2nd Term Project Management System
2nd Term Project Management System
Introduction
Project management is concerned with the overall planning and co-ordination of a
project
from conception to completion aimed at meeting the stated requirements and ensuring
completion on time, within cost and to required quality standards.
What is a Project?
A successful Project Manager must simultaneously manage the four basic elements of a
project: resources, time, cost, and scope. Each element must be managed effectively. All
these elements are interrelated and must be managed together if the project, and the project
manager, is to be a success.
1.Managing Resources
A successful Project Manager must effectively manage the resources assigned to the project.
This includes the labor hours of the project team. It also includes managing labor subcontracts
and vendors. Managing the people resources means having the right people, with the right
skills and the proper tools, in the right quantity at the right time.
However, managing project resources frequently involves more than people management.
The project manager must also manage the equipment (cranes, trucks and other heavy
equipment) used for the project and the material (pipe, insulation, computers, manuals)
assigned to the project.
Any project can be broken down into a number of tasks that have to be performed. To prepare
the project schedule, the project manager has to figure out what the tasks are, how long they
will take, what resources they require, and in what order they should be done.
3.Managing Costs
Often a Project Manager is evaluated on his or her ability to complete a project within budget.
The costs include estimated cost, actual cost and variability. Contingency cost takes into
account influence of weather, suppliers and design allowances.
The 80/20 Rule means that in anything a few (20 percent) are vital and many (80 percent) are
trivial. Successful Project Managers know that 20 percent of the work (the first 10 percent and
the last 10 percent) consumes 80 percent of your time and resources.
The first step in the project development cycle is to identify components of the project.
Projects may be identified both internally and externally: Internal identification takes place
when the energy manager identifies a package of energy saving opportunities during the day-
to-day energy management activities, or from facility audits. External identification of energy
savings can occur through systematic energy audits undertaken by a reputable energy auditor
or energy service company.In screening projects, the following criteria should be used to rank-
order project opportunities.
c) Planning
The planning phase is considered the most important phase in project management. Project
planning defines project activities that will be performed; the products that will be produced,
and describes how these activities will be accomplished and managed. Project planning
defines each major task, estimates the time, resources and cost required, and provides a
framework for management review and control. Planning involves identifying and documenting
scope, tasks, schedules, cost, risk, quality, and staffing needs.
The result of the project planning, the project plan, will be an approved, comprehensive
document that allows a project team to begin and complete the work necessary to achieve the
project goals and objectives. The project plan will address how the project team will manage
the project elements. It will provide a high level of confidence in the organization‘s ability to
meet the scope, timing, cost, and quality requirements by addressing all aspects of the project.
e) Controlling
Project Control function that involves comparing actual performance with planned performance
and taking corrective action to get the desired outcome when there are significant differences.
By monitoring and measuring progress regularly, identifying variances from plan, and taking
corrective action if required, project control ensures that project objectives are met.
f) Closing out
Project closeout is performed after all defined project objectives have been met and the
customer has formally accepted the project‘s deliverables and end product or, in some
instances, when a project has been cancelled or terminated early. Although, project closeout is
a routine process, it is an important one. By properly completing the project closeout,
organizations can benefit from lessons learned and information compiled. The project closeout
phase is comprised of contract closeout and administrative closure.
For a project to be taken up for investment, its proponent must present a sound technical
feasibility study that identifies the following components:
The proposed new technologies, process modifications, equipment replacements and
other measures included in the project.
Product/technology/material supply chain (e.g., locally available, imported, reliability of
supply)
Commercial viability of the complete package of measures (internal rate of return, net
present value, cash flow, average payback).
Any special technical complexities (installation, maintenance, repair), associated skills
required.
7.2.3 Financing
When considering a new project, it should be remembered that other departments in the
organization would be competing for capital for their projects. However, it is also important to
realize that energy efficiency is a major consideration in all types of projects, whether they are:
Projects designed to improve energy efficiency
Projects where energy efficiency is not the main objective, but still plays a vital role.
The funding for project is often outside the control of the project manager. However, it is
important that you understand the principles behind the provision of scarce funds.
