OlafPassenheim

ProjectManagement

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2
ProjectManagement
2009OlafPassenheim&VentusPublishingApSISBN978
-87-7681-487-8

ToTillJakobandJanMalte
 ProjectManageme Content
nt s

Contents

Foreword 10

1 ProjectManagement 11
1.1 Introduction 11
1.2 ProjectManagementandProcessManagement 12
1.3 ConceptualFramework 14

2 ProjectOrganisations 16
2.1 Introduction 16
2.2 ProjectOrganisationandResponsibilities 16
2.3 OrganisationalModels 19
2.4 ChoosingtheProjectOrganisation 24
2.5 Conclusion 25

3 ProjectScopeandEstimationofTimesandCost 27
3.1 Introduction 27
3.2 ProjectKick-OffMeeting 27
3.3 ProjectScopeManagement 28
3.4 ActivityResourceEstimating 33
3.5 ProjectTimeManagement 35
3.6 EstimationofProjectCost 37
3.7 Conclusion 41 dr
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duateengineersandexperienced personnel.
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 4 Project Plan 43
4.1 Introduction 43
4.2 Developing a ProjectNetworkPlan 43
4.3 Activity-On-NodeNetworkTechniques 45
4.4 Time Calculations 49
4.5 Conclusion 58

5 ProgressandPerformanceMeasurement 59
5.1 Introduction 59
5.2 TheProject Control Process 60
5.3 Performance Indicators 63
5.4 Project Monitoring, EvaluationandControl 67
5.5 Conclusion 75

6 Risk Management 77
6.1 Introduction 77
6.2 RiskManagement 78
6.3 RiskIdentication 80
6.4 RiskAnalysis 83
6.5 RiskResponse 87
6.6 RiskControl 89
6.7 Conclusion 93

7 Documentation,Audit,TerminationandClosure 94
7.1 Introduction 94
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 7.2 Documentation 94
7.3 Audit 97
7.4 ProjectTermination 102
7.5 ProjectClosure 108
7.6 Conclusion 114

8 FinalRemarksandfurtherReadingsE 116

ndnotes 117
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 ProjectManageme IndexofTables
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IndexofTables

Table4 1:Activity List 48

Table4 2:TimeEstimation 50

Table5 1: Scope changemanagementprocess 73

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 ProjectManageme IndexofFigures
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IndexofFigures

Figure 1 1: Conceptual Framework 14

Figure 2 1:Internal ProjectOrganisation 17

Figure 2 2: Pure Lineorganisation 20
Figure 2 3: PureProject Organisation 21
Figure 2 4: MatrixOrganisation 22
Figure 25: Organisational Structures inthe Project LifeCycle 25

Figure 3 1: MagicTriangle 29
Figure 3 2:WorkBreakdown Structure 30
Figure 3 3: ProjectTime Management 35

Figure 4 1: Exampleof a ProjectNetworkPlan 44

Figure 4 2:AON ExampleA 46
Figure 4 3:AON ExampleB 46
Figure 4 4:AON ExampleC 47
Figure 4 5:AON ExampleD 47
Figure 4 6:AON Example Suspension Bridge 49
Figure 4 7: Nodewith extendedinformation 51
Figure 4 8: ForwardPass 53
Figure 4 9: FinishedGraph 54
Figure 4 10: Critical Path 55
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 Figure411:PERTFormula 57
Figure412:PERTExample 57

Figure51:GANTTChart 61
Figure52:ControlCycle 68
Figure53:ScopeControl 70

Figure61:RiskManagementProcess 79
Figure62:RiskIdentication 80
Figure63:EvaluationofRisks 84
Figure64:RiskMatrix 86

Figure71:ImpactofTermination 107
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ProjectManageme Forewor
nt d

Foreword
Searchinginanylibraryforbooksonprojectmanagementwilldefinitelyleadtosuccess.Muchseemstohavebeenwri
ttenabouthowtomanageaprojectsuccessfully.Butwhydomostprojectsinreallifestillfailorendupexceedingtheor
iginallyagreeduponbudget,timeorresources?
Theanswerisquiteeasy:Theprojectsimplydoesnotexist.Everyprojectandasaconsequenceeveryprojectmanage
rhastodealwithdifferenttargets,differentenvironmentsand,lastbutnotleast,withdifferentpeople.Therefore,only
theKnow-howandtheDo-howwilltransformaprojectmanagerintoanexcellentprojectmanager.

