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Introduction toPROJECT MANAGEMENT
By: Prof. Kuldip Chander
24th September 2012
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What is project ?
PM BOOK:
A temporary endeavor undertaken to create a unique product ,service or result.
Oxford English Dictionary:
An individual or collaborative enterprise that is carefullyplanned and designed to achieve a particular aim.
A mission to create a unique product, facility or service withindefined scope, quality, time & cost.
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Project Life Cycle
Project life cycle defines the various phases to be undertaken
to accomplish the project. It defines the beginning andcompletion of the project.
Scope of work, out come along with persons involved in eachphase is well defined each such phase is marked bycompletion of one or more deliverables.
The conclusion of a project phase is generally marked by areview of both key deliverables and project performance todate.
Determine if the project should continue into its nextphase.
Detect and correct errors.
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Project Life Cycle
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Project Management Processes
Initiating processes -Authorizing the project along with
finalizing the outcome of the project. Planning Processes - Defining and refining objectives and
selecting the best of the alternative courses of action to attainthe objectives that the project was undertaken to address.
Execution Processes - Coordinating all resources (Men,Machine & Material) to carry out the plan.
Controlling Processes - Ensuring that project objectives arefulfilled through monitoring and measuring progress regularlyto identify variances from plan so that corrective action can betaken when necessary.
Closing Processes - Formalizing acceptance of the project orphase and bringing it to an orderly end.
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Process Group Links within a Project Phase
Note:- Arrows Depict Information Flows
Initiating
Processes
Planning
Processes
Executing
Processes
Controlling
Processes
Closing
Processes
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Project life cycle
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Core Planning Processes
Scope Planning - Developing a written scope statement
(defining the boundaries) as the basis for future projectdecisions.
Scope Definition - Subdividing the major project deliverablesinto smaller, more manageable components.
Activity Definition - Identifying the specific activities that must
be performed to produce the various project deliverables. Activity Sequencing - Identifying and documenting interactivity
dependencies.
Activity Duration Estimating - Estimating the time periodsrequired to complete individual activities.
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Core Planning Processes
Schedule Development - Analyzing activity sequences,activity durations, and resource requirements to create theproject schedule.
Resource Planning - Determining resources (Men, Machine,Materials, etc.) their respective quantities required along withthe time of procurement of each one to perform projectactivities.
Cost Estimating - Developing an estimate of the costsrequired to accomplish project activities.
Cost Budgeting - Allocating the overall cost estimate toindividual work packages.
Project Plan Development - Taking the results of otherplanning processes and putting them into a consistent,coherent document.
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Planning Facilitating Processes
Quality Planning - Identifying the quality standards relevant tothe project and methodology to attain them.
Organizational Planning - Identifying, documenting, andassigning project roles, responsibilities, and reportingrelationships.
Staff Acquisition - Engaging/ controlling the human resourcesrequired for the project, assigning the tasks to individuals.
Procurement Planning - Determining what to procure, howmuch to procure, and when.
Solicitation Planning - Documenting product requirements andidentifying potential sources.
Communications Planning - Detailing (Who, What, When &How) the information and communications requirement of thestakeholders i.e Information Flow Chart
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Planning Facilitating Processes
Risk Management Planning - Enlisting the risks involved
at each stage and finalizing the plan to mitigate these risksin a project.
Qualitative Risk Analysis - Performing a qualitativeanalysis of risks and conditions to prioritize their effects onproject objectives.
Quantitative Risk Analysis - Measuring the probability andimpact of risks and estimating their implications for projectobjectives.
Risk Response Planning - Developing procedures andtechniques to enhance opportunities and to reduce threatsto the project's objectives from risk.
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Executing Processes
Executing processes include core processes and facilitatingprocesses.
Project Plan Execution - Carrying out the project plan byperforming the activities included therein.
