PRINCIPLES OF PROJECT MANAGEMENT

Project Management Objectives 

The objectives of project management are to execute a project so that deliverables can meet 

scope requirements on budget and schedule, and at acceptable risk, quality, safety, and 

security levels. The example maintenance facility project is to deliver a five bay facility that 

meets pre-determined performance specifications within the three year schedule. 

Many times project objectives compete with each other and require skillful balancing 

throughout the project life cycle by the project manager. For example, unexpected soil 

conditions delay the maintenance facility construction contractor. The schedule can be made 

up by paying additional costs for contractor overtime to make up the delay. This is a 

cost/schedule trade-off. 

The greatest threat to project success is scope creep. The addition of a sixth bay to the 

maintenance facility we mentioned earlier is a clear example of added scope. Often projects 

face more subtle scope creep because the project manager allows the users to “piggy back” 

additional requirements on the project. For example, it may be that originally in the CIP 

process the maintenance of non-revenue vehicles was to be done in a different location. 

During the project life cycle the lease on the non-revenue location was lost and the 

maintenance department wants them maintained at a new bay at the new facility. The project manager will need to address such changes 

through retracing of the CIP process and obtaining new project authorization. 

In addition to scope, budget, and schedule, it is extremely important that the project manager facilitates a discussion of the project risk, quality, 

and safety and security objectives and incorporates the outcome in the Project Management Plan (PMP). Projects require well-defined 

configuration management, change control systems, and procedures for scope and change control, as described in Chapter 9. 

Project Management Process 

The project management process begins with identification of the user requirement, project constraints, resource needs, and establishment of 

realistic objectives to meet the strategic goals. Many times this will be an iterative process as new information becomes available through 

efforts by various professionals on the project and input from third parties, communities, users, and agencies having jurisdiction. 

The strategic goals that relate to capital projects are summarized in CIPs. Many times this information is in the Agency’s short range and long 

range transit plans. The approval of the project by the governing body will establish the project authorization. The project manager uses the 

project authorization to develop project management plans for implementation of the project. 

The project manager must have prior experience (or should consult with peers with prior experience) with the particular project type to balance 

the above competing objectives in a timely manner to adequately plan the project. Lack of prior experience will increase risks of not achieving the project objectives. In Chapter 3 – Project Initiation, we cover a discussion of project authorization and the PMP. In addition to scope, 

budget, and schedule, it is extremely important that the project manager facilitates a discussion of the project risk, quality, and safety and  security objectives for the project and incorporates the outcome in the PMP.

PURPOSE OF THIS CHAPTER 

Introduction 

It is important to understand how projects are developed. This chapter discusses the process for developing a Capital Improvement Plan 

(CIP) including: how a CIP is prepared, the organization needed to support a CIP, the identification of capital asset needs, how to prioritize 

projects within a CIP, financial planning to balance capital expenditures with other uses of funds and sources of available funding, and ways in 

which projects are authorized. 

Project Development 

During project development, the Agency identifies the need for a project, assesses the project’s ranking in importance relative to other 

projects, analyzes its funding requirements, and decides whether to authorize the project for implementation. Planning how to manage an 

authorized project is discussed in Chapter 3 – Project Initiation. 

The Agency’s mission, vision, and resulting strategic plan govern the development of the CIP. The strategic plan looks to the Agency’s 

mission that in turn defines its vision for the future and the strategies it will adopt to achieve the mission’s goals and objectives. The Agency 

can then determine what assets it needs to accomplish its strategies and identify any gaps between its existing and needed assets. Simply 

stated, a capital project is developed as a means of filling the gap between the needed and the existing assets. The CIP is a prioritized list of 

projects to meet the Agency’s capital asset needs. Figure 2-1 depicts the project development and CIP process. 

Not all projects in a CIP can be immediately implemented due to funding and other constraints. The Agency has to rank the relative 

importance of the projects and make hard choices to select which projects can be implemented, and which must be deferred along with the 

strategic objectives that depend on them. This part of the project development process requires a careful balancing of project costs against 

available financing and is a complex mix of public policy, public financing, and capital and operational budgeting.

INTEGRATE AGENCY GOALS INTO CAPITAL IMPROVEMENT PLAN 

If you are charged with managing the Agency’s project development process, it is important that you ensure that the resulting CIP is consistent 

with the Agency’s goals. Steps you should take to integrate the Agency goals into the CIP include: 

ƒ Assessing the capital resources needed to achieve the Agency’s goals 

ƒ Identifying gaps between current and needed capital resources 

ƒ Evaluating alternative approaches to filling the gaps. 

Success in assessing capital resource needs requires you to first confirm that the Agency’s goals and objectives align with the Agency’s 

mission. To do this you will need to put in place a strategic planning process where the Agency’s policy setting executive can re-examine the 

Agency’s mission in response to changing needs in community requirements, government mandates, board priorities, operations, and 

organizational strengths and weaknesses; and set policy goals and objectives consistent with the mission. With the goals and objectives in 

place, you can then assess what capital resources the Agency will need to accomplish each goal and objective. 

To identify any gaps between current and needed resources you will need an inventory of current capital assets. 

Soliciting the opinions of operations, maintenance, and engineering personnel who work directly with a current asset will provide you with a 

good source of information on the use and performance of an asset usually defined in terms of: 

ƒ Asset type, location, and status 

ƒ Physical condition and maintenance needs 

ƒ Use and level of performance 

ƒ Ownership of the asset when the service is contracted out. 

Comparing resources available with resources needed with enable you to identify any gaps and begin planning to fill them. 

As part of the project development process it is prudent to consider a range of alternatives to filling identified asset gaps. Not all strategic 

needs have to be filled with assets that are owned and operated by the Agency. In many cases it may be beneficial to outsource work or 

lease facilities. In our example maintenance facility project, it may be more beneficial to outsource heavy body work and painting to a local 

paint facility and avoid building a paint and body shop that does not get much use. Alternatively, adjacent Agencies may want to pool 

resources for certain functions and perform the work in shared facilities. Alternatives that you should consider to fill asset gaps include: 

ƒ Construct the capital asset 

ƒ Purchase the asset 

ƒ Modify and/or renovate an existing asset(s) 

ƒ Contract out the activity the asset would support 

ƒ Lease the asset 

ƒ Share the asset with adjacent agencies 

ƒ Privatize the activity the asset would support.

         Fully Practical Hand Book