project management.ppt

5/25/2018 project management.ppt

1/81Project Management

A Managerial Prospective

PROJECT MANAGEMENT


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Project ManagementA Managerial Prospective 2

Management

A process of working with people andresources to accomplish organizational

goals.

Getting things done through other people.


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Management (Contd)

The process of achieving organizationalgoals through planning, organizing,

leading, and controlling the human,physical, financial and informational

resources of the organization.


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Managerial Functions

Planning

Organizing

Leading

Controlling


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Manager as a.

Planner

Organizer

Leader

Controller

Motivator Facilitator

Coordinator

Problem Solver

Decision Maker

Negotiator

Strategist


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What is a Problem.....


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Decision:

The choice made from among alternatives.

Decision making:The process of organizing a problem,generating and weighting alternativescoming to a decision and taking action

with feedback.


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Conditions of Decision making: Certainty

Risk

Uncertainty

Ambiguity


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Project

Culture of a Project- Norms of an Organization

-Conflicts

Importance of Human Factor in Projects

Project


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Project Management

The process of controlling of a project from

beginning to an end to achieve projectobjectives in a given time.


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Project Management (Contd)

A project is a well-defined set oftasks/activities that must all be completed in

order to meet the projects goals. Each task may be started/stopped

independently

Tasks must be performed in a givensequence


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Project Management

A Managerial Prospective 12

Laws of Project Management

Projects progress quickly until they are 90% complete.Then they remain at 90% complete forever.

When things are going well, something will go wrong.

When things just cantget worse, they will. When thingsappear to be going better, you have overlookedsomething.

If project content is allowed to change freely, the rate of

change will exceed the rate of progress. Project teams detest progress reporting because it

manifests their lack of progress.


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Project Management


Trade-offs in Project Management

Performance

Cost Time


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Project Management


Activity Networks

Which tasks have to be completed first?

Which tasks rely on the results of othertasks?

Which tasks generate results forsubsequent tasks


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Project Management


Work Breakdown Structure(WBS)

A hierarchical decomposition of all thetasks to be accomplished for a project to

be completed.


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Project Management


A WBS is Not !!!

An Organizational chart

Not a flow chart showing temporal orlogical relationships among tasks

A listing of skills required to complete the

task


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Project Management


Why do projects fail?

Reliance on project management softwarerather than an understanding of project

management principles Communication problems

Failure to adequately adjust for changes

during the course of the project


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Project Management


Project Team and Its Required Area of Expertise

Project Management

1. Standard

Regulation

A. Interpersonal

Skills


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Project Management


Standard:

A document established by the consensusand approved by organized body.

Requirement imposed by the Governmentbodies.

Regulation:


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Project Management


Under Standing Project Environment

Cultural & Social Environment:

The teams need to understand how the project

affect the people and how the people affect the

project.


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Project Management


Under Standing Project Environment(Contd)

Physical Environment:

Project people norms

If the project will affect its physical surroundings, some team

members should be knowledgeable about the local ecology and

physical geography that could affect the project or be affected by the

project.


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Project Management


General Management Knowledge & Skill

Financial Management & Accounting

Purchasing & Procurement

Sales & Marketing

Contracts & Commercial Laws

Logistics & Supply Chain


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Project Management


Interpersonal Skills

Communication

Leadership

Motivation

Negotiation & Conflict Management

Problem Solving

MBO


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Project Management


Cost Estimation

Cost Budgeting

Cost Controlling

Project Cost Management


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Project Management


Project Cost Management

Project Cost Management includes theprocesses involved in planning,

estimating, budgeting, and controllingcosts so that the project can be completed

within the approved budget.


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Project Management


Life Cycle Costing

CostManagement should also consider theeffect of project decisions on the cost ofusing, maintaining and supporting the

product, services or results. Life CycleCosting should improve decision makingand is used to reduce cost and execution

time and to improve the quality andperformance of the project deliverable.


