Lecture 5

Project Scheduling and Project Cost

Management
Overview
• Time Management
• Project Network Diagrams
• Principles of Project Cost Management
• Resource Planning
• Cost Estimating
• Cost Budgeting
• Cost Control
 Project Scheduling

• Project scheduling is the process of organizing and planning

the tasks and activities required to complete a project within
a defined timeframe.
• It involves breaking down the project into smaller,
manageable tasks, estimating the time required for each task,
and sequencing them in a logical order to achieve project
goals efficiently.
 Project Scheduling… Key Components

• Work Breakdown Structure (WBS):

– A Work Breakdown Structure is a hierarchical decomposition of the
project scope into smaller, more manageable components.
– It breaks down the project deliverables into smaller, more manageable
work packages.
– Each work package is further decomposed into tasks or activities that
can be scheduled, estimated, and assigned.
• Task Identification:
– Identify all the tasks and activities required to complete the project.
This involves consulting with subject matter experts, stakeholders, and
team members.
– Tasks should be specific, measurable, achievable, relevant, and time-
bound (SMART) to ensure clarity and accountability.
 Project Scheduling

• Task Sequencing:
– Determine the order in which tasks need to be performed. Some tasks
may be dependent on the completion of others, while some can be
performed concurrently.
– Establish dependencies between tasks to create a logical sequence.
Dependencies can be of four types: finish-to-start, start-to-start, finish-
to-finish, and start-to-finish.
• Estimation:
– Estimate the duration and effort required for each task. This can be
done using various techniques such as expert judgment, analogous
estimation, parametric estimation, and three-point estimation.
– Duration estimation should consider factors like resource availability,
skill levels, and potential risks.
 Project Scheduling
• Schedule Development:
– Develop a project schedule by assigning start and end dates to each task
based on their dependencies, durations, and resource availability.
– Use scheduling tools such as Gantt charts, PERT charts, or critical path
method (CPM) to visualize the project schedule and identify critical paths.
• Schedule Control:
– Monitor and control the project schedule throughout its execution.
– Track actual progress against the planned schedule, identify deviations,
and take corrective actions if necessary.
– Adjust the schedule as needed to accommodate changes, delays, or
unforeseen events while minimizing impact on project objectives.
• Resource Allocation:
– Identify the resources (human, material, and equipment) required for
each task.
– Allocate resources based on availability, skill sets, and dependencies.
 Project Scheduling … Techniques and Tools
• Critical Path Method (CPM): Identifying the longest path of
dependent tasks to determine the minimum project duration.
• Program Evaluation and Review Technique (PERT): Using
weighted average durations to estimate task durations and
probabilities.
• Resource Leveling: Adjusting schedules to resolve resource
conflicts and ensure optimal resource utilization.
• Monte Carlo Simulation: Employing probability distributions to
simulate project outcomes and assess risks.
• Project Management Software: Tools like Microsoft Project,
Primavera P6, and Trello facilitate scheduling, resource
allocation, and tracking.
 Project Scheduling … Challenges and Considerations
• Resource Constraints: Limited availability of resources may lead
to scheduling conflicts and delays.
• Uncertainty: Changes in requirements, unexpected events, and
external factors can impact project schedules.
• Scope Creep: Expanding project scope without adjusting
schedules can lead to missed deadlines.
• Communication: Effective communication is essential for
coordinating tasks, resolving conflicts, and managing stakeholder
expectations.
 Project Scheduling … Monitoring and Control
• Regularly monitoring progress against the schedule to identify
deviations and take corrective actions.
• Adjusting schedules as needed to accommodate changes, risks,
and unforeseen circumstances.
• Communicating schedule updates to stakeholders and team
members to maintain transparency and alignment.
 Project Cost Management
• Project cost management involves estimating, budgeting, and
controlling costs to ensure that a project is completed within
the approved budget.
• It encompasses various processes aimed at predicting,
allocating, and managing financial resources throughout the
project lifecycle.
 Project Cost Management… Key Components
• Cost Estimation:
– Estimate the costs associated with completing project activities and
delivering project deliverables.
– Use historical data, expert judgment, analogous estimation,
parametric estimation, and three-point estimation techniques to
develop accurate cost estimates.
– Break down the project into smaller components to facilitate more
accurate cost estimation.
• Cost Budgeting:
– Develop a cost baseline by allocating the estimated costs to individual
tasks or work packages.
– Establish a budget for the project by aggregating the cost estimates for
