CHAPTER 3

Decisions and the Project Management Life Cycle

Success is the objective during project management, and good decision-making is the “yellow brick road” that leads to success. The project management life cycle guides decision-making. Project managers need a structure that helps to logically sequence their decisionmaking activities. Because early decisions impact later decisions, a project management life cycle identifies early activities that might have a bearing on later activities. Mistakes due to poor decision-making during the front end of the project management life cycle can have significant negative effects on the total cost of the product and its success with users and those who fund product development (often called bill payers) (Powell and Buede 2006).

Many problems surface late in the project due to earlier mistakes in decision-making, and this often results in a much higher cost to correct as well as increased project risk. Quality decisions made in the front end of the project management life cycle contribute to project, product, and organizational success and result in fewer conflicts when later decisions are made.

This chapter presents the project management life cycle, examples of decisions unique to each stage of the life cycle, decision gates within the life cycle, and examples of other life-cycle models.

This chapter presents the following sections:

The Project Management Life Cycle

Milestones within the Project Management Life Cycle

Stakeholder Decisions in the Project Management Life Cycle

Other Life-Cycle Models.

The Project Management Life Cycle

The project management life cycle provides a framework for the project manager to use to manage the project in an organized manner. The life cycle describes how a project progresses through a succession of stages; it is a logical sequence of activities needed to accomplish a project’s goals or objectives. Project activities must be grouped into stages because by doing so the project manager and the project team can efficiently and effectively plan and organize resources for each activity. This also allows the project manager and the project team to objectively measure the achievement of goals and justify their decisions to move the project to the next stage, make modifications to the project plans, or terminate the project. The project management life-cycle structure is of use to the project manager for the following reasons:

The project manager can use the project management life cycle to organize project management activities and to identify resources needed to support each stage.

The project manager can identify the collection of activities for each stage before proceeding to the next stage.

The project manager can effectively consider the impact that early decisions have on later stages of the project management life cycle, particularly with regard to various risks. (Precedence in decisionmaking is covered in greater detail in Chapter 5.)

Success in the project management life cycle requires establishing the management process for the entire life cycle of the project that is needed to reach the project’s objectives (Forsberg, Mooz, and Cotterman 2000). In this vein we propose a management process for the life cycle of the project that consists of six stages, as depicted in Figure 3-1: (1) Conception, (2) Feasibility Analysis, (3) Planning, (4) Implementation, (5) Controlling, and (6) Termination.

FIGURE 3-1: Project Management Life Cycle

Within the life cycle, the project transitions from its conception to its eventual termination in a logical sequence that facilitates project decision-making. Many decisions occur in each stage and must be adequately addressed as a project progresses.

It’s important to consider the decision-making sequence. Not considering the impact of early decisions on later decisions within the project management life cycle can have devastating results. Each life-cycle stage has a set of activities and a prescribed decision gate. The activities describe what work is to be done, and the corresponding stage defines when the work needs to be done. The life-cycle stage of the project dictates what, when, how, and why work should be accomplished during the project (Driscoll 2008).

Decision gates are used to determine the appropriate time to move forward to the next life-cycle stage. They serve as project milestones. The project can only pass through these gates by satisfying specific requirements, which are usually set by the project manager based on information obtained by project staff from potential users, production representatives, design staff, and management.

Table 3-1 presents the six project management life-cycle stages and connects them with respective activities and decision gates. Looking at this table, readers can infer the types of decisions project managers should address at different life-cycle stages. For example, during the conception stage the project staff must establish the high-level requirements for performance (race car acceleration capability), cost (race car operating cost) and schedule (race car repair time for specific repairs) for both the product (race car) and the project (design of the race car). These decisions influence whether the project work will result in the overall project success.

