Ultimate Project Management Toolbox

Synopsis

Have you ever wanted to run a project like Elon Musk? What about the ability to predict a project's success like a financial analyst at Goldman Sachs? Here's the Ultimate Project Management Toolbox that every project lead needs in their toolbox to ensure success from the very start. You'll gain how to calculate internal rate of return, conduct Monte-Carlo analysis, manage teams with a RACI matrix, write a project charter, track project status with dashboards and Gantt charts and conduct a post mortem survey.

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How can these project management tools help in predicting a project's success like a financial analyst at Goldman Sachs?

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Project management tools can help predict a project's success in several ways similar to a financial analyst at Goldman Sachs. They allow for the calculation of the internal rate of return, which can provide insight into the potential profitability of a project. They also enable the conduct of Monte-Carlo analysis, a statistical technique that allows for the modeling of different outcomes in a process that cannot easily be predicted due to the intervention of random variables. Tools like RACI matrix can help manage teams effectively, ensuring tasks are completed on time and resources are used efficiently. Project charters can provide a clear overview of the project, its objectives, and key stakeholders, while dashboards and Gantt charts can track project status and progress. Finally, a post mortem survey can provide valuable insights into what worked and what didn't, which can be used to improve future projects.

How can a post mortem survey contribute to the success of future projects?

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A post-mortem survey, also known as a project retrospective, is a tool to evaluate the strengths and weaknesses of a project after its completion. It provides valuable insights into what worked well, what didn't, and areas for improvement. This feedback can be used to refine processes, improve team collaboration, and increase efficiency in future projects. It also helps in identifying risks and issues that were not apparent at the project's outset, thereby contributing to better risk management in future projects.

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Outcome

With this framework, you'll learn the various stages of project management, from how to evaluate your project's viability, manage your team, track your progress and successfully complete your project with valuable takeaways for your next one. We'll use real-world examples from companies like SpaceX, Instagram, Microsoft, and also share an often-forgotten project management fail from Amazon and how you can avoid similar mistakes.

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How does this framework contribute to the successful completion of a project and provide valuable takeaways for the next one?

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This framework contributes to the successful completion of a project by guiding you through various stages of project management. It helps in evaluating the project's viability, managing the team, and tracking progress. It also provides valuable takeaways for the next project by using real-world examples to illustrate successful strategies and common pitfalls. This allows you to learn from both successes and failures, and apply these lessons to future projects.

What was the project management fail from Amazon and how can it be avoided?

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The specific project management failure from Amazon is not mentioned in the content provided. However, Amazon has had several project failures in the past. One notable example is the Fire Phone, which was discontinued just a year after its launch due to poor sales and reviews. This could have been avoided by better market research and understanding the competitive landscape. It's also crucial to listen to customer feedback and adapt the product accordingly. These are general project management principles that can help avoid similar mistakes.

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Tool highlights

RACI assignment framework

Once you know your project's risks and potential rewards, it's time to assign roles and responsibilities.

In 2015, Instagram's Head of Engineering had a problem — the company had a low transparency score in a survey of employee satisfaction. He discovered the issue was a lack of clarity behind how decisions were made. The issue wasn't communication about decisions, but communication about why decisions were made. So how did Instagram solve its clarity problem? A framework called RACI Team Roles & Responsibilities. (Slide 23)

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How can a project charter enhance the clarity and transparency of decision-making in a project?

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A project charter can enhance the clarity and transparency of decision-making in a project by providing a clear and concise document that outlines the project's objectives, scope, stakeholders, and deliverables. It serves as a reference guide for all project decisions, ensuring that they align with the project's goals and objectives. This transparency helps to build trust among team members and stakeholders, as they can see how decisions are being made and how they contribute to the project's success.

What is the significance of conducting a Monte-Carlo analysis in evaluating project risk?

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Monte Carlo analysis is a statistical technique that allows for a risk assessment by running a large number of simulations using possible inputs. This method is significant in evaluating project risk as it provides a range of possible outcomes and the probabilities they will occur for any choice of action. It allows project managers to understand the risk and uncertainty in a project. It's particularly useful in forecasting when there is significant uncertainty in making estimates and decisions.