Quality Assurance - Evaluating overall project performanceon a regular basis to provide confidence that the project isadhering to the quality standards defined in planning
process. Team Development - Developing individual and group
skills/ competencies to enhance project performance.
Machine/ Material Management - Defining the source,procurement process (tendering, quotations) &
procurement timings. Information Distribution - Ensuring information flow to
project stakeholders in a timely manner.
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Controlling ProcessesControlling processes include core processes and facilitating
processes.
Integrated change control - Coordinating changes across theentire project.
Scope verification - Formalizing acceptance of the project scope.
Scope Change Control - Controlling changes to project scope.
Schedule Control - Controlling changes to the project schedule. Cost Control - Controlling changes to the project budget.
Quality Control - Monitoring specific project results to determineif they comply with relevant quality standards and identifyingways to eliminate causes of unsatisfactory performance.
Performance Reporting - Collecting and disseminatingperformance information such as status reporting, progressmeasurement, and forecasting.
Risk Monitoring and Control - Keeping track of identified risks,monitoring residual risks and identifying new risks, ensuring the
execution of risk plans, and evaluating their effectiveness inreducing risk.
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Closing Processes
Contract Closeout - Completion and settlement of the contract,
including resolution of any open items. Administrative Closure - Generating, gathering, and
disseminating information to formalize phase or projectcompletion, including evaluating the project and compilinglessons learned for use in planning future projects or phases.
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Project appraisal
Five major aspects for Project Appraisal are as under:-
Economic assessment
Financial assessment
Socio Economic assessment
Environment assessment
Risk and Uncertainty Analysis
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Project appraisal
Economic Assessment
1. Demand And Supply position of the final product.
2. Statutory Compliances and its repercussions on projectimplementation.
3. Law of land
4. Availability of resources
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Project appraisal
Financial Assessment:
1. Credit worthiness of project sponsors
2. Does the project makes the financial sense
3. Methods
A. Cash flow Analysis
B. Internal Rate of Return (IRR)
C. Net Project Value (NPV)
D. Pay Back Method
E. Profitability index
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Financial Assessment
Aspects to be analyzed
I. Capital cost
II. Cash flow statement
III. Working capital required
IV. Loan Repayment schedule
V. Cash Revenue and income schedule
VI. Depreciation schedule
VII. Sensitivity analysis
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Project appraisal
Socio - Economic Assessment
Social Cost Benefit Analysis
Effect on mankind in the vicinity
Environment Assessment
Sustainable Development Method and cost of mitigating the environment effect
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Project appraisal
Risk and uncertainty analysis
What if
i. Capital cost increases by%
ii. Operating cost increases by%
iii. Delay in project implementationiv. Hindrance due to change in Government/local laws
v. Economic slowdown in country
What has greatest impact?
Is project still viable?
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Project Management
The art and science of mobilizing and managing the
resources (Men, Machine & Material)to accomplish the taskwithin the stipulated time ,cost & specified technicalstandards.
