Project Management Day 2 in the am

Project Management (PM)

PLAN

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The Planning Process

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Scope Management Progression

Conceptual: Realization of problem & project based solution

Initiation: specify a rough statement at the beginning of a project or commencement to the next phase (e.g., Charter)

Planning: developing documents to provide the basis for future project decisions

Definition: subdividing the major project deliverables into smaller, more manageable components

Verification: formalizing acceptance of the project scope

Change control: controlling changes to the project scope

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Business Context

Our 4,000 person SuZhou SOE is to be privatized in 2 years We make washing machines with a factory cost of 600 RMB

and are having difficulty selling them retail at 800 Haier easily sells a comparable model for 1,500 RMB The Int’l Appliance Show showed many Chinese brands, but

only Haier & famous Japanese brands fared well afterwards Our distributors complain of appearance, quality & image Our slow/no debt repayment has cut off bank financing We have until 2003.7.1 to have a new plant operational This is a desperate situation, nothing is sacred: not location,

not technology, not brand, not even time and budget Next president will probably be one of the project leaders!

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Lu Shan Manifesto (initiation)

Five Projects would be started: Raise capital (sell RE development rights) Re-engineer company (no slack; no work = no pay) Develop new prototype (negotiate with marketing) Get Production ready (hi quality, subcontract) Plan market transition (kill old, launch new)

Our “new green baby” is to be launched on 6.1 and be low energy and low water with a new brand name & positioning

On 2002.12.2 project leaders will deliver “Project Plan”

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Project Leaders Presentation

“We can deliver!” But, we need: Sponsor: Chairman, Organization: Project Style: Autonomous, Priority: Dedicated, Talent: Negotiated Resources: (through 2003.7.1)

Budget: M RMB 1.25 (+/- 20%, -3.35 savings) in new funding Milestones: 2.17 mock-up, 4.16 exposition, 5.15 pilot, 6.1 Launch Talent: Huang Da, Finance; Song MaiLing, Marketing; Liang SiLi,

Engineering; Chen Yun, Manufacturing; and Chairman Liu ShaoQi Freedom: New brand, new positioning, and expanded subcontracting

Goals: New product line image: “green”, “smart”, moderate price, low cost Good reviews after exposition

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Problem / Opportunity

Market perceives our products as too traditional and undifferentiated

Using current technology, we can create the perception of offering greater value while holding our costs in line

Need to target to upscale, younger urban apartment owner

Must avoid a major redesign of our core technology

Take 2 ideas from Japanese: subcontract and reposition

Create a new model line at incremental development costs

Must move very fast; exposition is in April 2003, or lose a year!

Gain market share with environment & energy conservation

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Goals

Revitalize the company with a new product line, targeted marketing, upscale positioning, and low cost digital technology, but based on our core values and capabilities

Revitalize finances by focusing on core capabilities in assembly, platform, and marketing; shed non-performing assets; subcontract rest

Possibly, use the success of the project to legitimize a successor to the retiring president

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Objectives

Launch a new brand based on “Upscale Conservation” on 2003.5.15 – 6.1

Design, develop, and produce new product by 2003.7.1

Have a successful exposition with visitors, distributors, and press coverage all up over 100% over previous year

Distribute without resistance for 150% of production costs

Sales up by 50% during last half of 2003, double in 2004

Meet or exceed all current product quality measures

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Getting Started

Line up appropriate “symbolic” sponsor

Quickly assemble a strong project team

Get key stakeholders involved in the project early

Prepare a detailed analysis of the business problem & solution and develop project measurement techniques

Use a phased, architect-ed approach

Make a project charter that formally recognizes the project and provides direction, objectives & budjet

Get sponsor, management & key stakeholders to agree

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Phoenix Project Charter Name: Phoenix Project (Engineering - new product line)

Start: 2002.11.11 Finish: 2003.6.30 Sponsor: Liu ShaoQi

Manager: Liang SiLi, x6125 liang-sili@ourco.com.cn

Objective: Develop a new product line, with targeted marketing, upscale positioning, and low cost digital technology, based on our core values and capabilities

Budget (RMB): Direct Labor, 650,000; Capital, 125,000; Expenses 375,000 Subcontracted 350,000 (ex. Inventory)

Approach: Split into 2 projects: α = make a working model, β = support launch effort Satisfy marketing with lo water/energy product with upscale appeal Use digital technology for features and employ subcontracting a lot

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Phoenix α: Scope

Phase 1: Alpha Phase – make a working model

With marketing, “guestimate” until convergence Deliverable: 2002.12.31 preliminary product spec Deliverable: 2003.3.16 product spec with price/cost tradeoffs

With production, learn from Japanese, not USA Deliverable: 2002.12.15 subcontract strategy Deliverable: 2003.2.16 subcontract list of items & prospects Deliverable: 2003.3.2 volume pricing Deliverable: 2003.3.16 preliminary production plan

Development, bias towards “off the shelf” and hi volume Deliverables: 2003.2.16 mock-up, 2003.3.16 (3) alphas

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Phoenix β: Scope

Phase 2: Beta Phase – support launch effort

With marketing, coordinate for show & launch Deliverable: 2003.4.10 appliance show Beta prototypes (3) Deliverable: 2003.5.4 operating manual draft for marketing

