0.01
0.07
0.06
0.1
0.29
0.29
0.09
0.37
0.11
0.01
0.31
0.15
0.04
0.55
0.74
0.94
0.09
pf(ER)
0.23
0.06
0.74
0.02
0.08
0.6
0.38
0.99
0.06
0.74
0.31
0.28
0.47
0.34
0.31
0.11
0.5
0.13
0.74
0.92
pf(DR)
0.53
0.12
0.07
0.18
0.08
0.11
0.12
0.01
0.1
0.04
0.29
0
0.95
0.67
0.41
0.95
0.03
1.27
0.01
0.16
pf(SR)
0.11
0.09
0.01
0.02
0.03
0.08
0.25
0.02
0.64
0.32
0.02
0.09
0.04
0.28
0.01
0.18
0.02
0.08
0.02
0.07
TER
5.84
7.76
8.93
9.85
11.48
11.66
13.63
14.55
14.79
24.63
27.91
28.59
36.14
37.6
39.23
45.97
64.66
81.58
88.13
95.43
33.42
TE(f), PO(f), EC(f), DC(f), SO(f) are the weights after bringing fuzziness in technology, political, economic, domestic, and social factors, respectively;
pf(TR), pf(PR), pf(ER), pf(DR), pf(SR) are the probabilities after bringing fuzziness in technological, political, economic, domestic, and social risks
occurring in the project, respectively.
Table 3. Total External Risks at a Glance With Fuzziness in Weights and Probabilities (Case 1)
R No.
20
6
2
16
19
12
4
18
1
15
7
8
17
14
11
5
13
3
10
9
PL(f)
3.58
16.76
8.16
37.96
24.92
3.57
51.89
35.25
10.4
4.28
11.82
9.75
18.7
26.54
35.13
15.25
32.23
16.38
59.34
28.16
PC(f)
6.01
13.14
12.79
11.39
4.93
44.59
5.62
0.25
2.03
31.7
33.43
2.34
3.87
10.05
39.92
38.99
12.47
53.62
5.14
19.24
PM(f)
5.04
20.74
28.51
7.51
14.54
7.61
49.61
2.55
39.82
3.42
7.23
38.72
3.77
40.15
11.9
26.15
40.53
13.65
5.37
76.34
TC(f)
13.37
14.96
23.71
30.88
1.26
4.73
5.81
2.4
25
4.24
16.46
9.9
56.76
18.35
14.22
14.58
27.27
7.26
16.96
8.06
CF(f)
8.28
8.65
6.48
7.62
16.3
22.3
15.38
0.48
43.42
46.53
20.98
2.01
15.22
29.64
54.42
3.59
23.98
36.39
21.43
5.7
Average
pf(SR)
0.1
0.08
0.05
0.19
0.25
0.12
0.06
0.66
0.03
0.22
0.39
0.31
0.74
0.29
0.74
0.12
0.12
0.41
0.96
0.38
pf(CO)
0.1
0.08
0.01
0.33
0.09
0.26
0.07
0.1
0.08
0.07
0.39
0.31
0.48
0.26
0.09
0.93
0.25
0.94
0.1
0.35
pf(MR)
0.09
0.08
0.26
0.09
0.07
0.22
0.35
0.12
0.03
0.1
0.3
0.93
0.15
0.51
0.02
0.55
0.9
0.73
0.38
0.98
pf(CR)
0.09
0.15
0.2
0.13
0.05
0.32
0.19
0.05
0.02
0.38
0.05
0.51
0.48
0.33
0.55
0.96
0.83
0.92
0.06
0.1
pf(FR)
0.41
0.32
0.01
0.18
0.82
0.29
0.09
0.2
0.62
0.55
0.61
0.06
0.45
0.53
0.38
0.19
0.45
0.11
0.94
0.15
TIR
5.92
9.11
12.79
17.25
21.34
21.62
23.4
23.68
29.1
30.72
33.19
45.09
50.25
52.89
58.09
67.21
76.97
77.81
81.06
93.46
41.55
PL(f), PC(f), PM(f), TC(f), CF(f) are the weights after bringing fuzziness in project size, concept, external project manager, contract mode, and contractor failure
factors, respectively; pf(SR), pf(CO), pf(MR), pf(CR), pf(FR) are the probabilities after bringing fuzziness in project size and complexity, concept, project manager,
contract mode, and contractor failure risks occurring in the project, respectively.
Table 4. Total Immediate Risks at a Glance With Fuzziness in Weights and Probabilities (Case 1)
52
June 2001

Relative Weights
Respondent
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
TE
PO
EC
15
10
30
10
5
30
25
25
25
40
5
40
40
25
15
20
40
10
15
15
15
20
10
20
10
10
35
40
25
30
25
30
35
35
30
30
10
30
10

Total
External
Risks
p(TR)
p(PR)
p(ER)
p(DR)
p(SR)
TER
15
10
0.1
5
30
0.1
15
10
0.2
10
10
0.1
50
10
0.01
15
10
0.4
15
10
0.2
15
10
0.2
5
20
0.2
10
10
0.4
55
10
0.01
10
10
0.4
30
10
0.3
Average Total External Risks
0.5
0.2
0.3
0.5
0.3
0.3
0.25
0.1
0.2
0.15
0.8
0.2
0.1
0.4
0.3
0.2
0.5
0.25
0.4
0.1
0.4
0.3
0.25
0.2
0.5
0.5
0.3
0.2
0.3
0.3
0.5
0.1
0.35
0.2
0.2
0.1
0.2
0.1
0.2
0.01
0.01
0.3
0.5
0.1
0.1
0.1
0.1
0.01
0.1
0.4
0.01
0.1
32.6
22.05
24.5
44
35.3
31
18.5
24.5
22.05
27
33.05
34.1
25
28.74
DC
SO
TE, PO, EC, DC, SO are the weights of technology, political, economic, domestic, and social factors, respectively; p(TR), p(PR), p(ER), p(DR), p(SR)
are the probabilities of technological, political, economic, domestic, and social risks occurring in the project, respectively.
Table 5. Summary of Project Risk Information on External Risk Factors (Case 2)