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RACI stands for Responsible, Accountable, Consulted and Informed. Under the RACI framework, roles are assigned based on who is responsible for a decision, who is accountable for that decision, who is consulted before the decision is finalized and who is informed of decisions when they are made. The purpose of RACI is to make sure all stakeholders know their responsibilities, confirm that resources are rightfully allocated, and create transparency so everyone is on the same page and be held accountable for what they are responsible for.

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Can you name a company that could benefit from the RACI framework and explain how?

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Any company that deals with complex projects could benefit from the RACI framework. For instance, a construction company could use it to clearly define who is responsible for each aspect of a project, who needs to be consulted before decisions are made, and who needs to be informed of those decisions. This would ensure that everyone knows their roles and responsibilities, resources are allocated correctly, and there is transparency throughout the project.

What are the challenges in applying the RACI framework and how can they be overcome?

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Applying the RACI framework can present several challenges. Firstly, it requires clear communication and understanding among all stakeholders about their roles and responsibilities, which can be difficult in large or complex projects. Secondly, it can be challenging to ensure that everyone adheres to their roles and does not overstep their boundaries. Lastly, it can be difficult to maintain the framework over time as roles and responsibilities may change. These challenges can be overcome by providing thorough training on the RACI framework, regularly reviewing and updating the RACI matrix, and fostering a culture of open communication and accountability.

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In Instagram's case, fewer decision-makers and more transparency around who made the decisions made it possible for the teams to move faster. Leaders were held more accountable and the RACI framework was scaled across the company.

Project charter

You've assigned team roles and everyone knows their responsibility on the project — but how do you keep the team focused on the project's main goal, especially over long timelines?

In 2002, Elon Musk wanted to buy a rocket to begin his dream to send humans to Mars. However, the price to buy one cost as high as $65 million dollars. Musk used a concept called "first principles" to think about how he could reduce costs enough to solve the financing problem. It turns out the raw materials only cost around two percent of the price of a rocket, so he purchased the raw materials and built one himself. Musk was not only able to cut the cost to launch a rocket by 10x, but did it at a profit. As a result, SpaceX is now worth roughly $74 billion as of September 2021.

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What are the benefits of using a project charter in aligning internal and external stakeholders around a common purpose?

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A project charter serves as a crucial tool in aligning both internal and external stakeholders around a common purpose. It provides a clear understanding of the project's goals, scope, technical requirements, risks, constraints, assumptions, and dependencies. This comprehensive overview sets expectations as the project develops, serving as a source of truth that encourages all stakeholders to adhere to the plan. It not only unites everyone involved but also helps prevent misunderstandings and conflicts, ensuring smoother project execution.

How can a project charter be used to manage the expectations of stakeholders in a project?

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A project charter can be used to manage the expectations of stakeholders in a project by serving as a clear and concise document that outlines the project's goals, scope, technical requirements, risks, constraints, assumptions, and dependencies. It sets the expectations for the project and serves as a source of truth that all stakeholders can refer to throughout the project's lifecycle. This helps to ensure that everyone is on the same page and understands what is expected, which can help to prevent misunderstandings and conflicts.

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To apply the concept of first principles to your own projects, you can use a project charter to unite all internal and external stakeholders around a common purpose. A project charter is not only the "elevator pitch" for your project's goals but outlines the scope of the project as well as its technical requirements, risks, constraints, assumptions and dependencies. These core principles of a project set expectations as the project develops, and can be used as the source of truth that grounds all stakeholders to stick to the plan.

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The project charter also outlines the project's timeline and budget, key stakeholders in charge, and criteria for success, so everyone involved knows who is responsible for what and what accomplishing the project should look like.(Slide 29-31)

Project dashboards and gantt charts

So now that you have a plan that's built on a strong foundation, how is that plan going?

Successful project managers need a project status dashboard tool to track their project's status across phases and key performance indicators. This dashboard helps communicate project updates to external stakeholders and internal team members. You can measure your time versus product phase and timeline versus resource capacity to measure your current status against goals outlined in the project charter. (Slide 39-43)

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To follow your progress over time, use a Gantt chart to outline your activity's progress against multiple timelines, with different visualizations for monthly, quarterly, half-year or full-year views. (Slides 44-50)

Post-mortem meeting

With the tools to track progress and stay on schedule, you should have all the resources you need to complete your next project — so what do you do when the project is over?