TABLE 3-1: Project Management Life-Cycle Stages

Stage	Activities	Decision Gates
Conception	Define the project Identify stakeholder needs Define project, product, and organizational goals Identify preliminary cost, schedule, and performance risks Establish high-level cost, schedule, and performance requirements for the project and also for the product	Requirements approval for both the project and product
Feasibility Analysis	Assess project, product, and organizational feasibility Assess resource capabilities Assess cost, schedule, and performance risks Define cost benefits Perform risk analysis	Required cost benefit and risk mitigation measures justified
Planning	Define project tasks Schedule tasks Resource tasks Develop project organization Continue risk analysis	Project management plan approval
Implementation	Perform project according to plan Mitigate cost, schedule, and performance risk Perform project testing Develop a training plan Develop a deployment plan Continue risk analysis	High-level requirements for the project and product verified and validated
Controlling	Monitor and control project resources Monitor and control project progress Monitor and control project performance Continue risk analysis	Performance measures met
Termination	Measure project success Terminate project Develop lessons learned Identify remaining resources	Project completion approved

The decision-making that occurs in each stage can be defined as either an activation or a conversion. An activation decision determines that some new activity should begin, based on the progress on other activities. A conversion decision establishes that some set of resources (typically money and information but not always) should proceed or continue with the goal of producing another set of resources or the final product. Each stage in the project receives available information and resources—or inputs. During each stage decisions are made that determine how the inputs are converted by selected actions into outputs (including information and resources). If a stage does not produce the right outputs, a poorly managed project will result. Mistakes in activation decision-making result when new activities are started with inappropriate resources. Mistakes in conversion decisions occur when inappropriate activities are selected for the resources available and the resources desired.

High-quality projects require that a vast array of decisions be made such that reasonably attractive alternatives are selected for most of these decisions. Attractive alternatives are those that result in reasonably good outcomes in most cases. Project managers must understand the broader context of a project in order to determine not only the processes, tools, and techniques necessary but also the decisions appropriate for each stage. Sample decisions for each stage are presented in the sections that follow.

Conception Stage

The first stage of the project management life cycle is Conception or Initiation. In this stage, the problem and project objectives are defined. The project objectives are sometimes referred to as user needs or requirements. Stakeholders who have a relationship to the project are also identified.

The Conception stage consists of steps that must be performed before starting the detailed planning and implementation stages of the project. The focus is on establishing and defining the project’s goals, objectives, deliverables, and requirements (Haugan 2006)—that is, the product and organizational goals. More important, this stage should produce a preliminary analysis of risks and the resulting impacts those risks could have on the time, budget, and performance requirements (Kerzner 2006). Key potential trade-offs among time, budget, and performance requirements should also be identified at this stage to guide future decisions.

Feasibility Analysis Stage

The Feasibility Analysis stage provides information on whether the project should be undertaken. Many decisions are made during this stage that should support whether to proceed with or terminate the project.

The Feasibility Analysis stage essentially entails “counting up the cost”—determining whether the project can be done. Key decisions in this stage include those about (1) required resources, (2) resource availability, (3) inherent risks to successful project completion, (4) expected costs and benefits of the project, (5) likelihood of completing the project on time and within the budget, and (6) project requirements and/or objectives.

An initial risk analysis is also performed during this stage. To achieve project success, a thorough analysis of every element that could potentially derail or cause the project to fail must occur. These and other elements (according to the nature of the project) must be considered.

Additional relevant decisions during this stage include determining how the feasibility analyses should be conducted to ensure that they are effective and efficient and defining a “feasible” project—i.e., a project with the right balance of cost, schedule, and performance. This balance needs to be defined at an abstract level very early in the project. For example, when designing a race car the early design team must establish the kinds of acceleration (and deceleration) desired before the concept for the car has really been defined at the level of detail needed to determine whether these requirements can be met.

Planning Stage

The Planning stage can be a continuation of or a parallel effort to the Feasibility Analysis stage; however, if it is determined that the project is feasible and should be pursued, the bulk of decision-making will occur in the Planning stage. Some aspects of project planning will naturally be considered when performing project feasibility analyses because such information is critical to identifying, at a minimum, what trade-offs need to occur in future decisions for performance, cost, and schedule, for both the product and project.

