PROJECTS AND OPERATIONS MANAGEMENT

MODULE-1

5 Phases of Project Management

When you divide the project into manageable stages, each with its own goals and
deliverables, it’s easier to control the project and the quality of the output.

Five phases of project management

The 5 basic phases in the project management process are:

1. Project Initiation

2. Project Planning

3. Project Execution
4. Project Monitoring and Controlling

5. Project Closing
Phase 1: Project initiation
is the first stage of turning an abstract idea into a meaningful goal. In this stage, you
need to develop a business case and define the project on a broad level. In order to do
that, you have to determine the need for the project and create a project charter. It
consists of goals, appointment of the project manager, budget, expected timeline, etc.

Consider the example of an automobile manufacturer assigned to develop an electric

vehicle. The selection of the design, capacity, and battery power of the vehicle will
not be a part of the initiation phase. The only certainty would be that an electric
vehicle will be developed within the given timeframe and budget.

Phase 2: Project planning

This stage requires complete diligence as it lays out the project’s roadmap.

There are several methods of setting up the project’s goals

but S.M.A.R.T. and C.L.E.A.R. are the most popular.

S.M.A.R.T Goals:
The ‘SMART’ criteria ensure that the goals you set for your project are critically
analyzed. It is an established method that reduces risk and allows project managers to
make clearly defined and achievable goals.
The acronym SMART stands for

C.L.E.A.R. Goals:
The ‘CLEAR’ method of setting up goals is designed to cater to the dynamic nature of
a modern workplace.

The acronym for CLEAR stands for

During the planning stage, the scope of the project is defined. There is a possibility of
changing the scope of the project demands it but the project manager must approve
the change.
.

Risk mitigation is another important aspect of project management that is a part of

the planning stage. The project manager is responsible for extrapolating past data to
identify potential project management risks and develop a strategy to minimize them.

Phase 3: Project execution

This stage is where your team does the actual work. As a project manager, your job is
to establish efficient workflows and carefully monitor the progress of your team.

Phase 4: Project monitoring and controlling

In the project management process, the third and fourth phases are not sequential in
nature. The project monitoring and controlling phase run simultaneously with project
execution, thereby ensuring that objectives and project deliverables are met.

During the monitoring phase of project management, the manager is also responsible
for quantitatively tracking the effort and cost during the process. This tracking not
only ensures that the project remains within the budget but also is important for
future projects.

Phase 5: Project closing

This is the final phase of the project management process. The stage indicates the end
of the project after the final delivery. There are times when external talent is hired
specifically for the project on contract. Terminating these contracts and completing
the necessary paperwork is also the responsibility of the project manager.

Most teams hold a reflection meeting after the completion of the project in order to
contemplate their successes and failures during the project. This is an effective
method to ensure continuous improvement within the company to enhance the
overall productivity of the team in the future.

The final task of this phase is to review the entire project complete a detailed report
that covers every aspect. All of the necessary data is stored in a secure place that can
be accessed by project managers of that organization.

MODULE 2

PROJECT MANAGEMENT KNOWLEDGE AREAS:

The project management knowledge areas can be simply defined as

the key aspects of project management that should be overseen by
project managers so they can plan, schedule, track and deliver
projects successfully with the help of the project team and project
stakeholders.
Each of these project management knowledge areas needs to be
managed throughout the five project phases, which are project
initiation, project planning, project execution, monitoring and
controlling, and project closing.
The 10 Project Management Knowledge Areas
1. Project Integration Management
Project integration management can be simply defined as the
framework that allows project managers to coordinate tasks,
resources, stakeholders, changes and project variables. Project
managers can use different tools to make sure there are solid project
integration management practices in place. For example, the project
management plan is important for project integration because it works
as a roadmap for the project to reach a successful end. Once created,
the project plan is approved by stakeholders and/or sponsors before
it’s monitored and tracked by the project management team.
The project integration area also includes the directing and managing
of the project work, which is the production of its deliverables. This
process is monitored, analyzed and reported on to identify and control
any changes or problems that might occur.
2. Project Scope Management
Project scope management is one of the most important project
management knowledge areas. It consists of managing your project
scope, which refers to the work that needs to be executed in a project.
Validate scope during the project, which means making sure that the
deliverables are being approved regularly by the sponsor or
stakeholder. This occurs during the monitoring and controlling
process groups and is about accepting the deliverables, not the specs
laid out during planning.

Project Scope Template

Use this free Project Scope Template for Word to manage your
projects better.
Download Word File

3. Project Time Management

Project time management involves estimating your project duration,
creating a project schedule and tracking the project team’s progress to
ensure the project is completed on time. To do so, the first thing to do
is to define your project scope to identify the tasks that should go into
your project schedule.
Those project tasks are then put in an order that makes sense, and
any dependencies between them are noted. These dependencies are then
determined to be either finish-to-start (FS), finish-to-finish (FF), start-
to-start (SS) or start-to-finish (SF). This is mostly for larger projects.
With the tasks now sequenced, the project resources required for each
must be estimated and assigned. The duration of each task is also
determined at this point.
4. Project Cost Management
This project management knowledge area involves estimating project
costs to create a project budget. To do so, you’ll need to use cost-
estimating tools and techniques to make sure that the funds cover the
project expenses and are being monitored regularly to keep
stakeholders or sponsors informed.
5. Project Quality Management
A project can come in on time and within budget, but if the quality
isn’t up to standard, then the project is a failure. This means that
quality management is one of the most critical project management
knowledge areas.
6. Project Human Resource Management
The project team is your most important resource, so it’s crucial to
assemble the best team and make sure they’re happy. But also you
need to track their performance to ensure that the project is
progressing as planned. A human resource management plan
identifies the roles and requirements for those positions, as well as
how they fit into the overall project structure.
Managing the project team is an ongoing responsibility of the project
manager. The team is monitored to make sure they’re working
productively and that there are no internal conflicts, so everyone is
satisfied.
7. Project Communications Management
All knowledge areas of project management are important,
but communication management might be paramount as it informs every
aspect of the project. Communications inform the team and
stakeholders, therefore the need to plan communications management
is a critical step in any project.
.
8. Project Risk Management
Risk management plans identify how the risks will be itemized,
categorized and prioritized. This involves identifying risks that might
occur during the execution of the project by making a risk register.

9. Project Procurement Management

This project management knowledge area deals with outside
procurement, which is part of most projects, such as hiring
subcontractors. This will impact on the budget and schedule. Procurement
management planning starts by identifying the outside needs of the
project and how those contractors will be involved.
10. Project Stakeholder Management
The stakeholders must be happy, as the project has been created for
their needs. Therefore, they must be actively managed like any other
part of the project.

PROCESS OF PROJECT INTEGRATION MANAGEMENT

1. Development of the project- it is a document, states the project
objectives and name the project manager
2. Development of the preliminary scope statement of project- to
identify the high level project objectives. Steps involved are: a)
process input-charter, statement of work, environmental factors,
organizational process assets. B) process definition-it expresses
how the project manager understands the project charter. C)
tools and techniques-software and tools used by the project
management team. d) process output- it mirrors what project
has understood.
 3. Project plan development: planning, policies, constraints,
assumptions. Project planning methodology
4. Directing and monitoring of project execution: carrying out the
project plan according to the strategy, plan and activities as per
the plan.
5. Project work must be monitored and controlled
6. Integrated change control: keep a check on the scope
performance using variance analysis.
7. Project must be closed when it has been completed: document is
produced by the project management team.
PROJECT SCOPE MANAGEMENT:
It refers to work that must be done in order to deliver a product,
service, result with specified features and functions. It determines a
list of specific project goals, deliverables, tasks, costs and deadlines.

With the scope in the project management defined right in the beginning, it
becomes much easier for project teams to manage and make the required
changes.

Importance of project scope management

For a project manager, managing the expectations of the stakeholders and
clients is one of the most challenging tasks. With a definite project scope,
managers can easily stay on track and ensure that all the deadlines are
being followed throughout the project life cycle.

A well-defined project scope management helps avoid common issues like:

• Constantly changing requirements

• Pivoting the project direction when you are already mid-way

• Realizing that the final outcome isn’t what was expected

• Going over the discussed budget
• Falling behind the project deadlines

Effective project scope management gives a clear idea about the time, labor,
and cost involved in the project. It helps to distinguish between what is
needed and what isn’t needed for accomplishing the project. Scope in project
management also establishes the control factors of the project to address
elements that might change during the project life cycle.

The scope is defined by understanding the project requirements and the

client’s expectations. The scope statement usually contains,

Project objectives, project deliverables, exclusions, constraints, assumptions

Scope statement in project management

The project’s scope statement is also called its scope document or statement
of work. The project scope statement

• details all the boundaries of the project while also establishing the

responsibilities of the team,

• defines all the procedures that need to be followed for verifying and

approving the finished work, and,

• gives team members a definitive guideline for making project-related

decisions.

When documenting the scope of a project, team members and stakeholders

have to be as specific as possible to avoid scope creep, a situation where some
parts of the project end up taking more time and effort than initially discussed
due to miscommunication or poor planning.
Project scope management process

Project Scope Management is a critical knowledge area in project management that involves
defining and controlling what work is required to be accomplished during a project. It
encompasses activities such as planning, collecting requirements, defining scope, creating a
Work Breakdown Structure (WBS), validating scope, and controlling scope. Let's explore each
component in detail, along with relevant examples.

1. Plan Scope Management:

Planning scope management involves creating a strategy to determine how the project's scope
will be defined, verified, and controlled throughout its lifecycle. This includes establishing
processes, tools, and techniques to be used for scope management. In a software development
project, the project manager would create a plan outlining how the project's scope will be
determined, such as conducting stakeholder interviews, analyzing business requirements, and
using prototyping techniques to clarify the scope.

Project Scope Management

2. Collect Requirements:
Collecting requirements involves identifying and documenting the stakeholders' needs and
expectations regarding the project's outcomes. It includes gathering information through
various techniques such as interviews, surveys, workshops, and document analysis. In a
construction project, the team would engage with stakeholders, including the client, architects,
and end-users, to gather requirements. This may involve conducting site visits, reviewing
architectural drawings, and interviewing stakeholders to understand their specific needs and
preferences.

3. Define Scope:
The most important task in Project Scope Management is defining the scope of the project.
Defining scope is the process of developing a detailed description of the project's deliverables,
boundaries, and objectives. It establishes what is included and excluded from the project,
setting clear expectations for all stakeholders. Example: In an event planning project, defining
the scope involves specifying the event's objectives, activities, and deliverables, such as venue
selection, catering services, guest list, program schedule, and marketing collateral.

Contents of the Project Scope:

1. Project Background
2. Project Approach
3. Strategic Alignment
4. Impact, if the project is not approved
5. Dependencies
6. Project Organizational Structure
7. Key Stakeholders
8. Objectives
9. Critical Success Factors
10. Deliverables
11. Inclusions/Exclusions
12. Constraints
13. Assumptions
14. Timeline and Milestones
15. Cost and Funding Sources

4. Create WBS (Work Breakdown Structure):

Creating a Work Breakdown Structure (WBS) is a technique to decompose the project's scope
into smaller, manageable work packages. It involves breaking down the project deliverables
into hierarchical components, facilitating better planning, estimation, and control. In a
marketing campaign project, the WBS may include work packages such as market research,
creative design, content development, social media advertising, and campaign analysis.

5. Validate Scope:
Validating scope involves formalizing the acceptance of completed project deliverables by the
stakeholders. It ensures that the deliverables meet the specified requirements and are aligned
with stakeholder expectations. In a website development project, the project team would
present the completed website to the client for validation. The client would review the
functionality, design, and content to ensure it meets their expectations before accepting the
scope.

Establish the Project Priorities - Triple Constraints

Any change in the scope of the project almost always affects the total cost, required time, or
the resulting quality of the project. The relationship between the Scope, Cost, and Time is an
equilateral triangle - changing any one component will affect the other components.
 Balancing the trade-offs between time, cost,
scope and quality

6. Control Scope:
Controlling scope refers to managing and controlling changes to the project's scope throughout
its lifecycle. It involves evaluating proposed changes, determining their impact on project
objectives, and implementing a change control process to minimize scope creep. In an
infrastructure project, the project manager would assess requested changes to the project's
scope, such as adding additional features or modifying design specifications. They would
evaluate the impact on cost, schedule, and resources before approving or rejecting the change
requests.

By effectively managing project scope, organizations can ensure that projects stay on track,
meet stakeholder expectations, deliver the intended outcomes, and complete Project Scope
Management. This can help prevent scope creep, avoid unnecessary rework, and increase
project success rates.

Project scope management is the second knowledge area in the Project Management Institute’s
(PMI) Project Management Body of Knowledge (PMBOK). It includes the processes that
ensure all of the required work (and only the required work!) is included in the project.
PMBOK’s scope management process flow diagram

In the PMBOK, scope management has six processes:

1. Plan Scope Management: Planning the process, and creating a scope management plan.
 2. Collect Requirements: Defining and documenting the stakeholder’s needs.
3. Define Scope: Developing a detailed project scope statement.
4. Create WBS: Subdividing project deliverables into smaller work units.
5. Validate Scope: Formalizing the acceptance of the deliverables.
6. Control Scope: The ongoing process of monitoring and managing changes to the project scope.
Inputs

1. Project charter
2. Project management plan
▪ Quality management plan
▪ Project life cycle description
▪ Development approach
3. Enterprise environmental factors
4. Organizational process assets
Tools & Techniques

1. Expert Judgment
2. Data analysis
▪ Alternatives analysis
3. Meetings
Outputs

1. Scope management plan

2. Requirements management plan

Collect Requirements

Most projects have a long list of requirements. In the construction field there are usually
hundreds of building codes, environmental regulations, design manuals, and the like. And in the
I.T. and internet space the requirements are often not even well defined at the project outset
which has resulted in the popularity of iterative project management methods like agile.