ThisbookisbasedupontheglobalprojectmanagementexperiencesIgainedindifferentpositions,especiallywithint
ernationalmanagementconsultingcompaniesandworkingasamemberandchairmanofexecutiveboards.Inowha
vethepleasuretosharemyknowledgeandgainnewexperiences(notonlyinprojectmanagement)asaprofessorwith
eagerandenthusiasticstudents.

Everyprojectmanagerwilldevelophisorherownmanagementstyleintheircareer.Duetotheconstraintsinthenumber
ofpagesofthisbookIhavelimitedtheexamplesandcasestudiestoanabsoluteminimum.Alsotheso-calledsoft-
skillsofprojectmanagementcouldnotbediscussedindetail.

Thisbookshouldprovidetheinterestedreaderwithanoverviewofthemethodsandtoolswhichhavebeenprovens
uccessfulforprojectmanagers.Everybodywhowouldliketohaveanextendedreadingaboutsomechaptersshou
ldrefertotheendnotes,whereadditionalreferencesarelisted.

Ifyouhaveanycomments,pleasedonothesitatetocontactmeatolaf_passenheim@web.de.

Havefunreadingthebookandimplementingsometechniquesinyournextprojects.

April2009 Prof.Dr.OlafPassenheim
ProjectManageme Forewor
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ProjectManageme ProjectManageme
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1 ProjectManagement

1.1 Introduction

Itwasjustafewdecadesago,inthe1950s,thatmodernprojectmanagementwasfirstseenasanindividualsubjectwithin
theareaofeconomicsciences.Centuriesback,so-
calledprojectswerefinishedsuccessfully,e.g.thebuildingoftheaqueductsinRomantimesortheconstructionofthe
GreatWallinChina,buttheseprojectsweremanagedmoreonanad-
hocbasismostlyusinginformaltechniquesandtools.

Projectmanagementnowadaysisregardedasaveryhighpriorityasallcompaniesororganisations,whethersmallor
large,areatonetimeoranotherinvolvedinimplementingnewundertakings,innovationsandchangesetc.
projects!
Theseprojectsmaybeindividuallydiverse,howeverovertime,sometools,managementtechniquesandproblem-
solvingapproacheshaveproventhemselvestobemorerewardingthanothersinbringingprojectstoasuccessfulend
.

Thedevelopmentofprojectmanagementhasalwaysbeeninparalleltothedevelopmentofgeneraltrendsinworldwi
deeconomics.The1990'swereallaboutglobalisation;the2000'sareaboutvelocityandclosetotheedgeofanewdeca
deinwhichtheworldmaybehastofaceaneconomicrecession.Nowadays,almostmorethanever,everybodyasksfor
projectstoreturntheworldeconomytoitsformerspeed.
Thisalsounderlinestheimportanceofcontinuouslearninganddevelopmentofprojectmanagementcapabilitiesino
rganisationstoallowcorporateteamsinafastchangingworldtoworkcollaborativelyindefiningplansandmanaging
complexprojectsbysynchronisingteam-orientedtasks,schedules,andresourceallocations.

However,gainingandsharingprojectinformationisnottheonlykeytosuccess.Todaysinformationtechnologiesal
lowprojectmanagerstopractiseandworkwiththeirteamsinareal-
timeenvironment.Asaconsequenceofthispotential,projectteammembersareabletoconcurrentlyview,actandre
acttothesameupdatedinformationimmediately.

Additionallytoexternalchallenges,projectteamsareforcedonamacroleveltodeliversatisfyingresultsforinternal
orexternalcustomersandstaywithintherestrictionsofbudget,timeandresources(qualityandquantity).Inparallelt
othesedeliverables,executivesarealsoaskingtheprojectmanagementonamicroleveltoensuretheuseofmodernm
anagementtools,suchas(1)customisingtheprojectorganisationtofittheoperationalstyleoftheprojectteamsandre
spectiveteammembers,(2)informingtheexecutivemanagementabouttheproject'sprogressonareal-timebasis,
(3)ensuringthatcriticaltaskdeadlinesaremetand(4)ensuringthatprojectteammembersknowaboutandmonitorp
rojectriskandshareaccurate,meaningfulandtimelyprojectdocuments.
Asaresult,thethrillinganddemandingpositionofaprojectmanagernotonlyrequiresaparticularsetofskills-
howtocommunicate,tocontrolandtomotivatepeople,butalsothespecificknowledgeabouttoolsandtechniquesre
quiredtorunaprojectsuccessfully.
 1.2 ProjectManagementandProcessManagement

Lookingatprocessmanagementandprojectmanagement,ononesidethesetermsgohand-in-
handwithdeliveringsuccessful(projectandroutine)work,yetontheotherside,hardlyanytermsmoreoftenresultin
confusionandmisunderstandings.