In July of 2014, Amazon launched its own smartphone, called the Amazon Fire phone. But two months after launch, Amazon already began offering massive discounts to make the phone practically free with a contract. A month after that, Amazon wrote off nearly $170 million worth of Fire Phone inventory as a loss, eventually discontinuing the product completely. While Amazon's Kindle e-reader was a massive success that enabled on-the-go reading, the Fire Phone was dead-on-arrival. So where did Amazon go wrong? Amazon likely asked itself the same question in a []boldpost mortem meeting.[/bold](Slide 54)

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To ensure future success on your next project, make sure to conduct a post-mortem meeting where you can hold a team survey to learn insights on where your team felt the project succeeded or where there's room for improvement. You can survey the project as a whole or its individual achievements. You can also survey the team's collaboration and productivity, or even survey your own management style to learn how you can improve your project management. These post-mortem surveys gather feedback from everyone so you can turn your next project into an even greater success.

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In Amazon's case, a post-mortem revealed that instead of Amazon's typical emphasis on what the consumer wants, they built a phone no one wanted when all the consumer needed was a new app or two.

IRR calculation

Before a project begins, you need to figure out how much it's going to cost.

According to Goldman Sachs, over $504 billion dollars of stock buybacks were issued in 2021 — the most in over 22 years. Microsoft made headlines when it announced its own $60 billion dollar stock buyback program in September. So how do companies like Microsoft make the decision to deploy so much capital to stock buybacks? The answer is an(Slide 8)

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To calculate a project's cost, project managers use a tool called an internal rate of return, or IRR, formula. IRR calculations are used to weigh a project's expense against its potential gains. Corporations use IRR to evaluate stock buyback programs. In Microsoft's case, Microsoft used IRR calculations to determine owning more of their own stock would be a better investment in the long run than an acquisition of another company.

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Typically, IRR is calculated via Microsoft Excel, as hand calculations require a lot of trial and error. To determine your project's IRR, estimate the initial cost of the investment and how much it will bring in future cash flows. You use these assumptions and plug them into the IRR formula to see if the cash inflows negate the initial investment's outflow to make the net present value of the project equal zero. (Slide 7)

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How does the use of near-quantum computers align with Goldman Sachs' digital transformation initiatives?

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The use of near-quantum computers aligns with Goldman Sachs' digital transformation initiatives by enhancing their risk analysis capabilities. The current risk analysis models used by Goldman analysts require significant computing power and are often done overnight. Near-quantum computers could run these simulations 100 times faster, thus improving efficiency and potentially providing more accurate results. This aligns with the broader digital transformation initiatives by integrating advanced technology to improve business processes.

How can other companies implement near-quantum computers in their operations?

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Other companies can implement near-quantum computers in their operations by first identifying the areas that require high computing power, such as risk analysis, data processing, and simulations. They would then need to invest in near-quantum computing technology and infrastructure. This could involve partnering with tech companies that are developing these computers. Additionally, they would need to train their staff or hire experts who can operate and maintain these systems. It's important to note that the implementation of such advanced technology would require a significant investment and a strategic approach.

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As a project manager, you should always pick a project with the highest net present value, not the highest IRR. This is because the IRR is the lowest level of return to recoup an investment, while a higher net present value points to the long-term value of a project.

Monte-carlo analysis

After you know the cost and benefit of a project, you will also need to calculate the associated risks. Many project managers need to conduct a project risk analysis to determine potential downside concerns before undertaking a massive new venture.

Goldman Sachs has a new technology it plans to use to conduct its risk analysis: near-quantum computers. The current risk analysis models used by Goldman analysts take a ton of computing power and are often done overnight. While a fully quantum computer could perform these simulations a thousand times faster, this technology is still ten years away. However, near-quantum computers could run these simulations 100x faster and could be ready in five years or less.

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The formula these simulations run is called a Monte-Carlo analysis, which is used to predict the probability of different outcomes as random variables are added. To use a Monte-Carlo analysis, assign multiple values to an uncertain variable to get a range of results. Take the average to obtain an estimate, which usually takes the shape of a bell curve. The average return becomes the most likely outcome, with an equal chance that the return could be higher or lower.

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Because of the way Monte-Carlo works, it can be assumed that there is a 95% chance the end result will wind up within two standard deviations from the average.(Slide 12)

For more tools on what makes project managers successful, download this framework. You'll gain additional tools like cost estimation tables, net present value calculators, project benefits maps, project design structure matrices, work breakdown structures, critical path diagrams, kanban boards, and so much more. Enjoy!

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