Relative Weights
Respondent
No.
1
2
3
4
5
6
7
8
9
10
11
12
13

PL
PC
PM
20
30
30
10
20
15
25
20
30
35
10
20
30
20
10
15
20
5
20
25
35
25
15
50
10
10
15
15
30
20
10
30
20
20
15
20
20
30
10
50
15
25
20
20
5
10
35
15
15
15
15
20
10
5
10
35
20
10
10
5
25
40
20
10
30
Average Total Immediate
TC
CF
Total
Immediate
Risks
p(SR)
p(CO)
p(MR)
p(CR)
p(FR)
TIR
0.9
0.2
0.6
0.1
0.2
0.5
0.25
0.25
0.3
0.35
0.9
0.4
0.3
Risks
0.5
0.1
0.25
0.2
0.05
0.5
0.25
0.3
0.2
0.15
0.5
0.1
0.1
0.9
0.3
0.1
0.4
0.15
0.3
0.35
0.1
0.15
0.25
0.4
0.2
0.1
0.1
0.1
0.3
0.3
0.1
0.4
0.05
0.2
0.1
0.1
0.2
0.5
0.2
0.5
0.2
0.5
0.2
0.5
0.4
0.1
0.15
0.3
0.15
0.5
0.5
0.2
64
20
44.25
27
32.5
46.5
25
22.25
23.25
25.25
50
42.5
21
34.12
PL, PC, PM, TC, CF are the weights of project size, concept, external project manager, contract mode, and contractor failure factors, respectively;
p(SR), p(CO), p(MR), p(CR), p(FR) are the probabilities of project size and complexity, concept, project manager, contract mode, and contractor failure risks
occurring in the project, respectively.
Table 6. Summary of Project Risk Information on Immediate Risk Factors (Case 2)

suffered mostly because of the risks arising out of this dimension. Therefore, the medium level of risk can be interpreted to mean that decision-makers must be cautious if
their project risks are placed at this level, reconsider the entire project, and develop alternative strategies.
However, a low level of risk may not be of much concern.
For example, in Case 2, the total external risk dimension
was placed at this level, and the project did not encounter
June 2001
many problems from these risks. However, contingency

planning should be done to face problems as they arise.
A high level of risk was not encountered in any of these
cases. But it is clear that if a project is judged to be high risk
on both dimensions, it may be better to abandon it altogether. On the other hand, a high-risk level on one dimension is also a cause for concern, and decision-makers have to
reconsider the project and/or develop alternative strategies.
53
R No.
TE(f)
PO(f)
EC(f)
DC(f)
SO(f)
pf (TR)
pf (PR)
pf (ER)
pf (DR)
pf (SR)
TER
7
8
2
9
5.45
18.33
3.82
33.37
3.1
1.48
0.34
38.39
17.42
11.42
16.63
33.8
17.24
13.84
19.02
6.94
12.68
9.67
9.04
7.23
0.34
0.27
0.16
0.02
0.46
0.19
0.32
0.18
0.06
0.16
0.34
0.11
0.2
0.08
0.23
0.07
0.08
0.15
0.02
0.01
8.74
9.66
10.8
12.16
11
10
13
1
2.05
2.58
71.57
15.94
11.81
0.37
2.62
6.27
9.52
30.83
13.8
29.95
24.65
2.97
45.77
4.52
1.89
17.38
19.1
18.83
0.01
0.44
0.08
0.06
0.06
0.11
0.18
0.82
0.36
0.38
0.35
0.68
0.36
0.15
0.14
0.51
0.04
0.16
0.15
0.01
13.24
16.17
20.16
28.9
5
6
4
12
3
0.34
43.97
9.52
30.21
48.37
17.89
10.58
79.55
7.61
38.06
33.14
13.27
8.1
58.39
35.57
40.96
28.54
9.4
13.62
14.37
5.68
7.64
5.57
3.14
19.52
0
0.67
0.12
0.79
0.37
0.47
0.34
0.51
0.02
0.3
0.2
0.68
0.53
0.49
0.39
0.41
0.17
0.32
0.1
0.59
0.02
0.01
0.16
0.01
0.3
32.11
46.91
49.98
54.13
57.38
27.72
Average
TE(f), PO(f), EC(f), DC(f), SO(f) are the weights after bringing fuzziness in technology, political, economic, domestic, and social factors, respectively;
pf(TR), pf(PR), pf(ER), pf(DR), pf(SR) are the probabilities after bringing fuzziness in technological, political, economic, domestic, and social risks occurring
in the project, respectively.
Table 7. Total External Risks at a Glance With Fuzziness in Weights and Probabilities (Case 2)
R. No.
PL(f)
PC(f)
PM(f)
TC(f)
CF(f)
pf (SR)
pf (CO)
pf (MR)
pf (CR)
pf (FR)
TIR
13
2
8
9
10
15.01
7.82
37.39
28.24
31.17
17.09
10.41
32.06
6.94
25.88
19.08
12.82
23.35
15.57
2.67
27.86
22.39
16.85
3.31
3.77
34.92
7.84
0.13
2.37
5.29
0.25
0.1
0.12
0.38
0.32
0.14
0.06
0.06
0.38
0.28
0.08
0.46
0.18
0.17
0.04
0.15
0.14
0.26
0.04
0.15
0.02
0.3
0.23
0.25
0.21
12.64
12.79
14.91
16.65
18.94
4
3
7
6
19.32
50.79
27.09
16.64
18.26
16.91
31.2
37.94
25.66
2.64
58.75
5.73
8.39
25.84
4.74
31.78
10.29
15.71
7.55
31.63
0.09
0.23
0.42
0.41
0.02
0.31
0.19
0.22
0.44
0.08
0.3
0.36
0.52
0.07
0.04
0.68
0.34
0.82
0.11
0.26
21.23
32.09
35.68
47.15
1
5
11
12
6
13.35
1.6
5.16
26.54
7.21
44.02
7.46
45.87
22.13
18.82
4.8
18.65
19.19
12.47
59.41
25.67
68.94
39.55
34.67
0.06
0.14
0.69
0.79
0.27
0.07
0.86
0.13
0.4
0.13
0.27
0.27
0.17
0.06
0.14
0.88
0.84
0.66
0.56
0.36
50.54
52.26
67.96
70.84
Average
34.9
PL(f), PC(f), PM(f), TC(f), CF(f) are the weights after bringing fuzziness in project size, concept, external project manager, contract mode, and contractor
failure factors, respectively; pf(SR), pf(CO), pf(MR), pf(CR), pf(FR) are the probabilities after bringing fuzziness in project size and complexity, concept,
project manager, contract mode, and contractor failure risks occurring in the project, respectively.
Table 8. Total Immediate Risks at a Glance With Fuzziness in Weights and Probabilities (Case 2)
Based on this interpretation of the risk management matrix, a summary of possible actions for different combinations of the two risk dimensions is presented in Figure 4.
Conclusion
The primary concern for managing risks in projects is to
think through the project before it starts. However, project
managers often act minute by minute in a project environmentactivity schedule, resource allocation, defects liquidation, etc. It is not surprising that project managers give
54
their project most of their attention, but it is alarming that

they pay so little heed to their environmentsimmediate
and external. There is ample evidence that this inattention
can be risky.
Viewing project risks in light of immediate and external
environments, as has been done here, can provide a more
structured way to identify the appropriate risks and bring
fresh viewpoints to the project. Such an analysis can provide
an understanding of both current and potential changes. The
model presented in Figure 1 can be a further guide to this
structured-thinking process.
June 2001
High
Segment I
Abandon the Project

at This Stage
Segment II
Abandon the Project at

This Stage
Reconsider the Project
Proposal
Low

Proposal
Develop Alternatives
Transfer the Risks
Reconsider the Whole

Project Proposal
Transfer the Risks
Transfer the Risks

Defer the Risks
Reduce the Risks
Assign Contingencies and
Go for the Project
High
Medium