The success of any project is directly related to the accurate definition and documentation of
stakeholder needs.
 Inputs

1. Project charter
2. Project management plan
▪ Scope management plan
▪ Requirements management plan
▪ Stakeholder engagement plan
3. Project documents
▪ Assumption log
▪ Lessons learned register
▪ Stakeholder register
4. Business documents
▪ Business case
5. Agreements
6. Enterprise environmental factors
7. Organizational process assets
Tools & Techniques

1. Expert judgment
2. Data gathering
1. Brainstorming
2. Interviews
3. Focus groups
4. Questionnaires and surveys
5. Benchmarking
3. Data analysis
1. Document analysis
4. Decision making
1. Voting
2. Multicriteria decision analysis
5. Data representation
 1. Affinity diagrams
2. Mind mapping
6. Interpersonal and team skills
1. Nominal group technique
2. Observation/conversation
3. Facilitation
7. Context diagram
8. Prototypes
Outputs

1. Requirements documentation
2. Requirements traceability matrix
Define Scope

At this step, the requirements are compiled into a scope statement. An example of a scope
statement might be:

To design a bridge that meets all state road design standards while providing adequate stream flow
for a 1:100 year flood event. Erosion of the bridge abutments must be reasonably controlled, and
environmental permits must be obtained and strictly adhered to.

Inputs

1. Project charter
2. Project management plan
▪ Scope management plan
3. Project documents
▪ Assumption log
▪ Requirements documentation
▪ Risk register
4. Enterprise environmental factors
5. Organizational process assets
Tools & Techniques

1. Expert judgment
2. Data analysis
 ▪ Alternatives analysis
3. Decision making
▪ Multicriteria decision analysis
4. Interpersonal and team skills
▪ Facilitation
5. Product analysis
Outputs

1. Project scope statement

2. Project documents updates
▪ Assumption log
▪ Requirements documentation
▪ Requirements traceability matrix
▪ Stakeholder register

Create WBS

In this section, a detailed work breakdown structure (WBS) is created. The WBS is defined as
the subdivision of the work into smaller, more manageable work packages. A WBS can take
numerous forms, such as division by phases, deliverables, or subprojects. But regardless of how
you structure it, the WBS should contain the man-hours, equipment, tools, contractor expenses,
and any other item of cost. Although the WBS is not about the cost (Pricing and cost control are
part of the Project Cost Management knowledge area), the realization of cost helps to ensure
you identify every part of a work package.

Inputs

1. Project management plan

▪ Scope management plan
2. Project documents
▪ Project scope statement
▪ Requirements documentation
3. Enterprise environmental factors
4. Organizational process assets
Tools & Techniques
 1. Expert judgment
2. Decomposition
Outputs

1. Scope baseline
2. Project documents updates
▪ Assumption log
▪ Requirements documentation

Validate Scope

Formalizing the project deliverables is a task unto itself. In my engineering company, we

sometimes give clients a scope statement and ask them to give verbal approval, particularly if it
contains many non-standard things (i.e. not just another bridge). Other stakeholders, like
landowners around a new development, are given scope statements which may or may not
require acceptance depending on the circumstances and stage of the project.

Inputs

1. Project management plan

▪ Scope management plan
▪ Requirements management plan
▪ Scope baseline
2. Project documents
▪ Lessons learned register
▪ Quality reports
▪ Requirements documentation
▪ Requirements traceability matrix
3. Verified deliverables
4. Work performance data
Tools & Techniques

1. Inspection
2. Decision making
 ▪ Voting
Outputs

1. Accepted deliverables
2. Work performance information
3. Change requests
4. Project document updates
▪ Lessons learned register
▪ Requirements documentation
▪ Requirements traceability matrix

Control Scope

Project scope must not only be well defined, but well controlled. Like I said above, “scope creep”
trips up many projects and I’ve seen some ugly ones. Any changes in stakeholder expectations
or requirements during the project’s execution phase must be integrated into a new scope
statement and work breakdown structure. The associated cost, time, and resource changes must
be itemized and managed.

Inputs
 1. Project management plan
▪ Scope management plan
▪ Requirements management plan
▪ Change management plan
▪ Configuration management plan
▪ Scope baseline
▪ Performance measurement baseline
2. Project documents
▪ Lessons learned register
▪ Requirements documentation
▪ Requirements traceability matrix
3. Work performance data
4. Organizational process assets
Tools & Techniques

1. Data analysis
▪ Variance analysis
▪ Trend analysis
Outputs

1. Work performance information

2. Change requests
3. Project management plan updates
▪ Scope management plan
▪ Scope baseline
▪ Schedule baseline
▪ Cost baseline
▪ Performance measurements baseline
4. Project documents updates
▪ Lessons learned register
▪ Requirements documentation
▪ Requirements traceability matrix
The benefits of Project Scope Management
Good project scope management will
1. Help to understand what is in-scope of the project
2. Help to understand the deliverables of the project
 3. help to make informed decision making during the
project
4. helps to identify risks and plans steps to mitigate
5. helps in setting the right expectations to the
stakeholders
6. helps in planning on time money,
manpower, material
7. eases the scope related stress on project manager
8. prioritizes tasks to keep the project on track and
reduces unplanned work to save on time and
expenses
9. Enable effective communications between
stakeholders by bringing everyone on the same page
10. support successful project delivery
Project scope Limitations:
Project constraints are the general limitations that you need to account for during the
project life cycle. For example, a cost constraint means that you’re limited to a
specific project budget, while a time constraint means you must complete your
project within a specified timeframe.
Most project constraints impact one another, which is why constraint management is
crucial for project success. If you decide that you must expand the project timeline,
then you’ll likely need more money to complete the project as well. Your project
scope will also expand when the time and cost of your project expand.

The triple constraints of project

management
The triple constraints of project management—also known as the project management
triangle or the iron triangle—are scope, cost, and time. You’ll need to balance these
three elements in every project, and doing so can be challenging because they all
affect one another.
 There are trade-offs when balancing scope, cost, and time, and you must decide
what you’re willing to sacrifice in order to maintain project alignment and
functionality.
For example, your project can only stay within scope if your project’s budget and
time allotments stay steady. If you want to finish the project in less time, your scope
must also decrease to balance out the project unless you’re able to make
adjustments to the budget.

Scope
Project scope refers to a project’s magnitude in terms of quality, detail, and
deliverables. Time and money are dependencies of project scope, because as the
project scope grows, the project will require more time and money to complete.
You’ll need to be aware of scope creep throughout each project phase and work hard
to prevent it. You can prevent scope creep by creating detailed project plans and
getting project stakeholders to sign off on everything before production begins.

Cost
Cost constraints include the project budget as a whole and anything of financial value
required for your project. Items that may be a cost constraint include:
• Project cost
• Team member salaries
• Cost of equipment
• Cost of facilities
• Repair costs
• Material costs

Time
Time management is essential for project success, and there are various time
constraints you’ll face during each phase of your project. When you try to increase
your project timeline, there will be consequences like extended deadlines,
adjustments to the team calendar, or less time for planning.
Time elements in your project that can lead to constraints may include:
• Overall project timeline
• Hours worked on project
• Internal calendars and goalposts
• Time allotted for planning and strategy
• Number of project phases
Scope, cost, and time are called the iron triangle because these three constraints
can be difficult to maneuver around each other while maintaining project quality. For
example, if you cut your budget or increase your scope, you’ll likely need to
compensate by loosening up on time.

Other common project constraints to

consider
While scope, cost, and time are the triple constraints of project management, there
are three other project constraints you may encounter in your project life cycle: risk,
resources, and quality.

Risk
Project risks are any unexpected occurrences that can affect your project. While most
project risks are negative, some can be positive. For example, a new technology
may be released while your project is in progress. This technology may help you
finish your project quicker or it may cause more competition in the market and
reduce your product value.
You can determine project risks using risk analysis and risk management strategies to
keep them at bay. Some risks you may face include:
• Stretched resources
• Operational mishaps
• Low performance
• Lack of clarity
• Scope creep
• High costs
• Time crunch
Use a risk register to assess the likelihood and severity for each project risk, then
mitigate the most likely and severe risks first.
 Resources
Resources tie closely with cost constraints on your project because these project
requirements cost money. Without proper resource allocation, can experience lower
project quality, an increased budget, and timeline delays.
Some resources to consider include:
• People
• Equipment or materials
• Facilities
• Software

Quality
Project quality is the measure of how well your project deliverables meet initial
expectations. Every project constraint affects project quality because project quality
is the ultimate result of your project. However, project quality is also its own
constraint because there are aspects of the project that can result in poor quality that
aren’t necessarily related to cost, time, resources, risk, or scope. These include:
• Lack of communication
• Poor design or development skills
• Too many project changes
You must manage project quality as its own entity while also balancing the other five
project constraints if you hope to achieve high project performance. If you fail to
manage your constraints, the result can be low project quality and low customer
satisfaction.

How to manage project constraints

1. Understand your constraints: You can’t manage your project constraints unless you
understand what they are. Once you know your project constraints, you can plan around
them. For example, during project planning, assess what risks you might face as well as what
resources you’ll need and what those resources will cost.
2. Plan and strategize: When you consider all six of the most common constraints in
your project plan, you can move forward with a better perspective for what’s ahead. Your
 project plan should include strategies to mitigate constraints and balance the triple constraints
of scope, cost, and time. You can also implement strategies to address additional project
constraints , like trying to prevent project risks from occurring.
3. Control project quality: You can control project quality by regularly monitoring your project
plan and processes. As your team handles various tasks throughout project execution, use
work management software to ensure everyone is staying on track. Establish a change control
process so that if changes occur, you can prevent scope creep.
4. Manage risk: Use risk analysis to identify, assess, and prepare for potential project risks.
With a strong risk management plan in place, you can keep the most damaging project risks
at bay and prepare for any unexpected risks that may occur.
5. Communicate effectively: Team communication is essential for successful management of
project constraints. Without strong communication, you may think you’re balancing your
constraints while another team member is unknowingly disrupting your hard work. When you
discuss every aspect of the project with your team, you can work together to reach project
goals.
6. Embrace flexibility: You must embrace flexibility in order to effectively balance project
constraints. There will be times when you’ll need to compromise on project elements in order
to stay within scope. If you aren’t flexible, you’ll end up sacrificing project quality. Keeping
your customers or stakeholders satisfied should be your top priority, which means accepting
trade-offs when necessary.

See constraints in real time with

project management tools
Keep track of your project constraints through every phase of the project life cycle in
order to ensure the project quality meets stakeholder expectations. When you
encounter a situation where you must adjust one project constraint, like the project
schedule, consider how that will affect other project areas—like cost and scope—and
balance your constraints as necessary

Project time management

Objectives of Time Management in Project
Management
Time is a critical resource in project management, and
effective time management is crucial for project success.
Here are the key objectives of project time management:
• Helps meet project deadlines: A well-managed
schedule ensures that tasks and activities are
completed on time, helping the team to meet project
deadlines.
• Increases efficiency: By breaking down the project
into smaller activities and prioritizing them, team
members can focus on one task at a time, leading
to increased efficiency.
• Identifies potential delays: Estimating activity
durations and creating a schedule allows project
managers to identify any tasks that may take longer
than expected and take preventive measures.
• Enables effective resource allocation: With
detailed knowledge of the project schedule, project
managers can allocate resources efficiently to
ensure that tasks are completed on time.
• Facilitates communication: A well-managed
schedule provides a clear timeline for activities and
milestones, promoting effective communication
among team members and stakeholders.
Importance of Project Time Management
Project time management is a cornerstone of effective
project management for several reasons:
1. Efficiency:
Firstly, efficient time management enables teams to
complete their tasks within the pre-defined timeline. This
efficiency in execution not only optimizes resource
utilization but also prevents waste of effort on
unnecessary or redundant tasks.
2. Cost Control:
Secondly, there’s a direct correlation between time
management and cost control. Delays often lead to cost
overruns, as time and resources are closely intertwined
in any project. Therefore, effective project time
management helps keep budgets in check.
2. Quality Assurance:
Next, well-managed timelines ensure that the project
team has enough time for quality control processes.
Rushing towards deadlines could compromise the
quality of deliverables, while good time management
facilitates thorough testing and quality checks.
3. Stakeholder Satisfaction:
Furthermore, the timely delivery of project milestones
and the final output enhances client and stakeholder
satisfaction. It establishes the project team’s credibility,
fostering trust and paving the way for future
collaborations.
4. Risk Management:
Lastly, effective project time management also aids in
risk management. Monitoring the schedule regularly
allows project managers to identify potential delays or
bottlenecks early on and implement mitigating
measures.
5. Productivity Enhancement:
In addition to efficiency, another crucial aspect of project
time management is its ability to enhance overall team
productivity. By appropriately scheduling and allocating
tasks, team members can focus on their responsibilities
without feeling overwhelmed. It also allows for a
smoother transition between tasks, thus reducing
downtime and fostering productive work patterns.
6. Stress Reduction:
Effective project time management can significantly
alleviate stress within the project team. When there’s a
clear understanding of timelines and expectations, team
members can better manage their workflows. This clarity
can prevent last-minute rushes and reduce burnout,
contributing to a healthier and more balanced work
environment.
7. Learning and Improvement:
Project time management stands as a powerful tool for
continual learning and progress. Despite unexpected
obstacles and delays that may occur during any project, efficient time management
enables early detection of these hurdles. This early detection is not only crucial for
immediate problem-solving but also serves as a learning curve for upcoming projects,
thus promoting a culture of constant enhancement.
Key Characteristics of Effective Time Managers

Effective time managers exhibit several key characteristics that enable them to efficiently
manage project timelines:

• Strong Planning Skills: First and foremost, effective time managers excel at
planning. They meticulously plan each phase of the project, carefully defining
tasks, estimating their durations, and determining their sequence and
dependencies.
• Prioritization: Next, they are adept at prioritizing tasks based on their
importance, urgency, and contribution to project goals. They employ techniques
like the Eisenhower Matrix to separate important tasks from urgent ones and
prioritize them accordingly.
• Delegation: Furthermore, successful time managers know the importance of
delegation. They understand their team’s skills and capabilities and assign tasks
accordingly, thereby ensuring efficient completion of tasks and optimal resource
utilization.
• Flexibility: In addition, they are flexible and able to adapt to changes. They
understand that project schedules can change due to unforeseen circumstances
and can quickly adjust their plans to accommodate these changes.
• Problem-Solving Skills: Lastly, effective time managers are problem-solvers.
They anticipate potential delays and plan for contingencies, thereby reducing the
risk of timeline overruns.