AccordingtoJohansson[Johanssonetal.
(1993)],aprocesscanbedefinedastheconstitutionoflinksbetweenactivitiesandthetransformationthattakesplace
withintheprocess.Thiscanincludetheupstreampartofthevaluechainasapossiblerecipientoftheprocessoutput.Th
erefore,everyprocesshasthefollowingcharacteristics:

- Definability:Itmusthaveclearlydefinedboundaries,inputandoutput.
- Order:Itmustconsistofactivitiesthatareorderedaccordingtotheirpositionintimeandspace.
- Customer:Theremustbearecipientoftheprocess'outcome,i.e.acustomer.
- Value-
adding:Thetransformationtakingplacewithintheprocessmustaddvaluetotherecipient,eitherupstreamo
rdownstream.
- Embeddedness:Aprocesscannotexistinandofitself;itmustbeembeddedinanorganizationalstructure.
- Cross-functionality:Aprocessregularlycan,butnotnecessarilymust,spanseveralfunctions.

Frequently,aprocessowner,i.e.apersonbeingresponsiblefortheperformanceandcontinuousimprovementofthep
rocess,isalsoconsideredasaprerequisite.Thefundamentalnatureofaprojectontheotherhandisthatitisatemporary
endeavourundertakentocreateauniqueproduct,service,orresult.Projectsaredistinguishedfromoperations(andt
hereforealsofromprocesses)andfromprograms.

Aprojectwilldeliverbusinessand/ortechnicalobjectives,ismadeupofdefinedprocesses&tasks,willrunforasetperi
odoftime,hasabudgetandresources.ProjectManagementdealswithtrackingthisprocess'execution,fromaschedul
eandcostperspective.Itincludesfunctionsfordevelopingtheoptimalprojectschedule,producingafinancialmodelo
ftheproject,schedulingandtrackingofeffortagainstplan,managingcostsagainstbudget,andreportingofstatus,tona
mebutafew.Theuniquenessofthedeliverable,whetheritisaproduct,service,orresult,requiresaspecialapproachint
hattheremaynotbe
apre-existingblueprintfortheprojectsexecutionandtheremaynotbeaneedtorepeattheprojectonceitiscompleted.
Uniquenessdoesnotmeanthattherearenotsimilaritiestootherprojects,butthatthescopeforaparticularprojecthasde
liverablesthatmustbeproducedwithinconstraints,throughrisks,withspecificresources,ataspecificplace,andwithi
nacertainperiod;therefore,theprocesstoproducethedeliverableaswellasthedeliverableitselfisunique.

Tobetemporarysignifiesthatthereisadiscreteanddefinablecommencementandconclusion;themanagementofapr
ojectrequirestailoredactivitiestosupportthischaracteristicand,assuch,akeyindicatorofprojectsuccessishowitperf
ormsagainstitsschedulethatis,doesisstartandendontime?

Therefore,everyprojecthasthefollowingcharacteristics:

- Consistsoftemporaryactivitiesthathavepredeterminedstartandenddates.
- Usesrestrictedresources.
 - Ithasasinglegoalorasetofgoals.
- Alleventsaretoberealizedtodevelopasingleandnewoutput.
- Usuallyhasabudget.
- Usuallyaprojectmanagerisresponsibleforco-ordinatingallactivities.