Proposal
Transfer the Risks
Segment VI
Segment VIII
Segment VII
Segment V
Segment IV
Medium
External Project Risk
Abandon the Project at

This Stage
Proposal
Segment III
Transfer the Risks

Defer the Risks
Reduce the Risks
Assign Contingencies and
Go for the Project
Segment IX
Plan for Contingencies

and Go for the Project
Low
Immediate Project Risk
Figure 4. Interpretation of the Risk Management Matrix Nine Possible Scenarios

The success of the project completion within budgeted
time, cost, and perceived parameters depends to a great extent
on the early identification of the risks that are immediate to the
project. This can help project managers make better decisions
in the areas of project selection, mode of implementation, contractor selection, and deciding the project organization, etc.
Project managers need to focus on those key aspects that
are important to a particular project. The significant factors,
as defined in this paper, outline the boundary and determine
the extent of analysis of the external environment. These factors must be identified before undertaking further analysis.
The list presented in the Appendix can be used for risk identification and subsequent assessment. However, further development of this list beyond the 10 factors used is possible. The
methodology of risk quantificationconsisting of deciding
relative weights against each factor, assigning their respective
probabilities of occurrence, and finally using the equation presentedwas found to be effective. The interpretation of the
risk scores on the two dimensions of the risk management matrix is indicative of the proper strategies and decisions that the
project managers in the two cases would have taken had the
methodology been applied at the projects inception.
The methodology presented here for ascertaining project
risk presents an opportunity to take a holistic view of all
risks and arrive at a useful interpretation as to strategies that
have to be adopted. The matrix can also be used for immediate classification of projects in terms of their inherent risks.
However, there is scope to test the risk management matrix on future projects to further validate it. There is also
June 2001
scope to apply more rigorous mathematical treatments to

the data collected. Projects of differing sizes and complexities can be analyzed to examine the applicability of the proposed matrix in general.
References
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91). New York: John Wiley and Sons.
Black, Ken. (1996, Nov.). Causes of project failure: A survey of
professional engineers. PM Network, 10 (11), 2124.
British Standard Institute. (1996). BS 6079: 1996 guide to project
management (pp. 2829). London: British Standard Institute.
Bureau of Indian Standard. (1994). IS 13999:1994, ISO
8402:1994. Indian standard quality management and quality assuranceVocabulary (first revision). New Delhi: Bureau of Indian
Standard.
Choudhuri, S. (1994). Project management (pp. 3, 510, 1519).
New Delhi, Tata: McGraw Hill Publishing Co. Ltd.
Cleland, D.I., & King, W.R. (1983). System analysis and project
management (pp. 70, 240245). New York: McGraw Hill Book
Company.
Datta, Sumit, & Sridhar, A.V. (1999). A case study on BSL modernization, A book of selected cases, Volume V. Ranchi, India: Management Training Institute, Steel Authority of India, Ltd.
Datta, Sumit, Sridhar, A.V., & Bhat, K.S. (1998). A case study on
DSP modernization, A book of selected cases, Volume IV. Ranchi, India:
Management Training Institute, Steel Authority of India, Ltd.
Jannadi, M. Osama. (1997, June). Reasons for construction business
failures in Saudi Arabia. Project Management Journal, 28 (2), 3236.
Kerzner, Harold. (1987). Project managementA systems approach
to planning, scheduling, and controlling (pp. 2, 7180, 406407).
New Delhi: CBS Publishers & Distributors.
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Lockyer, K., & Gordon, J. (1996). Project management and network

techniques, sixth edition (pp. 4854). London: Pitman Publishing.
Mallak, L.A., Kurstedt, H.A. Jr., & Parzak, G.A. (1997, June).
Planning for crises in project management. Project Management
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Moore, P.G. (1983). Project investment riskThe business of risk,
first edition. Cambridge University Press.
Project Management Institute. (1996). A guide to the project management body of knowledge (PMBOK guide) (pp. 23, 38, 6064,
111122). Upper Darby, PA: Project Management Institute.
Shen, Li Yen, Li, Heng, & Love, P.E.D. (1998). Dynamic approach to construction project management. Proceedings of International Conference on Systems and Dynamics. IIT Khragpur, India.
Steele, Lowell W. (1989). Managing technology. The strategic view
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Company.
Sumit Datta is a senior faculty member in project

management and quality systems with the Management
Training Institute, Steel Authority of India Ltd., Ranchi,
India. He has a B.E. in metallurgical engineering from
Jadavpur University, Calcutta, and has worked as a
project manager for Indian Iron and Steel Company, India. He is
currently completing his Ph.D. in project management from Birla
Institute of Technology, Ranchi.
S.K. Mukherjee is the vice chancellor of Birla Institute

of Technology, Ranchi. He received his B.E. and M.E. in
mechanical engineering from Jadavpur University. His
areas of research include management of systems,
automation and robotics, manufacturing technology, and
ergonomics. He is a Fellow (Ph.D.) of the Indian Institute of
Management, Calcutta, the Institution of Engineers (India), and of the
Indian Institution of Production Engineers.
Appendix
Subfactors to be considered for ascertaining weights and
probabilities in various risk factors.
External Project Risks
1. Technological Risks
What are the uncertainties associated with the technology selected for the project?
Can this technology be absorbed with current level of expertise available in the organization?
What should be the level of difficulty in handling this
technology?
How are the local factors going to affect the absorption?
What kind of preparation would be required to do this?
What should be the gestation period for the project with
this technology?
To what extent is the chosen technology maturing?
56
What new technologies are being explored in the same area?

What are the levels of understanding of the future users
of this technology?
What are the probabilities of chosen technologies being
suitable for local conditions?
What is the likelihood of a breakthrough?
How rapidly will the breakthroughs impact be felt?
When and how will the recent breakthroughs in basic research lead to commercial products?
What might some new applications of currently available
technologies be developed?
Have we ascribed a level of confidence to every critical
technical objective?
Have decisions that should be left open because of inadequate information on technology been identified and responsibility assigned for reducing the uncertainty?
2. Political Risks
Who are the international/overseas project partners
(equipment supplier/supplier/consultant/contractor) for
this project?
Which countries are involved?
What is the political situation at present in those countries?
What will be the likely political situation during the life
of the project?
What is the level of political stability within the country?
Which political parties will gain/lose strength in the next
two or three elections?
What significant shift will occur in governmental policies, laws, and regulations pertaining to specific industries?
What will be the likely political environment during the
life of the project?
What will be the political environments impact on the
project?
What will be the likely incidence of conflict with neighboring countries?
3. Risks Associated With Economic Climate
What are the prospects of the economic health of the
country?
What will be the level of inflation over the next five years?
Will GNP increase or decrease over the next five years?
Which industries will grow or decline in the next decade?
What about the economic health of the submarkets?
How will economic events and trends likely affect the
project?
What will be the likelihood of government intervention
in the economy?
What are the present and past rates of inflation?
What is the balance of payment deficit?
What are the major government policieslong term and
short termregarding the industry?
What are the government policies on taxes and duties?
What are the government policies on other incentives?
4. Risks Associated With Domestic Climate
What is the level of physical violence near the project site?
What is the level of extremist tendencies among the local
political parties?
June 2001
What are the local governments attitudes toward trade

and investment?
What changes in the regulation are forthcoming?
5. Social Risks
What will be impact of the project in the society (employment/rehabilitation)?
Who is going to be affected?
What will be the environmental impact of the project?
What are the current or emerging trends of culture?
Will there be an increase in the political conservatism?
What lifestyle shifts might occur in society?
How will the consumption pattern change?
Immediate Project Risks