Remember, these characteristics are not inherent but can be developed through practice
and experience. Consequently, mastering these skills is imperative for successful project
time management.
Tools for Project Time Management

To effectively manage time in a project, it is essential to have the right tools and
processes in place. It is important to note that different projects may require different
tools and processes for time management depending on factors such as project size,
complexity, and industry. Project managers must carefully consider these factors and
choose the most suitable tools and processes for their projects.

Here are some commonly used tools and processes for project time management:

• Gantt charts: This visual representation of project tasks, their durations, and
dependencies is a popular tool for scheduling and tracking project progress.
• Critical Path Method (CPM): CPM helps identify the critical path – the sequence
of activities that must be completed on time to meet the project deadline.
• Schedule Network Analysis: This process involves identifying and analyzing
the relationships between project activities to determine their impact on the
overall project schedule.
• Resource Leveling: This technique ensures that resources are not overallocated
and that tasks are completed within the available resources and time.
• Timeboxing: In timeboxing, a set amount of time is allocated for a task or
activity. This helps increase focus and prioritize tasks.
• Schedule Compression: This process involves shortening the project schedule
without affecting the scope or quality of deliverables, often achieved through
techniques like fast-tracking and crashing.

Steps for the Project Time Management:

By following these steps and setting realistic expectations, your project will be more
likely to succeed:

STEP-1. Plan from start to finish:

Start by setting a vision for the result and breaking down the project into
manageable chunks. Make sure you have an estimated schedule for
each component of the project.

STEP-2. Set clear goals and milestones:

When setting project goals, make sure they are realistic and achievable.
Use milestones along the way to show progress, so that you can adjust
the course as necessary.

STEP-3. Establish a meeting schedule with deadlines established in

advance:

Respect those deadlines, stick to them, and communicate regularly with

everyone involved in the process.
STEP-4. Involve everyone at every stage in the process, from
beginning to end:
For example, you can use meetings or other meeting tools like calendars or email alerts
to keep track of who’s working when, who’s doing what, and when things need to get
done next

Project Time Management Processes:

The Project Management Institute (PMI) identifies six processes that fall under project
time management:

1. Define Activities: Tasks and activities required to deliver the project are defined
here. These are the building blocks of the project schedule.
2. Sequence Activities: Subsequently, dependencies between these activities are
identified and they are sequenced accordingly. This helps to establish the order
of work and identify any critical paths.
3. Estimate Activity Durations: In this phase, the time required to complete each
task or activity is estimated. This is critical in building a realistic project schedule.
4. Estimate Activity Resources: Once the durations are estimated, the next step
in the project time management process is to estimate the resources needed for
each activity. These resources may be human, material, or financial.
5. Develop Schedule: Based on these estimates, a project schedule is developed
that outlines when each task should start and finish.
6. Control Schedule: Finally, the schedule is monitored and controlled throughout
the project’s lifecycle. Any changes to the schedule are managed and
communicated to all stakeholders. This ensures that the project remains on track
to meet its deadlines.

Process # 1. Define Activities:

The defined activities process in the project time management is a further breakdown of
the work package elements of the WBS. It documents the specific activities needed to
fulfill the deliverables detailed on the WBS and the project scope statement. The key
benefit of time management in the project management process is to break down work
packages into activities that provide a basis for estimating, scheduling, executing,
monitoring, and controlling the project work.

A. DEFINE ACTIVITIES PROCESS INPUTS:

The following are inputs to the Define Activities process:

• Scope baseline (deliverables, constraints, and assumptions).

• Enterprise environmental factors (project management information systems).
• Organizational process assets (existing guidelines and policies, lessons learned
knowledge base).

B. DEFINE ACTIVITIES TOOLS AND TECHNIQUES:

The tools and techniques of the Define Activities process are as follows:

i. DECOMPOSITION:

• Decomposition involves breaking the work packages into smaller, more

manageable units of work called activities.
• These are not deliverables but the individual units of work that must be
completed to fulfill the deliverables listed in the WBS.
• Time management in project management activities will help in later planning
processes to define estimates and create the project schedule.

ii. ROLLING WAVE PLANNING:

• Rolling wave planning is an iterative planning technique in which the work to be

accomplished in the near term is planned in detail, while the work in the future is
planned at a higher level.
• It is a form of progressive elaboration. Therefore, work can exist at various levels
of detail depending on where it is in the project life cycle.
• During early strategic planning, when information is less defined, work packages
may be decomposed to the known level of detail.
• As more is known about the upcoming events in the near term, work packages
can be decomposed into activities.

iii. EXPERT JUDGEMENT:

Expert judgment, in the form of project team members with prior experience developing
project scope statements and WBSs, can help you define activities.
C. DEFINE ACTIVITIES OUTPUTS:

Define Activities in project time management has three outputs:

• Activity list,
• Activity attributes, and,
• Milestone list.

i. ACTIVITY LIST:

A crucial outcome of the Define Activities process is generating a comprehensive activity

list. This list ought to encapsulate all the planned activities for the project, providing a
detailed scope of work description for each activity. Additionally, it must contain an
identifier, such as a code or number, to clarify the nature of the work and its completion
method for team members. Using transitional words, this process ensures streamlined
project time management and fosters a clear understanding of project tasks among team
members.

ii. ACTIVITY ATTRIBUTES:

The characteristics of project activities extend through activity attributes, enhancing the
detail within the activity list. Inevitably, these attributes change throughout the project’s
lifespan as the availability of information increases. Initially, activity attributes often
encompass elements such as the activity ID, the activity name, and the associated WBS
identification code. However, as the project advances and evolves through various
planning processes, additional details may be included. These can consist of processing
and succeeding activities, logical relationships, leads and lags, requisites for resources,
and any constraints or assumptions tied to the activity. Importantly, this process fosters
dynamic project time management, adapting to the project’s shifting needs and
circumstances.

iii. MILESTONE LIST:

In the realm of project time management, milestones hold significant importance. They
usually symbolize the successful attainment of major project deliverables or noteworthy
events within the project’s timeline. For instance, the approval and validation of the
project charter might be viewed as a milestone. To effectively manage time in project
management, it’s essential to document these accomplishments in a milestone list,
specifying whether each milestone is obligatory or optional. Despite their resemblance to
standard schedule activities in terms of structure and attributes, milestones carry zero
duration. This is because they signify a specific point in time rather than a period of
activity.

Process # 2. Sequence Activities:

Now that you’ve delineated the activities, it’s time to logically arrange them, recognizing
any interdependencies among them. The project time management process involves
sequencing activities, and utilizing a variety of inputs, tools, and techniques. This
essential step primarily yields project schedule network diagrams. It’s worth noting that
these diagrams can also have a consequential link to project cost management.

A. SEQUENCE ACTIVITIES INPUTS:

• Activity List.
• Activity Attributes.
• Milestone List, and,
• Project Scope Statement.

You’ve already seen all the inputs to this process. They are activity lists, activity
attributes, milestone lists, project scope statements, and organizational process assets.
We’ll look at several new tools and techniques next.

B. SEQUENCE ACTIVITIES TOOLS AND TECHNIQUES:

Sequence Activities in project time management have three tools and techniques, all of
which are new to you:

• Dependency determination.
• Precedence diagramming method (PDM).
• Applying leads and lags.

i. DEPENDENCY DETERMINATION:

Dependencies are relationships between the activities in which one activity is dependent
on another to complete an action, or perhaps an activity is dependent on another to start
an action before it can proceed.
CLASSIC EXAMPLE:

• You’re going to paint your house, but unfortunately, it’s fallen into a little disrepair.
• The old paint is peeling and chipping and will need to be scraped before a coat of
primer can be sprayed on the house.
• After the primer dries, the painting can commence.

ii. PRECEDENCE DIAGRAMMING METHOD (PDM)

The Precedence Diagramming Method (PDM) is a powerful tool in the realm of project
time management. It is a visual representation technique that aids in the understanding
of task interdependencies and aids in sequencing activities in a project. Each task is
represented as a node and is connected with arrows to indicate the direction and
sequence of work. The PDM also supports four types of dependencies:

• Finish-to-Start (FS),
• Start-to-Start (SS),
• Finish-to-Finish (FF), and
• Start-to-Finish (SF).

They provide a comprehensive view of the project timeline.

iii. LEADS AND LAGS:

Leads and Lags are another fundamental concept in project time management. They are
utilized to fine-tune the project schedule, allowing flexibility in the sequence of activities.
A Lead accelerates the successor activity, enabling it to start before its predecessor is
complete. Consider it like a head start in a relay race. Conversely, a Lag delays the
initiation of the successor activity. It represents a waiting period or a time cushion
between activities, ensuring that all necessary preconditions are met before the next
activity begins. Using Leads and Lags effectively can optimize the project schedule and
ensure smoother execution.
Process # 3. Estimate Activity Durations:

It is a critical process in project time management, where the project manager estimates
the number of work periods needed to complete individual activities.

A. INPUTS:

Essential inputs for this process include the activity list, activity attributes, resource
calendars, and project scope statement.

B. TOOLS AND TECHNIQUES:

The primary tools and techniques involve expert judgment, analogous and parametric
estimating, and three-point estimates based on PERT (Program Evaluation and Review
Technique).

C. OUTPUTS:

Expected outputs are duration estimates and project document updates.

Process # 4. Estimate Activity Resources:

It identifies the type and quantity of resources required for each activity.

A. INPUTS:

The activity list, resource calendars, and risk register stand as primary inputs.

B. TOOLS & TECHNIQUES, AND OUTPUTS:

Techniques used can include expert judgment, alternatives analysis, and project
management software, resulting in a resource requirement breakdown and updates to
the activity list and resource breakdown structure.

Process # 5. Develop Schedule:

This process synthesizes all schedule-related information into a timeline with planned
dates for completing project activities.

A. INPUTS:

Inputs include activity sequence, duration estimates, resource calendars, and project
scope statements.

B. TOOLS AND TECHNIQUES:

Schedule network analysis, critical path method, and schedule compression are some
techniques employed here.

C. OUTPUTS:

The outcome of this process is a project schedule that maps out key milestones and a
project calendar.

Process # 6. Control Schedule:

It refers to monitoring project status to update project progress and manage changes to
the schedule baseline.

A. INPUTS:

Project management plan, project schedule, and work performance data are inputs for
this process.

B. TOOLS AND TECHNIQUES:

Here, tools and methods like schedule comparison bar charts, performance reviews, and
variance analysis are used to ensure the project stays on track.

C. OUTPUTS:

Change requests, project management plan updates, and project document updates are
the usual outputs

PROJECT COST MANAGEMENT

Cost management in project management involves the planning,

estimating and overall control of budget. Cost management
processes are in place to help project teams plan and control
budgets during the project life cycle.

While cost management overall is a complicated process and a

critical project management knowledge area, we can break it down into four
processes:
1. Resource planning.

While resource management is in place to plan, allocate, and

schedule the resources needed for each stage of a project,
resource planning looks specifically at the costs associated with
each of these resources.

Because of the complexity of this process, a work breakdown structure

(WBS) can help to simplify and provide clarity.

Using your resource management software, identify what resources will be

used to complete each item in the WBS, determine the associated
costs, and perform a cost-benefit analysis.
2. Cost estimation.

Cost estimation is the process of approximating the costs

associated with each of the resources required for all scheduled
activities. It’s an important part of the cost management process.

Cost estimating forecasts the cost of completing a project within

a defined scope. Given that scope tends to shift throughout the
life of a project, cost estimation is not a one-time process.

Effective cost management requires project managers to keep abreast

of budgetary changes during a project’s lifespan. These
estimations sum up all the costs involved in successfully
completing a project.

To get a good estimate at the costs, you can use one of the
following techniques:

• Analogous estimating – Past projects should inform the cost

estimate, here. Analogous estimations use previous, similar
projects as a reference point for costing up the new one.
 • Parametric modeling – Mathematical formulas, based on
Regression Analysis or Learning Curve models, inform
potential project cost estimations.
• Bottom-up estimating – Costs are based on known
quantities, such as individual work or item cost and duration
or time spent on individual tasks.
3. Cost budget.

Cost estimations lead directly into cost budgets..

A good project budget will help you make key decisions with
respect to the project schedule and resource allocation
constraints.

These budgets should account for everything from direct labor

costs, to material costs, factory costs, equipment costs,
administrative costs, and software costs.

To set the cost budget, consider the following techniques:

• Cost aggregation – This requires you to aggregate or combine

costs from an activity level to a work package level. The
final sum of the cost estimates is applied to the cost
baseline.
• Reserve analysis – With this cost management method, you
create a buffer or reserve to protect against cost overruns.
The degree of protection should be equivalent to the risk
foreseen in the project. The buffer is part of the project
budget, but not included in the project baseline.
• Historical data – Under this technique, you use estimates
from closed projects to determine the budget of the new
project. This is very similar to analogous estimation.
• Funding limit reconciliation – Here, you adhere to the
constraints of a funding limit. This is based on the limited
amount of cash dedicated to your project. To avoid large
variations in the expenditure of project funds, you may need
to revise the project schedule or the use of project
resources.
4. Cost control.
Good project managers should have a constant eye on cost and
potential scope creep. This includes being vigilant for times when
costs vary from estimations. Cost control also involves informing
the stakeholders of cost discrepancies that vary too much from
the budgeted cost.

Controlling the budget means being aware of the:

• Original budget
• Approved costs
• Forecasted costs
• Actual costs
• Committed costs

Budget control involves being aware of and acting on changes and

issues as and when they occur.

To effectively control project costs, consider these tools and

techniques:

• Earned value management – This uses a set of formulas to

help measure the progress of a project against the plan. It
integrates schedule, scope and costs to measure project
success against planned and actual values. Benefits include
measuring cost alongside other factors.
• Forecasting – This uses a project’s current financial situation
to project future costs. The forecast is based on budgeted
cost, total estimated cost, cost commitments, cost to date,
and any over or under budgeted costs. It can be useful as
part of the controlling and monitoring phase.
• To-Complete Performance index (TCPI) – A cost
management tool that represents the level of project
performance needed for future work to meet the budget.
Useful to make decisions about efficiency when a project is
under way. A TCPI figure above 1.0 indicates your project is
running above budget.
• Variance analysis – A technique that involves analyzing the
differences between the budget and final cost projections.
• Performance reviews – These are used to check the health
of a project. A performance review includes an analysis of
project costs, schedule, scope, quality and team morale.
 This may help to gain a broader view — for instance, if you
suspect an unprofitable project will cause talent drain in the
long term.