Projectsareusuallycharteredandauthorizedexternaltotheprojectorganisationbyanenterprise,agovernmentagen
cy,acompany,aprogramorganisation,oraportfolioorganisation,asaresultofoneormoreofthefollowingfeatures:

- Amarketdemand(e.g.,aconsumerproductcompanyauthorisingaprojecttodevelopanewfruitdrinkf
orkidswithlesssugarinresponsetoanincreasedhealthawareness)
- Abusinessneed(e.g.,apublisherauthorisingaprojecttowriteanewbooktoincreaseitsrevenues)
- Acustomerrequest(e.g.,anamusementparkauthorizingacompanytodevelopanewrollercoaster)
- Atechnologicaladvance(e.g.,anelectronicsfirmauthorisinganewprojecttodevelopafaster,cheaper,an
dsmallernetbook)
- Alegalrequirement(e.g.,U.S.federalgovernmentauthorisesaprojecttoestablishlawsforcontrollin
gthehomeloansystem)
- Asocialneed(e.g.,anon-
governmentalorganisationauthorisingaprojecttoraisetheawarenessofdonatingblood)
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Thesefeaturescanalsobecalledproblems,opportunities,orbusinessrequirements.Thecentralthemeofallthesefea
turesisthatmanagementmustmakeadecisionabouthowtorespondandwhatprojectstoauthorizeandcharter.

Thisbookwillprovideaframeworkdemonstratinghowaprojectcanbeinitiated,planned,executedandclosedwithi
naregularprojectlifecycle,whichalsoformstheconceptualframeworkofthisbookandisshowninFigure1-1.

Figure1-1:ConceptualFramework

1.3 ConceptualFramework

Projectstypicallyhaveidentifiablephasesandeachphasehasauniquesetofchallengesfortheprojectmanager.Ifwev
iewtheprojectfromthehighestlevel,thesebasicprojectphasescanbealsoidentifiedasmajorfactorsinfluencingthe
projectsuccess.Ifoneofthesephasesisplannedorexecutedwrongly,theprojectwillhaveahighprobabilityoffailure
.

Chapter2willdescribethechallengesofaprojectorganisation.Projectmanagementisusedinalmosteveryorganis
ationorindustry;howeverthebiggerandthereforemorecomplexanorganisationis,themoreprofessionaltheappro
achhastobeimplementedfortherightprojectorganisation.Specialistsfromdifferentdepartmentscannotjustbepul
ledawayfromtheirlineresponsibilitiesornewemployeescantjustbehiredwithouttheinternalandexternalcommu
nicationrequirements,careerperspectivesandthedistributionofpowerbeingtakenintoconsideration.

InChapter3theprojectworkfinallystarts:Themajordeliverablesandtheparticipatingworkgroupsareidentified.
Theteambeginstotakeshape.Questionsofpossibility(canwedotheproject?)andjustification(shouldwedothepro
ject?)areaddressed.
 NextisthePlanningPhase(Chapter4),wheretheprojectscopeisfurtherdevelopedinasdetailedalevelaspossible.I
ntermediateprojectoutcomesandmilestonesareidentified,alongwiththestrategyforachievingthem.Formulating
thisstrategybeginswiththedefinitionoftherequiredelementsofworktasksandtheoptimumsequenceforexecuting
them.Estimationsaremaderegardingtheamountoftimeandmoneyneededtoperformtheworkandwhentheworkis
tobedone.

Chapter5describestheexecutionphase:theprojectworkisperformedunderthewatchfuleyeoftheprojectmanage
ment.Performanceandprogressiscontinuouslymonitoredandappropriateadjustmentsaremadeaccordingtoastri
ctlyregulatedchangeinmanagementprocedureandrecordedasdistinctionsfromtheoncedefinedstrategy.Throug
houtthisphase,theprojectteamconcentratesonmeetingthe
objectivesregardingtime,budgetandresourcesdevelopedandagreeduponatthebeginningoftheproject.

Chapter6dealswiththeincreasinglyimportantrequirementsofriskmanagement.Especiallyduringthelastecono
miccrisis,itwasproventhatinadequateriskmanagementsystemsplayedanimportantrolemoreinmanyprojectdisa
sters.Properriskmanagementtrackstheprogressofoutstandingactionplans,describeswhoisresponsibleforthosea
ctions,andsetstheexpectedtimeframeforresolution.

