 Hi, I'm Dr. Lucinda Stanley and I want to welcome you to the Unit 1 Review for Strategic Project Management. There are seven units in the course, so you'll be able to watch a review of each unit as you get to them and have access to the reviews as you prepare for the final exam. In this video, we're going to review some of the concepts found in the study guide related to Unit 1. So before we get started, let's review the learning outcomes for this unit. These are the things that you should know by the time you finish this unit. Our first learning outcome is examine how projects achieve an organization's strategic objectives. Every project an organization undertakes should be directly tied to the organization's strategic objectives. Next, we're going to distinguish between projects and ongoing operations when presented with various scenarios. Many people are confused about what a project is and how it's different from regular operations. We're going to look at that in Unit 1. Explain the role of organizational leadership in finding projects opportunities and overcoming organizational challenges to related projects. Once we've defined what a project is, we'll look at how projects are decided on and which stakeholders are involved in making the decision to begin a project. Next, we'll demonstrate best practices that contribute to a project's success or failure. Unfortunately, not all projects are successful. We'll take a look at what could determine the success or failure of a project. Demonstrate how the triple constraint scope, schedule, and budget interplay within a project. Finally, we'll look at what's called the triple constraint of project management. The three major elements of a project that work together towards successful completion of the project or the failure of the project, that would be scope, schedule, and budget. At this point, I bet you're wondering why I went over all of those learning outcomes with you. Why are learning outcomes important? Every resource in the course can be tied back to one of the learning outcomes, which means that all assessments, including the final exam, are directly linked to the learning outcomes. Once you get to the end of the course, if you review the learning outcomes, you can see which ones you feel confident that and if there's some that you're not sure about, it's a good idea to go back to the units that cover that outcome and review the material. This will ensure that you will have all the knowledge you need to be successful in the exam. So based on our objectives for this unit, here are the specific elements we're going to cover. We're going to look at some definitions, strategic objectives, project versus ongoing operations, who selects a project, the net present value, project success or failure, and of course, the triple constraint. So you'll find many more vocabulary words in the study guide. In this review, we're going to concentrate on these four. What is the strategy? What are operations? What is the net present value and what is triple constraint? Let's get started. So what are strategic objectives and how are they related to project management? Organizations define strategic objectives as a way to stay focused on what is important and achieve the overall goals of the organization. Every project should have its objectives directly tied back to a strategic objective of the organization. Pursuing a project that will not move organizational objectives forward is a waste of resources. Objectives related to project management, they help make sure the project is focused on improving the organization and meeting the organization's goals. Projects often deliver only tangible benefits such as a new computer system or additional resources, but they could also provide intangible benefits such as employee success or customer satisfaction. Creating projects that tie back to the organization's strategic objectives can also create a competitive advantage for the organization such that they are able to provide a better product or service than their competitors. Many students and managers struggle with understanding the difference between a project and ongoing operations. Let's take a look at the characteristics of both then look at a few examples. When we talk about ongoing operations, we mean the daily activities that must be done on a regular basis. They tend to be repeated in the same sequence over and over. Some examples include a payroll specialist who processes timecards each week so that employees can be paid. That has to happen every week. A production manager who schedules routine maintenance of the machinery every month on a rotating basis or a team leader having weekly meetings to discuss issues that need to be addressed. Now let's take a look at what makes a project different from ongoing operations. First, some general characteristics of projects include that a project is unique, meaning it's something different that the organization has not done before. Second, a project has to have a beginning and end. Project managers have an eye on when the project must be finished as we'll see later that is an important consideration for the success of a project. Lastly, a project is generally focused on one specific goal to solve a problem or to improve a process. It's designed to in some way make the organization better after it's complete. Some examples of projects would include building the new factory facility or as you see whether when we talk about a project we're looking at something finite, something that will end. It may end in two weeks or two years depending on the project but it will eventually no longer be part of the organization's processes. While ongoing operations do not end, they are tasks that must be completed over and over for the organization to survive. Now that we know how a project is different from an organization's regular operations, let's look at who makes the decision to start a project. Every project has what is known as a project sponsor. This is likely the person who initiated the idea of the project who thought of a particular project would move the organization toward meeting their organizational objectives. So who are these project sponsors? It honestly depends on the organization. Some organizations rely on upper management or organizational leaders who know the organization's strategic goals to come up with ideas for projects that will move them along in meeting those strategic goals. Some organizations seek out project ideas from anyone in the organization. Anyone who has an idea that could benefit the organization is welcome to submit a proposal with some basic reasoning of why the project would be a good idea. This could be a team leader on the production floor or