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Project Management


Accounting Terminologies

Opportunity Cost

Sunk Cost

Direct vs Indirect Project Cost

Variable and Fixed Project Cost

Controllable and Non-Controllable Project Cost

Depreciation


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Project Management


Cost Management Plan

Process Description

Reporting Formats

Precision Levels

Units of Measure

Organizational Procedures LinksControl Thresholds

Earned Value Rules

Cost Management Plan


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Project Management


Cost Estimating

Developingan approximation of the costs of

the resources needed to complete the

project activities


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Project Management


Cost Estimating (Contd)

Input Tools & Techniques Output

1. Enterprise Environmentalfactors

2. Organizational ProcessAssets

3. Project Scope Statement4. Work Breakdown

Structure5. Project Management Plan

Schedule managementplan

Staffing management

plan Risk register

1. Analogous estimating2. Determine resource cost

rates3. Bottom up estimating

4. Project Managementsoftware

5. Vendor bid Analysis6. Reserve Analysis7. Cost of Quality

Activity cost estimates


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Project Management


Reserve Analysis

An analytical technique to determine theessential features and relationships of

components in the project managementplan to establish a reserve for the

schedule duration, budget, estimated cost

or funds for a project.


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Project Management


Activity Cost Estimate

An activity cost estimate is a quantitativeassessment of the likely costs of the

resources required to complete schedule

activities.This includes but not limited to labor, materials,

equipment, services, facilities, information

technology and special category such as aninflation allowance or cost contingency reserve.


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Project Management


Cost Budgeting

Aggregating the estimated costs of

individual activities or work packages to

establish a cost baseline.


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Project Management


Cost Budgeting

Input Tools & Techniques Output

1. Preliminary Scope

Statement

2. Work break down structure

3. WBS dictionary

4. Activity cost estimates

5. Project Schedule

6. Resource Calendar

7. Contract

8. Cost Management Plan

1. Cost Aggregation

2. Reserve Analysis

3. Parametric

Estimating

4. Funding Limit

Reconciliation

1. Cost Baseline

2. Project Funding Requirement

3. Cost Management Plan (Up dates)

4. Requested Changes


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Project Management


Fund Limit Reconciliation

Large variations in the periodic expenditure of

funds are usually undesirable for organizational

operations. Therefore the expenditure of funds is

reconciled with the funding limits set by the

customer or performing organization on the

disbursement of the funds for the project.


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Project Management A Managerial Prospective36

Budget

The approval estimate for the project or any work breakdown

structure component or any schedule activity.

Cost BaselineThe cost base line is a time phased budget that is used as a

basis against which to measure, monitor and control overall

cost performance on the project. The cost baseline is the

component of the project management plan.


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Project Funding RequirementsFunding requirements, total and periodic (e.g. annual

or quarterly) are derived from the cost baseline and

can be established to exceed. Usually by a margin

to allow for either early performance/progress or

cost overruns. The total funds required are those

included in the cost baseline plus the managementcontingencies reserve account.


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Cost Control

Influencing the factor that create cost

variances and controlling changes to the

project budget.


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Cost Controls

Budget at Completion (The amount youbudgeted for the entire project)

Estimate at Completion (The amount that you

expect that the total project to cost)

Estimate to Complete (From the point on, howmuch more we expect the project to cost to finish theproject)

Variance at Completion (How much over orunder budget we expect to have)


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Project Risk Management

Project Risk Management includes the processes

concerned with conducting risk management planning,

identification, analysis, responses and monitoring and

control on a project.

The objective of the risk management is to increase the

probability and impact of positive events and decreasethe probability and impact of events adverse to project

objectives.


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Risk An uncertain event or condition that if it occurs has a

positive or negative effect on a projects objectives.

Triggers

Indications that a risk has occurred or is about o occur.

Triggers may be discovered in the risk identifications

process and watched in the risk monitoring and controlprocess. Triggers are some time called risk symptoms or

warning signs.


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Project Management A Managerial Prospective 42

Project Risk Management

Risk Management Planning

Risk Identification

Quantitative Risk Analysis Qualitative Risk Analysis

Risk Response Planning

Risk Monitoring & Controls


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Project Procurement Management

Project Procurement Management Includes the

process to purchase or acquire the products,services, or results needed from outside the

project team to perform the work.


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Project Procurement Management

1. Plan

Purchase or

Acquisition

2. Make or Buy

3. Plan

Contracting

1. Floatrequest/

Tendering

2. Receive Bid

or Quote

3. Selection ofvendor

4. Contract

awarding

1. Contract

Administratio

n

2. Managing

Interfaceamong

various

providers

1. ContractClosure

2. Post

procurement

Audit

3. Post

performance

evaluation

Project ProcurementManagement

Planning Executing Monitoring &

Controlling

Closing


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Plan Purchase or Acquisition

Determination of What to purchase, why and

when to purchase.