By learning how to estimate expenses, determine budgets, and

control costs, you can be a better project manager and leader.
Effective cost management will help you get projects done on
time and under budget, the golden ticket for any successful
project manager.
Importance of cost management important

In project management, the cost management process is an

important tool to keep profits healthy, reducing the risk your
project could become unviable. When you define what healthy
finances look like, it’s easy to make decisions in real time when
work is underway.

The importance of cost management comes into play from the

very beginning of the project lifecycle, however. This is because
costs and budgets affect key project decisions — from the people
you hire to the materials you use.

When a project doesn’t stay within budget, it can remain

incomplete, harming a project manager’s reputation. In a worst-
case scenario, mismanaged costs can make an organization
unviable.

Great project cost management lets you generate data to share

with stakeholders. When you view this using intuitive software,
it’s easy to lift insights for future project plans.

The benefits of implementing project cost

management.
The project cost management process empowers you to plan a
project well, make informed decisions once activities are
underway, and measure success.
Keep track of multiple types of project cost, including:

• Direct costs – These include money earmarked for software

fees and other mission-critical overheads.
• Indirect costs – In business, indirect costs are a fact of life.
Each individual project contributes to your organization’s
electricity bill, for instance.
• Fixed costs – One-off fees may be considered fixed, since
they aren’t linked to time management.
• Variable costs – This type of cost rises if a project is
extended or delayed. Staffing costs are a common example.
• Sunk costs – These are purchases that have already been
made, effectively the cost is deemed to be sunk.

The challenges of project cost management.

When elements of your project plan change, the corresponding
cost figures will alter too. Losing grip of your project’s scope is a
fast way to also lose track of costs, putting your entire project at
risk.

Accurate cost management also requires schedule and cost

integration. Communication can be key for this. Ask your finance
analysts to provide direction to managers responsible for aspects
of project delivery, and for teams to report back on issues in turn.
If tasks are stretching beyond timelines in the original plan, this
should be reflected in a project manager’s calculations right
away.

Project cost management tools.

A work management software like Adobe Workfront provides a centralized
location for all project data and information, helping you to stay
aware of variances in the budget, make approvals, track
comments, and see all-important project data.

Management of project costs

To manage project costs effectively, bring together all elements

of a strong project cost management plan. This involves resource
planning, cost estimation, cost budgeting and cost control.
Managing project costs requires strategic thinking and careful
processes at every stage.

The three main methods of estimating cost are the:

• Expert judgement – The quickest and involves asking expert

people or groups to provide insight. They may use data on
past projects also.
• Parametric estimating – Uses statistical information about
the relationship between variables and may use an algorithm
to map past project data onto current plans.
• Analogous estimating – something of a half-way house
between the above two methods. Uses values such as scope,
duration and project-specific measures from past activities.
The actual costs in previous projects help to shape
estimates.

project costs aggregated

Project costs are aggregated – combined and calculated – by

adding the baseline cost estimates for each element of a project
and its subtasks. With the sum of the lowest estimates for each
part, a project manager can get a sense of the minimum costs to
plan for.

Cost aggregation also allows you to see scheduled spending for

each subtask and time period. It also helps to calculate the cost-
performance baseline, helping project managers keep track of
cash flow throughout the project life cycle.

PROJECT QUALITY MANAGEMENT

Project quality management is the process of continually

measuring the quality of all activities and taking corrective action
until the team achieves the desired quality. Quality management
processes help to:

• Control the cost of a project

• Establish standards to aim for
• Determine steps to achieve standards
Effective quality management of a project also lowers the risk of
product failure or unsatisfied clients.

Three quality management processes:

• Quality planning
• Quality assurance
• Quality control
Quality planning.

A good quality management plan starts with a clear definition of

the goal of the project. First, be clear on what the product
or deliverable is supposed to accomplish. Assessing the risks to
success

• Setting high standards

• Documenting everything

Also key is defining the methods and tests to achieve, control,

predict, and verify success.
Quality assurance.

Quality assurance provides evidence to stakeholders that all

quality-related activities are being done as defined and promised.
It ensures safeguards are in place to guarantee all expectations
regarding quality outputs will be met.

Quality assurance is done to the products and services delivered

by a project

Quality assurance tests use a system of metrics to determine

whether the quality management plan is proceeding acceptably.
By using both qualitative and quantitative metrics, you can
effectively measure project quality with customer satisfaction.
Quality control in project management.

Quality control involves operational techniques meant to ensure

quality standards. This includes identifying, analyzing, and
correcting problems. While quality assurance occurs before a
problem is identified, quality control is reactionary. It occurs
after a problem has been identified and suggests methods of
improvement.

It measures specific project outputs and determines compliance

with applicable standards. It also identifies project risk factors,
their mitigation, and ways to prevent and eliminate unsatisfactory
performance.

Benefits of project quality management:

• Quality products. Ensuring you and the project team check
the quality of the project means the product will go through
multiple development processes. This will help to deliver a
final product that meets customer expectations.
• Customer satisfaction. Tackling problems in real-time and
communicating with the customer will ensure they’re up to
date and aware of any issues. Incremental customer
feedback can also help you to deliver a better final product.
• Increased productivity. With a project quality management
system everyone knows deadlines and what is needed in
advance. Having set deadlines, meetings, and reports can
influence the project team to hit targets early to keep the
project on track.
• Financial gains. Projects can run over budget if good quality
management is absent. By having the three processes in
place — planning, assurance, and control — you can tackle
problems before they cut into your budget.
• Removes silos. Boost collaboration between teams with
project quality management tools. Being able to easily see
where each team is up to and using meetings to discuss
feedback between departments can remove departmental
silos.

Quality management tools.

Affinity diagrams.

Affinity diagrams generate, organize, and consolidate information

concerning a product, process, complex issue, or problem. It
expresses ideas without quantifying them (brainstorming sessions).
Process decision program charts.

Process decision program charts see the steps required for

completing a process and analyzing the impact. These charts help
to identify what could go wrong and help plan for these scenarios.
Interrelationship diagrams.

SixSigmaDaily defines interrelationship diagrams as diagrams that

show cause-and-effect relationships. These diagrams identify
variables that occur while working on a project and what parts of
the project those variables might affect.
Prioritization matrices.

Use these during brainstorming sessions to evaluate issues based

on set criteria to create a prioritized list of items. It helps to
identify what issues may arise and determines the problems to
prioritize to meet objectives.
Network diagrams.

A visual representation of a project’s schedule. This helps plan

the project from start to finish. It illustrates the scope and
the critical path of the project. The two types of network diagrams
are:

• Arrow diagram
• Precedence diagram
Matrix diagrams.

A matrix diagram is used to analyze data within an organization’s

structure. It shows the relationships between objectives, factors,
and causes that exist between rows and columns that make up the
entire matrix. There are multiple types of matrices to use,
depending on the number of items and groups of items to analyze.

The different matrix diagrams and their use cases:

• L-shaped matrix. Creates a relationship between two items.

• T-shaped matrix. Creates a relationship between three
groups of items.
 • Y-shaped matrix. Creates a relationship between three
groups of items, but it is displayed in a circular diagram.
• C-shaped matrix. Creates a relationship within three groups
of items, and it is displayed in 3D.
• X-shaped matrix. Creates a relationship between four
groups of items.

Quality management software.

Project quality management is multifaceted. Your team must:

• Clearly understand the quality expectations

• Determine how you will measure whether you’re meeting
those expectations
• Implement any necessary changes along the way

The ideal work management platform allows you to track these

aspects in one easy-to-use place.

Three main processes of project quality management.

These are Quality Planning, Quality Assurance, and Quality

Control/content.

Planning is focused on shaping a clear goal/s for the project.

Assurance uses tests, metrics, and checklists to demonstrate to
stakeholders the project is running as it should. Quality content is
all about identifying solutions to problems relating to quality.

The best way to manage project quality is it invest in a project

quality management system and follow the three principles of
quality management — planning, assurance, and control. The right
software will enable you to set clear roles, tasks, and deadlines.
By centralizing production in one place, keeping track of client
feedback, amends and sign off will be much easier.

PROJECT RESOURCE MANAGEMENT

Project resource management is about how you plan, manage, and
optimize resources to deliver the best possible outcomes for your project
and your people. It’s about intelligently aligning and assigning people to
projects where they’re empowered to deliver their best work - engaged in
tasks that suit and stimulate them, and never bored or burnt out.

By planning and managing your project resources effectively, you’re more

likely to meet project milestones, stick to budget, and delight your clients.

project resource management

Project resource management describes the process of identifying,
securing, and managing the resources you need to deliver a project
successfully. It employs interconnected techniques to ensure a project
meets its milestones - by intelligently applying the right resources to the
right tasks at the right time.

The Project Management Institute breaks project resource management

down into six steps.

1. Plan resource management - Planning how you’ll manage your

resource management for a particular project, based on factors such
as project type and complexity.
2. Estimate activity resources - Establishing the resource
requirements for the project, taking into account the type, quantity
and characteristics of each resource.
3. Acquire resources - Obtaining the resources you require for
success, often in a competitive landscape.
4. Develop resources - Developing individual and team capabilities, to
ensure cohesion, collaboration, and competence to deliver the
project.
5. Manage resources - Monitoring and managing performance to
optimize project outcomes.
6. Control resources - Monitoring resource utilization and taking corrective
action if required.
 a resource in project management
A resource can be anything required to deliver a project successfully. It
could be a physical resource - like specific materials or equipment. Or it
could refer to human resources - the talented team members you need to
deliver project outcomes.

Identifying, obtaining, monitoring and managing resources is fundamental

to project management.

Project management is concerned with managing every element of a

project to ensure it is a success - from people and processes
to budget and schedule. It comprises a range of tools and techniques to
ensure a project meets agreed objectives, timescale and cost.

Resource management is specifically concerned with managing

resources within a business - such as materials, equipment, and people. It
isn’t just concerned with a single project. It’s about ensuring the
organization has the resources it needs to deliver all of its workstreams
successfully. This includes forecasting needs, planning the allocation of
resources, and ensuring they’re being utilized to the best effect.

benefits of project resource management

Project resource management is beneficial because it lays the foundations
for project success. It provides a structured framework to think through
staffing implications and how you’ll optimize your human resources - so you
and they can deliver the project to the best of your abilities, given the
interdependencies and constraints you face.

Project resource management processes help you:

• Build your dream team - by identifying the best resources available

to you and providing data to negotiate for them.
• Rightsize your team - ensures efficiency by reducing the risk of
over- or under-estminating resource needs by intelligently matching
resources to requirement.
• Prevent burnout or boredom - which can undermine your team’s
ability to deliver their best work.
• Avoid the unexpected - through realistic appraisal of resource
availability and alternative options.
• Build trust and transparency - through fair assignment of staff,
clear roles and responsibilities, and a team charter.
• Improve efficiency - by ensuring optimal resource utilization through
agreed monitoring and management processes.
A resource management plan documents how project resources should be
allocated, managed, and released over the course of your project. It will
contain key information about the project and its staffing including:

• Required resources - Your rationale behind who you need and

why.
• Your resource schedule - The project schedule mapped to when
each resource is required.
• Roles and responsibilities - What each member of your project
team will do.
• Assumptions and constraints - Factors that your project resource
plan is based on.
The six core project resource
management processes
The Project Management Institute issues comprehensive guidance for
project management professionals each year in a publication called Project
Management Body of Knowledge - PMBOK for short. The information
below summarizes their approach to project resource management.

1. Plan resource management

It establishes your approach to planning and managing resources based on
the type and complexity of the project, as well as environmental and market
factors.

2. Estimate activity resources

This stage is about establishing the resource requirements for the project -
taking into account type, quantity and characteristics of the resources you
need.

Resource estimating techniques

There are a number of different estimating techniques you can use to work
out how many resources you’ll need to deliver a particular project.

• Expert judgment - Consult with individuals or groups with relevant

expertise in resource planning to determine an informed estimate.
• Bottom-up estimating - Estimate team resources at an activity level
and ladder that up to the full work package.
• Analogous estimating - Use data from a previous similar project as
the basis for estimating the current project.
• Parametric estimating - Calculate resource needs based on
historical data and other variables. For example, imagine a year-long
project requires 4,000 hours of coding. If - in the past - that has taken
one person two years, you know you’ll need two people to complete it
in one year.
Selection criteria

When considering which resources you’d like access to, you should
consider the following and rank your preferences according to how different
individuals score.

• Availability - Whether the team member is likely to be available for

your project, taking in a realistic account of other projects and
priorities they're working on, as well as demand for their expertise.
• Experience / knowledge - Whether the team member has the
relevant experience to contribute to project success, such as
knowledge of the customer or similar projects.
• Skills - Whether the team member has the relevant skills to succeed
in the project - such as experience with particular equipment or
interpersonal skills .
• Attitude - Whether the team member has the ability to work with
others as a cohesive team - and whether this is a project that will
stimulate and engage them.
• Location - Whether the team member’s location will impact on
delivery and need accommodations to be made.
• Cost - The cost of the team member relative to the value they will
deliver for the project.
3. Acquire resources
This stage is concerned with securing the resources you’ve identified for
your project. As the project manager, you may not have control over the
resources you require. This could be because of a matrix project
environment, internal reporting relationships, or other reasons.

Failure to acquire necessary resources can affect the project schedule,

budget, and outcomes. Insufficient resources - or inadequate capabilities -
reduce the likelihood of project success. So it’s important to make a strong
business case for your cause. Your resource estimation, selection criteria,
and alternatives analysis should be influential here.

Create a resource calendar

With your resources in place, it’s time to start resource scheduling and
creating your resource calendar. This will help you plan a reliable
overarching project schedule.

A resource calendar documents the time periods that each resource is

needed for - and records any constraints on that time. For example time
zones, work hours, vacation time, local holidays, and commitments to other
projects.