all tasks or work packages.
– Ensure that the budget is realistic and aligned with the project scope,
schedule, and quality requirements.
 Project Cost Management… Key Components
• Cost Control:
– Monitor and control project costs throughout its lifecycle to prevent cost
overruns and ensure that the project remains within budget.
– Track actual costs against the budgeted costs and identify any variances.
– Implement corrective actions to address cost overruns or deviations from
the budget.
– Use tools such as earned value management (EVM) to measure project
performance and forecast future costs based on project progress.
• Resource Optimization:
– Optimize resource utilization to minimize costs without compromising
project quality or schedule.
– Identify opportunities to streamline processes, eliminate waste, and
improve efficiency.
– Consider outsourcing certain activities or using alternative resources to
reduce costs.
 Project Cost Management… Key Components
• Cost Reporting:
– Generate regular reports on project costs to keep stakeholders informed
about budget status and financial performance.
– Provide detailed breakdowns of costs incurred, planned expenditures,
variances, and corrective actions taken.
– Communicate effectively with stakeholders to address any concerns or
questions regarding project costs.
• Risk Management:
– Identify and assess potential risks that could impact project costs.
– Develop contingency reserves to mitigate the impact of unforeseen events
or changes in project scope, schedule, or resource availability.
– Monitor and manage risks throughout the project lifecycle to minimize
their impact on project costs.
 Project Cost Management… Techniques and Tools
• Analogous Estimating: Using historical data from similar projects
to estimate costs.
• Parametric Estimating: Estimating costs based on a statistical
relationship between historical data and project parameters.
• Bottom-Up Estimating: Estimating costs by identifying and
summing up the costs of individual work items or tasks.
• Reserve Analysis: Allocating contingency reserves to address
uncertainties and risks.
• Earned Value Management (EVM): Integrating scope, schedule,
and cost measures to assess project performance and forecast
future performance.
 Time Management
• Time management is a critical aspect of project management,
ensuring that projects are completed within deadlines and
allocated resources.
• It involves planning, organizing, and controlling activities to
achieve specific objectives within specified timeframes.
• Effective time management enhances productivity, minimizes
delays, and improves overall project outcomes. Here are detailed
notes on time management in project management:
• By employing effective processes, tools, and techniques, project
managers can optimize resource utilization, minimize delays, and
enhance overall project success.
 Best Practices for Effective Time Management
• Clear Objectives: Ensure that project objectives are well-defined and
understood by all stakeholders to avoid ambiguity and misalignment.
• Effective Communication: Foster open communication channels within the
project team and stakeholders to clarify expectations, address issues
promptly, and share progress updates.
• Empowerment and Delegation: Delegate tasks and empower team members
to take ownership of their responsibilities. Empowered team members are
more likely to meet deadlines and contribute creatively to project success.
• Regular Monitoring and Reporting: Monitor project progress regularly using
key performance indicators (KPIs) and metrics. Generate reports to
communicate progress, identify deviations from the schedule, and take
corrective actions.
• Continuous Improvement: Encourage a culture of continuous improvement
by conducting post-project reviews, analyzing lessons learned, and
implementing changes to enhance future time management practices.
 Processes and Techniques in Time Management
• Project Scheduling: Develop a project schedule outlining the sequence
of activities, their durations, dependencies, and critical paths.
– Techniques such as Gantt charts, network diagrams (PERT/CPM), and milestone
charts are commonly used for scheduling.
• Time Estimation: Accurately estimating the time required for each
activity is crucial.
– Techniques such as expert judgment, analogous estimation, parametric estimation,
and three-point estimation (PERT) can be employed for time estimation.
• Setting Milestones: Break down the project into smaller, manageable
tasks and set clear milestones to track progress and ensure
accountability.
 Processes and Techniques in Time Management
• Resource Allocation: Allocate resources based on the project schedule
and requirements.
– Consider factors such as availability, skill sets, and dependencies when assigning
tasks to team members.
• Prioritization: Identify critical tasks and prioritize them based on their
importance and impact on project objectives.
– This ensures that essential activities are completed on time.
• Time Tracking: Monitor and track the progress of project activities
against the planned schedule.
– Regularly update the project schedule to reflect actual progress and make