1. Large and Complex Project Risks
What is the size of the project?
Is the project cutting across the entire organization?
Which functions, departments, and activities of the organization are going to be affected?
What should be the level of coordination?
Is the delay in one subproject going to affect another?
What should be the requirement of personnel, especially
during the construction phase?
What should be the requirement of organizational restructuring as each subproject goes through a different lifecycle phase?
Are trained personnel, including supervisors and project
managers, available to handle such a large project?
Are the facilities, expertise, resources, and management
know-how available to handle the situation?
What will be the number of excess personnel after the
project is over? What will be cost of redeployment of the
personnel?
2. Risks Associated With Conceptual Difficulty
Supplydemand projections and trendwhat are their
levels of accuracy?
How solid are the price-volume projections?
How completely has the customer been identified?
How well are his or her needs and preferences understood?
Has the need for the project been properly established?
What are the current requirements of the customer?
What are the likely future requirements?
What are the current demands of the customer?
What is the likely future demand of the customer?
What facilities are required to make these products or
services?
What facilities need to be created to make these happen?
What inputs are required to make these happen?
What are the channels available for distribution to the
customer?
How well is the application known?
How do the products attain the specifications?
How realistic is the timing of introduction?
What would be the effect of slippage?
How solid is the projection of competitive reaction?
How carefully have the potential competitors been identified?

3. Risks of Managing Projects by an External Agency
How is the project going to be managed?
Is the present organizational structure for handling the
project sufficient? Can it be enlarged by drawing people
from other areas of the organization?
What are the risks involved in appointing external agencies to manage the project?
What are the probable external agencies to act as project
manager?
What is the past performance of the external agency as
project manager?
What are its business ethics? Do they match with the
clients requirement?
What should be the external agencys responsibility vis-vis total stake in the project?
What is its level of commitment and professionalism?
4. Risks Associated With Mode of Contract
Why has this particular mode of contracting been chosen?
What are the probable difficulties that are bound to
come with the chosen mode?
What are the preparations required for facing those difficulties?
What is the past experience with this particular mode?
Is the consortium approach going to be there in the project?
Who is going to be the consortium leader?
What will be his or her relationship (authority vis--vis
responsibility) with other members?
Who will be in command to monitor and control the
performance of the consortium members (consortium
leader/client)?
What risks does the consortium leader have if the projects fail to meet deadline?
Who will be responsible for a slippagethe consortium
leader or the member?
5. Risks of Failure by Contractors
What is the experience (performance, attitude, business
ethics, etc.) in the past with the contractor?
What is the level of experience available with the organization?
What is his or her current level of engagement?
What is the financial status of the contractor?
What is the industrial relations prevailing in this organization?
Who are the owners?
What kind of systems and procedures (ISO: 9000/ BS:
5750/ EN: 29000, etc.) are followed?
Cover to Cover
Book Review Editor, Kenneth H. Rose
The Project Managers Desk Reference

by James P. Lewis
any project managers have

faced the dilemma of selecting
one reference book to keep close at
hand from among competing handbooks and so-called bibles. The
Project Managers Desk Reference, 2nd
Edition, by James P. Lewis is a good
choice for early consideration.
Lewiss book is designed for practitioners. It is not a textbook for academic study, but rather a hands-on resource that offers
practical advice for day-to-day use. He has updated the 2nd
Edition with current information and revised the format,
based on reader feedback, to improve its direct application
to project management work.
The books 30 chapters present bite-sized, concise
morsels that address principal elements of project management. Lewis organizes them into five sections for continuity
and easy indexing. He covers the basics of planning, scheduling, controlling, and evaluating, and then advances to
other issues that affect or often determine project success.
The opening section is brief and to the point, introducing
two unique aspects of this book: a view of a seven-part project
management system that defines essential components; and a
proprietary 16-step project management model that provides
a road mapa process for managing projects of any size in
any domain. Following chapters add detail to the framework.
Lewis explains that project planning begins with the understanding of what customers really want as the foundation for
defining a project. This leads to establishing mission, vision,
goals, and objectives for the project. In discussing project
strategy, Lewis opens the door to social aspects of project management, which receives additional attention later in the book.
He also introduces SWOT (strengths, weaknesses, opportunities, threats) analysis, which recurs throughout the text.
The planning section ends with the work breakdown
structure (WBS). Lewis reminds readers that the WBS does
not show sequence of activities, and advises readers not to
include more detail in a WBS than they can manage. He also
introduces consensual estimating, in which several people
collaborate to develop an estimate through interactive discussion rather than mathematical models or majority votes.
58
Scheduling is both art and science. The science part is

pretty well understood with all the tools available. According to Lewis, its the art thats a real struggle. In spite of
the many network and simulation tools, there is usually no
one best way. The key often lies in a combination of wise
choices. Lewis offers suggestions for applying art and science, and includes a walkthrough of a sample schedule for a
common eventa dinner partyfor illustration.
Project controls are essential in getting to where you want
to go. Lewis briefly discusses three types of project reviews:
design, status, and process. He offers tips for conducting reviews that will produce meaningful results. He also addresses the important issue of canceling projects, a traumatic
but often necessary action. The overview of project control
closes with a summary of a project control system that emphasizes dividing work into chunks that may be monitored and using tangible deliverables as progress indicators.
Lewis gives considerable attention to earned value
analysis as a control mechanism. His explanation is clear
and concise, even with the many acronyms associated with
this topic. His frank discussion of cross-charging is a welcome bit of illumination on a shadowy subject that is usually neither recognized nor addressed. Lewis extends the text
to cover progress payments and general budgeting topics
that will be informative to readers whose careers have been
focused on product development and delivery.
Lewis concludes the traditional handbook material with
causes of project success and failure. He presents 13 potential causes for failure that serve well as warning signs, or
things to consider during project planning. He links in risk
management as the means for preventing trouble by
avoiding, mitigating, or transferring project risk.
What makes this book different is the section on other issuesthings that go beyond the typical contents of project
management handbooks. Lewiss chapter on sociotechnical
systems is an eye-opener for those who may view people as
just another resource to be assigned. His analysis of the social-technical interaction in project organization is augmented by a chapter contributed by Robert K. Wysocki,
which profiles world-class project management organizations. The chapter includes a quick diagnostic survey instrument for project organizations, a discussion of project
management competencies, and a series of evaluation tools
with guidance on interpreting results.
Projects are completed by people, and communication is
the medium that holds people togetheror apart. Lewis
June 2001
discusses five factors for good communication and defines

