BA 246 PROJECT MANAGEMENT

Reminder Please go to LinkedIn and join “BA 246 Project Management” to download: • Syllabus •  Teams • Case Studies •  Lecture Slides • Other Announcements

Cross-Cultural Project Management for International Construction in China • Cross-Cultural Management and Construction Project

Management

• Case: New Chinese Hotel •  10-year Joint Venture between APC and YRTSB •  1999 article, during which skilled resources were scarce

in China, but some issues are still relevant today • Budget?

• USD 72M+ •  Timeline?

•  2-year completion

Cross-Cultural Project Management for International Construction in China •  Issues and Outcomes:

• Delay? • 2-years

• Contract in 2 different languages • How to address?

• 3 years after completion, APC reduced equity interest from 49% to 10%

Doing Business Right in China • Use of Chinese consultants: Cultural considerations in

Communications, Dispute Resolution, and Negotiations •  Identifying the Secretary General as the decision maker:

Power Distance

• Contracts in China? • Prevalence of Bribery

•  Local (Region-level) officials have tremendous discretionary power

• Relationships – Guanxi

Guanxi

• Network of relationships among various parties that cooperate together and support one another

• Correct "Guanxi" is vital to any successful business strategy in China

Guanxi

•  Develop relationships with suppliers, retailers, banks, and local government officials

•  They can indirectly link you to new acquaintances and information resources, thus helping you to develop other right "Guanxi" you need

•  The company has to maintain the relationship if it wants to do more business with the Chinese

What’s in it for us in the Philippines? • The management of contracts is one of the key operational processes by which commercial relationships are shaped and controlled; can be seen from a ‘legal’ and a ‘managerial’ perspective (Chartered Institute of Procurement and Supply)

• Equal importance of Contracts and Relationships in managing business

• Applicable to Project Management

Three Overriding Responsibilities of a Project Manager

• Acquiring Resources

• Fighting fires and obstacles (due to uncertainties)

• Leadership and making trade-offs Emphasis on Communication and Relationships!

Selling Project Ideas Task 1 • Work alone •  Think of a project for a company that you have worked

with; Describe this project in a few sentences • Make a few notes about how you would present your idea

to your team. What would you tell them for them to support your idea?

•  3 minutes

Selling Project Ideas Task 2 • Assign a Facilitator per group to monitor time • Each person will sell his idea to the team • All other members will listen, take notes, and avoid

making comments until all have had their turns; NO Q&A •  3 minutes • After everyone has presented, each person will give 1-

minute feedback to the best idea that he chooses •  Team will select winner based on votes

Selling Project Ideas Task 3 • Present the chosen Team Project Idea in class • Why have you chosen this? • What did they do that differentiated them and their ideas?

Self Reflection • My strengths in selling my ideas are? • What do I need to improve? • What actions can I take to improve?

Signed Project Charter • Formally recognizes the existence of the project

• Gives the project manager authority to spend money and commit corporate resources to the projects

The Business Case Answers the question:

“What do we have to gain from this project?”

Business Case Components 1.  Executive Summary

• Most high-level decision makers will not read more than 1 or 2 pages

2.  Project Drivers • What circumstances alerted us to the need for this

project? • Problems • Opportunities • Mandate (e.g. rules or government policies)

Solve! Seize! Comply!

Project Drivers • Problem-driven project?

• Opportunity-driven project?

• Mandate-driven project?

Problem-Driven Project: Edible Drone • Unmanned Aerial Vehicle

(UAV), which costs £150 ($183) is made of an edible, starch-based thermoplastic

• Can be filled with 50kg of vacuum-packed food, water and medical supplies

• With parachuted air drops the problem is you can’t guarantee where the loads will land

• UAV delivers humanitarian aid to within 7m of its intended target

Opportunity-Driven Project: Mactan-Cebu International Airport Terminal

• 4.5 million passengers a year to 8 million passengers in 2018

• Currently 44.13% completed

Mandate-Driven Project: Privatization of MWSS •  In 1997, Republic Act 8041, also known as “The Water Crisis Act” paved the way for the Privatization of Metropolitan Waterworks and Sewerage System (MWSS)

• Transferred the operational responsibilities of MWSS to Manila Water Company, Inc. (for the East Zone) and Maynilad Water Services, Inc. (for the West Zone)

• Duration of Concession Agreement: Aug 1997 - Aug 2022

Business Case Components 3.  Underlying Causes

• Reasons why the Problems or Opportunities exist

4.  Goal • What would we like to achieve? • Should be measurable

Business Case Components 5.  Options for Achieving the Goal

6.  Assessment of Options for Achieving the Goal •  List Advantages and Disadvantages of each option • Comparative financial analysis of each option • Multi-criteria factor rating • Multi-stage decision tree

Team Work •  Identify the Project Driver/s of your chosen project –

specify what, where, when, and how significant • Establish goal for the project • Generate a list of at least 3 different options for achieving

the goal •  5 minutes

SELECTING PROJECTS

How do you select projects? • Project Managers typically are not involved in project selection

• However, the projects considered and process of selecting influence how the Project Managers plan and manage the project

Numeric Selection Methods • Financial Assessment Methods

• Payback Period • Discounted Cash Flow

• Scoring Methods • Unweighted 0-1 Factor Method • Weighted Factor Scoring Method

Payback Period = Initial Fixed Investment Annual Net Cash Inflows

Payback Period Example: Project A initial investment of $5 million Project B initial investment of $2 million Projects are expected to deliver the following revenues in a linear manner over a period of several years

Year 1 Year 2 Year 3 Year 4 Year 5 Project A 1.5 M 1.5 M 1.5 M 1.5 M 1.5 M Project B 500K 500K 500K 500K 500K

3.33 years 4.00 years

• What are the disadvantages of Payback Period?

• Are cash flows per year always uniform or same?

• What about the effects of time value of money?

Discounted Cash Flow Net Present Value (NPV) is a factor of • Net Cash inflows per Period • Required Rate of Return or Hurdle Rate = NPV(rate,value1,value2,..) [in Excel] = CashFlow1 + CashFlow2 + … [formula] (1+R)1 (1+R)2

Less • Initial Investment

Discounted Cash Flow Example: Project A initial investment of $40,000 Project B initial investment of $40,000 Required Rate of Return of 10% with Net Cash Flow below

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Project A 21,000 16,000 9,000 8,000 4,000 2,000 Project B 5,000 6,000 8,000 10,000 16,000 18,000

8,153 2,440

Numeric Selection Methods • Scoring Methods

• Unweighted 0-1 Factor Method • Weighted Factor Scoring Method

Unweighted 0-1 Factor Method

Criteria Project A Project B No increase in energy requirements 1 1 Potential increase in market share 1 No new facility required 1 No new technical expertise required 1 Total Score 2 3

Weighted Factor Scoring Method

Criteria Weight Project A Project B No increase in energy requirements 10% 5 4 Potential increase in market share 40% 4 2 No new facility required 20% 0 5 No new technical expertise required 30% 2 5 Total Score 100% 2.7 3.7

In Conclusion • Which is the best method?

• Use a combination of Project Selection Methods

Next Meeting: Friday •  Team: Submit 1-page Project Proposal with executive

summary, project driver, underlying causes, goal, stakeholders, deliverables (Email before class on Wednesday, 22 March)

• Bring 1 Laptop per team

• Download and familiarize Mind Mapping Software: Mindjet MindManager (or equivalent)

End