Make or Buy Analysis

It is a general management technique that can be used to

determine whether a particular product or service can be

produced by the project team or buy from the market.


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Contract

A contract is normally binding agreement that obliges the

seller to provide the specified product and obligates the

buyer to pay for it.

Contract Fundamentals

A contract may be written or oral and is both a legal

document and a relationship between the parties


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Type of Contract

Fixed Price of

Lump-Sum ContractsCost Reimbursable

Contracts

Time & Material

Contract

Contracts


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Type of Contracts

Fixed Price/ Lump sum Contracts

Cost Reimbursable Contracts

Time & Material Contract


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Fixed Price or Lump-Sum Contract

A type of contract involving a fixed total price for a well definedproduct.

Fixed price contracts may also include incentives for meeting orexceeding project objective such as schedule targets.

Cost Reimbursable Contracts

A type of contract involving payment by the buyer to the seller for thesellers actual cost plus a fee typically representing sellers profit.These type of contracts often includes some incentive clauses.

Time & Material Contract

A type of contract that is a hybrid contractual agreement containingaspects of both i.e. Fixed price & Cost Reimbursable Contracts


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Contract Type Selection

What Contract type might best suit the project?

Degree of Cost and Schedule Risk

How Complex is the requirement Cost & Price Analysis

Urgency of the Deliverables

Frequency of Changes

Degree of definition of the statement of the work


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Project Evaluation and Review Technique(PERT) /Critical Path Method (CPM)

Graphical display of interrelationships amongactivities and the order of project activities

Allows estimates of completion time and cost


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PERT / CPM

1. List activities and duration; develop WBS.

2. Order activities through use of Gannt chart.

3. Develop immediate precedent activities.

4. Draw project graph.

5. Calculate early start / early finish.

6. Calculate late start / late finish.

7. Determine critical path using slack time.8. Crash project


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Example(Build a new mountain bike)

A major manufacturer of bicycles is planning to enter the

high-end market for mountain bikes by designing a new,

state-of-the-art mountain bike. The bicycle is to be a

completely new design, and management has directed

the design team to incorporate the latest technology in

every facet of the productframe, gears, wheels,

brakes, and so onyet keep the price of the bike within

$100 of leading competitors prices.

A ti iti & D ti Ti


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Activities & Duration Times

ActivityExpected Duration

(months)ADo preliminary market analysis 1.0

BDevelop preliminary market designs 3.0

CDo preliminary manufacturing study 1.0

DEvaluate and select best product design 1.0EDevelop detailed marketing plans 1.0

FDesign manufacturing process 3.0

GDevelop detailed product design 3.0

HBuild and test prototype 1.0IFinalize product design 1.5

JOrder components 1.0

KOrder production equipment 3.0

LInstall production equipment 2.0


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Work Breakdown Structure (WBS)

The set of independent tasks or work packagesthat constitute a project

Hierarchy of sub-projects that make of the totalproject

Useful for controlling costs, time, and resourceallocation

Partial Work Breakdown Structure


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Partial Work Breakdown Structure(for step G)

Mountain

Bike

WheelSystems

GearingSystems

FrameSystems

Seat SystemsBrake

Systems

Hubs

Rims &Spokes

Gears &Chains

Derailleur &Shifters

Fork SystemFrame

Structure

BearingSystems

TubingStructure

JoiningSystems

Tubing

Cover &Padding

Seat Structure

Calipers

Levers &Cables

G tt Ch t


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Gantt Chart(for mountain bike development project)

ADo preliminary market analysis

BDevelop preliminary market designs

CDo preliminary manufacturing study

DEvaluate and select best product design

EDevelop detailed marketing plans

FDesign manufacturing process

GDevelop detailed product design

HBuild and test prototype

IFinalize product design

JOrder components

KOrder production equipment

LInstall production equipment

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Time in Months

Precedence Relationships


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Precedence Relationships

ActivityImmediate

PredecessorADo preliminary market analysis --

BDevelop preliminary market designs A

CDo preliminary manufacturing study A

DEvaluate and select best product design B, CEDevelop detailed marketing plans D

FDesign manufacturing process D

GDevelop detailed product design D

HBuild and test prototype GIFinalize product design F, H

JOrder components I

KOrder production equipment I

LInstall production equipment E, J, K


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A

C

B

D

ES EF

LS LF

(Duration)

ES = Early Start

EF = Early Finish

LS = Late StartLF = Late Finish

PERT / CPM Chart Structure


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Project Management A Managerial Prospective