This ensures you have a realistic picture of the time your

resources actually have available for project work - you’re not about to be
blindsided by an unexpected delay to your schedule.

4. Develop resources
Now you’ve secured your resources, you need to develop them into a
coherent, collaborative and capable team, so you can ace your project
objectives. Considerations at this stage include:

• Colocation - Do you need to physically bring your team together in

one location? If not, how will you ensure effective remote
collaboration?
 • Technology - What tools will you use for collaboration,
communication, file access etc?
• Team charter - Defining and documenting team objectives,
strategies and values so all members have a shared understanding.
• Team building - How will you create a team that works well together,
both for the benefit of individual team members and project
objectives?
• Training - Do individuals or the whole team need training to deliver
their part of the project.
• Recognition and reward - What milestones do the team need to
achieve and how will you reward completion?

5. Manage resources
When your project is in motion, you’ll need to monitor and manage
resource performance. It’s about keeping your team focused, on schedule,
and set for success.

Emotional intelligence, leadership and influencing skills are essential here,

A key element of this stage is monitoring resource utilization - whether your
team is being used to optimal capacity, how much of their time is billable
and non-billable, and mapping planned vs actual utilization.

6. Control resources
This coincides with the ‘Manage’ stage. Where ‘Manage’ is related to
human resources, ‘Control’ relates to physical resources.

Project resource management tools

Project resource management software provides access to real-time
information about project resources, so that you can model, monitor
and manage human resources more effectively - without having to wade
through spreadsheets and potentially out-of-date project data.
Types of resources used in project
management
People, processes, and technology, also referred to as the golden
triangle, are essential for successful project implementation.

Labor

Labor or human resources comprises employees (part-time or full-time)

and contingent staff with various skill sets required for delivery. Labor
is essential to execute tasks necessary for the successful completion of
projects. Managing them diligently ensures that the right people are in
suitable roles and work efficiently to help achieve the project objectives.

Consumables & materials

Consumables and materials are essential in project management as

they directly impact the cost, quality, risks, etc., and are needed to
generate the final product. For example, the materials for a road
construction project are soil, rock aggregates, binders like lime,
bituminous materials, cement, etc. Managing these resources is crucial
as they ensure the successful completion of projects within the
committed time and budget while meeting the quality and regulatory
requirements.

Equipment & tools

Tools and equipment play a vital role in project management as they

help perform specific tasks within a project. For instance, software
development projects require computers and various software to
complete their tasks successfully. Tools and equipment cover all the
tangible assets (machinery, plant, equipment, etc.) and intangible
assets (software, process, methods, and ideas). These assets might
change depending on the type and nature of the organization.
Managing these resources ensures uninterrupted project execution,
contributing to success.

Facilities

Facilities in project management constitute the physical infrastructure,

resources, and environment necessary for project execution. It includes
land, conference rooms, office space, accommodation, storage facilities,
etc. Providing appropriate facilities, like meeting rooms for team
meetings, discussions, presentations, etc., can help improve team
members’ productivity and communication.

Finance

Money is essential to procure the resources and carry out the

necessary work. Furthermore, budgeting is key in project management
to plan and control the project expenses.

Characteristics of human
resources in project management
Resources help in delivering the tasks effectively. Team members
provide extra hands and mind to complete the work. Similarly,
equipment, technology, and processes amplify workforce efficiency.

However, while assigning resources to projects, one must consider the

following characteristics of human resources:
Flexibility and adaptability attributes

Since project management deals with dynamic and unpredictable

situations, human resources must demonstrate qualities such as
adaptability and flexibility. Therefore, managers must consider the
resources capable of adapting to changing project requirements,
priorities, and timelines. Moreover, they should be open to new ideas,
willing to learn, and ready to handle unforeseen challenges.

Effective communication skills

Communication is critical in project management, and human

resources are crucial in ensuring effective communication among team
members, stakeholders, and project managers. Employees possessing
strong verbal and written communication skills can convey information
concisely and accurately and foster open and transparent
communication channels.

Leadership qualities

Human resources demonstrating excellent leadership qualities and the

ability to influence others steer the projects to success. They inspire
and motivate team members, provide guidance and support, nurture a
positive work culture, promote teamwork, and effectively manage
conflicts.

anizational efficiency.

PROJECT COMMUNICATION MANAGEMENT

One of the most important responsibilities of project management is
communication. Communication is typically a critical ability that
enables projects to run effectively. Learning project communication
management can help you lead project teams better. In this article,
we define project communication management, discuss its
importance, highlight its types, provide steps for effective
communication in project management, and list other project
management skills.
Project communication management refers to a group of processes
that assist in ensuring the appropriate communications, which the
relevant individuals transmit, are well received and understood.
Communication in project management also deals with the sharing
of ideas and opinions between professionals who are working on
similar or related tasks. Essentially, communication in project
management ensures that each professional working on the project
is aware of the goals and expectations. This helps professionals
work more efficiently and often improves the quality of their work.
Types of communication
Professionals separate most forms of communication into three
categories, namely verbal, nonverbal, and written communication.
Though each of these types is essential, many professionals rely on
verbal and written communication the most. Here is a list of specific
types of communication channels that professionals use in project
management:
Meetings
Consider arranging regular or informal meetings with project
participants. Meetings are a useful means of communication when
you want to provide an update on a project that may require a
detailed explanation or anticipate any inquiries. It may be beneficial
to begin projects with a meeting to build your team of experts and
establish a communication precedent. Consider conducting meetings
in person or by video call to ensure the inclusion of all experts.
Email
Emails are a classic mode of communication that many workplaces
utilize for professional and informal communication. When managing
a project, check your email often to ensure that you read any
project-related emails your team members send to you. Additionally,
you may want to consider utilizing an email chain to notify your team
of impending meetings and deadlines, or you may choose to send
individual emails to experts with whom you wish to communicate.
Phone calls
Phone calls are an excellent way to communicate when you want an
immediate response or the content you're trying to communicate is
critical. Telephone conversations frequently have a more personal
feel than various types of written communication. To ensure
effective phone calls, consider texting the expert shortly before
confirming their availability. This ensures they are ready for the issue
you want to communicate.
Discussion boards
In the early stages of your project, consider establishing a discussion
board or group chat. Professionals can use discussion boards to ask
common inquiries and communicate with other members of their
team. It's helpful to utilize a discussion board as both an educational
and team-building tool since it may assist your team in enhancing
their collaborative skills and work quality.
Surveys
Professionals may conduct surveys to ascertain overall consensus on
a given subject. Consider utilizing surveys to solicit input from your
team members or solicit votes on a certain issue. Surveys are also an
excellent method for anonymous communication. This means you
may solicit feedback from your team members without them feeling
nervous about your response.
Presentations
Presentations are an effective method of verbal communication that
professionals use to educate their colleagues about a subject or
share information. Consider speaking at project milestones or
organizing sessions to teach experts how to accomplish a certain
activity. You may wish to deliver a presentation in person or by video
call, or you may choose to make a document format of your
presentation for individuals to view.
Memos
Memos are short, informational messages that update professionals
on issues related to the project. Project managers often use memos
to share new policies or procedures related to project tasks. When
writing memos, try to keep your message brief. Professionals often
email memos or print them off to post in a public area of the
workplace.
Project plans
Project plans are documents that map out the process of a project.
Managers usually create project plans in the early stages of their
work but update them frequently. This management tool often
includes projects objectives, contact information for team members,
and other recourses to help aid in the project's development.

to effectively communicate in project management

To manage your project effectively, it's vital to understand how to interact with your
team. To learn how to communicate successfully, you may follow these steps:

1. Plan for the project

It's important to consider communication throughout the project's earliest planning

phase. Try to develop a project plan that details each stage of the project and
carefully assemble your team of pros. Planning for these elements of the project
early on allows for more efficient communication with your team later on in the
[Link]: How to Create a Project Communication Plan (With Template)

2. Establish a communication method

Try to establish a key means of communication for the project after assembling a
team and developing a project strategy. While it may be useful to utilize many modes
of communication during the project, notifying team members of the primary mode of
communication helps structure the project. For instance, you might initiate a group
chat at the start of the project and indicate the type of communication you intend
professionals to have there.

3. Share project goals

Try to ensure that you communicate the project's objectives to your team on a
frequent basis. This guarantees that each individual is aware of the project's
objectives. Consider inviting specialists to provide their suggestions on how to
accomplish the project's objectives when presenting them. This may assist you in
achieving your project's objectives with a higher level of quality or efficiency.

4. Listen to your team

Listening skills are critical for communication growth. Try to listen to your team and
attempt to elicit their opinions and ideas on certain themes. This enables you to
communicate with the team and demonstrates your appreciation and respect for
them. Usually, when you demonstrate your respect for your project team by listening
to them, they feel more motivated to reciprocate. This enhances your leadership
abilities and helps in the completion of your project's objectives.

5. Keep everyone updated

As your project progresses, be sure to update your team on any changes within the
project. This includes updates on progress, policy change, new methods, and other
aspects of the project. Keeping your team updated ensures that each professional
understands the current status of the project. It also may foster a sense of inclusion
and accountability, as you are involving everyone in the project's processes.

6. Monitor employee performance

Monitoring your team member's job performance allows you to notice if any
employee needs extra help. This also helps you understand what you want to
communicate. Knowing how each team member is performing also may let you
decide which type of communication works best for your project. For example, if you
notice a few employees are not working under the most up-to-date terms of the
project, you might change your communication method to a more effective type for
your team.

PROJECT RISK MANAGEMENT

 Definition of Project risk
According to PMI, the project risk may be defined as the chance of certain
occurrences adversely affecting project objectives, the degree of exposure to
negative events, and their probable consequences.

As a result, the project risk is defined by three risk factors:

1. The risk event or identification (what can possibly happen to harm the project)

2. The risk probability (how likely is the occurrence of the event)

3. The amount at stake ( what could potentially be lost).

Identifying, analysing, and responding to risk factors throughout the whole project
process (and in the best interest of its objectives) is defined as risk management.

A risk factor is a situation that may induce project risks. It increases the chances of
something happening that will stand in the way of your project objectives. The impact
of a risk factor should be calculated for in the risk management plan. Each stage of a
project life cycle can pose new risk factors for your project.

3 Common Types of Project Risks

Each project has its own risks that depend on the project's current environment and
each of them needs to have its own project risk management plan. We can split risks
into two groups - external and internal. External risks cannot be controlled by an
organisation and include political, economic, and natural risks. Internal risks are the
ones that a project manager or a risk management team can manage, and they are
the most common project risks.

Cost risk

Cost risk is the growth of project costs that were not calculated. In other words, it is
the risk that the project will cost more than its allocated budget. This is perhaps the
most common of all the project risks, and it happens due to poor budget planning,
not managing resources correctly, inaccurate cost estimation, and scope creep. Cost
risk can often lead to the other two common risks - schedule risk and performance
risk.

Schedule risk

Schedule risk is the risk of activities taking longer than expected. Typically this risk is
also due to poor planning. Schedule risk is closely related to cost risk because an
inaccurately planned schedule often leads to increases in cost since longer projects
simply cost more. Schedule risk also leads to delays and that results in missed
timelines and a possible loss of competitive advantage. Schedule risk can also lead
to performance risk - missing the timeline to perform its intended mission.

Performance risk

Performance risk is essentially the danger of the project failing to deliver results that
meet the project's specifications. The source of this risk is difficult to identify because
it might be attributed to a variety of circumstances.

A project team can deliver the project within the budget and schedule, yet
nevertheless, fail to achieve the expected results and benefits. Additionally,
performance risk can contribute to cost and schedule risk if a team's or technology's
performance causes the project's cost and length to rise. In the end, the organisation
wasted money and effort on a project that didn't work out.

What is a risk management in project management?

Risk cannot be managed, per se. Risk has to do with uncertainty, probability or
unpredictability, hence the term risk management tends to be misleading. There is
no way to truly have control over events happening during the project. Risk
management must be seen as preparation for possible events in advance, rather
than responding to them as they are happening.

With more time on hand, it is possible to find alternative action plans and choose the
one that is most in line with the project's goals.
 Because you are not able to control the event itself, you must control and regulate
how you react to it. As a result, risk management is defined as the formal process
whereby risk factors are systematically identified, assessed and provided for. In
other words, project risk management accounts for strategies that ensure a more
robust response to risks. Those include response planning, mitigation, deflection and
contingent planning.

Why is project risk management important?

Risk management is a very important part

of project management because it can
exponentially increase the chances of a
project's successful outcome. Developing
and sticking to a project management plan
is extremely beneficial as it:
• Assists you in avoiding major disasters.

• Increases your revenue by lowering your costs

• Ensures successful project completion

• Gives you a competitive advantage

• Increases a sense of accountability and reponsibility

• Assists you in discovering new possibilities

Risk management is inseparable from the cost, schedule and quality of the project.
Consequently, it has to be a key component of the project management process.

6 Key Steps in the Risk Management Process

For handling project risk, you need to have an effective risk management plan. The
process of making one usually consists of these six steps:
Identify the Risk

This is the first step in the risk management process because you cannot resolve a
risk if you do not know what it is. There are many ways you can get the project risk
identified but one of the most common ways is by brainstorming together with your
team and stakeholders. You can also find people with relevant experience to your
project and schedule a meeting with them.
When thinking of all the ways things can go wrong, note them. List all the ways a
potential project risk can grow and even check past projects' data. It is important to
keep all of the collected data in a risk register so you can reflect on the past in order
to improve future projects.

Analyse the Risk

Risk analysis is a process that is used to identify and analyse potential problems that
could negatively impact the project. Once you identify risks, you can begin to analyse
them. Many implications, such as avoiding future lawsuits, addressing regulatory
difficulties, complying with new legislation, lowering project risk, and minimising its
impact, can be proactively addressed. This can be determined using qualitative and
quantitative risk analysis.

Risk analysis includes analysing the likelihood, severity, and response plan for each
risk you have found. While determining the project risk's severity, it is important to
consider how the risk will affect the project's goals; can it cause a delay in its
completion, undermine the budget or other resources, etc. For that reason, the best
option is to include the opinions of a project team or key stakeholders in this step.
The response plan you come up with for each risk is what the project team will use
when the risk arises to quickly address it.