Identified knowledge areas:
1. Project Scope Management
2. Project Time Management
3. Project Cost Management
4. Project Quality Management
5. Project Integration Management
6. Project Human Resource Management
7. Project Communications Management
8. Project Risk Management
9. Project Procurement Management
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Project Scope Management
Defines and controls what is included or not included in the
project Processes include
1. Scope planning
2. Scope definition
3. Creation of a Work Breakdown Schedule
4. Scope verification
5. Scope control
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Project Time Management
Includes processes required for the timely completion of a
project Processes include
1. Defining activities
2. Sequencing activities
3. Estimating resource activities
4. Estimating duration of activities
5. Developing the project schedule
6. Controlling the project schedule
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Project Cost Management
Planning, estimating, budgeting and controlling costs to
ensure the project completion within the approved budget Processes include
1. Cost estimating
2. Cost budgeting
3. Cost control
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Project Quality Management
All activities that determine quality policies, objectives and
responsibilities for the project to satisfy the needs for which itwas undertaken
Processes include
1. Quality planning-identifying quality standards that are
relevant to the project (Plan)2. Quality assurance-evaluating overall project
performance to provide confidence that project willsatisfy relevant quality standards (Implement orExecution)
3. Quality control-monitoring specific results to comply withquality standards and eliminating unsatisfactoryperformance causes (Check or Control)
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Project Integration Management
Effective integration of the processes required to accomplish
project objectives
Progress Include
1. Project charter development
2. Preliminary project scope statement development
3. Project management plan development
4. Project execution
5. Monitoring and control of project work
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Project Human Resource Management
Processes that organize and manage the project team
Processes include:
1. Human resource planning
2. Acquiring the project team
3. Developing the project team4. Managing the project team
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Project Communications Management
Activities to ensure project information is timely and
appropriately generated, collected, distributed, stored,retrieved and disposed off
Processes include
1. Communications planning
2. Information distribution
3. Performance reporting
4. Managing stakeholders
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Project Risk Management
Processes to increase the probability and impact of
positive events and decrease the probability and impact ofnegative events
Updated throughout the project
Processes include
1. Risk management planning2. Risk identification
3. Qualitative risk analysis
4. Quantitative risk analysis
5. Risk response planning6. Risk monitoring and control
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Project Procurement Management
Processes to purchase/acquire the products, services or
results needed to perform the project work. Includes contract management and change control
processes to administer contracts or purchase orders.
Processes include:
1. Planning purchases and acquisitions2. Contract planning
3. Requesting seller responses
4. Selecting sellers
5. Contract administration6. Contract closure
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Types of Contract
In construction industry generally following types of
contracts are used1. EPC Engineering, Procurement and construction
contract example all general construction contracts
2. BOT Build Operate and transfer (Expressway
contract)3. BOOT Build Own Operate and Transfer (Yamuna
expressway contract)
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Different PPP Models
Degree of Private Sector Involvement
DegreeofPrivate
SectorRisk
Design-Build
Government
Operation / MaintenanceService /License
Design-Build-Operate
Lease-Develop-Operate
Build-Lease-Operate-Transfer
Build-Own-Operate-Transfer
Build-Own-Operate
Buy-Build-Operate
Privatisation
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Project Scheduling Techniques
Gantt Chart (Bar Chart)
LOB (Line of balance technique) CPM (Critical Path Method)
PERT (Program evaluation and review technique)
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CPM & PERT
CPM was developed by Du Pont and the emphasis was on
the trade-off between the cost of the project and its overallcompletion time (e.g. for certain activities it may be possible todecrease their completion times by spending more money -how does this affect the overall completion time of theproject?)
PERT was developed by the US Navy for the planning andcontrol of the Polaris missile program and the emphasis wason completing the program in the shortest possible time. Inaddition PERT had the ability to cope with uncertain activity
completion times (e.g. for a particular activity the most likelycompletion time is 4 weeks but it could be anywhere between3 weeks and 8 weeks).
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Originated by H.L.Gantt in 1918
Gantt chart
Advantages- Gantt charts are quite commonlyused. They provide an easy graphicalrepresentation of when activities(might) take place.
Limitations- Do not clearly indicate detailsregarding the progress of activities
- Do not give a clear indication ofinterrelation ship between the separate
activities
CPM/PERT
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CPM/PERT
These deficiencies can be eliminated to a large extent by
showing the interdependence of various activities bymeans of connecting arrows called network technique.