adjustments as necessary.
• Contingency Planning: Anticipate potential delays or risks and develop
contingency plans to mitigate their impact on project timelines.
– Buffer time can be allocated in the schedule to accommodate unforeseen
circumstances.
 Tools and Technologies for Time Management
• Project Management Software: Utilize project management tools such
as Microsoft Project, Asana, Trello, or Jira to create schedules, allocate
resources, track progress, and collaborate with team members.
• Time Tracking Software: Use time tracking tools like Harvest, Toggl, or
Clockify to monitor the time spent on various project tasks and
activities.
• Collaboration Platforms: Platforms like Slack, Microsoft Teams, or
Basecamp facilitate communication and collaboration among team
members, enabling efficient coordination and timely decision-making.
• Calendar and Reminder Apps: Personal productivity tools such as
Google Calendar, Outlook Calendar, or Todoist can help individuals
manage their time effectively by scheduling tasks, setting reminders,
and prioritizing activities.
 Time Management.. Challenges and Solutions
• Scope Creep: Changes in project scope can disrupt timelines and lead to
delays.
– Address scope creep by establishing clear change management processes and
obtaining approvals for scope changes.
• Resource Constraints: Limited availability of resources, including skilled
personnel and budgetary constraints, can hinder project progress.
– Optimize resource utilization through effective planning and prioritization.
• Dependencies and Delays: Dependencies among project tasks can lead to
delays if not managed effectively.
– Identify critical path activities and manage dependencies proactively to minimize
delays.
• Unforeseen Risks: Unforeseen risks such as technical issues, market changes,
or external factors can impact project timelines.
– Develop risk management plans to anticipate and mitigate potential risks.
 Project Network Diagrams
• Project Network Diagrams are graphical representations of the
sequence and interdependencies of project activities.
• There are two primary types of project network diagrams:
– the Precedence Diagramming Method (PDM), which includes the
Activity-on-Node (AON) and Activity-on-Arrow (AOA) methods,
– the Arrow Diagramming Method (ADM).
 Arrow diagram method (ADM)
• The ADM, or activity network diagram, uses arrows to represent
activities associated with the project.
• In ADM:
– The tail of the arrow represents the start of the activity and the head
represents the finish.
– The length of the arrow typically denotes the duration of the activity.
– Each arrow connects two boxes, known as “nodes.”
• The nodes are used to represent the start or end of an activity in a sequence.
• The starting node of an activity is sometimes called the “i-node,” with the final
node of a sequence sometimes called the “j-node.”
– The only relationship between the nodes and activity that an ADM chart
can represent is “finish to start” or FS.
Arrow diagram method (ADM)
 Precedence Diagramming Method (PDM)
• PDM network diagrams are frequently used in project
management today and are a more efficient alternative to ADMs.
• In the precedence diagramming method for creating network
diagrams, each box, or node, represents an activity—with the
arrows representing relationships between the different
activities.
• The arrows can therefore represent all four possible
relationships:
– “Finish to Start” (FS): When an activity cannot start before another
activity finishes
– “Start to Start” (SS): When two activities are able to start simultaneously
– “Finish to Finish” (FF): When two tasks need to finish together
– “Start to Finish” (SF): This is an uncommon dependency and only used
when one activity cannot finish until another activity starts
 Key Concepts
• Critical Path: The longest path through the network diagram,
indicating the shortest possible duration to complete the project.
Activities on the critical path have zero slack time.
• Float or Slack: The amount of time an activity can be delayed
without affecting the project's overall duration. Activities with
float are not on the critical path.
• Merge and Burst Activities: Merge activities involve multiple
predecessors and a single successor, while burst activities have a
single predecessor and multiple successors.
• Dummy Activities: Artificial activities inserted into the network
to represent dependencies that cannot be shown using regular
arrows.
 Steps to Create a Project Network Diagram
1. Identify all project activities.
2. Determine the sequence of activities and their dependencies.
3. Draw the network diagram using appropriate symbols for
activities, nodes, and arrows.
4. Analyze the diagram to identify the critical path, float, and other
important parameters.
5. Update and revise the network diagram as the project
progresses or as changes occur.
 Principles of Project Cost Management
• Cost Estimation
• Cost Budgeting
• Cost Control
• Resource Optimization
• Risk Management Integration
• Stakeholder Engagement
• Continuous Improvement
 Principles of Project Cost Management
• Cost Estimation:
– Definition: Cost estimation involves predicting the expenses associated with