Prioritise the Risk

Because not all project risks are equal, an evaluation is needed so project managers
know what resources they can gather towards the risk's resolvement. By
categorising your list of risks as high, medium, and low, you can know which ones
deserve to be more thoroughly investigated and which ones are not that serious.
With a clear perspective like this, you can begin to plan for how and when these risks
will be addressed. Some of them require immediate action because they can derail
the entire project, while other risks, though still important, do not threaten the
successful completion of the project.

Assign a Risk Owner for Each Risk

This step in the risk management process is key. All the hard work done identifying,
analysing, and prioritising risks would be for nothing if you don't assign the task of
overseeing it to someone. A risk owner can be anyone - often it is a team member
who is the most suited to monitor the risk. Then that person is responsible for
identifying risk as well as leading the work towards its resolvement. Every risk should
have a person responsible for it. That way, every potential threat to the project's
success is covered.

Respond to the Risk

In this step, you can put to use everything you have prepared so far. But first, you
need to identify if the risk is positive or negative. A lot of the time, people think of all
the potential events that can occur as a threat - something that will impact the project
negatively. However, that is not always the case. Sometimes events that take place
can be good for your project. Those opportunities are then called positive risks and
you should seize them to the best of your ability.

For each identified risk there should be a strategy for its management and mitigation.
Once the strategy (preventative or contingency plan) is developed, the next step is to
manage risk according to its priority. The manager communicates with the risk owner
and together they decide which action plan to use to resolve the problem.

Monitor the Risk

This step is tracking the progress of the initiative chosen for risk resolvement.
Whoever is in charge of the risk will also be responsible to monitor and report its
progress towards resolution. Project managers have to stay updated and have an
accurate picture of the project’s overall progress. This enables them to identify and
monitor new risks. Updating is achieved with a series of meetings set up to manage
the risks.

While managing risks, it is important to always be transparent. Everyone involved in

a project should know what is going on so that they can know what to pay attention
to and help prevent and manage any risks that may arise in the future.
5 Tips to reduce risks in project management
Although it is not possible to eliminate them completely, using the following five tips
can be helpful to effectively reduce the number of risks.

1. Creating a risk management plan

Having a detailed risk management plan as a part of an overall project plan is

essential to the successful completion of the project. The risk management plan
should define what is used for identifying and prioritising risk, risk tolerance, how
team members will respond to the risk, how it will be communicated, etc. Basically, it
serves as a guide for you and your team throughout the project execution. So,
investing time and effort into its development is more than worth it - sometimes your
whole project depends on it.

2. Keeping risk register up to date

The risk register is a list of all possible risk events that have the potential to
negatively impact the project. The risk register can either be combined with your risk
management plan or a separate document. In it, project managers should track what
risk events have occurred, how the team has responded, and if (and which) new
risks have surfaced.

The risk register helps project managers stay on top of potential problems. This is
why it is crucial for it to be kept up to date - so all the information referred to is
accurate. By doing so, the project managers, team members and other key
stakeholders can always have a clear picture of the project's progress.

3. Understanding the risk event

Usually in risk management, people think about the risks in terms of possible
outcomes more than as the risk events themselves. Risks should be looked at as
"something may occur due to some reason and it will impact something". Those
"somethings" are what you need to understand. They do not always end up being a
bad thing, as risks can also be positive opportunities. This helps with risk
management because by looking at risks from this angle, you can understand the
risk's root, what the risk event is and how to address it.

4. Being proactive (instead of reactive)

When unplanned events do occur, it is necessary to be agile and react as soon as

possible. Controlling a situation is much more important than just responding to it
after an event has already taken place. Investing time in each step of the risk
management process can prepare you to take preventative steps and reduce the
probability of the risk event occurring.

5. Developing project management skills

Above all, managing projects and their associated risks efficiently require a solid
foundation of project management skills. Earning a certificate in project management
is one of the best ways to enhance these abilities. Managing your projects properly
can lead to higher profits, better relationships with clients, and the ability to grow and
expand your business. Programmes such as the Institute's Certified Project
Management Diploma, are designed to help you develop these crucial skills. Click
here to learn more.

MODULE 3
NATURE AND SCOPE OF POM, ITS RELATIONSHIP WITH
OTHER SYSTEMS IN ORGANISATIONS.
Nature of Operations management: Operations Management is a field that
focuses on the management of resources and processes to create and deliver
goods or services. It is a relatively new domain, only emerging as a different
discipline in the early 20th century. Operations management is concerned with
all aspects of an organisation’s operations, including the design, planning,
control, and execution of processes.
Operations management aims to ensure that the organisation’s operations are
efficient and effective. This blog post will explore the nature, scope, and
fundamentals of operations management. We will also discuss some of the
challenges faced by operations managers.

Before moving ahead and understanding the nature of operations management,

check out our Advanced Certificate in Operations, Supply Chain and Project
Management which has all the necessary learning resources you require to be
an operations manager.

Objectives of Operations Management

Operations management is a field concerned with designing, planning,
controlling, and operating an organisation’s production systems. The objectives of
operations management are to:
1. Ensure that the organisation’s production systems can meet customer
demand. Operations management is the process of ensuring that business
operations are efficient with regards to using as few resources as necessary and
effective in terms of meeting customer demand. The ultimate goal and nature of
operations management are to improve the efficiency and effectiveness of an
organisation’s operations while also reducing costs.

2. Maximise the efficiency of the organisation’s production systems. The goal

of operations management is to maximise the efficiency of these production
systems so that the organisation can produce goods and services more
effectively and efficiently. There are plenty of different tools and techniques that
operations managers use to achieve this goal, such as process improvement
methods, quality control techniques, and work measurement tools.
3. Minimise the cost of producing goods and services. The objective of
operations management is to minimise the cost of producing goods and services
while still providing high levels of quality and customer satisfaction. One of the
effective ways this can be accomplished is by streamlining production processes
and eliminating waste. Additionally, effective operations managers will
continuously look for ways to improve efficiency and productivity to keep costs
low.
 4. Improve the quality of the goods and services made by the
organisation. The objective of operations management is to improve the quality
of the goods and services of the organisation. It can be done through a variety of
means, such as improving the efficiency of production processes, ensuring that
products are produced to meet customer specifications, and reducing waste and
defects in finished products. Improving quality can lead to increased customer
satisfaction and loyalty, which can, in turn, lead to higher sales and profits for the
organisation.

5. Increase the flexibility of the organisation’s production systems. Operations

management strives to increase the flexibility of an organisation’s production
systems. The goal is to make the organisation more responsive to market
demands and better adapt to changes in the business environment. This may be
accomplished through various means, such as introducing new technologies,
revising processes, or changing the organisational structure.
6. Reduce the risk of disruptions to the organisation’s production
systems. The leading objective of operations management is to reduce the risk
of disruptions to the organisation’s production systems. This includes ensuring
that all necessary resources are available and that processes are running
smoothly and efficiently. Operations managers work to identify and mitigate
potential risks before they can cause problems. Doing so helps keep the
organisation’s production systems running smoothly and avoid costly downtime.
7. Improve communication and coordination among all parties involved in
operating an organisation’s production systems. The objective of operations
management is to Improve communication and coordination among all parties
involved in the operation of an organisation’s production systems. This includes
managers, employees, suppliers, customers, and other stakeholders. By
improving communication and coordination among all parties involved in
production, operations managers can improve efficiency and effectiveness
throughout the organisation.

Scope Of Operations Management

It is the process of planning, organising, directing, and controlling the
resources needed to produce goods and services. The scope of
operations management includes all the activities necessary to plan,
design, and manage the production and distribution process.

The eight scopes of operations management are as follows:

1) Facility layout planning: This step involves deciding how
best to utilise the space in a factory or office to optimise
workflow.

2) Workforce planning and management: This includes

ensuring that there are enough employees with the right
skills to do the work required and managing employee
performance.

3) Inventory management: This encompasses everything

from raw materials to finished products and ensuring that
inventory levels are maintained at an optimum level.

4) Scheduling: This is creating a production schedule that

meets customer demand while maximising efficiency.

5) Quality control: Quality control is essential to ensuring that

products meet customer expectations and standards.

6) Transportation and logistics: Operations managers must plan to

move goods from suppliers to customers efficiently.

7) Maintenance: Regular maintenance is necessary to keep

equipment and facilities running smoothly.

8) Project management: Many operations require project

management to ensure that they are completed within time and
budget.

The Goals Of Operations Management

The goal of operations management is to ensure that all processes

within the organisation are running smoothly and efficiently. It
includes everything from product development and manufacturing
to distribution and customer service. Ultimately, the aim is to
minimise waste and maximise resources to improve profitability.
To achieve these goals, operations managers must have a strong
understanding of all aspects of the business and how they
communicate with one another. They must also be able to identify
areas for improvement and put in place systems and controls to
monitor performance. Regular reviews and audits are essential to
improve efficiency levels continuously.

Components of Operations Management

Forecasting

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Forecasting is a critical component and nature of operations management. It

helps organisations make informed decisions about future production needs
and capacity requirements. There are several vital elements to consider when
developing a forecasting system, including:

• The type of product or service being produced

• The underlying demand for the product or service
• The lead time required to produce the product or service
• The amount of variability in the production process
• The level of inventory desired

An effective forecasting system takes all of these factors into account and
provides accurate information that can be used to make sound operational
decisions.

Total Quality Management

Total Quality Management is a strategic approach to improving an organisation’s

competitiveness. It is a philosophy that emphasises the need for continuous
advancement in all aspects of an organisation’s operations, with the ultimate
goal of providing customers with products and services that meet or exceed
their expectations.

The basic components of TQM are:

1) Quality planning: This involves setting quality objectives and goals and
developing plans to achieve them.

2) Quality control: This is the process of monitoring and measuring the quality
of products and services to ensure they meet desired levels. It also includes
taking corrective action when necessary.

3) Quality assurance: This entails developing and implementing procedures

and processes to prevent the occurrence of defects in the first place.

4) Quality improvement: This encompasses continual efforts to identify and

eliminate sources of defects and variation to improve overall quality levels.

Materials Requirement Planning

In materials requirement planning (MRP), the timing of production activities is

planned to ensure that materials are available when needed. This type of
planning is necessary because many manufacturing processes require the use of
raw materials, which must be obtained from suppliers and often have lead times
that must be taken into account. In addition, finished products are often
required for assembly or other downstream processes before they can be
shipped to customers.

To effectively manage the flow of materials through a manufacturing

organisation, MRP systems keep track of three types of information:

1) The master schedule, which indicates when each finished product is due to be
completed;

2) The inventory records, which show how much material is on hand and where
it is located; and

3) The bill of materials (BOM), which lists the raw materials and subassemblies
required to make each finished product.

Using this information, MRP systems generate schedules for purchasing raw
materials and components as well as for producing finished products. These
schedules consider lead times for procurement and production, as well as any
minimum order quantities that may apply. In some cases, MRP systems also
generate rescheduling messages if there are delays in obtaining necessary
supplies.

Just In Time

Just In Time (JIT) is a manufacturing philosophy that arose in the 1970s. Its main
goal is to eliminate waste throughout the production process by producing only
what is needed and in the quantities needed.

This philosophy was born out of necessity as businesses increasingly felt the
squeeze of overseas competition. To survive and thrive, they had to find ways to
operate more efficiently and cut costs wherever possible. JIT became one of the
most popular methods for achieving this.

Advanced Executive Certificate in Supply Chain Strategy and Operations

Management

There are four key principles of JIT:

1) Produce only what is needed

2) Produce only what is demanded

3) Do not overproduce or keep excessive inventory on hand

4) Streamline the production process to minimise waste and maximise

efficiency.

When properly implemented, JIT can result in significant cost savings, improved
quality control, and customer satisfaction. It can also lead to shorter lead times,
increased flexibility, and reduced inventories.

Inventory Management

It is the process of tracking inventory levels and making decisions about what
levels are acceptable. This includes both raw materials and finished goods. The
aim should be to strike a good balance between having too much inventory
(which ties up cash and can lead to obsolescence) and too little inventory (which
can lead to stockouts and lost sales).

Inventory management is a critical component of operations management. It

encompasses all of the activities and processes associated with the
management of inventory, including but not limited to procurement,
warehousing, transportation, and customer service.

An effective inventory management system must take into account both the
physical and financial aspects of inventory. The physical aspect includes the
actual goods or materials that make up the inventory, while the financial aspect
encompasses the costs associated with procuring, storing, and transporting the
inventory.

An effective inventory management system will minimise both the physical and
financial risks associated with excess or obsolete inventory. Excess inventory can
tie up valuable resources and lead to storage costs, while obsolete inventory can
result in lost sales and customers.

The components of an effective inventory management system include:

1) A clear understanding of customer demand: This involves forecasting

future demand for products or services and ensuring that there is enough
inventory on hand to meet this demand.
2) An efficient procurement process: This ensures that the right products are
ordered from suppliers at the right time and in their required quantities.

3) An effective warehousing strategy: This involves storing inventory in a way

that minimises damage, loss, or theft while maximising space utilisation.

4) A well-designed transportation network: This ensures that finished goods

are delivered to customers within the stipulated time and in good condition.

The Roles of the Operations Manager

A proficient operations manager is responsible for all the day-to-day

running of the business. They ensure that all operations are
conducted smoothly and efficiently.

They plan, implement, and control operational processes and

activities. They also contribute to the formulation of company
policies and objectives.

The operations manager is also responsible for managing and

developing staff. They motivate staff to achieve goals and maintain
high levels of performance.

The operations manager plays a vital role in ensuring that the

company meets its targets and objectives. They play a vital role in the
success of the business.

Importance of POM
Project management is important because it ensures projects get
delivered on time, on budget, and within the agreed-upon scope. It not
only saves time and money, but it also helps produce high-quality
deliverables that achieve the intended outcomes for a project.
Project management's importance lies in aligning projects with the
business strategy and resource capacity, defining clear objectives,
creating realistic project plans, managing resources, maintaining quality,
mitigating risk, creating and following processes, overseeing progress,
and managing stakeholders.