A

C

B

D

E

F

G H

I J

K

L

PERT / CPM Chart


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A(1)

C(1)

B(3)

D(1)

E(1)

F(3)

G(3) H(1)

I(1.5) J(1)

K(3)

L(2)

0 1

1 4

1 2

5 6

5 8

5 8

9 10.5

8 9

10.5 11.5

10.5 13.5

13.5 15.5

4?Or2?4 5

Early Start / Early Finish

(start with A)


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0 1

1 4

1 2

5 6

5 8

5 8

9 10.5

8 9

10.5 11.5

10.5 13.5

13.5 15.5

4 5

Late Start / Late Finish

(start with L)

A(1)

C(1)

B(3)

D(1)

E(1)

F(3)

G(3) H(1)

I(1.5) J(1)

K(3)

L(2)

13.5 15.5

12.5 13.5

10.5 13.5

9 10.5

8 95 8

6 9

12.5 13.5

4 5

3 4

1 4

0 1


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Calculating Slack Time to Find the Critical Path

Slack time tells us how long a particular activity can bedelayed without delaying the entire project

Assumption: All preceding activities completed as early

as possible

Slack = LSES or Slack = LF-EF


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Calculating Slack Time

Activity Duration ES EF LS LF SlackA 1 0 1 0 1 0

B 3 1 4 1 4 0

C 1 1 2 3 4 2

D 1 4 5 4 5 0

E 1 5 6 12.5 13.5 7.5

F 3 5 8 6 9 1

G 3 5 8 5 8 0

H 1 8 9 8 9 0

I 1.5 9 10.5 9 10.5 0

J 1 10.5 11.5 12.5 13.5 2

K 3 10.5 13.5 10.5 13.5 0

L 2 13.5 15.5 13.5 15.5 0

The critical path lies through those activities with no slack time.


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Critical Path

1 2

5 6

5 8 10.5 11.5

C(1)

E(1)

F(3) J(1)

12.5 13.56 9

12.5 13.5

3 4

9 10.5

0 1

1 4

5 8

9 10.5

8 9 10.5 13.5

13.5 15.5

4 5

A(1)

B(3)

D(1)

G(3) H(1)

I(1.5)

K(3)

L(2)

13.5 15.5

10.5 13.58 95 8

4 5

1 4

0 1


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Project Crashing

(Accounting for the Time/ Cost Trade-off)

What if the project cant be completed within thetargeted time?

Can the project be shortened by adding moreresources?

If so, do the necessary resources exist?


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Project Crashing (Crunching)

1. Determine if critical path (CP) falls withintargeted time. If yes, stop.

2. If no, compute crash cost per time period foreach activity.

3. Select activity on CP with lowest crash costand crash.

4. Re-compute CP and check to see if within

targeted time.5. Repeat as necessary.


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Critical PathEnumeration

A-B-D-E-L 8A-B-D-F-I-J-L 12.5A-B-D-F-I-K-L 14.5A-B-D-G-H-I-J-L 13.5A-B-D-G-H-I-K-L 15.5

A-C-D-E-L 6A-C-D-F-I-J-L 10.5

A-C-D-F-I-K-L 12.5A-C-D-G-H-I-J-L 11.5A-C-D-G-H-I-K-L 13.5


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Critical Path CrashingA-B-D-E-L 8A-B-D-F-I-J-L 12.5A-B-D-F-I-K-L 14.5

A-B-D-G-H-I-J-L 13.5 13

A-B-D-G-H-I-K-L 15.5 15A-C-D-E-L 6A-C-D-F-I-J-L 10.5A-C-D-F-I-K-L 12.5

A-C-D-G-H-I-J-L 11.5 11

A-C-D-G-H-I-K-L 13.5 13

Spent $20 to shorten0.5 months

Critical Path Crashing


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A-B-D-E-L 8A-B-D-F-I-J-L 12.5A-B-D-F-I-K-L 14.5

A-B-D-G-H-I-J-L 13 11

A-B-D-G-H-I-K-L 15 13A-C-D-E-L 6A-C-D-F-I-J-L 10.5A-C-D-F-I-K-L 12.5

A-C-D-G-H-I-J-L 11 9

A-C-D-G-H-I-K-L 13 11

New CP

(1)

(2)

(2)

(2)

(3)