completing project activities and delivering project deliverables.
– Principle: Cost estimation should be based on reliable data, historical
information, expert judgment, and consideration of various factors such as
resource rates, inflation, and market conditions.
– Techniques: Common techniques include analogous estimation, parametric
estimation, bottom-up estimation, and three-point estimation (PERT).
• Cost Budgeting:
– Definition: Cost budgeting involves allocating the overall project budget to
individual tasks or work packages.
– Principle: Budgeting should be performed meticulously to ensure that
resources are allocated optimally and that the budget is sufficient to cover all
project costs.
– Tools: Project management software, spreadsheets, and earned value
management (EVM) techniques can aid in budgeting and tracking
expenditures.
 Principles of Project Cost Management
• Cost Control:
– Definition: Cost control involves monitoring project costs and taking
corrective actions to ensure that the project stays within budget.
– Principle: Continuous monitoring of costs against the budget is essential to
identify variances early and implement corrective measures promptly.
– Approaches: Earned value management (EVM), variance analysis, and
trend analysis are commonly used to monitor and control project costs.
• Resource Optimization:
– Definition: Resource optimization focuses on maximizing the utilization of
resources while minimizing costs.
– Principle: Efficient resource allocation is crucial for cost optimization. This
involves balancing resource availability, skill sets, and project
requirements to avoid over allocation or underutilization.
– Strategies: Resource leveling, resource smoothing, and outsourcing are
strategies used to optimize resource utilization and manage costs
effectively.
 Resource Planning
• Resource planning is a crucial aspect of project management,
involving the identification, allocation, and utilization of
resources necessary for successful project execution.
• It encompasses various types of resources including human
resources, equipment, materials, time, and budget.
• Effective resource planning ensures optimal resource utilization,
minimizes wastage, and enhances project performance.
 Resource Planning
• Resource Identification:
– Before initiating resource planning, it is essential to identify all resources required
for project completion.
– Resources can be broadly categorized into human resources (project team
members), physical resources (equipment, materials), and financial resources
(budget).
• Resource Estimation:
– Human resources estimation involves determining the skills, expertise, and time
commitments of project team members.
– Equipment and material estimation involves forecasting the quantity and
availability of physical resources needed for project tasks.
– Financial resource estimation involves creating a budget allocation plan for various
project activities.
• Resource Allocation:
– Resource allocation involves assigning identified resources to specific tasks and
activities within the project.
– Project managers must consider factors such as resource availability, skillsets, and
workload when allocating resources.
 Resource Planning
• Resource Optimization:
– Resource optimization aims to maximize the utilization of available
resources while minimizing waste and inefficiencies.
– Techniques such as resource leveling and resource smoothing are used to
balance resource demand and supply across different project phases.
– Resource conflicts, such as overallocation or underutilization, must be
resolved through negotiation, reallocation, or rescheduling.
• Resource Scheduling:
– Resource scheduling involves creating a timeline or schedule that outlines
when specific resources will be utilized throughout the project.
– Project managers use scheduling tools such as Gantt charts or project
management software to allocate resources based on task dependencies
and priorities.
– Resource schedules should be regularly updated to reflect changes in
project requirements, resource availability, or unforeseen circumstances.
 Resource Planning
• Resource Tracking and Monitoring:
– Continuous tracking and monitoring of resources are essential to ensure
adherence to the resource plan and project schedule.
– Project managers use key performance indicators (KPIs) such as resource
utilization rates, budget variance, and task completion timelines to evaluate
resource performance.
• Contingency Planning:
– Contingency planning involves anticipating and planning for unforeseen events or
resource constraints that may impact project execution.
– Contingency plans may include alternative resource sources, reallocation of
existing resources, or adjustments to project schedules and priorities.
• Communication and Collaboration:
– Project managers should ensure clear and transparent communication regarding
resource requirements, allocations, and changes throughout the project lifecycle.
– Collaboration tools and techniques such as regular meetings, status reports, and
collaborative software platforms facilitate coordination among team members and
stakeholders.
 Ended
Thank You!