conditions required for effective communication.
Julian Stubbs, another contributor, addresses business-tobusiness marketing with a structured approach that brings discipline to a highly creative domain. While the approach is
valuable in its own right, the concepts may also be useful to
project managers for communication within their organization.
The book closes with several chapters on systems
thinking, problem solving, and decision-making. All are important in contemporary project management where
schedule is not the primary or even single focus. Todays
world is a system world, and project managers must be virtuosos on the tools and techniques necessary for success.
Many handbooks compete for the project managers attention. Most claim to be the best. Such a designation is
difficult to confer. James P. Lewiss The Project Managers Desk
Reference is a book that will not let you down. It provides an
extensive repertoire from which a busy project manager may
extract practical information for immediate use.
McGraw-Hill Professional Book Group, 2000, ISBN: 0-07-134750-X,
hardcover, 512 pp., $70.00.
Available online at www.pmibookstore.org
Reviewed by Ken Rose, a Management Consultant in

Hampton, VA, and a PMI member.
Project Management
Edited by Paul C. Tinnirello
roject Management is a collection of
articles describing various techniques and methodologies that are
used within the information technology (IT) arena. The examples cover
the waterfront concerning IT project
management; an area in which too
many project managers flounder due
to special requirements and situations. Over 75% of IT projects are
completed over budget and late. In fact, most IT projects end
up being canceled or restarted.
The diverse selection of processes selected by the editor
indicate the plethora of possible practices that could be used
by the project manager; however, these are only recommendations and do not guarantee success. The successful IT
project manager, whether a project manager with some or no
IT experience or an information technologist with some or
no project management experience, should analyze the collection and then make individual decisions concerning the
processes to use in his or her own IT project environment. In
the IT project management world, project managers need a
text like this to provide a guide to a successful project: on
time, on budget, and per specifications.
June 2001
After a general overview of project management practices, the editor leaps directly into the IT arena. It is interesting that Tinnirello includes sections on managing
business relations and managing outsourced projects. These
two sections are the true meat of the book and should be
referenced continually by the project manager.
The first section deals with an area in which many of the
projects in todays IT world seem to fail; that is, with understanding and controlling the requirements as presented by
the customer. Too many times, the customers have not provided the project manager with the information required to
obtain successful completion of a project. These 10 articles
should be mandatory reading for every IT project manager.
The section on managing outsourced IT projects is paramount in this age of restructuring and elimination of internal IT resources. The company project manager will need
to understand how to best handle the different types of outsourcing available. These articles should be read selectively
depending on the type of project being outsourced. One
area within this section that deserves special attention is the
idea of certification of the outsourced software, especially as
organizations turn more and more toward commercial offthe-shelf (COTS) applications, such as Enterprise Resource
Planning (ERP) applications. This article provides the IT
project manager with a summary of tasks that should be followed in order to ensure that outsourced or COTS applications meet needed certification requirements. The included
specific list is perhaps the most important item in the book,
and one that project managers can apply to any IT project.
Overall, the selections gathered by Tinnirello are exceptional and, as stated earlier, provide the reader with many
options to follow depending upon the specific project at
hand. If there is any fault with the book it is with the title.
The casual browser in a bookstore would have to know upfront that this book deals primarily with projects in the IT
arena. While it is true that many other project managers
would also profit from reading this book, the true winners
are the IT project managers, but only if they are aware of the
resource.
Project managers who have access to Project Management
should see an improvement in the dismal success rate of IT
projects, causing other project managers to seek the reasons
for success and perhaps also benefit in turn. They probably
will find themselves reaching for this book many times as
they encounter new and unusual IT projects. All information technology project managers should obtain this exceptional collection of IT project management solutions and
become intimately familiar with its valuable contents.
CRC Press, 2000, ISBN: 0-8493-9998-X, hardcover, 512 pp., $79.95.
Reviewed by Donald C. McNeeley, a Project Manager with

MANTECH in Chesapeake, VA, overseeing the implementation of a DoD-wide Sybase-oriented application within
the U.S. Navy, and a PMI member.
59
Project Management for the Technical

Professional
by Michael Singer Dobson
ost technical professionals have

faced the prospect of moving
from a staff to a management position. To some, it was a welcome challenge; to others, a never-ending
nightmare. Michael Singer Dobson
addresses this situation in his book,
Project Management for the Technical
Professional, that provides practical advice for a successful transition.
The book is divided into four sections. The first focuses on
individual leadership. Dobson starts strong on Page 1 with a
clear graphic that shows leadership as something that originates from within and looks outward. Readers would do well
to prepare a contrasting image: write the word me on a piece
of paper and surround it with a circle of inward-pointing arrows. If this image depicts your view of leadership, what follows will do you a world of good.
Readers should keep their pencils close at hand, for Dobson
intends his book to be an interactive journey. Frequent exercises require readers to get involved by doing things, not just
reading about them. Section 1 includes a survey aimed at
know thyself, as well as exercises that require readers to think
about what weve read and how it applies to us.
Dobsons final point in Section 1 is that moving into
management is nothing less than a career change that demands different goals, skills, and methods. It requires a
broader view and an ability to recognize and deal with
problems that may be very fuzzy, complex, and new.
Section 2 presents some tools for the new manager.
People skills are paramount. Dobson reviews the classic
styles of management and reminds readers that a combination of styles tailored to the situation is usually most effective. He reviews the criticality of communication and
provides guidance on giving feedback to others, emphasizing the importance of listening.
Delegation is an essential task for new managers. Dobson
offers a diagnostic exercise and clear advice on what to delegate and how to do so.
Recruiting, hiring, training, and the always-thorny issue
of performance appraisal get down-to-earth treatment.
Dobsons summary of motivation theory is clear and concise.
His discussion of conflict management is complete, including
various foundations of conflict and how to address them.
Section 2 closes with an overview of the many alphabet
soup management initiatives that new managers may encounter: TQM, MBO, ZBB, and so on. The discussion will
not make experts of readers, but will provide a level of functional literacy necessary for basic understanding.
Section 3 homes in on managing technical professionals.
Dobson discusses technical culture and provides an
60
amusing list of techno-terms. For example, encrypted English means that the writer has poor writing skills. But more
important, Dobson offers useful suggestions for changing
culture in a technical environment.
Technical projects are often completed by teams. Dobsons
extensive treatment of this issue is one of the books great
strengths. Good teams dont just happen. New managers
must know both techniques and traps if they are to get this
right. A sound discussion of power and informal organizations in following chapters combines to make Section 3 the
real powerhouse of this fine book.
Section 4 is the books only shortcoming. At 14 pages,
this section on managing technical projects hardly fulfills
the promise of the books title. But this is not a fatal flaw.
Dobsons brief introduction to project management is probably best fleshed out by perusal of the PMBOK Guide. So
much of value precedes this section that duplication of detail is both unnecessary and unwise.
Project Management for the Technical Professional is a
unique and valuable addition to project management literature. Throughout, author Dobson illustrates theory with a
series of case studiesbrief stories that clarify content by
way of real-world examples. He uses references from popular films and cartoons to illuminate points in an engaging
and memorable way. In so doing, Dobson has produced a
text that speaks to todays professionals in todays language,
communicating information and knowledge that will aid
the leap from technical worker to technical leader.
Project Management Institute, 2001, ISBN: 1-880410-76-1,
paperback, 178 pp., $34.94.
Available online at www.pmibookstore.org
Reviewed by Ken Rose, a Management Consultant in