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A-B-D-E-L 8 6

A-B-D-F-I-J-L 12.5 10.5

A-B-D-F-I-K-L 14.5 12.5

A-B-D-G-H-I-J-L 11 9A-B-D-G-H-I-K-L 11A-C-D-E-L 6A-C-D-F-I-J-L 10.5

A-C-D-F-I-K-L 12.5A-C-D-G-H-I-J-L 9A-C-D-G-H-I-K-L 11

B and I can both be crashed for$60pick one

(I picked B)


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Critical Path crashingA-B-D-E-L 6

A-B-D-F-I-J-L 10.5 9.5

A-B-D-F-I-K-L 12.5 11.5

A-B-D-G-H-I-J-L 9 8

A-B-D-G-H-I-K-L 11 10A-C-D-E-L 6

A-C-D-F-I-J-L 10.5 9.5

A-C-D-F-I-K-L 12.5 11.5A-C-D-G-H-I-J-L 9 8

A-C-D-G-H-I-K-L 11 10


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Treating Time as Probabilistic

What if the time estimates for completion ofproject activities arent certain?

optimistic time

most likely time

pessimistic time


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Using Time Estimates

1. Calculate ET = Expected Time for eachactivity.

2. Use ET to determine CP and, if necessary, tocrash the project.

3. Determine variance of expected time for eachactivity.

4. Calculate Z and determine probability project

will be completed by a desired time.



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Variable definitionsa = optimistic time for activity

m = most likely time for activity

b = pessimistic time for activityET = expected time of each activity

s2= variance of ET for each activity

TE= expected project completion time (CP time)

D = desired project completion time

SsCP2 = sum of variances along CP


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1. Calculate ET for each activity

2. Calculate TE= S(ETs) along CP3. Determine variances

4. Calculate Z (use App. E (p. 742) or NORMSDIST in Excel)

a 4m bET

6

2

2 b a

6

s

E

2

CP

D TZ

s



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Optimistic Most Likely Pessimistic Expected Time Variance of ETActivity a m b ET s2

A 0.5 1 1.5 1 0.028

B 2.5 3 3.5 3 0.028

C 0.5 0.75 1 0.75 0.007

D 0.5 1 1.5 1 0.028

E 0.5 0.75 1 0.75 0.007F 2 2.5 3 2.5 0.028

G 2 4 6 4 0.444

H 1 2 3 2 0.111

I 0.5 1.5 2.5 1.5 0.111

J 0.5 1 1.5 1 0.028

K 1 2 3 2 0.111

L 1 1.5 2 1.5 0.028


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A(1)

C(.75)

B(3)

D(1)

E(.75)

F(2.5)

G(4) H(2)

I(1.5) J(1)

K(2)

L(1.5)

0 1

1 4

1 1.75

5 5.75

5 7.5

5 9

11 12.5

9 11

12.5 13.5

12.5 14.5

14.5 164 5

Early Start / Early Finish

Using ET

0 1

1 4

3.25 4

4 5

13.75 14.5

8.5 11

5 9

11 12.5

9 11 12.5 14.5

13.5 14.5

14.5 16



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Using Time EstimatesCritical Path

Activity ET 2 ES EF LS LF SlackA 1 0.028 0 1 0 1 0

B 3 0.028 1 4 1 4 0

C 0.75 0.007 1 1.75 3.25 4 2.25

D 1 0.028 4 5 4 5 0

E 0.75 0.007 5 5.75 13.75 14.5 8.75

F 2.5 0.028 5 7.5 8.5 11 3.5

G 4 0.444 5 9 5 9 0

H 2 0.111 9 11 9 11 0

I 1.5 0.111 11 12.5 11 12.5 0

J 1 0.028 12.5 13.5 13.5 14.5 1

K 2 0.111 12.5 14.5 12.5 14.5 0

L 1.5 0.028 14.5 16 14.5 16 0

Critical Path: A-B-D-G-H-I-K-L

TE= 1+3+1+4+2+1.5+2+1.5 = 16

sCP= .028+.028+.028+.444+.111+.111+.111+.028 = .889

Note: individual variances contain rounding errorsee imbedded Excel worksheet above,

double click and scroll down


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E

2

CP

T 16

.889

D 12

12 16Z 4.24 ~ 4.0

.889

s

Using Appendix E, p. 742,probability project will be completed

in 12 months is .00003 or .003%

Using NORMSDIST(4.24) in Excel,probability project will be completedin 12 months is .0011%

See calculations in imbedded Excelfile on previous slide.


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The End

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