Funding can become an issue when energy efficiency projects have previously been given a
lower priority than other projects. It is worth remembering that while the prioritization of
projects may not be under our control, the quality of the project submission is.
The availability of external funds depends on the nature of your organization. The finance
charges on the money you borrow will have a bearing on the validity of your project.
Before applying for money, discuss all the options for funding the project with your finance
managers.
It is reiterated that energy savings often add substantially to the viability of other non-energy
projects.
S.R.P** NICMAR 2ND TERM-PROJECT MANAGEMENT SYSTEMS Page 83
7.2.4 Contracting
Since a substantial portion of a project is typically executed through contracts, the proper
management of contracts is critical to the successful implementation of the project. In this
context, the following should be done.
The competence and capability of all the contractors must be ensured. One weak link
can affect the timely performance of the contract.
Proper discipline must be enforced among contractors and suppliers by insisting that
they should develop realistic and detailed resource and time plans that are matching
with the project plan.
Penalties may be imposed for failure to meet contractual obligations. Likewise,
incentives may be offered for good performance.
Help should be extended to contractors and suppliers when they have genuine
problems.
Project authorities must retain independence to off-load contracts (partially or wholly)
to other parties where delays are anticipated.
7.2.5 Implementation
The main problems faced by project manager during implementation are poor monitoring of
progress, not handling risks and poor cost management.
a) Poor monitoring of progress: Project managers some times tend to spend most of their
time in planning activity and surprisingly very less time in following up whether the
implementation is following the plan. A proactive report generated by project planner
software can really help the project manager to know whether the tasks are progressing as
per the plan.
S.R.P** NICMAR 2ND TERM-PROJECT MANAGEMENT SYSTEMS Page 84
b) Not handling risks: Risks have an uncanny habit of appearing at the least expected time.
In spite of the best efforts of a project manager they are bound to happen. Risks need
immediate and focused attention. Delay in dealing with risks cause the problem to
aggravate and has negative consequences for the project.
c) Poor cost management: A project manager's success is measured by the amount of cost
optimization done for a project. Managers frequently do all the cost optimization during
the planning stages but fail to follow through during the rest of the stages of the project.
The cost graphs in the Project planner software can help a manager to get a update on
project cost overflow. The cost variance (The difference between approved cost and the
projected cost should be always in the minds of the project managers).
Once the project is completed, performance review should be done periodically to compare
actual performance with projected performance. Feedback on project is useful in several
ways:
a) It helps us to know how realistic were the assumptions underlying the project
b) It provides a documented log of experience that is highly valuable in decision making in
future projects
c) It suggests corrective action to be taken in the light of actual performance
d) It helps in uncovering judgmental biases
e) It includes a desired caution among project sponsors.
Depending on the nature of the project, savings are determined using engineering
calculations, or through metering and monitoring, utility meter billing analysis, or computer
simulations.
8.1 INTRODUCTION
Any project involves planning, scheduling and controlling a number of interrelated activities with use of
limited resources, namely, men, machines, materials, money and time. The projects may be extremely
large and complex such as construction of a power plant, a highway, a shopping complex, ships and
aircraft, introduction of new products and research and development projects. It is required that
managers must have a dynamic planning and scheduling system to produce the best possible results
and also to react immediately to the changing conditions and make necessary changes in the plan and
schedule. A convenient analytical and visual technique of PERT and CPM prove extremely valuable in
assisting the managers in managing the projects.
Both the techniques use similar terminology and have the same purpose. PERT stands Quantitative
Techniques
for Project Evaluation and Review Technique developed during 1950‘s. The technique for
Management was developed and used in conjunction with the planning and designing of the Polaris
missile project. CPM stands for Critical Path Method which was developed by DuPont Company and
applied first to the construction projects in the chemical industry. Though both PERT and CPM
techniques have similarity in terms of concepts, the basic difference is, PERT is used for analysis of
project scheduling problems. CPM has single time estimate and PERT has three time estimates for
activities and uses probability theory to find the chance of reaching the scheduled time.