Overtime CPM and PERT became one technique
ADVANTAGES:
Precedence relationships
large projects
more efficient
C i i l P h
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Critical Path
Is that the sequence of activities and events where there
is no slack i.e.. Zero slack Longest path through a network
minimum project completion time
CRITICAL PATH TAKES 24 WEEKS FOR THE
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CRITICAL PATH TAKES 24 WEEKS FOR THE
COMPLETION OF THE PROJECT
AOA Project Network for House
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darla/smbs/vit 39
AOA Project Network for House
3
2 0
1
3
1 1
11 2 4 6 7
3
5
Lay
foundation
Design house
and obtain
financing
Order and
receive
materials
Dummy
Finish
work
Select
carpet
Select
paint
Build
house
AON Project Network for House
13
22
43
31 5
1
61
71Start
Design house
and obtain
financing
Order and receivematerials Select paint
Select carpet
Lay foundations Build house
Finish work
PERT
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darla/smbs/vit 40
PERT PERT is based on the assumption that an activitys duration
follows a probability distribution instead of being a single value
Three time estimates are required to compute the parametersof an activitys duration distribution:
pessimistic time (tp ) - the time the activity would take ifthings did not go well
most likely time (tm ) - the consensus best estimate of theactivitys duration
optimistic time (to ) - the time the activity would take if thingsdid go well
Mean (expected time): te = tp + 4 tm + to6
Variance: Vt =2 =
tp - to
6
2
P b bilit t ti
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darla/smbs/vit
Probability computation
Determine probability that project is completed within
specified time
Z =x -
where = tp = project mean time = project standard mean time
x = (proposed) specified time
Li f B l
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Line of Balance
St k h ld i P j t
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Stakeholders in Project
Stakeholders are:
Project Managers Customers
Performing Organizations, owners
Sponsor
Team
Internal/External
End User
Society, citizens
Others: owner, funders, supplier, contractor
E d V l A l i
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Earned Value Analysis
Earned Value Analysis
Integrates cost, schedule and scope Better that comparing projected vs. actual because
time and cost are analyzed separately
Terms:
BCWS Budgeted Cost of Work Scheduled (howmuch work should be done)
BCWP Budgeted Cost of Work Performed a.k.a.Earned Value (how much work is budgeted, howmuch did we budget)
ACWP Actual Cost of Work Performed (howmuch did the completed work cost)
E d V l A l i
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Earned Value Analysis
Terms: BAC Budget at Completion (how much did you
budget for the total job)
EAC Estimate at Completion (what do we expectthe total project to cost)
ETC Estimate to Completion (how much more dowe expect to spend to finish the job)
VAC Variance at Completion (how muchover/under budget do we expect to be)
Earned Value Analysis
E d V l A l i
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Earned Value Analysis
Formulas Variance (Plan Actual)
Cost Variance (CV): BCWP ACWP; negative isover budget
Schedule Variance (SV): BCWP BCWS; negativeis behind schedule
Cost Performance Index (CPI): BCWP
ACWP
I am only getting x out of every $ BCWPACWP
Earned Value Analysis
Earned Val e Anal sis
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Formulas
Schedule Performance Index (SPI): BCWP
BCWS
I am only progressing x % of the planned rate
Estimate at Completion (EAC): BAC
CPI
As of now we expect the total project to cost XRs.
Estimate to Complete (ETC): EAC ACWP; howmuch will it cost from now to completion
Variance at Completion: BAC EAC; when theproject is over how much more or less did we spend(most common way of calculating EVA
Earned Value Analysis
S Curve for Earned Value
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S Curve for Earned Value
Project Quality Management
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Project Quality Management
3 major processes:
Quality Planning Identifying quality standards that arerelevant to the project (Plan); Project Manager, ProjectOwner
Quality Assurance Evaluating overall projectperformance to provide confidence that project willsatisfy relevant quality standards (Implement or
Execution); Project Team Quality Control Monitoring specific results to comply
with quality standards and eliminating unsatisfactoryperformance causes (Check or Control); ProjectManager, Project Team
Compatible with ISO 9000 and 10000 series Proprietary and non-proprietary approaches (total
quality management
Must address the management of the project andthe product of the project
SOFTWARES FOR PROJECT MANAGEMENT
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SOFTWARES FOR PROJECT MANAGEMENT
MS PROJECT
PRIMAVERA
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Thank you