Hampton, VA, and a PMI member.
Computer-Aided Project Management

by George Suhanic
hen a major project turns into a horror story, usually

no one party is to blame. The English tunnel between
England and France was approved at about $9 billion in
1986. Ten years later the projects cost had escalated to more
than $18 billion, and the project faced the possibility of
bankruptcy. The Toronto Skydome stadium project was completed with a 400% cost overrun. The Denver International
Airport opened in 1995 at a final cost of $3 billion over the
original budget of $1.7 billion. The author cites these projects
as examples of the traditional owner/consultant/contractor
arrangement in which the project environment is highly decentralized. Dealing with the many hazards of large, complex
projects is difficult in the best of times. The wrong or incompatible computer tools can render the task virtually hopeless.
Todays project manager can choose from a great many
computer tools. Computer-Aided Project Management by
June 2001
George Suhanic is a resource to help identify the specific job

of various computer software, and most importantly, to help
integrate computer tools in support of all the systems of
project management. It is structured as a textbook that provides students and less-experienced readers a deeper understanding of project management from a systems perspective.
For readers experienced in project management, the book offers insights for improving computer-aided applications
from case studies, problems, and exercises. Almost half of its
472 pages are devoted to case studies covering complex projects including development of an online multiple-project
control system for a corporate engineering department, expansion of the Ontario/Quebec High Speed Rail, development of a new international airport (based on the Montreal
and Toronto airports), and design of a new health research
center. The case studies are based on the actual project consulting work of the author and his associates.
Following the introductory chapter, the books next five
chapters aim to integrate project information into a common
database to facilitate five systems of project management: (1)
project definition structure, (2) project work breakdown structure, (3) organizational structure, (4) project budget and cost
control, and (5) project schedule and progress control. A
strength of this book is that each chapter incorporates material
from the case studies to provide examples from actual projects.
The seven case histories in Part 3 distinguish this book by
providing applications of methodology that reflect the complexity of modern projects. The cases cover a range of projects and are interesting and well written. A disappointment
is that the cases fail to include a lessons learned perspective. The difficulty and hard work in relating individual
projects and organizations to modern software projects is
too often in the background.
An intriguing issue woven into this book is whether we
are entering a new era in computer-aided project management. Computerization is carrying out more of the roles of
project management. However, it may be just as easy to
make a bad schedule, cost estimate, or critical path with a
software package as manually. A bridge has to be built,
Suhanic argues, between the New Age computer tools and
the age-old difficulties and attitudes that bedevil projects.
The main themes of the book are a solid understanding of
the systems of project management, CPM/PERT logic networks, accurate project cost and schedule information, and
utilizing the computer as a tool that project people use to
create, manage, control, and deliver the project.
Computer-Aided Project Management will advance the understanding of college seniors and graduate students of the
many benefits of computer applications. The case studies
offer valuable insights for practicing project managers.
Guidelines for PMJ Book Reviews

Our book review section is called Cover to Cover.
PMJ invites project managers from all areas of business
to serve as reviewers and submit reviews of business, management, and technical books (including PMI Publishing
titles) that give fellow PMI associates pointers toward information resources that may be of value to them in their
professional endeavors. The books strong points, as well
as its weak points if this information may be useful to the
reader, should be included. The review should be no more
than 750 words (please use your computer word count to
verify length of submission).
The review should begin with a strong, brief opening
paragraph that tells the reader why the book is important.
The review should not only describe the content of the
book, but also explain what the content meanswhy it is
a contribution to the project management body of knowledge. Reviews may include the following elements:
A summary of key or unique concepts.
Favorite quotes, graphics, charts, etc.
Important tips or guidelines.
New terms or phrases, such as knowbots or
teamocracy.
A message from the book that should be remembered
for future use, or should have been disclosed years ago.
Reviews should be written in a conversational style that
maintains academic rigor. Reviewers should avoid use of
the first person (I) and focus on the book and its contents. Reviewers should also avoid use of extensive lists as
a means of duplicating text. Instead, focus on what the
text means to readers.
PMJ welcomes reviews on books about how to get
business results, competing in todays complex workplace,
employees needs, new approaches to technology and
management, global changes, as well as new ideas about the
theory, concepts, and techniques of project management.
Include the publishing information from the book at the
end of your review. Please include as much of the following
information as you can find on the book. We will assist you
in adding the information you cannot locate. [Book title, author name(s), publisher (+ city, state), year published, ISBN
number, total pages, and price in U.S. dollars.]
Please send your completed review via e-mail or on
disk. Please use MS Word to save it and include a hardcopy of your review. Please remember to include your
name, title, company, address, and phone/fax/e-mail.
Please send your reviews to:
Book Review Editor
assisteditor@pmi.org
or
Project Management Institute Publishing Division
Four Campus Boulevard
Newtown Square, PA 19073-3299 USA
Oxford University Press, 2001, ISBN: 0-19-511591-0, Hardback,

472 pp., $75.00.
Reviewed by John M. Cooper, Ed.D., Assistant Professor of

Humanities, Social Sciences, and Management at Wentworth
Institute of Technology, Boston, MA, and a PMI member.
June 2001
PMJ reserves the right to edit all material submitted for

publication.
61
Calendar of Events
Note: To register for PMI Seminars World, call +800-713-8130
(U.S. and Canada), or call +847-384-7739, fax +847-6989245 (International), or visit www.pmiseminars.org. PMI
Seminars World 2001 cities and dates are subject to change
because of hotel space and availability.
June 1719 IFMAs World Workplace Europe 2001. Sponsored by the International Facility Management Association. Innsbruck, Austria. For more information, call
+32-2-645-2672, e-mail europe@ifma.org, or visit
www.worldworkplace.org/ww01europe
June 1819 Leaders in Their Fields, Asia-Pacific Regional Forum. Sponsored by the PMI Sydney Chapter.
Sydney, Australia. Held in conjunction with the PMI
Board of Directors meeting and immediately preceding
PMI Seminars World. For more information, visit
www.pmi.org/chapters/sydney/pmweek.htm
June 2023 PMI Seminars World 2001. Sydney, Australia.
September 1821
Norway.
PMI Seminars World 2001. Oslo,
September 2325 IFMAs World Workplace 2001