Planning: Planning involves setting the objectives of the project. Identifying various activities to be
performed and determining the requirement of resources such as men, materials, machines, etc. The
cost and time for all the activities are estimated, and a network diagram is developed showing
sequential interrelationships (predecessor and successor) between various activities during the planning
stage.
Scheduling: Based on the time estimates, the start and finish times for each activity are
worked out by applying forward and backward pass techniques, critical path is identified, along
with the slack and float for the non-critical paths.
Controlling: Controlling refers to analyzing and evaluating the actual progress against the
plan. Reallocation of resources, crashing and review of projects with periodical reports are
carried out.
Resource Allocation
Identifying the types of resources
Quantity of resources
Duration of Activity
Controlling
Evaluating Progress
Degree of fulfillment of the objectives
Analyzing the status of the project
Remedial measures/re-plan
Some conventions of network diagram are shown in Figure 8.10 (a), (b), (c), (d) below:
Network Model
Solution:
Figure 8.11: Network diagram representing house construction project.
The network diagram in Figure 8.11 shows the procedure relationship between the
activities. Activity A (preparation of house plan), has a start event 1 as well as an ending
event 2. Activity B (Construction of house) begins at event 2 and ends at event 3. The
activity B cannot start until activity A has been completed. Activities C and D cannot
begin until activity B has been completed, but they can be performed simultaneously.
Similarly, activities E and F can start only after completion of activities C and D
respectively. Both activities E and F finish at the end of event 6.
Example 2: Consider the project given in Table 8.2 and construct a network diagram.
Example 3: Construct a network for a project whose activities and their predecessor
relationship are given in Table 8.3.
Table 8.3: Activity Sequence for a Project
The critical path for any network is the longest path through the entire network. Since all activities must
be completed to complete the entire project, the length of the critical path is also the shortest time
allowable for completion of the project. Thus if the project is to be completed in that shortest time, all
activities on the critical path must be started as soon as possible. These activities are called critical
activities . If the project has to be
completed ahead of the schedule, then the time required for at least one of the critical activity must be
reduced. Further, any delay in completing the critical activities will increase the project duration.
S.R.P** NICMAR 2ND TERM-PROJECT MANAGEMENT SYSTEMS Page 91
The activity, which does not lie on the critical path, is called non-critical activity. These non-critical
activities may have some slack time. The slack is the amount of time by which the start of an activity
may be delayed without affecting the overall completion time of the project. But a critical activity has no
slack. To reduce the overall project time, it would require more resources (at extra cost) to reduce the
time taken by the critical activities to complete.
Before the critical path in a network is determined, it is necessary to find the earliest and
latest time of each event to know the earliest expected time (T ) at which the activities
E originating from the event can be started and to know the latest allowable
time (T ) at
L which activities terminating at the event can be completed.
Forward Pass Computations (to calculate Earliest, Time T )
E
Procedure
Step 1 : Begin from the start event and move towards the end event.
Step 2 : Put T = 0 for the start event.E
Step 3: Go to the next event (i.e node 2) if there is an incoming activity for event 2,
add calculate T of previous event (i.e event 1) and activity time.
Step 4 : Repeat the same procedure from step 3 till the end event. 248
Step 4 : Repeat the same procedure from step 2 till the start event.
The two important components of any activity are the cost and time. Cost is directly
proportional to time and vice versa. For example, in constructing a shopping complex,
the expected time of completion can be calculated using be time estimates of various
activities. But if the construction has to the finished earlier, it requires additional cost to
Network Model complete the project. We need to arrive at a time / cost trade-off between total cost of
project and total time required to complete it.
Normal time : Normal time is the time required to complete the activity at normal conditions and
cost.
Crash time : Crash time is the shortest possible activity time; crashing more than the normal time
will increase the direct cost.
Cost Slope
Cost slope is the increase in cost per unit of time saved by crashing. A linear cost curve
is shown in Figure 8.27.
Example 9: The following Table 8.13 gives the activities of a construction project and
other data.
If the indirect cost is Rs. 20 per day, crash the activities to find the minimum duration of
the project and the project cost associated.
Solution: From the data provided in the table, draw the network diagram (Figure 8.28)
and find the critical path.
Critical path : Is a network and a continuous chain of activities that connect the initial event to the
terminal event.