12 Benefits Of Project Management

Characteristics of Production Management:

1. Decision making managerial function.

2. Deals with several processes.

3. Many Sub-Systems

4. As per specifications.

5. Improving efficiency and productivity.

6. Manufacturing as a competitive advantage.

Objectives of Production Management:

Ultimate Objectives

1. To produce quality products.

2. Producing at least cost

3. Right Quantity.

4. Manufacturing schedule or at the right time

Intermediate Objectives

1. Optimum use of Materials

2. Machinery and equipment

3. Manufacturing services

4. Manpower
Scope of Production and Operation Management:

1. Selection of Location (Acquisition of land)

2. Plant Layout and Materials handling (constructing

buildings, buying and installing machinery)

3. Capacity Planning

4. Product Design (product development, manufacturing,

marketing)

5. Process Planning and Designing (routing, estimating, and

scheduling)

6. Material Management (Cost reduction and control,

identification and specification of material)

7. Maintenance Management (availability, minimum

breakdown, optimal capacity)

8. Production Planning and Control

9. Quality Control (size, colour, shape, taste, performance)

10. Methods Study (systematic recording, critical

examination, work simplification)

Trends in Production and Operations Management

Recent trends in production and operation management relate to

global competition and the impact it has on the manufacturing
firms.

Some of the recent trends are:

Global marketplace: Globalisation of business has compelled many
manufacturing firms to have operations in many countries where
they have certain economic advantages. This has resulted in a level
of competition among the manufacturing firms throughout the
world.

Production /operation strategy: More and more firms are

recognising the importance of production /operation strategy for
the overall success of their business and the necessity for relating it
to their overall business strategy.

Total quality management(TQM): The TQM approach has been

adopted by many firms to achieve customer satisfaction by the
never ending quest for improving the quality of goods and services.

Time reduction: Reduction of the manufacturing cycle time and

speed to market a new product provides competitive edge to a firm
over other firms. When companies can provide products at the
same price and quality, quicker delivery provides one firm with a
competitive edge over the other.

Supply chain management: Management of supply chain from

suppliers to final customer reduces the cost of transportation ,
warehousing ,and distribution throughout the supply chain.

Lean production: Production systems have become lean

production systems which use minimal amounts of resources to
produce a high volume of high quality goods with some variety.

Functions of Production Management:

1. Production Planning

2. Production control

3. Industrial Engineering
 4. Purchasing

5. Plant Engineering

6. Manufacturing

7. Method Analysis

8. Inventory Control

9. Plant Layout and Materials handling

10. Work Measurement

11. Other Functions like raw material release to production

prior to the production process

Importance of Production Management:

Successful organisations have well defined and efficient line and

support functions. Production comes under the category of line
functions which directly affects customer experience and thereby
the future of organisation itself.

The aim of production functions is to add value to products or

service which will create a strong and long lasting customer
relationships or association. This can be achieved by healthy and
productive association between Marketing and Production people.
Marketing function people are frontline representatives of the
company and provide insights to real product needs of customers.

An effective planning and control on production parameters to

achieve or create value for customers is called production
management.
Problems of Production Management:

1. Problem of Location of the plant

2. Problem of Plant Layout

3. Problem of product Designing

4. Problem of Inventory and Production Control

5. Problem of Quality Control

6. Problem of Labour control

7. Problem of Cost Control and Improvement.

Importance Of Production Management to the business firm

An efficient production management ensures the following

advantages:

(i) Production of good quality products at a reasonable cost of

production,

(ii) Maintains optimum inventory level

(iii) Betters and improves productivity of all inputs,

(iv) provides uninterrupted supply of goods and services

(v) Improves the profitability of the organisation,

(vi) Provides better customer services

(vii) Stabilises employment and removes poverty from masses.

Transformation Process:
The production management department of a manufacturing
organisation makes it possible outlining the latest techniques of
production of a new product, improvement in the existing product
line, catching up newer techniques, improving the quality of goods
and controlling the costs of production. Good quality and
reasonable prices are the twin blades of one pair of scissors making
the growth and expansion of the business possible.

PRODUCTION SYSTEM
Production systems: Production systems are systems that are used
to produce goods or services. These systems often involve multiple
steps or processes that must be completed in order to produce the
final product

A Production System implies the set-up consisting of assets such as

facilities, machines and equipment that transform resources into
valuable output using processes and technology.
In other words, we can understand it as a system that converts factor
inputs into outputs which is capable of satisfying the market demand.

Majorly, it focuses on the system aspect of the production/operations

function. It is a combination of three significant components given below:
 1. Input (Capital, Machines, Equipment & Tools, Labour)
2. Conversion Process
3. Output (Goods and Services)

Production implies the transformation of several Inputs into Outputs, i.e.,

the Product.

A system is a mechanism consisting of a set of things working together.

Companies use production systems to cater for the demand of their

target market. However, the requirements of the customers keep varying
with time. Therefore, the requirement of the production also changes
accordingly.

The production system depends on the type of products offered by the

company. In addition, it is also affected by the strategies adopted to
meet distinct customer needs.

The companies need to take some crucial decisions in this regard:

• Choice of the technology to be used for production.

• The capacity of the production systems.
• Production volume as per market demand.
The entire system operates in an environment. Some factors from
the internal and external environment affect the production process.
Thus, companies consistently take feedback and make suitable
adjustments in the production system.

The system may even fail if the production processes do not

generate the desired output.

Content: Production System

1. Types
• Intermittent Production
• Job-shop Production
• Batch production
• Continuous Production
• Mass Production
• Flow Production
2. Characteristics
3. Example
4. Intermittent Production v/s Continuous Production
5. FAQ

Production System Types

The type of production system depends upon the type and volume of
output. Besides, it differs across industries and target consumer
markets.

The major determinants that aid the selection of a production system

are:

• Volume: It indicates the average quantity of goods for production.

 • Variety: It is the product variants, alternatives and range for
production.
• Flow: It indicates the nature and intensity of the production process.

Broadly, the production system is classified into two categories as

follows:

1. Intermittent Production
• Job-shop Production
• Batch Production
2. Continuous Production
• Mass Production
• Process/Flow Production

1. Intermittent Production

It is a type of production system where the production flow is intermittent

or irregular. It means the production process begins and stops at
irregular intervals.

Here the production is carried out based on the customer orders,

i.e. Make-to-order. Consequently, the producer can customize their
products as per the orders received.

Each time the jobs and route are changed depending on the order
received. Therefore, the producer needs to install general-purpose
production equipment.

Features of Intermittent Production

• Order-based production of goods.

• Production on a smaller scale.
• Flexibility in production.
• Production of a greater variety of products.
a. Job-shop Production

Job-shop production or Unit Production facilitates the manufacturing of

customized products. Here, the production of one or a few products
takes place. Moreover, it is completely based on the user
specifications and within a stipulated period and cost.
Advantages

1. A wide variety of products can be offered to customers.

2. The workers are more skilled in comparison to other systems.
3. Ease in management due to limited resources and workers.
4. Flexibility in process and creative methods to generate unique
output.

Disadvantages

The cost of production is high due to small-scale production.

1. The higher lead time of the system.

2. Under-utilization of equipment.
3. Requirement of highly skilled labours.

b. Batch production

This production system is more than a unit production but less than
mass production. Here, the production happens in lots and batches
at regular intervals.

The product is disintegrated in the form of Jobs. Further, the whole

batch passes through these jobs one at a time. The production of the
next batch begins post-completion of the ongoing batch.

Example: Medicines, Shoes and Bags

Advantages

1. Usage general-purpose machines.

2. Risk can be substituted among Batches.
3. Better resource utilization.
4. Per-unit cost is lesser in comparison to unit production.

Disadvantages

1. It requires specific fixtures.

2. High cost in sourcing materials.
3. High work-in-progress inventory.
4. More lead time due to changes in set-up.

2. Continuous Production
Here, the production occurs continuously with a consistent supply of
materials. In other words, the products are constantly in motion.

Unlike intermittent production, there are no frequent halts. The

production is carried out on a large scale. The companies maintain the
inventory as per demand forecasts.

Identical goods are produced due to product standardization and bulk

production.

Features of Continuous Production

• Complete utilization of equipment and raw materials.

• Production at large scale.
• Per-unit cost is less due to bulk production.
• Less lead time as the set-up is required only at the beginning.
• Highly automated and capital-intensive system.

a. Mass Production

Companies use it for carrying out production in very large quantities. It

involves the manufacturing of discrete parts, popularly known
as Assemblies. Here, the companies adopt a Make-to-stock business
strategy.

The flow of this production system is constant and continuous. And, the
facility arrangement is in line or per product layout.

Example: Soaps, Pens and Toothpaste

Advantages

1. The cycle time is comparatively less.

2. Automation of material handling.
3. Low work in progress.
4. The cost of production is low.

Disadvantages

1. Default at one place may stop the entire production.

2. Line layout needs changes with the change in product design.
3. High capital investments.
b. Flow Production

As the name suggests, the flow of production

is uniform and standardized. All the processes are arranged
sequentially, and all the products pass through them.

This production system is rigid. Companies stock the products and use
them to fulfil the quick demand of the market.

Examples: Chemical Plants, Tv and Engines.

Advantages

1. Less amount of wastage.

2. Semi-skilled can also be employed.
3. Higher profit margins.
4. The process flow is constant.

Disadvantages

1. Less flexible to increase or decrease the number of processes.

2. Restrictions on product differentiation.
3. Incapable of fulfilling individual demand.

Characteristics of Production System

The varied characteristics and importance of production systems are as

follows:

• Organized Activity: The production system is an organized

activity. As all the activities or processes within the system are
defined and run for a specific purpose.
• Transformation: This system’s main work is converting Inputs into
Outputs.
• Coordination: Here, every part of the system is well coordinated.
The absence of coordination may lead to system failure and losses.
• Control: It is a crucial function of this system. This is
because, review and maintenance of the system are required for its
healthy functioning and productivity.
• Value Addition: Through this process, manufacturers add value to
the inputs. Consequently, the output generated serves the needs of
the consumers.
Example of Production System

Nestle

It is a multinational food and beverages corporation having headquarters

in Switzerland. Some of its bestselling products are – Nescafe, Kitkat
and Maggi.

It uses Batch Production as its type of production system.

Ford Motor

It is an America-based multinational automobile manufacturer. Ford’s

SUV is one of its best-selling cars, making it America’s best SUV brand.

It uses Moving Assembly Line as its production system.

Difference between Intermittent and Continuous Production

The table below clearly differentiates between Intermittent and

Continuous production systems:

INTERMITTENT PRODUCTION CONTINUOUS

BASIS
SYSTEM PRODUCTION SYSTEM

Flexibility More Flexible Less Flexible

Lead Time The lead time is more as it Here, lead time is less; once

requires a frequent change in set, it doesn't require changes

set-up

Wastage More amount of waste is Less amount of waste is

generated generated
 INTERMITTENT PRODUCTION CONTINUOUS
BASIS
SYSTEM PRODUCTION SYSTEM

Product Variety of products in less Identical product in large

quantity quantity

Cost per unit The price is high due to the Cost is low due to

of Product customization standardization and bulk

production

FORECASTING
Forecasting refers to the practice of predicting what will happen in the
future by taking into consideration events in the past and present.
Basically, it is a decision-making tool that helps businesses cope with
the impact of the future’s uncertainty by examining historical data and
trends. It is a planning tool that enables businesses to chart their next
moves and create budgets that will hopefully cover whatever
uncertainties may occur

Forecasting Methods

Businesses choose between two basic methods when they want to

predict what can possibly happen in the future: qualitative and
quantitative methods.

1. Qualitative method

Otherwise known as the judgmental method, qualitative forecasting

offers subjective results, as it is comprised of personal judgments by
experts or forecasters. Forecasts are often biased because they are
based on the expert’s knowledge, intuition and experience, making the
process non-mathematical.
One example is when a person forecasts the outcome of a finals game
in the NBA based more on personal motivation and interest. The
weakness of such a method is that it can be inaccurate and biased.

2. Quantitative method

The quantitative method of forecasting is a mathematical process,

making it consistent and objective. It steers away from basing the
results on opinion and intuition, instead utilizing large amounts of data
and figures that are interpreted.

Features of Forecasting

Here are some of the features of making a forecast:

1. Involves future events

Forecasts are created to predict the future, making them important for
planning.

2. Based on past and present events

Forecasts are based on opinions, intuition, guesses, as well as on facts,

figures, and other relevant data. All of the factors that go into creating a
forecast reflect some extent what happened with the business in the
past and what is considered likely to occur in the future.

3. Uses forecasting techniques

Most businesses use the quantitative method, particularly in planning

and budgeting.

The Process of Forecasting

Forecasters need to follow a careful process in order to yield accurate

results. Here are some steps in the process:

1. Develop the basis of forecasting

The first step in the process is investigating the company’s condition
and identifying where the business is currently positioned in the
market.

2. Estimate the future operations of the business

Based on the investigation conducted during the first step, the second
part of forecasting involves estimating the future conditions of the
industry where the business operates and projecting and analyzing
how the company will fare in the future.

3. Regulate the forecast

This involves looking at different forecasts in the past and comparing

them with what actually happened with the business. The differences in
previous results and current forecasts are analyzed, and the reasons
for the deviations are considered.

4. Review the process

Every step is checked, and refinements and modifications are made.

Sources of Data for Forecasting

1. Primary sources

Information from primary sources takes time to gather because it is

first-hand information, also considered the most reliable and
trustworthy sort of information. The forecaster does the collection, and
may do so through things such as interviews, questionnaires, and focus
groups.

2. Secondary sources

Secondary sources supply information that has been collected and

published by other entities. An example of this type of information
might be industry reports. As this information has already been
compiled and analyzed, it makes the process quicker.

