Commonly used terms as defined in PMBOK

Project

According to the PMBOK " A project is a temporary endeavor undertaken to create a unique product, service, or result." Projects are undertaken to fulfill objectives by producing deliverables. Projects are undertaken at all organizational levels. A project can involve a single individual or a group. A project
can involve a single organizational unit or multiple organizational units from multiple organizations. Examples of projects include but are not limited to:

• Developing a new pharmaceutical compound for market,
• Expanding a tour guide service,
• Merging two organizations,
• Improving a business process within an organization,
• Acquiring and installing a new computer hardware system for use in an organization,
• Exploring for oil in a region,
• Modifying a computer software program used in an organization,
• Conducting research to develop a new manufacturing process, and
• Constructing a building.

Objective

An objective is defined as an outcome toward which work is to be directed, a strategic position to be attained, a purpose to be achieved, a result to be obtained, a product to be produced, or a service to be performed.

Deliverable

A deliverable is defined as any unique and verifiable product, result, or capability to perform a service that is required to be produced to complete a process, phase, or project. Deliverables may be tangible or intangible. Fulfillment of project objectives may produce one or more of the following deliverables:

1. A unique product that can be either a component of another item, an enhancement or correction to an item, or a new end item in itself (e.g., the correction of a defect in an end item);

2. A unique service or a capability to perform a service (e.g., a business function that supports production or distribution);

3. A unique result, such as an outcome or document (e.g., a research project that develops knowledge that can be used to determine whether a trend exists or a new process will benefit society); and

4. A unique combination of one or more products, services, or results (e.g., a software application, its associated documentation, and help desk services).

Repetitive elements may be present in some project deliverables and activities. This repetition does not change the fundamental and unique characteristics of the project work. For example, office buildings can be constructed with the same or similar materials and by the same or different teams. However, each building project remains unique in key characteristics (e.g., location, design, environment, situation, people involved).

Temporary endeavor

The temporary nature of projects indicates that a project has a definite beginning and end. Temporary does not necessarily mean a project has a short duration. The end of the project is reached when one or more of the following is true:

• The project’s objectives have been achieved;
• The objectives will not or cannot be met;
• Funding is exhausted or no longer available for allocation to the project;
• The need for the project no longer exists (e.g., the customer no longer wants the project completed, a change in strategy or priority ends the project, the organizational management provides direction to end the project);
• The human or physical resources are no longer available; or
• The project is terminated for legal cause or convenience.

Projects are temporary, but their deliverables may exist beyond the end of the project. Projects may produce deliverables of a social, economic, material, or environmental nature. For example, a project to build a national monument will create a deliverable expected to last for centuries.

Projects drive change in organizations

From a business perspective, a project is aimed at moving an organization from one state to another state in order to achieve a specific objective (see Figure below).

Before the project begins, the organization is commonly referred to as being in the current state. The desired result of the change driven by the project is described as the future state.

For some projects, this may involve creating a transition state where multiple steps are made along a continuum to achieve the future state. The successful completion of a project results in the organization moving to the future state and achieving the specific objective.

Projects enable business value creation

Business value in projects refers to the benefit that the results of a specific project provide to its stakeholders. The benefit from projects may be tangible, intangible, or both. PMI defines business value as the net quantifiable benefit derived from a business endeavor. The benefit may be tangible, intangible, or both.

In business analysis, business value is considered the return, in the form of elements such as time, money, goods, or intangibles in return for something exchanged.

Examples of tangible elements include:

• Monetary assets,
• Stockholder equity,
• Utility,
• Fixtures,
• Tools, and
• Market share.

Examples of intangible elements include:

• Goodwill,
• Brand recognition,
• Public benefit,
• Trademarks,
• Strategic alignment, and
• Reputation.

Project Initiation

Organizational leaders initiate projects in response to factors acting upon their organizations. There are four fundamental categories for these factors, which illustrate the context of a project:

• Meet regulatory, legal, or social requirements;
• Satisfy stakeholder requests or needs;
• Implement or change business or technological strategies; and
• Create, improve, or fix products, processes, or services.

These factors influence an organization’s ongoing operations and business strategies. Leaders respond to these factors in order to keep the organization viable. Projects provide the means for organizations to successfully make the changes necessary to deal with these factors. These factors ultimately should link to the strategic objectives of the organization and the business value of each project.

Some Factors that Lead to the Creation of a Project

1. New technology - An electronics firm authorizes a new project to develop a faster, cheaper, and
smaller laptop based on advances in computer memory and electronics technology

2. Competitive forces- Lower pricing on products by a competitor results in the need to lower
production costs to remain competitive

3.Material issues - A municipal bridge developed cracks in some support members resulting in a
project to fix the problems

4. Political changes - A newly elected official instigating project funding changes to a current project

5. Market demand - A car company authorizes a project to build more fuel-efficient cars in response
to gasoline shortages

6. Economic changes - An economic downturn results in a change in the priorities for a current project

7. Customer request - An electric utility authorizes a project to build a substation to serve a new
industrial park

8. Stakeholder demands - A stakeholder requires that a new output be produced by the organization

9. Legal requirement - A chemical manufacturer authorizes a project to establish guidelines for the
proper handling of a new toxic material

10. Business process improvements - An organization implements a project resulting from a Lean Six Sigma value stream mapping exercise

11. Strategic opportunity or business need - A training company authorizes a project to create a new course to increase its revenues

12. Social need - A nongovernmental organization in a developing country authorizes a project to
provide potable water systems, latrines, and sanitation education to communities suffering from high rates of infectious diseases

13. Environmental considerations - A public company authorizes a project to create a new service for electric car sharing to reduce pollution

This is end of today's post, in the next post we shall discuss about Project management and it's importance