Asshowninfig.1-
1,thearrowpointsagaintochapter3,definingtheprojectscope.This,however,justreflectstheideaandpracticalexperi
encethatrarelydoesaprojectcomeswithinthesetboundariesoftime,budgetorresources.ProjectManagementalsoha
salottodowithconstantlyrehearsingandslightlyadaptingtheoriginalprojectscopeinacontrolledway.
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ProjectManageme ProjectOrganisatio
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2 ProjectOrganisations

2.1 Introduction

Theambitionistoachievetechnologicallyandeconomicallythebestresultsinthedevelopmentofcontinuouslymor
ecomplexandorganisationalproblem-
solvingstrategies.Complextasksinlargeorganisationsrequirethegreatestpossibleco-
operationbetweencorporatedivisionsandspecialistsandrequiresagreatdealofmultidisciplinarity.Themoreproj
ectworkbecomesimportantforaffectedorganisations,thelesstraditionalmanagementandorganisationalconcept
swillbesuccessful.Traditionalorganisationsaremainlycharacterisedbyasplit-
upbetweencompetenceandmanagement(leadership),whichisfocusedonanefficientandeffectivejobprocessing.
Projectmanagementseemstheidealsolutiontomaximisethepossibilityofthesuccessfulcompletionofatask,whic
his,bydefinition,time-limited.

Buttheimplementationofprojectteamswithintheorganisationscannotonlybechallenging,butalsodangerous,asth
efulfilmentofaprojecttaskhasusuallyneverbeenachievedbeforeandthereforeimpliesalotofuncertainty,especiall
yfortheprojectmemberaffected.Lookingattheinstitutionalsideofprojectmanagement-
mainlystructuralaspectsoftheorganisation,thelinkwiththeparentorganisationsaswellasHumanResourcesareco
nsidered.Questionsconcerningthebestprojectorganisation,the(personnel)configurationoftheprojectteamandth
edecisionpowersalsohavetobeanswered.Asaprojectismainlyrunundertimerestrictionsandthereforetolerancefo
radaptionorfailure-correctionishardlyavailable,theset-
upoftheprojectorganisationisprobablythelargestobstacletoprojectsuccess.

Whendecidingonaprojectorganisationitshouldbetheaimtogivetheinvolveddepartmentsandprojectmembersam
aximumdegreeoffreedomintheirdecisions,toconsiderpersonnelrestrictionsandrequirementsoftheorganisationa
ndtoavoidhavoccausedbyunclearjobdescriptionsoranaccumulationofco-
ordinationrequirements.Butalso,simplychoosingthebestpositionofaprojectorganisation-
betweenapurelineorganisationandapureprojectorganisation,wontnecessarilybesuccessful.Byusingsuchastan
dardisedroadmap,opportunitiesandrisksofdifferentorganisationalstructurescannotbeseenandpowercentresa
ndareasofconflictcannotbeidentified.

Thecommonunderstandingofprojectmanagersnowadaysisthatthereisnotasinglebestoptionforsettingupaprojec
torganisation.Thechosenorganisationalstructurehastoreflecttherequirementsoftheprojectandtheorganisations
,hastofitthepossiblerequirementsaswellastechnologicalopportunitiesofthefutureandthereforeisthebestbalance
betweentechnologicalandhuman-
socialfactors.ProjectManagementhastoidentifypriortoaprojectstarttheinternalandexternalrequirementsinorde
rtogivethebestpossiblerecommendationforasuccessfulproject.

2.2 ProjectOrganisationandResponsibilities

Thestructuralorganisationisastaticframeworkofanorganisationthatdefinesononesidetheinternaldistributionoftas
kstoindividualsordepartments,andontheothersidetherelationshipbetweentheindividuals/departments.Whilethe
structuralorganisationdefineswhohastodoajob,theoperationalstructurefollowsamoredynamicapproach,namely
when,whereandhowoftensomethinghastobedone.
ProjectManageme ProjectOrganisatio
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 InProjectManagement,thestructuralorganisationhastofulfiltwotasks:

- Definition,howaprojectorganisationisembeddedwithintheparentorganisation(organisationalmodels,
seediscussionbelow).
- Definition,howtheorganisationisstructuredinternallywithintheprojectteam.Thegeneralfram

eworkofsuchaninternalprojectorganisationisshowninFigure2-1:

