1.1 What Is a Project?

According to the Project Management Institute (PMI) in its A Guide to the Project Management Body of Knowledge (PMBOK Guide), a project is defined as “a temporary endeavor undertaken to create a unique product, service, or result.”1

Projects are undertaken by all levels of an organization and may include several departments, divisions, or business units. Projects can be undertaken by an individual, a group, or a team.

Let us break down this definition of a project into its parts and add a few other characteristics to clarify what a project is. This exercise will help you better apply this knowledge to the real world.

1. Temporary

2. Unique product, service, or result

3. Drive change

4. Enable business value creation

5. Other project characteristics

Temporary Endeavor

Temporary endeavor means that a project has a specific start and end date. That specific timeframe may be one month, or it may be many months or years, but it does not go on into perpetuity. For example, building the pyramids of Giza, hosting the Olympic Games, developing a new all-electric commercial airplane, creating a new software or mobile application, planning and executing a wedding, building an apartment building, and adding on to a house are all temporary endeavors. However, an assembly line that produces potato chips 24 hours a day, seven days a week is production, not a temporary endeavor.

Temporary does not mean that a project has a short duration; some projects may last for years. According to the PMBOK Guide, the end of a project is reached when one or more of the following criteria have been realized:

• The project’s objectives have been achieved

• The objectives will not or cannot be met

• The project’s funding is exhausted or no longer available

• The need for the project no longer exists

• The human or physical resources are no longer available

• The project is terminated for legal cause or convenience

Unique Product, Service, or Result

Unique product, service, and result refer to the output (deliverable) or outcome (result) of a project. If an output or outcome is not unique and repeatable, such as the bags of potato chips that roll off an assembly line or the apps that you download onto your mobile device, its creation does not qualify as a project. As defined in the PMBOK Guide,

Deliverables may be tangible, such as a new consumer product or a new manufacturing process, or intangible, such as a patent or a marketing campaign. According to the PMBOK Guide, deliverables that fulfill an organization’s strategic objective include the following:

• A unique product is an artifact that is produced and is quantifiable. A unique product can be either a component of another item, an enhancement or correction to an item, or a stand-alone item.

  A new electric motor to be installed in Tesla vehicles is an example of a component of another item, an automobile. A new version of autonomous driving software for Tesla automobiles that offers additional functionalities and corrects known issues with the previous version is an example of an enhancement or correction of an item. The Tesla Model 3 was a project that produced a new end-item in itself, the most affordable Tesla.

• A unique service is a specific option or the capability to perform a service. Google, Apple, and others offer cloud storage services and music streaming services. The development of these services represents a unique deliverable.

• A unique result is an output, outcome, or document. For example, a publicly traded company that has just been caught, and publicly shamed, in an ethical scandal may initiate a program to change its corporate culture to one that values ethical actions, such as transparency and sustainability. The improvement program may entail several projects that aim to change management and employee behavior and employees’ perceptions of the organization, and it may also include projects that improve the way the public sees the organization. Another example of a unique result for an organization may come after several years of multidisciplinary research, with the publication of a paper that dispels existing norms, establishes new findings and best practices, and allows society to improve.

• A unique combination of one or more products, services, or results may also be a deliverable that fulfills a strategic objective. An example of this is a utility patent that Uber has filed to improve a business process that verifies the identity of drivers and passengers, thus increasing safety and accountability. The patent is a tangible document, the idea is intangible and describes a way of doing something, and the result is a service through a tangible mobile device that benefits drivers and passengers.3

  Another example of this may be a new enterprise resource planning (ERP) and integrated customer resource planning (CRM) system initiative that management has approved, funded, and prioritized. This system initiative will be utilized by everyone in the company and is projected to save time and money, improve customer experience, and grow sales revenue. The configuration and installation of this system is a product deliverable, the training programs for the various departments and personnel are service deliverables, and the business change initiative to communicate the utility and benefits of the new system to employees and customers is a result deliverable.

It is important in project management to understand the difference between outputs and outcomes. Using the example above, the installation and successful configuration of the ERP/CRM system can be considered an output. It is a deliverable that does not create any value independently. For example, the installation team may do a fine job configuring and installing the new ERP/CRM system on time, on budget, and to the specifications required, but that output has no value unless employees or customers actually use the system as intended to achieve the desired strategic objective. Such a result is considered the outcome. An outcome is achieved when employees are actively and productively using the system and the employees and customers realize the benefits of the system. The successful implementation is a work product that was delivered, and the active use of the system is the transformational change, or result, that satisfied the strategic goal of the ERP/CRM system initiative.

With regards to being unique, projects may include elements that are common and repetitive, and therefore not unique. An experienced and successful custom home builder that has been in business for 20 years may use the same suppliers, builder resources, systems, and processes for each house, yet each house is unique in its location, design, environment, customer preferences, zoning, neighborhood associations, and municipal building codes. Therefore, each home built is a unique project.

Drive Change

Projects drive organizational change. Projects are initiated to move organizations from one state to another state to achieve a specific objective. During this change, the project may produce various outputs that are aimed at achieving a strategic outcome.