Project planning includes the project management techniques of identifying, scheduling, and resourcing tasks. In project planning, several documents are created, including resource plans, financial plans, monitoring plans, risk plans, acceptance plans, and communications plans. In addition, a decision-making process (or plan) should be identified. This decision-making process should establish which types of decisions are going to be made by whom, as well as what types of information should be available for the various types of decisions. For each of these plans, more detail is provided for the near term, but each plan should address the entire project management life cycle on some level.

Risk analysis should continue in this stage: Risks to the project, the product, and the organization should be defined. Also, a definition of the criteria for successful project completion should be developed.

Key decisions in this stage include those about (1) required tasks to accomplish project objectives, (2) required tasks to satisfy product performance, (3) best team organization to support project objectives, (4) resource requirements, (5) best approach for meeting schedule objectives, (6) skills required, and (7) elements of the project management plan. The level of planning is commensurate with the nature, scope, and requirements of the project. Project managers have a suite of tools (e.g., Primavera^®, MS Project^®) at their fingertips to make the tasks of project planning simpler and efficient. These tools do not replace decision-making, but they do aid in the decision-making process.

Implementation Stage

The Conception stage gets the project started in the right direction; the Feasibility stage demonstrates the project can be done; the Planning stage defines the tasks and determines when and how the tasks will be performed. The Implementation stage is the stage in which the detailed tasks are implemented and performed—the stage in which project, product, and organizational objectives are realized. In this stage, the project manager is responsible for overseeing implementing the decisions made during the Planning stage. The project manager must also ensure that decisions are adequately resourced, as needed. Project planning continues to occur during this stage to handle the unexpected and unforeseen events that arise during the Implementation stage.

Key decisions in this stage include those about (1) time that resources are required, (2) design changes required to meet key performance objectives, (3) operational requirements, (4) key constraints and limitations, (5) all risks, (6) changes in the environment that affect the project, and (7) changes in business needs that affect the project.

Controlling Stage

The Controlling stage is intended to monitor activities performed during the Implementation stage and identify necessary changes to the plan as the project progresses. All projects require a set of control mechanisms. These control mechanisms assist the project in meeting schedule, meeting budget, developing the product, and monitoring the progress made in achieving project objectives. Besides performance, cost, and schedule, special attention must be paid to the management of risk, changes to the design of the product and project, communications inside the project team and outside to key stakeholders, and the test or acceptance process.

For this stage to occur, project performance during the Implementation stage must be monitored. Specific elements of the project must be defined by the project manager as critical to keeping project performance as close as possible to expected performance. After those elements are defined, data must be collected on actual performance, and that data must be compared to planned performance.

Next, significant trends and variances should be identified along with their impact on project objectives. Corrective actions, if any, should occur as the process continues. Several management processes, such as change and risk management, should be undertaken to monitor and control the project deliverables. Key decisions in this stage include those about (1) control mechanisms, (2) control parameters, (3) test requirements, (4) data collection requirements, and (5) change procedures.

Termination Stage

A project can be terminated at any time. To properly terminate a project when objectives have been successfully achieved, consider three essentials things: (1) the time needed to terminate the project, (2) estimated and budgeted costs that support termination, and (3) any other termination objectives such as documentation. During this stage, pay attention to remaining resources that can be reallocated to other projects or other services within the company. The major activities of this stage are project closure and a review of project completion.

Key decisions in this stage include those about (1) termination criteria, (2) project termination authorization, (3) termination requirements, (4) termination objectives, (5) reports required, and (6) lessons learned. The last decision, lessons learned, is critical to the success of future projects so that other projects learn from the successes and failures found in this project.

Control Gates within the Project Management Life Cycle

The purpose of control gates is to measure the progress of a project and to determine whether the project should be terminated. Another term for control gates is transition reviews (Forsberg, Mooz, and Cotterman 2000). Control gates are structured decision points (events or milestones) in the project management life cycle and are routinely found at the beginning and end of each stage, as shown in Table 3-1. Control gates provide an assessment of the elements of each stage and provide project baseline control. They are needed to assist the project manager in effectively managing the project and to control the business, budget, and technical aspects of the project (Forsberg, Mooz, and Cotterman 2000).