Activity : An activity represents an action and consumption of sources.
PERT : Project Evaluation Review Technique — is a unique a important controlling device.
The PERT take into consideration the three types of time optimistic time, pessimistic time and likely
time.
CPM : Critical Plan Method is a diagrammatical technique for planning and scheduling of
projects.
Float : Is used in the context of network analysis. Float may be +ive or –ive.
Arrow : Direction shows the general progression in time.
Slack : Normally associated with events. It indicates the amount of latitude.
Network : Is a series of related activities which result in once produces (or services). It is a
pictorial presentation of the various events and activities covering a project.
Event : An event represent the start or completion of activity.
The rest of the work will cost less than budgeted.Is this probable? Do I have the necessary staff for this
new contract? Will labour rate and currency exchange rate fluctuations affect my project‘s costs? How
will funding cuts affect my cash flow? Is price or usage causing my cost variance?
Activity: Effort that occurs over a time period and generally consumes resources.Another term
for Activity is Task.
Actual Cost:A cost sustained in fact,on the basis of costs incurred,as distinguished from
forecasted or estimated costs.
Actual Cost of Work Performed (ACWP): The sum of the costs actually incurred in
accomplishing the work performed.
Baseline:The original plan for a project, work package, or an activity plus or minus any
approved changes against which progress on the project is measured.
Budget:A time-phased plan of operations for a given period.
Budget at Complete (BAC):The estimated total cost of the project when it is complete.
Budgeted Cost of Work Performed (BCWP): The sum of the budgets for completed work
and the completed portions of open work.It is ameasure used in cost control that allows you to
quantify the overall progress of theprogramme in monetary terms.BCWP is calculated by
multiplying the physical percentcomplete by the planned cost.Another term for BCWP is Earned
Value.
Budgeted Cost of Work Scheduled (BCWS):The sum of the budgets for all planned work
scheduled to be accomplished within a given timeperiod.
Cost Overrun: The amount by which a contractor exceeds or expects to exceed the estimated
costs and/orthe final limitations (the ceiling) of a contract.
Direct Costs: Those costs (labour,material,and other direct costs) that can be consistently
related to work performed on a particular project. Direct costs are best contrasted with indirect
costs that cannot be identified to a specific project.
Earned Value (EV):The sum of the budgets for completed work and the completed portions of
open work.It is a measure used in cost control that allows you to quantify the overall progress of
the programme in monetary terms.EV is calculated by multiplying the physical percent complete
by the planned cost.
Earned Value Management System (EVMS):The EVMS guidelines incorporate best business
practices for programme management systems that have proven to provide strong benefits for
programme or enterprise planning and control. The processes include integration of programme
scope, schedule and cost objectives, establishment of a baseline plan for accomplishment of
programme objectives, and use of earned value techniques for performance measurement
during the execution of a programme.
Estimate at Complete (EAC):A value expressed in either dollars and/or hours to represent the
projected final costs of workwhen completed.EAC is calculated by adding the actual cost of work
performed to theestimate to complete.The EAC is calculated as ETC + ACWP.
Full Time Equivalents (FTE) :Also known as equivalent staffing units,FTEs are typically
expressed as persons per month.
Level of Effort (LOE):Work that does not result in a final product (e.g.liaison,co-
ordination,follow-up,or other support activities) and which cannot be effectively associated with a
definable end product process result.Level of effort is measured only in terms of resources
actually consumed withina given time period.
Original Budget:The initial budget established at or near the time a contract was signed or a
project authorized, based on the negotiated contract cost or management‘s authorization.
Performance Measurement Baseline (PMB):The time-phased budget plan against which
project performance is measured.It is formed bythe budgets assigned to scheduled cost
accounts and the applicable indirect budgets.For future effort,not planned to the cost account
level,the PMB also includes budgets assigned to higher-level CWBS elements. The PMB does
not include any management or contingency reserves, which are isolated above the PMB.
Programme Manager: An individual who has been assigned responsibility for accomplishing a
specific unit of work. The project manager is typically responsible for the planning,
implementing, controlling, and reporting of status on a project.