one of the people who runs the machinery. But once a project proposal has been made by a project sponsor, who makes the decision to choose one project over another? That decision is typically going to fall on the organizational leaders. For example, the Chief Financial Officer will likely be the one to make a decision about a project to improve the payroll process, or the Chief Executive Officer would make the decision regarding a project that addresses a strategic goal of the organization. To be clear, the decision makers don't normally make the decision to start a project willy-nilly, meaning just because. They have tools they can use to help them decide which projects have merit and will add value to the company. Let's look at some of those tools here. The Chief Operations Officer or Chief Financial Officer or the Chief Executive Officer don't get to those positions without gaining some valuable experience and insights into how to make an organization better. They use that experience or expertise to guide them to making decisions that will match the operations' strategic goals. Many project decision makers will conduct brainstorming sessions with others in the organization to weigh the pros and cons of projects that have been proposed. Having others share their insight based on their experiences makes it more likely that the decision to move forward with a project will be the right one. Both the expert executive opinion and the brainstorming methods of making the choice for which projects to move forward with would be considered non-numeric tools, while they may have collected some data before making a decision. The decision is based mostly on experience and expertise. Sometimes a project decision maker just doesn't have experience or expertise in a particular area where a project has been suggested. In that case, they can rely on mathematical or numeric tools or processes to help them see how a project might add value to an organization. Let's look at one of those numeric tools in the next slide. You'll probably recognize this problem from the study guide, but let's take a closer look at what it's telling us. Decision makers can use a net present value analysis to compare the cost to undertake the project and what its projected monetary value will be once the project is completed and its results are implemented within the organization. In the case from the study guide, we're looking at a project that is anticipated to cost $100. That's a lot of money to spend without knowing if the money is well spent. So the decision maker does an analysis on how much the project will save over the course of time once it's implemented. In this case, the decision maker determines the implementation of the project will result in a savings of $60,000 the first year and $45,000 for the next three years after that. They use a 12% discount rate, which is the interest rate that they pay to use the money for the project or to borrow the money. Overall, they can see that the project will pay for itself in year three, $125,000 minus $60,000 minus $45,000 and minus another $45,000. And using the discount rate, the present value of that $125,000 is $38,466. They can use that number to compare one project with another to see which product is a better deal. Now it's time to talk about project success or failure. To be honest, there's a high percentage of projects that fail, which is why my image has a bigger failed bubble than a succeeded bubble. Because there are generally so many elements to a project, and each one of the elements could have some risks associated with it, there's a higher likelihood of a project failing. That isn't to say that the project doesn't provide as deliverable, although that is certainly possible. Mostly a project is determined to have failed if it exceeds the budget it was given, or if it takes longer to complete the project than originally determined. Those are the biggies. There's also a possibility of scope creep, meaning more elements are added to the project after the project has been approved, which might increase the cost or increase the amount of time it will take to complete the project. Another big reason for a project to fail is that the project must rely on outside vendors to supply the project with the resources that are not available within the organization. If a vendor is unable to provide the raw materials for a project manager to complete a prototype, the project manager must either source out another vendor or simply wait for the original vendor to have the materials he needs. This will increase the time it will take to complete the project, thus leading to project failure. Of course, a project could simply just become so far behind and so far over budget, then it just isn't going to add enough value to the organization to complete. Now that we have the bad news out of the way, let's look at what makes a project successful. Successful projects have project managers who stay on top of the process by following up on every aspect of the project, making sure they and their team follow through on action items as quickly as possible, and being aware of potential risks so that if they happen, there is a plan in place to mitigate the damage to the project's success. The elements of a project that must be closely monitored are known as the triple constraint. Triple constraint is a theory of project management that reminds project managers that if they focus too much on one element, that may take away from another element and leave the project in danger of failing. Let's see what I mean by that. Notice that if more time is spent on the schedule element, the cost budget and the project scope elements do not receive as many of the project resources, which may put the project in jeopardy because the project manager must keep all elements in alignment. Similarly, if project managers who let the budget or cost of the project go awry, it could impact the schedule, the project scope, or both. So it's important for a project manager to keep the triple constraint model in mind as they manage their project. In this unit, we've begun to see how projects are related to the organization's strategic objectives. We've learned how a project is different from an organization's ongoing operations, and we've learned how projects are chosen and who is responsible for choosing which projects get implemented. Additionally, we've looked at the characteristics of a project's success and how easily a project can fail. Finally, we learned about the triple constraint theory, which recommends keeping the scope, schedule, and budget in alignment in order to increase the likelihood of having a successful project. In the next unit, we'll look at the project life cycle.