Annual Conference & Exposition. Sponsored by the
International Facility Management Association.
Kansas City, Mo., USA. For more information, call
+713-623-4362, e-mail events@ifma.org, or visit
www.worldworkplace.org/northamerica
September 2327 IIEC-2001, First International Industrial Engineering Conference. Organized by the Industrial
Engineering Department, Faculty of Engineering and
Technology, University of Jordan. Amman, Jordan. For
more information, e-mail rawabdeh@ju.edu.jo
June 30 Deadline for call for papers for ICAIS 2002,

First International Congress on Autonomous Intelligent
Systems, to be 1215 February 2002. Geelong, Australia.
Notification of acceptance, 15 September 2001; delivery
of manuscripts, 30 November 2001. Sponsored by
Deakin University; Institution of Electrical and
Electronic Engineers; Institution of Electrical Engineers;
Institution of Engineers, Australia; International
Computing Sciences Conventions; and the Natural
and Artificial Intelligence Systems Organization.
For more information, visit
www.icsc-naiso.org/conferences/icais2002/index.html
October 1013 Houston 2001: Engineers in a Changing

World. Sponsored by ASCE. For more information, call
+703-295-6300 (outside U.S.) or +800-548-2723 (in U.S.),
or visit www.asce.org/conferences/annual01/index2.html
July 34 Second European Conference on Intelligent

Management Systems in Operations. Organized
by the Operational Research Society. University of
Salford, U.K. For more information, visit
www.orsoc.org.uk/conf/index_f.html
November 1821 18 November, 11th Global Project

Management Forum; 1921 November, International
Project Management Congress 2001: PM Development
in the Asia-Pacific Region in the New Century. Sponsored by the Engineering Advancement Association of
Japan and the Japan Project Management Forum. Tokyo,
Japan. For more information, visit www.enaa.or.jp/JPMF
July 1113 Second IberoAmerican Project Management

Forum. Sponsored by the PMI Santiago Chapter. Santiago, Chile. For more information, visit
www.pmi.cl/congreso, call +56-(2)-732-1118, or e-mail
pmichile@entelchile.net
July 1720 PMI Seminars World 2001. Seattle, Wash., USA.
July 2427 PMI Seminars World 2001. Chicago, Ill., USA.
August 38 How Governments Matter, conference of the
Academy of Management. Washington, D.C., USA. For
more information, visit www.aom.pace.edu/meetings/2001
August 710 PMI Seminars World 2001. Toronto, Ont.,
Canada.
August 2124 PMI Seminars World 2001. Denver, Colo.,
USA.
September 1114
Calif., USA.
62
September 1213 Corporate Branding 2001.

Sponsored by the American Management Association.
Chicago, Ill., USA. For more information, visit
www.amanet.org/events/corp_brand/index.htm
PMI Seminars World 2001. San Diego,
October 2327
USA.
PMI Seminars World 2001. Dallas, Texas,
November 110 First to the Future, PMI Annual Seminars & Symposium. Nashville, Tenn., USA. For more information, visit www.pmi.org/symposium2001
November 1216 ProjectWorld Canada. Ottawa, Ont. For
more information, visit www.projectworld.com
November 2124 pm days 01: Projects & e-Business.

Includes pm researuch EUROConference II: Benchmarking the project-oriented society, 2122 November.
Organized by Roland Gareis Consulting in cooperation
with Projekt Management Austria and Projektmanagement Group. Vienna, Austria. For more information, call
+43-1-367-70-22-70, e-mail office@rgc.at, or visit
www.pmtage.at
November 2223 ProjectWorld International. Birmingham,
U.K. For more information, visit www.projectworld.com
December 1 Deadline for call for papers for The Relationship Between Cost Analysis and Program Management, special-topic issue of the Journal of Cost Analysis &
Management. Authors should prepare manuscripts in accordance with the JCA&M style guidelines available at
www.erols.com/scea under publications and the
Journal of Cost Analysis & Management.
June 2001
Notes for Authors

SCOPE
The Project Management Journal is the
professional journal of the Project Management
Institute (PMI). The mission of PMJ is to
advance the state of the art of the knowledge of
project and program management. PMJ
presents useful information on both theory and
practice in the field of project management.
Authors are encouraged to submit the following
types of original manuscripts: descriptions of
innovative practices; summaries of research
results; reviews of current literature; surveys of
current practices; critical analyses of concepts,
theories, or practices; developments of concepts,
theories, or practices; analyses of failure.
Manuscript length should not exceed 12,000
words. The selection of manuscripts for
publication is based on the extent to which they
advance the knowledge and understanding of
project management. PMI neither approves
nor disapproves of any data, claims, opinions,
or conclusions presented.
MANUSCRIPT REVIEW
PMJ uses a double-blind review process. The
first review of every manuscript is performed
by two or three anonymous referees (members
of the PMJ Editorial Review Board). The
manuscript is then either accepted, rejected, or
returned to the author for revision (with
reviewer comments furnished to the author).
Revised manuscripts are sent to the Editor,
who makes a final disposition. PMJ strives to
respond to all authors within three months of
the date the manuscript is received at the PMI
Publishing Division. Accepted manuscripts are
subject to editorial changes. The author is
solely responsible for all statements made in
the manuscript, including editorial changes.
ORIGINAL PUBLICATION
It is the policy of PMI to be the sole, original
publisher of manuscripts. Manuscripts that
have been submitted simultaneously to other
magazines or journals will be rejected outright
and will not be reconsidered. Republication of
a manuscript, possibly revised, that has been
disseminated via conference proceedings or
newsletter is permitted if the Editor judges
there are significant benefits to be gained from
publication.
COPYRIGHT
Upon acceptance of a manuscript, authors
will be asked to transfer copyright of the
article to the publisher. This transfer will
ensure the widest possible dissemination of
information. This transfer of copyright enables
PMI to protect the copyrighted material for
the authors, but does not relinquish the
authors proprietary rights. The copyright
June 2001
transfer gives PMI the exclusive rights to