Schedule Performance Index (SPI):The planned schedule efficiency factor representing the
relationship between the value of the initial planned schedule and the value of the physical work
performed, in other words earned value.The SPI is calculated as BCWP/BCWS.
Schedule Variance (SV):An indicator of how much a programme is ahead or behind schedule.
The SV is calculated as BCWP - BCWS.
Schedule Variance
BCWS : of the work I scheduled to have done,how much did I budget for it to cost?
BCWP : of the work I actually performed, how much did I budget for it to cost?
BCWP : of the work I actually performed,how much did I budget for it to cost?
Performance Measurement
Technique
Planning includes
1.Time planning
2.Resource planning
3.Planning control system
1.Time planning
1.Project work breakdown
2.Drwing project networks
3.Project work sheduling
2.Resource planning
1.Planning construction manpower
2.Plannnijng construction materials
3.Selecting construction equipment
4.Planning construction costs
5.Planning construction budgets
3.Planning control system
1.Resource productivity control
2.Project cost control
3.Project time control
Costs can be controlled within the planned, by proper monitoring accordingly to the planned.
Sample :
The process of project control described earlier requires the establishment of a firm base line defined
in terms of scope, quality, time and cost on a compatible basis, and in units that can be more readily
handled. One of the more important and powerful techniques for managing a large complex project,
therefore, is the Work Breakdown Structure (WBS), which greatly facilitates control.
Communication
Project Charter
Project Procedures Document
Project Change Requests Log
Project Status Report
PM Quality Assurance Report
Procurement Management Summary
Integration
Project Issues Log
Project Management Plan Project Procedures Overview
Project Performance Report Project Proposal
Cost Communications Management Plan
Procurement Plan
Project Schedule
Project Budget
Risk Response Plan and Register
Project Procedures Document
Work Breakdown Structure (WBS)
Project Schedule
Work Package
Responsibility Assignment Matrix (RAM)
Cost Estimates Document
Risk Response Plan and Register
Project Budget
Scope Statement
Project Budget Checklist
Work Breakdown Structure (WBS)
Project Management Plan
Project Change Requests Log
Project Issues Log
Human Resources Project Management Plan Changes Log
Project Performance Report
Project Charter Lessons Learned Document
Work Breakdown Structure (WBS) Project Performance Feedback
Communications Management Plan Product Acceptance Document
Project Organization Chart Project Charter
Project Team Directory Closing Process Assessment Checklist
Responsibility Assignment Matrix (RAM) Project Archives Report
Project Management Plan
Project Procedures Document
Kickoff Meeting Checklist
Project Team Performance Assessment
Project Manager Performance Assessment
10. Negotiator’s role.: The project manager negotiates important conflicting issues and
business related matters, both inside and outside of the project environment. He represents
the organization on major negotiations.
Theoretically, the sponsor prepares the charter and affixes his/her signature, but in reality, the project
manager may prepare it for the sponsor ís signature. At a minimum, the charter should include:
Identification of the project manager and his/her authority to apply resources to the project
Construction Participants
The agencies supporting the construction industry include but are not limited to the following:
Construction business promoters like government bodies, public and private enterprises for real estate
and industrial development, and other similar agencies.
1. Construction management consultant firms.
2. Architect-engineering associates.
3. Construction manpower recruitment and training agencies.
4. Construction materials developing, manufacturing, stocking, transportation and trading firms.
5. Construction plant and machinery manufacturing, distributing, and repair and maintenance
organizations.
6. Banking and finance institutions.
7. Risk insurance and legal services companies.
8. Construction quality assurance, and research and development establishment.
9. Contractors and contracting firms.
Project Mission
The project manager aims to achieve its mission by:
Managing • Organizing resources
• Time & progress • Directing resources
• Cost & cash flow • Monitoring resources
• Quality & performance • Controlling resources
• Organization behavior Within
With Organization resources • Quality constraints
By • Time constraints
• Planning resources • Cost constraints
• Scheduling resources • Environment constraints
These difficulties, uncertainties and risks pose never-ending questions concerning the resources like:
at what scale are the resources required?
where are they going to come from?
when should they be inducted at site?
where should they be housed?
how to optimize their utilization? And
when to demobilize them?