At the end of each life cycle stage, the control gates produce unique outputs, such as reports, prototypes, and test results. The outputs are used by the project manager and other decision makers to determine whether the project has met the goals for that stage or milestone and is ready to move forward to the next stage. As a result these outputs are often called exit criteria for the stage just ending (or entry criteria for the next stage) (Forsberg, Mooz, and Cotterman 2000). The project manager oversees the activities in each stage and is responsible for the project’s progress through each stage. The project manager must be careful assessing whether the goals of a stage have been achieved because flexibility to make adjustments as development continues may mean the difference between success and failure. Each stage consists of groups of activities that can be performed either in series or in parallel, which can determine which of the various outputs can be achieved and the relative cost-effectiveness for achieving each output.

Control gates also require decisions. For any selected control gate, the decision alternatives include (Archibald 2004):

Proceed with the remaining work in the current stage.

Start work on the next stage.

Replan and restart a stage already completed.

Revise the project objectives, plans, and schedules.

Terminate the project.

Place the project on hold.

A number of factors determine whether a project continues to the next stage, the most important of which is often risk. The decisions made in each stage of the project management life cycle possess a certain degree of risk. Risk types include administrative risk, financial risk, technical risk, schedule risk, programmatic risk, and management risk. To minimize the risks faced during the project, a complete risk analysis that addresses all stages of the project should be conducted in the Conception stage. However, once this initial risk analysis has been completed, further risk analyses should be periodically performed. Existing risks should be redefined and updated, and new risks should be identified and defined as information becomes available. The project proceeds to the next life cycle stage only when there is an acceptable level of risk across the project. Both risk and uncertainty are covered in greater detail in Chapter 9.

Every project is unique and each one must be managed according to the nature of the project. Although we have presented the use of decision gates at the end of each stage, you might find they are needed at other points during the life-cycle stage. What is important is the presence of a clear management approach for ensuring progress and baseline approval (Forsberg, Mooz, and Cotterman 2000).

Stakeholder Decisions in the Project Management Life Cycle

Stakeholders play a key role in the life of a project. They are essentially the reason why a project exists. It is the interest of the future users of the product that motivate the initiation of the project. The willingness of the bill payers to fund the development constitutes a critical veto on initiation and continuation of the project. Finally, all other stakeholders must demonstrate some interest and excitement or the bill payers will back out. Thus, the primary focus of any project management effort in every life cycle stage is on the stakeholders—their needs, wants, and desires.

What is a stakeholder? A stakeholder can be defined as an individual or an organization that is actively involved in a project or whose interests can be affected by the outcome of a project. In each life-cycle stage, stakeholders can assist the project manager in making critical decisions that will cause a project to succeed or fail. Stakeholders also provide feedback throughout the project management life cycle that is used to improve project performance, satisfy product requirements, and contribute to organizational goals.

Key stakeholders include the CEO, program manager, project manager, customers/users, performing organization, project team members, management team, financial sponsor, contractors, consultants, and project management office. Although all stakeholders are important, they are not equally important. Their vested interest in and relationship to the project, product, or organization determine their relative importance. Stakeholders exist both within and outside the project environment. Identifying the obvious stakeholders—those internal to the project environment—is usually a minor task. However, identifying stakeholders that are not so obvious—those external to the project—is somewhat more challenging. We can more easily identify the stakeholders who are not obvious by viewing the project and treating it as a system.

The International Council on Systems Engineering defines a system as

In their introduction to the book Decision Making in Systems Engineering and Management (2008), Gregory Parnell and Patrick Driscoll note systems have the following important attributes that apply to project management (3):

They have interconnected and interacting elements that perform systems functions to meet the product and service needs of stakeholders and consumers.

They have objectives that are achieved by system functions.

They interact with their environment, thereby effecting stakeholders.

They use technology that is developed by engineering experts.

They have a system life cycle containing elements of risk that are managed by project managers.

They require systems decisions, analysis by qualified persons, and decisions made by project managers.