republish or reprint the manuscript in any
form or medium as well as to grant or refuse
permission to third parties to republish all or
parts of the manuscript.
SHORT ITEMS
Short items do not need rigorous academic
scrutiny and are not refereed. Upon receipt,
however, these items become the copyright
property of PMI.
Opinion presents thoughtful discussion
of project management issues.
Correspondence pertains to the project
and program management profession,
including references to literature, practice,
and scholarship as well as discussion and
replies related to articles published in PMJ.
Book Reviews express opinion about
books related to the project management
profession, or about general management
or technical books that cover topics of
particular value to the project manager.
Calendar of Events offers notices of
forthcoming meetings, conferences, and
calls for papers.
SUBMISSIONS
Send manuscripts to: Editor, Project
Management Journal, Four Campus
Boulevard, Newtown Square, PA, 19073-3299
USA. Submit five copies of the manuscript on
811 inch paper, double spaced throughout,
and printed on one side only; and/or send an
electronic copy via e-mail to
assisteditor@pmi.org. Manuscripts should
include the following in the order listed:
A title page that includes the title of the
manuscript and each authors name,
affiliation, mailing address, and phone, fax,
and e-mail address. Correspondence will be
directed only to the first author listed.
An abstract of 100 words or less that
outlines the purpose, scope and conclusions
of the manuscript, and selected keywords.
Text (use headings and no more than two
levels of subheadings). To permit objective
reviews by two referees, the abstract and first
page of the text should not reveal the authors
and/or affiliations, but only the manuscript
title.
References.
Figures and Tables (titled, numbered in
Arabic, with captions, each on a separate
sheet, preferred location indicated within the
body of the text).
Biographical details of each author.
Upon manuscript acceptance, authors
must also provide a final electronic version
with the information above, a black-andwhite passport-style professional
photograph, and a signed copyright
agreement.
COMPUTER-GENERATED TEXT AND

ILLUSTRATIONS
Authors are requested to submit the final text
and illustrations on 3.5" IBM/compatible
disks or via e-mail. As with the requirements
for manuscript submission, the main text, list
of references, table and figure captions, and
author biographies should be stored in
separate text files with clearly identifiable file
names. Keep the layout of the text as simple
as possible and save text in their original
applications and/or Rich Text Format (RTF).
It is essential that the name and version of
the word processing program and format of
the text files are clearly indicated (example:
Word for Windows 95 doc).
Upon acceptance of the manuscript for
publishing, authors will also be asked to
provide illustrations in computer format.
Preferred formats are CorelDraw, MacroMedia
Freehand, Freelance Graphics, PowerPoint,
Harvard Graphics, Harvard Chart, or Canvas. If
one of these formats is unavailable, submit in
Windows Metafile (WMF), Adobe Illustrator
(AI or EPS) or Encapsulated PostScript (EPS).
Please use default/standard extensions. If
illustrations are available in paper form only,
they will be recreated electronically for
publication. Contact PMI Publishing Division
for further details.
STYLE OF TEXT
You should write in clear and concise
English. Spelling should follow Websters
New World Dictionary. Authors whose native
tongue is not English are assured that
in-house editorial attention to their
manuscript will improve clarity and
acceptability to readers. For questions
regarding style and format of text, refer
to the Publication Manual of the American
Psychological Association, Fourth Edition.
REFERENCES
For questions regarding reference format,
refer to the Publication Manual of the
American Psychological Association, Fourth
Edition, Bibliographic Forms for Journal
Articles. References used in the text should
be identified by author name and
publication date in parentheses, e.g.,
(Cleland & King, 1983), and listed
alphabetically at the end of the manuscript.
Page numbers should be cited for all
quotations. Follow the format example
shown below:
Baker, Bud. (1993). The project
manager and the media: Some lessons
from the stealth bomber program. Project
Management Journal, 24 (3), 1114.
63
Cleland, David I., & King, William R.

(1983). Systems analysis and project management. New York: McGraw-Hill.
Hartley, John R. (1992). Concurrent
engineering. Cambridge, MA: Productivity
Press.
Please ensure that references are
complete, that they include, where relevant,
authors name, article or book title, volume
and issue number, publisher, date and page
reference.
The use of page footnotes should be
kept to a minimum. Footnotes should be
numbered consecutively and listed at the end
of the text as endnotes.
KEYWORDS
Keywords categorize your manuscript. They
cover project management methodologies and
processes, tools and techniques, PMBOK
Guide knowledge areas, industries, types of
projects, geography. Please list three or four
keywords that best categorize your manuscript.
Choose from the following list of suggested
keywords (this is not a comprehensive list) or
you may use your own.
Accounting
Activity Duration Estimating
Agriculture
Arrow Diagramming Method
Baselines
Benchmarking
Benefit/Cost Analysis
Budgeting
Change Control
Communications Management
Concurrent Engineering
Configuration Management
Conflict Resolution
Constraints
Construction
Contingency Planning
Contract Closeout
Cost Estimating
Cost Management
Critical Path
Delegation
Deliverables
Design
Documentation
Earned Value
Engineering
Environment
Estimating
Fast-Tracking
Feedback
Finance
Float
Funding
Human Resource Management
Information Systems
Integration Management
Large Project
Leadership
Life-cycle Costing
Manufacturing
Management Skills
Matrix Organization
Milestones
Mitigation
Monte Carlo Analysis
Multiproject Planning
Negotiating
Networking
New Product Development
Organizational Planning
Organizational Structure
Parametric Modeling
Performance Reporting
Pharmaceuticals
Procurement Management
Productivity
Project Life Cycle
Project Management Software
Project Plan Development
Quality Assurance
Quality Management
Reengineering
Resource Planning
Responsibility
Risk Management
Risk Response Development
Schedule Development
Schedule Control
Scope Management
Scope Definition
Scope Change Control
Simulation
Staff Acquisition
Stakeholders
Standards
Statistical Sampling
Team Development
Time Management
Tools
Training
Transportation Variance
Utilities
Virtual Organization
Work Breakdown Structure
Work Packages
CHECKLIST
5 copies of manuscript or sent via e-mail

IBM/PC compatible disk (upon
acceptance)
100-word abstract
Illustrations
Author biographies
Black-and-white passport-style
professional author photographs (upon
acceptance)
Signed copyright agreement (upon
acceptance)
PROOFS
Correspondence and proofs for correction
will be sent to the first-named author unless
otherwise indicated. Copyediting of
manuscripts is performed by PMI staff. The
authors are asked to check proofs for
typographical errors and to answer queries
from editors. To improve publication times it
is important that proofs be returned within
three days. Authors may be charged for
extensive corrections at the proofing stage.
COPIES AND REPRINTS

Authors will receive three copies of the
Journal free of charge. Additional copies of
the Journal and/or article reprints can be
ordered at any time from the PMI
Publishing Division.
PROJECT MANAGEMENT INSTITUTE
PUBLISHING DIVISION
Four Campus Boulevard
Newtown Square, Pennsylvania
19073-3299 USA
Tel: +610-356-4600
Fax: +610-356-4647
E-mail: assisteditor@pmi.org
Index of Advertisers
PMI Seminars & Symposium ............................................................................................... C2
PMI SeminarsWorld ............................................................................................................. C3
Primavera Software System .................................................................................................... C4
Roland Gareis Institute .......................................................................................................... 44
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June 2001

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