These are the competencies that a project manager needs to understand in order to operate in
the environment effectively. These competencies should be considered in tandem with the
management and technical competencies.
Business Literacy —Ability to understand the line of business or company, to take the
business vision and translate it into the project vision.
Corporate Procedures & Tools —Ability to understand established policies and procedures
and corporate tools; how to apply them to the project.
Communications — Ability to produce clear status reports (clear writing and verbal skills),
communicate tactfully and candidly, simplify jargon, make clients aware of all issues, be an
excellent listener.
External Issue Management — Ability to identify, analyze and prioritize issues external to the
project and develop mitigation plans.
Financial Acumen — Ability to understand how decisions affect the bottom line knowledge
about general financial and accounting principles and practices that impact operations;
knowledge about the links between operations and the company‘s financial performance is
essential to create value for all stakeholders of the organization.
Organization — Ability to find a place for everything so that needed tools, resources and data
are easily accessible, ability to create and maintain a clear team structure.
Problem Solving and Decision Making — Ability to analyze and define a problem, evaluate
alternatives, find a solution, understand how and when to make a choice.
Relationship Management — Ability to consult and provide advice; to facilitate discussion and
resolve conflict; to develop relationships with key project stakeholders; to recognize and deal
with other cultures; to establish trust, credibility and respect; and to be willing to give more than
to receive.
Strategic Thinking — Ability to analyze the future impact of decisions by taking a big-picture
approach, to strategically position the project within the business to relate to short and long-term
objectives.
These have been traditionally considered the main competencies required by the project the
results of which the project manager will be accountable. For every project, a project execution plan
is required, and the following competencies will be needed to bring the project to fruition.
Budget Planning — Understand and know how to perform cost/benefit analyses; use sound
rationale; ensure that all factors are included; maintain focus on budget; consult with client and
mgmt if estimated final costs are close to or above budget.
Client ( or Customer ) Focus — Understand who is the client and what are the client‘s needs;
ability to provide realistic expectations; to reach agreement with client from outset of project.
Contract / Procurement Management — Understand and know how to use purchasing project
tools, how to create contracts with clear and agreed to terms and conditions, and how to
administer contracts.
Environmental, Health & Safety Management — Understand and know how to comply with
all regulations; implement a positive attitude toward health and safety in design and execution of
the project; ensure safe deliverables.
Hand-over Management — Understand and know how to coordinate, implement, test and
deliver a project in order to produce an effective working system (or a successful product).
Risk Management —Understand how to assess, document and manage internal and external
project risks; develop contingencies and mitigation plans.
Project Controls and Process Management — Understand and know how to use standard
project management tools & techniques to schedule, plan, track and correct project
performance; know how to make effective use of technical and management methodologies.
Quality Management — Understand how to obtain and ensure quality results (or products) for
total client satisfaction, ability to take corrective actions and perform verification of project
standards, effectively.
Scope Definition — Ability to establish a clear scope, define the extent of the project; what's in,
what's out, set up and understand approval procedures.
Common sense – the ability to spot sensible, effective, straight forward, least risky, least
complex solutions i.e. ..% right on time is better than ...% far too late!
Open mindedness – an approach where one is always open to new ideas, practices and
methods and in particular gives equal weight to the various disciplines involved on the project.
Adaptability – a propensity to be flexible where necessary and avoid rigid patterns of thinking
or behaviour, to adapt to the requirements of the project, the needs of the sponsors, its
environment and people working on it – to ensure a successful outcome.
Inventiveness – an ability to discover innovative strategies and solutions from within oneself or
by encouragement with other members of the project team, and to identify ways of working with
disparate resources to achieve project objectives.
Prudent risk taker – a willingness and ability to identify and understand risks but not to take a
risky approach in an unwise or reckless fashion.
Fairness – a fair and open attitude which respects all human values.
Commitment – an over-riding commitment to the project‘s success, user satisfaction and team
working. A strong orientation towards goal achievement.
"The trouble with most of us is that we would rather be ruined by praise than saved by criticism."
- Norman Vincent Peale