With production Deliverable: 2003.4.30 pilot run of 100 for “children’s day”

Development Deliverable: 2003.5.19 performance & reliability testing report Deliverable: 2003.5.19 full CAD/CAM production drawings Deliverable: Rev. 1 Software for operation and maintenance

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Activity Definition & Sequencing

Alpha Phase

Product SpecPreliminary Product

SpecProduct SpecificationCost Tradeoff Report

Preliminary Production Report

Subcontract StrategySubcontractable ItemsSubcontract ProspectsPreliminary Production Plan

Construct Mock-UpPackagingMechanicalConfigurationElectricalMock-up Demo

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Activity Definition & Sequencing

Beta Phase

Design Betas Pkg, Mech, Config, Elec,

Digital, Operation, Maint, QA

Construct Betas (3) Procure Build Test Demo Ship

Pilot Run (100)Build DocumentationMold ConstructionProcureIncoming TestComponent TestAssembleSystem TestShip

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Resource Planning

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Guidance in Making WBSs

A unit of work should appear at only one place in the WBS. Every WBS item is the sum of the WBS items below it. A WBS item is the responsibility of only one individual,

even though many people may be working on it. The WBS must be consistent with the way in which work is

actually going to be done. Project team members should be involved in developing

the WBS to ensure consistency and buy-in. Each WBS item must have a objective scope of work. The WBS must be a flexible to accommodate inevitable

changes while properly maintaining control of the work content in the project according to the scope statement.

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Activity Duration & Scheduling

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Activity Duration & Scheduling

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Task Dependency Diagram

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Precedence Diagramming Method (PDM)

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Cost Estimating

Type of Estimate When Done Why Done How Accurate

Rough Order ofMagnitude (ROM)

Very early in theproject life cycle,often 3–5 yearsbefore projectcompletion

Provides roughballpark of cost forselection decisions

–25%, +75%

Budgetary Early, 1–2 years out Puts dollars in thebudget plans

–10%, +25%

Definitive Later in the project, <1 year out

Provides details forpurchases, estimateactual costs

–5%, +10%

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Cost Budgeting

Cost budget involves allocating project cost estimates to individual work items (based on WBS)

Cost budget provides cost baseline – a time-phased budget that the project managers use to monitor and measure cost performance

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Quality Assurance

Quality assurance ensures that quality products are delivered

Another goal of quality assurance is continuous quality improvement

Benchmarking can be used to generate ideas for quality improvements

Quality audits help identify lessons learned that can improve performance on current or future projects

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Quality Resources

Deming led Japan to top quality with his 14 points Juran wrote the Quality Control Handbook and 10 steps to

quality improvement Cosby wrote Quality is Free Ishikawa developed quality circles and using fishbone

diagrams Taguchi developed methods for optimizing the process of

engineering experimentation Feigenbaum developed the concept of total quality control

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Project Plan Development

A project plan is used to coordinate all project planning documents

Its main purpose is to guide the project execution

Project plans help the project manager to: lead the project team determine the project status

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Project Plan Contents

Executive Summary (what will help the next higher level of management)

Business Problem/Opportunity, Goals and Objectives

Solution, Organizing Principles, Competitive & Strategic Impact

Project Charter, Scope, Architecture, Phases, Deliverables, WBS (Levels 1 & 2), Success Measures, and Quality Plan

External & Internal Dynamics, Risks & Key People

Collaterals: Strategic Benefits, Alternatives, Contingencies, Check Points

Financial Analysis: Costs, Cash Flow, Capital Expenditures

Appendix: Gantt Chart, PERT Chart, Selected Drawings

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Planning Outputs (Wish List)Knowledge Area Process Outputs

Integration Project Plan Development Project Plan Supporting Detail Scope Scope Planning Scope Statement Supporting Detail Scope Management Plan Scope Definition WBS Time Activity Definition Activity List Supporting Detail WBS Updates Activity Sequencing Project Network Diagram Activity List Updates Activity Duration Estimating Activity Duration Estimates Basis of Estimates Activity List Updates Schedule Development Project Schedule Supporting Detail Schedule Management Plan Resource Requirement Updates Cost Resource Planning Resource Requirements Cost Estimating Cost Estimates Supporting Detail Cost Management Plan Cost Budgeting Cost Baseline Quality Quality Planning Quality Management Plan

Operational Definitions Checklists Inputs to Other Processes

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Planning Outputs (More)Knowledge Area Process Outputs

Human Resources Organizational Planning Role and Responsibility Assignments

Staffing Management Plan Organizational Chart Supporting Detail Staff Acquisition Project Staff Assigned Project Team Directory

Communications Communications Planning Communications Management Plan

Risk Risk Identification Sources of Risk Potential Risk Events Risk Symptoms Inputs to Other Processes Risk Quantification Opportunities to Pursue, Threats

to Respond to Opportunities to Ignore, Threats to

Accepts Risk Response Development Risk Management Plan Inputs to Other Processes Contingency Plans Reserves Contractual Agreements

Procurement Procurement Planning Procurement Management Plan Statement of Work Solicitation Planning Procurement Documents Evaluation Criteria Statement of Work Updates

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Concluding Remarks

Questions and Answers

Thank you, again.

You can find a copy of this lecture (550 KB) on the Internet at:

http://cha4mot.com/PM