METHODS OF FORECASTING
The types of qualitative forecasting methods are listed below:
1. Executive opinions: The opinions of experts from different departments
are considered and averaged to forecast future sales. This method of
forecasting can be done easily and quickly without the necessity of
elaborate statistics. But the main disadvantage is that it depends on
individual opinions that may not be unanimous and can vary from individual
to individual which could lead to wrong forecasting.
2. Delphi technique: In this method, panels of experts are selected and
are individually questioned about the upcoming events. They do not form a
group. For long-range forecasting, this method is beneficial and very
effective. The main disadvantage of this method is that from the returns
there is a lack of and low reliability.
3. Consumer surveys: In this method, the survey is conducted directly on
the customers on their purchases. The surveys can be done through
telephone contacts, personal interviews or questionnaires to obtain data
from the customers. This method requires extensive statistical analysis to
test consumer behavior.
4. Salesforce polling: In this method, the forecast is done based on the
opinions of salespeople who have steady interactions with the clients. As
they are closest to the customers, they can better predict the requirements
of the customers for the future market. The main advantage of this
forecasting method is that it is very simple to use and understand. The
information can be segregated easily into different categories. But the
drawback is that the salespeople can be either optimistic or pessimistic
about their predictions and this could lead to inaccurate forecasting.
In general, all the forecasting techniques assume the underlying
relationship in the past and predict the relationship for the future. Most of
the techniques are based on some previous data, opinions, surveys, etc.
Qualitative methods:(based on judgment and opinion)
1. Jury of executives:
opinions of high-level executives
[Link] force composite:
estimates from sales individuals are reviewed for reasonableness (may
tend to make underestimates), then aggregated.
[Link] market survey:
Asking the customers may give the best forecasts but it is higher in cost,
difficult to apply.
[Link] method:
(a)Panel of experts queried.
(b)Chosen experts to participate should be of a variety of knowledgeable
people in different areas (finance, marketing, production, etc). They are
unknown to anyone, except for the coordinator.
(c) Through a questionnaire, the coordinator obtains estimates from all
participants.
(d)The coordinator summarizes results and redistributes them to
participants along with appropriate new questions.
(e)Summarize again and refine forecasts and develop a new question

Introduction to Quantitative Methods of

Forecasting
Quantitative methods of forecasting are widely used in businesses to make
predictions about future trends. These methods rely on mathematical
models and historical data to make informed predictions. Quantitative
forecasting methods are best used when historical data is available, and
the relationships between variables are clearly defined. There are various
types of quantitative methods of forecasting, including time-series analysis,
regression analysis, and econometric modeling.
Time-Series Analysis
Time-series analysis is a method of forecasting that uses historical data to
predict future trends. This method assumes that future patterns will
resemble past patterns. Time-series analysis involves analyzing historical
data, identifying patterns and trends, and using this information to make
predictions about the future. This method is useful when there is a
consistent pattern in the data and when the data is not affected by external
factors.
Regression Analysis
Regression analysis is a method of forecasting that uses historical data to
predict future trends. This method is used when there is a relationship
between two or more variables. Regression analysis involves analyzing
historical data, identifying the relationship between variables, and using this
information to make predictions about the future. This method is useful
when the data is affected by external factors.
Econometric Modeling
 Econometric modeling is a method of forecasting that uses economic data
to predict future trends. This method involves analyzing economic data,
identifying patterns and trends, and using this information to make
predictions about the future. This method is useful when there are
economic factors that can affect the data.
Advantages of Quantitative Methods of
Forecasting
There are various advantages to using quantitative methods of forecasting
in business:
• Accuracy: Quantitative methods of forecasting rely on data analysis and
mathematical models, which make predictions more accurate.
• Objectivity: Quantitative methods of forecasting are objective and based
on historical data, which reduces the impact of personal bias.
• Consistency: Quantitative methods of forecasting are consistent and can
be used repeatedly, making them reliable.
• Ease of Use: Quantitative methods of forecasting are relatively easy to use
and require minimal expertise in statistics and mathematics.
Limitations of Quantitative Methods of
Forecasting
While there are several advantages to using quantitative methods of
forecasting, there are also some limitations:
• Data Availability: Quantitative methods of forecasting rely on historical
data, which may not always be available or reliable.
• Assumptions: Quantitative methods of forecasting make assumptions
about future patterns based on past data, which may not always hold true.
• External Factors: Quantitative methods of forecasting may not account for
external factors that can affect future trends.

FACILITY PLANNING, FACILITY LOCATION

it is the process of finding and establishing the ideal geographical location for a
facility. A facility in this case is generally a structure dedicated to a certain aspect
of your business, be it sales or manufacturing or storage. This also includes
facilities that provide a certain set of goods and/or services. The process is focused
on placing these establishments in areas that would drive up the chances of
commercial success and give that specific facility a competitive edge.
Apart from the fact that it provides a significant economic advantage, a business
could find that there is a need for planning for several other reasons. For one, it
could be because it already has a facility and is looking to expand or even relocate
to an area that has a more active customer base. Planning is mainly needed for
reducing the cost of transport and production. It should be close enough to the
source of raw materials as well as the market to which the finished products will be
sent.

Of course, this may not always be the case and the reasons could vary depending
on the industry and other socio-economic factors. For examples, if the market was
down in a particular area due to lack of customers, then the business would have to
relocate to a place that was more responsive to its efforts.

‘‘
The growth of a business directly depends on its location. You can only
have a successful business where people have a need that has to be met
and somewhere accessible.

A Step-By-Step Guide On How To Identify The

Facility Location
Step 1: Come up with a location analysis

Before setting out to find your future business locality, you need to assess the
different factors that could affect the location’s decision. This gives you an initial
idea about the limitations and boundaries within which you can do your search and
it helps narrow down the entire process. There are two types of factors that you
need to consider:

Controllable factors

▪ Proximity to the market.

▪ Supply of raw materials.

▪ Access to transportation.

▪ The availability of supporting infrastructure.

▪ Ability to pay labour wages and the availability of

said labour in the area.

▪ Availability of finances to run the facility.

▪ The type of industry you are active in.

Uncontrollable factors

▪ Government policies.

▪ Unpredictable or unfavourable climate conditions.

▪ The lack of supporting industries or infrastructure in

the area.

▪ The community’s perception of the business.

▪ Any competitors that exist or may come to exist in

that location anywhere in the near future.
Based on the nature of the industry the business is in, the company needs to
highlight and assign a weight to each one of those factors. The ranking is usually
on a scale of ‘0’ to ‘1’, which indicates least important and most important
respectively. This helps identify which are the factors that will most likely affect
the search for your location and what you should consider before settling on any
one location.

Step 2: Find the ‘centre of gravity’

Simply put, it is finding the right location relative to other locations. A centre of
gravity in this context means to reduce the cost of transportation by determining
the ideal location for the facility.

The cost of transportation depends mainly on the distance the materials and
products need to be moved, the weight of the items and the time it takes to move it.
By mapping out the location of the different suppliers in the area, the distance to
the market and the distance to the facility from the suppliers, the centre-of-gravity
technique allows you to find the most centralised location that would bring down
overall transportation costs.

Step 3: Establish a backup plan

It is not a guarantee that even after all your research and analysis that your first
choice will be finalised. As mentioned before there are unexpected and
uncontrollable factors that may affect the end-decision and cause last-minute
ripples. Having said that, you should come up with a couple of alternative
locations, based on the same two steps mentioned above.

Keeping the criteria uniform ensures that the backup locations will more or less be
ideal for the new facility once finalised.

Step 4: Time to make a decision

Once you have all the information at your disposal, make the choice and get to
work. Remember, the location you choose should complement the type of industry
the business is involved in.

Step 5: Visualise and execute

This step revolves around the actual manifestation of the idea. Turn the plans for
the facility into a visual three-dimensional model or display based on the location
and size of the area the facility is to be set up in. This process helps you evaluate
the effectiveness of the facility and where improvements can be made before the
business is operational.

Types Of Facilities To Consider When Planning

There are generally three categories into which facilities can be categorised.
Consider these divisions and see which area your new business establishment falls
into, as each section comes with its own set of challenges and advantages.

Heavy manufacturing facilities: These are the large commercial factories that
you see on TV. They occupy an enormous amount of space and are very heavy on
the cost in terms of maintenance and energy expenditure. You also have to hire a
large number of people to help operate these behemoths. If your business falls into
these categories you should prepare a significant budget to run the business for a
minimum of 18 months where you might not see a profit.

Light industry facility: On the other end of the manufacturing spectrum, we have
these light industries that operate on a much smaller scale. They specialise in
products that are not so capital intensive, for example, matchboxes, spectacles,
small electronic gadgets, kitchen utensils and so on.

Due to their smaller size, they have smaller maintenance and operating costs as
well. These types of facilities are more customer-oriented as opposed to the large-
scale mass production of the heavy industrial facilities. It would make more sense
to have them located closer to your customer base and local retail stores where the
products can be purchased.

Retail and service facilities: The last broad category to consider is retail or
service facilities. These are essentially all your grocery stores, supermarkets,
bakeries and restaurants. Compared to the other two categories, this type of facility
is the smallest and least costly, relatively speaking. Being that its main function is
to service the customer directly, it should be located right where the customers are.

Urban and suburban areas are great locations for these types of establishments. It
also means that you need to select an area based on the amount of competition you
may face there.

TECHNIQUES OF FACILITY LOCATION

Facility Location
 There are many factors that can determine where an organization will locate its
facilities. For any given situation, some factors become more important than others
in how facility location affects an organization’s performance. For example, when
a company needs to open a new manufacturing facility, there are several factors
that determine which location reduces the company’s operating costs while
providing a great level of responsiveness to the market.

Key Factors in Facility Location Decision-

Making
• Proximity to sources of supply:
o Firms that process bulk raw materials usually locate close to the source of supply
to reduce transportation costs. Paper mills locate close to forests, canneries are
built close to farming areas, and fish processing plants are located close to the
harbors where the fishing vessels dock.

• Proximity to customers:
o There are several reasons why an organization would locate close to end
customers. Service firms need to be close to customers to be convenient, as is the
case for grocery stores, gas stations, fast food restaurants, and hospitals.
Transportation costs can also require proximity to customers, as in the case of
concrete manufacturing. Perishable products often re

Facility Location

There are many factors that can determine where an organization will locate its
facilities. For any given situation, some factors become more important than others
in how facility location affects an organization’s performance. For example, when
a company needs to open a new manufacturing facility, there are several factors
that determine which location reduces the company’s operating costs while
providing a great level of responsiveness to the market.

Key Factors in Facility Location Decision-

Making
• Proximity to sources of supply:
o Firms that process bulk raw materials usually locate close to the source of supply
to reduce transportation costs. Paper mills locate close to forests, canneries are
built close to farming areas, and fish processing plants are located close to the
harbors where the fishing vessels dock.

• Proximity to customers:
o There are several reasons why an organization would locate close to end
customers. Service firms need to be close to customers to be convenient, as is the
case for grocery stores, gas stations, fast food restaurants, and hospitals.
Transportation costs can also require proximity to customers, as in the case of
concrete manufacturing. Perishable products often re

• Community factors:
o Communities may offer a number of incentives to entice companies, including waiving or reducing
taxes, and providing access roads, water and sewer connections, and utilities. Community attitudes
can also play a role in an organization’s location decision. Some communities may actively
discourage companies that might bring more pollution, noise, and traffic to the area. Some
communities may not want a prison to be located in their community. Other communities may
welcome such firms because of the jobs, tax revenues, and economic diversity they promise.

• Labor factors:
o Research shows that the majority of location decisions are largely based on labor factors, since labor
is a critical variable for many firms. Labor factors include the prevailing wage rate in a community for
similar jobs, the supply of qualified workers, and the average education level of the local population
(percentage of high school graduates, etc.). Other labor factors can include the degree of union
organizing and the general work ethic of a community, as well as other measures of absenteeism,
and worker longevity in a job can play a strong role when a firm makes a location decision.

• Other factors:
o Many other factors can play a role in the location decision, including quality of life (crime rates, good
schools, climate, and recreation options), access to major transportation arteries, construction costs,
proximity of the competition, and opportunities for future expansion.[1]

Methods for Finding the Best Facility Location

Location Factor Rating

One method to assist in choosing the best location is the Location Factor Rating (also known
as Weighted Scoring Model). The various factors important in this decision are decided upon
and each is given a weight between zero and 1.0 to reflect each factor’s importance. Every
site is then evaluated in comparison with each other and given a score. Weighted scores are
calculated by multiplying each score by its corresponding weight. When weighted scores are
summed up, the highest weighted score reflects the location which is the most attractive
based on all factors.

Example
 Site
Location Factor Weight Site #1 Site #2
#3

Proximity to Suppliers 0.3 80 85 80

Business Environment 0.25 65 90 55

Wage Rates 0.15 72 55 65

Community 0.1 65 60 40

Proximity to Customers 0.1 55 90 70

Labour Pool 0.05 40 45 65

Proximity to Airport 0.05 60 55 80

Weighted Scores

Location Factor Site #1 Site #2 Site #3

Proximity to Suppliers 24.0 25.5 24.0

Business Environment 16.3 22.5 13.8

Wage Rates 10.8 8.3 9.8

 Community 6.5 6.0 4.0

Proximity to Customers 5.5 9.0 7.0

Labour Pool 2.0 2.3 3.3

Proximity to Airport 3.0 2.8 4.0

Total Score 68.1 76.3 65.8

In this example, site #2 shows the highest score when evaluated against site #1 and #3. So,
we choose site #2.

Centre of Gravity Method

In order to minimize transportation costs, the centre of gravity method may be used to locate
a facility that serves several area (or other facilities) such as a warehouse or distribution
centre. This method uses an (X-Y) coordinate system to cover the geographical map of the
areas under study, and identifies the x and y coordinates for the location of the new facility
based on the coordinates of the other facilities and the volume (quantity) of demand for each
area (facility). For example, in the following figure, each blue star represents a market area
that needs to be served, and the size of area also shows the demand quantity for that market.
We are looking for the whereabouts (i.e., x̄ and ȳ) of the location for our facility to be set up
to serve all these markets while minimizing our total transportation costs.
 Figure 8.2: Centre of Gravity formula.

x̄ = the x coordinate for the new facility

ȳ = the y coordinate for the new facility

xi = x coordinate of destination (market) i

yi = y coordinate of destination (market) i

Qi = quantity to be transported to destination i

Example

Using the center of gravity method and the information below on the location of the potential
markets, determine where the new facility should be located to minimize the total
transportation cost. Note that a selected point in the middle of each region is representing the
regional market.

Market Volume X Y

London 600 1 2

Toronto 400 3 4
Kingston 550 6 4

Barrie 800 2 6