Enable Business Value Creation

Business value, as defined by PMI, is the net quantifiable benefit derived from a business endeavor. The benefit may be tangible or intangible. Business value is often considered as the return on time, money, goods, or intangibles in return for something exchanged. The goal of a project is to create business value. Examples of tangible value may include the following:

• Monetary currency

• Stock equity

• Utility

• Fixtures

• Tools

• Market share

Examples of intangible value may include the following:

• Trademarks

• Goodwill

• Reputation

• Brand recognition

• Public benefits

• Strategic alignment

Other Project Characteristics

Thus far, we know that projects are temporary endeavors that create a unique product, service, or result. We also know that projects can be large or small and may be undertaken by an individual, an external project management professional, or a team within an organization. There are other characteristics of a project, and these characteristics are part of why project management is a growing field and its methodology and processes are highly valued by many individuals and organizations.

In this section, we will consider some of these additional project characteristics:

1. Multidisciplinary

2. Complex

3. Conflict

4. Part of a Program

5. Uncertainty and Risk

Multidisciplinary and Complex

Multidisciplinary projects are inherently complex and are most often defined by high cost and resource requirements. Planning a birthday party for a four-year-old is a fun project that involves some coordination for the invitations, cake, party hats and accessories, games, and perhaps a bouncy house, but a birthday party lacks complexity and exists in a single discipline. Now consider a $150 million six-year highway reconstruction project initiated by the department of transportation. This project will impact millions of commuters, truck drivers, and tourists as well as local businesses and neighboring residences. Such a large, multidisciplinary, and complex project will require many resources, including subject matter experts, consultants, engineers of various types, construction companies, public relations consultants, and steering committee(s). It will also require website management to keep the public informed and gain approval from state, county, and city politicians, as well as federal funding and approval. This type of complex, multidisciplinary project definitely requires the full suite of formal project management standards, knowledge, and consultancy.

Some disciplines that may be required for complex projects include software, mechanical, civil, and electrical engineering. Within these disciplines, there may also be specialized skills, knowledge, and experience that are necessary to address specific project requirements and deliverables (e.g., nuclear engineering for a power plant project, aerospace engineering for the development of a new aircraft, and petroleum engineering for an oil and gas project). Some examples of the subject matter experts required for more complex projects are environmental consultants and auditors for highway infrastructure or neighborhood redevelopment projects, structural engineering and fire protection consultants for high-rise residential and office towers, and cybersecurity consultants for IT projects.

While the line between a project and a non-project can be blurry, the absence or presence of multiple disciplines and complexity is often a good determinant as to whether something is a program, a project, or a task. For practical purposes, building a birdhouse and fixing a car are considered tasks because even though these temporary endeavors may be unique, they lack the multidisciplinary and complexity characteristics that require project management knowledge, standards, and consultancy.

An initiative to design and produce Alice, a new electric-powered mini-airliner by Eviation, is complex and requires multiple disciplines (e.g., overall design and the engineering disciplines required for testing, materials, regulation, certification, capital, tooling, and manufacturing). Such an endeavor would be considered a program, within which there would be several projects to focus on and some unique deliverables to be integrated together for the desired outcome of a new electric-powered commercial aircraft. Portfolios, programs, and projects will be addressed in more detail in section 1.5.

Conflict

As will be introduced in more detail in Topic 2 and Topic 4, projects often involve conflict, as they vie for competing interests, funding, resources, and schedules. Inherently, projects promote change. Organizational change often elicits fear, resistance to change, and conflict. Greater than 90% of project management is about people and communication with project stakeholders, such as individuals, departments, business units, executive leadership, external consulting resources, investors, suppliers, and customers. Not only does each person have a unique personality and social style but each person also has unique interests, priorities, and schedules. Interfacing with stakeholders who often have opposing interests creates conflict and uncertainty. Competing for scarce resources, such as time, money, and human capital, creates conflict.

Part of a Program

As will be discussed in section 1.5, projects are often part of a larger initiative or program. In the Alice project, the entire creation of a functioning prototype may be considered a program that is made up of various integrated projects. For example, one project within the program may be to develop the electric motor, the batteries, and the related parts and systems. Another project may focus on the airframe and exterior. Another project may focus exclusively on the interior. A separate project may center on the mechanical systems of the aircraft. The outputs of each of these projects are integrated together into the finished prototype.

Uncertainty and Risk

Even with proper project management, projects will always exist in an environment of uncertainty and risk. Risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives. While project management cannot eliminate risk and uncertainty, it can reduce risk and uncertainty and prepare you to better respond to risks when they materialize into issues.

All projects, by nature of being unique, exist in an environment of uncertainty. Imagine the uncertainty Tesla projects have existed in. Prior to Tesla, an all-electric car company did not exist. Prior to the Roadster and Model S, no all-electric car had achieved widespread market success. Similarly, autonomous driving vehicle technology and various artificial intelligence projects exist in technological uncertainty, regulatory and market acceptance uncertainty, safety uncertainty, and financial return on investment uncertainty. The race for a COVID-19 vaccine was surrounded with risk and uncertainty.

Figure 1.3 illustrates that at the start of any project, there is more uncertainty than there is knowledge about what the future will hold. With time, as the project moves through the beginning phase, the planning phase, and the executing phase, the project manager and project team progressively gain knowledge about the project and thus obtain better knowledge about the risks and uncertainty. As a project progresses, some risks will no longer be active because the project is past the point of those risks being relevant. At some point, knowledge about the project exceeds the unknowns. Even after a project is completed, unknowns that could affect the long-term success of the project’s outcome remain. Uncertainty and risk can never be eliminated.