Figure2-1:InternalProjectOrganisation

Theprojectsponsoristhemanagerorexecutivewithinanorganisationwhoisnotdirectlyinvolvedintheoperational
workoftheprojectbutwhocanoverseeaproject,delegateauthoritytotheProjectManagerandcanprovidesupportasat
rainerorcoachtotheProjectManager.TheProjectSponsorhassufficientauthorityorinfluencetodirectallthestaffinv
olvedinaprojectorasmanyaspossibleandtogettheco-
operationofkeystakeholders.Heensuresthattheprojectisalignedwiththeorganizationalstrategyandcompliantwith
policy.Inlargerprojects,hehasfrequentcontactwiththeProjectManagersoastomonitorhiseffectiveness.Dependin
gontheinitialset-
upoftheprojecthecanalsochairtheSteeringCommittee,approvefinaldeliverablesandcommunicateabouttheproje
ctinsidetheagencyandwithexternalstakeholders.
 Thesteeringcommitteeisagroupofseniormanagersresponsibleforbusinessissuesaffectingtheproject.Theyusual
lyhavebudgetapprovalauthority,makedecisionsaboutchangesingoalsandscopeandarethehighestauthoritytoresol
veissuesordisputes.Thesteeringcommitteeassistswithresolvingstrategiclevelissuesandrisks,canapproveorrejec
tchangestotheprojectwithahighimpactontimelinesandbudgetandhastoassessprojectprogressandreportontheproj
ecttoseniormanagementandhigherauthorities.
Thesteeringcommitteeprovidesadviceandguidanceonbusinessissuesfacingtheprojectandtheyuseinfluenceand
authoritytoassisttheprojectinachievingitsoutcomes.

Boththeprojectsponsorandthesteeringcommitteealsohavetocarryouttheprojectgovernanceofaproject.Asmuc
hascorporategovernanceisrequirednowadaysnotonlyinstocklistedcompanies,projectorganisationsalsorequire
compliancewithcertainrules.Governanceingeneralcanbedescribedasallactivitiesandprocesseswhichensurethat
directorsandmanagersactintheinterestsoftheorganisationandareaccountablefortheiruseofthoseassets.

Projectgovernanceiscarriedoutbyregularreviewofprojectdocuments,suchasplansandstatusreports,lookingfor
evidencethattheprojectisintheinterestsoftheorganisationandusesassetsresponsibly.Indiscussionsanddecisions
,thepersonresponsiblefortheProjectGovernancehastovoteforwhathebelievesisbestfortheorganisationanditssta
keholders.TofulfillalltheserequirementsitiscompulsorythattheProjectManagerandhisteamdemonstratecompe
tence,ethics,andcompliancewithorganizationalpolicy.

Anadvisorycommitteeisagroupofpeoplethatrepresentskeyprojectstakeholdersandprovidesadvicetotheproject.
Likesteeringcommittees,advisorycommitteesaregenerallyrecruitedfromseniormanagement.Unlikesteeringcom
mittees,advisorycommitteescannotmakedecisionsregardingaproject.Theirroleistoprovideinsightstotheteamreg
ardingstakeholderinterests,technicaladviceandotherrelevantinitiatives.Paralleltothesteeringcommittee,theyass
istwithresolvingissuesandrisksandshouldusetheirinfluenceandauthoritytoassisttheprojectinachievingitsoutco
mesandtocommunicateabouttheprojectprogresswithintheirorganizations.

Theprojectmanagerisnaturallythekeypersonwithintheprojectorganisationandhastheoverallresponsibilityfor
meetingprojectrequirementswithintheagreedtotime,cost,scopeandqualityconstraintswhichformtheframewor
koftheprojectplan.Projectmanagersreporttothesteeringcommittee,whichhasdelegateditsauthoritytotheprojec
tmanager.Thegeneraltasksofaprojectmanagerare:

- Supervisionandguidancetotheprojectteam
- Regular(weeklyormonthly)projectstatusreportstotheprojectsponsor/steeringcommittee
- Chairriskandchangecontrolcommittees(ifapplicableforaproject)
- Attendsteeringcommitteemeetingsandpreparesupportingmaterialswiththeprojectsponsor
- Executeprojectmanagementprocesses:risk,issues,change,quality,anddocumentmanagement
- Ensureprojectplan,scheduleandbudgetareup-to-date;detectandmanagevariances
 Ateamleaderisapersonresponsibleformanagingonepartofaproject,orasubproject.Thispositiononlyexistsonl
argerprojectswheresubprojectsarerequiredduetothenumberofemployeesinvolvedordifferentprojectgoalsallo
wtheparallelwork.Ateamleaderideallyhasprojectmanagementskills,includinghumanresourcemanagement,ina
dditiontorelevanttechnicalskills.Usually,juniorprojectmanagersareselectedforthisposition.Ateamleaderrevie
wsallsub-teamdeliverables,holdsregularsub-
teamstatusmeetingsandprovidesregularstatusreportstotheprojectmanager.