When we view the project as a system, we realize that a project affects and is affected by environmental factors—both internal and external— and that it has an effect on all stakeholders. As mentioned earlier, the stakeholders who are not obvious tend to fall within the external environment. When we understand a project’s external environment, we have a better idea of additional stakeholders who should be considered in the project management life cycle. External environmental factors are shown in Figure 3-2. These environmental factors are useful in identifying stakeholders who are not so obvious.

FIGURE 3-2: Environmental Factors

A complete taxonomy of stakeholders includes five types (Parnell and Driscoll 2008):

Decision Authority: The stakeholder(s) with decision-gate authority to move the project forward and to terminate the project

Client: The person or organization that solicited support to manage the project; the source of project compensation; the stakeholder that principally defines product requirements

Owner: The person or organization responsible (and hopefully accountable) for the proper development of the product or system. This person or organization may become responsible (and accountable) for keeping the product or system operating once it becomes deployed and available.

User: The person or organization that will use or operate the product or system once it becomes deployed and available. This person or organization may also become responsible (and accountable) for keeping the product or system operating once it becomes deployed and available.

Consumer: In some cases, such as commercial products, the consumer and the user are the same. In other cases, the consumer is the person(s) or organization(s) that have created intentional dependencies on the products or services delivered by the project. For example, if the product is a commercial airplane, the user is the airline and the consumers are the people who pay the airline to fly on the airplane.

In project management, there are usually two decision authorities— one for the project and one for whom the project is being performed. The relationship between Sikorsky—an aircraft development firm in the United States—and the Saudi government presents a good example of the differences between the two decision authorities. The Saudi government desired an aircraft that could transport its royal officials. They contracted with Sikorsky to build the aircraft. In this case, representatives of the Saudi government acted as the decision authority for the verification, validation, and acceptance of the aircraft based on how well it satisfied their needs. The general manager within Sikorsky acted as the decision authority for resources allocated to the project, as well as for ensuring the project satisfied the objectives of each life cycle stage. Continuing with this example, the client was the Saudi government; the owner was the maintenance organization; the users were the pilots and other flight crew; and the government officials were the consumers.

Stakeholders can perform multiple roles. In many projects, the user and consumer are the same. In some cases, the decision authority and client can be the same. The roles and levels of responsibility for stakeholders tend to change over the course of the project’s life cycle. For example, in the Conception stage, consumers and clients assist the project manager in defining their needs, wants, and expectations. Consumer and client involvement in the project is naturally highest during this stage. In the Feasibility Analysis and Planning stages, stakeholders help to identify environmental factors that have a bearing on the project. Stakeholders assign resources to the project in the Implementation stage. In the Controlling stage, stakeholders verify and validate that the project is meeting its objectives. In the Termination phase, stakeholders evaluate whether the project satisfies schedule, cost, and product performance objectives.

Other Life-Cycle Models

Using the specific project management life cycle presented in this chapter is not the only possible approach to project management; it is presented simply as one model and methodology for possible use. The life-cycle model we present has the advantage of being a simple representation of how a project proceeds; the model is structured, promotes concurrency—several activities proceeding in parallel, is cyclic, provides feedback, supports ongoing changes, and if properly used, delivers value to stakeholders.

Two other life-cycle management approaches can be useful in managing projects. The Design for Life Cycle approach produces designs in which many facets of the product’s life cycle are considered concurrently. The Life Cycle Management approach is an integrated approach that assists in managing the total life cycle of products and services.

Two systems engineering approaches are the waterfall life-cycle model, depicted in Figure 3-3, and the spiral life-cycle model, depicted in Figure 3-4. The waterfall life-cycle model allows for recycling through earlier stages to solve problems that arise in subsequent stages. The spiral life-cycle model presents the notion of repeated cycling through a development process; each spiral produces increasingly complex prototypes, leading to full-scale development.

FIGURE 3-3: Waterfall Life-Cycle Model

FIGURE 3-4: Spiral Life-Cycle Model

One great source of information on project management and systems engineering life-cycle models is the website “Max’s Project Management Wisdom” (Archibald 2004). Table 3-2 provides a good summary of project life-cycle models from www.maxwideman.com.

TABLE 3-2: Project Life-Cycle Models