Lastbutnotleast,ateammemberisapersonassignedtoateamwhoisresponsibleforperformingaclearlydefinedparto
ftheprojectactivities.Dependingontheorganizationalset-
upateammembermayreportdirectlyorindirectlytotheprojectmanagerandisassignedtoworkpart-timeorfull-
timeontheproject.

2.3 OrganisationalModels

Therearetwofundamentallydifferentwaysoforganizingprojectswithintheparentorganisation:

- Theprojectaspartofthefunctionalorganisationorpurelineorganisation
- Theprojectasafree-standingpartoftheparentorganisation(projectorganisation)
- Athirdtype,calledamatrixorganisation,isahybridofthetwomaintypes
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 Thepurelineorganisationorfunctionalorganisation(seeFigure2-
2)doesnothaveaspecificpositionforprojectmanagers.Projectmanagersarespecialistorlinemanagerswhoarealign
edtotheprojectforaspecifictime.Theprojectisdividedintopartialtasksanddelegatedtoresponsibledepartments.T
heteammemberscontinuetoreporttotheirline-directorsanduppermanagers.

Figure2-2:PureLineorganisation

Theadvantagesare:

- Reducedoverhead,asnoadditionalprojectteammembershavetobehired
- Providesclearlymarkedcareerpathsforhiringandpromotion
- Employeesworkalongsidecolleagueswhosharesimilarinterests,thereforetheexpertiseoftheteamme
mbersstayswithintheirdepartments
- Nostructuralchangeforrunningtheprojectrequired
- Flexibilityforchangesintheprojectscope
- Easypost-projecttransitionastheprojectteammemberssimplycontinuedoingtheirlinejobagain

Thedisadvantagesare:

- Co-ordinationoffunctionaltasksisdifficultaslittlerewardforco-
operationwithotherdepartmentsisgrantedsinceauthorityresideswithfunctionalsupervisor
- Providesscopefordifferentdepartmentheadstopassoffcompanyprojectfailuresasbeingduetothefailures
ofotherdepartments
- Slowreactiontimeduetolongcommunicationlineswithintheproject
 Withinthepureprojectorganisation(task-
force)theprojectmanagerisfullyresponsibleforagroupofspecialists,whichhavetemporarilydedicatedtheirenti
reworkforcetotheproject(seeFigure2-3).

Figure2-3:PureProjectOrganisation

Theadvantagesare:

- Simpleandfast,astheprojectmanagerhasfulllineauthorityovertheprojectandallmembersoftheprojectte
amarereportingdirectlytotheprojectmanager
- Thelinesofcommunicationareshortened;theabilitytomakeaswiftdecisionisenhanced
- Across-
functionalintegrationissupportedasapureprojectorganisationcanmaintainapermanentcadreo
fexpertswhodevelopskillsinspecifictechnologies
- Aprojectteamthathasastrongandseparateidentityanddevelopsahighlevelofcommitmentfromitsmem
bers
- TheorganizationalstructuretendstosupportaholisticapproachtotheprojectThedisadvantage

sare:

- Eachprojecthastobefullystaffedwhichcanleadtoaduplicationofstaffnumbers
- Projectmanagerstendtostockpileequipmentandtechnicalassistanceasthisrepresentstheimportan
ceoftheirprojectwithintheorganisation
 - Pureprojectgroupsseemtofosterinconsistencyinthewayinwhichpoliciesandproceduresarecarriedout
- Inapureprojectorganisation,theprojecttakesonalifeofitsown,withownrulesandprocesses
- Thepost-
projecttransitionisdifficultastheretendstobeconcernamongteammembersaboutcareeraftertheprojec
tends

Thematrixorganisationasshowninfigure2-
4isacombinationofafunctionalandapureprojectorganisation.Thisorganisationalstructureallowsforparticipation
onmultipleprojectswhileperformingnormalfunctionalduties.Agreaterintegrationofexpertiseandprojectrequire
mentscanbeachieved.

Figure2-4:MatrixOrganisation

Amatrixorganisationcantakeonawidevarietyofspecificforms:

Projectorstrongmatrixorganizationsmostcloselyresemblethepureprojectorganisation.Theprojectman
agerdecideswork-andpersonnel-
progress,thelinemanagerprovidesresourcesandconsultstheprojectmanagerasaspecialist.

Theco-
ordinationorfunctionalorweakmatrixmostcloselyresemblesthefunctionalform.Theprojectmanageron
lyco-ordinatesthecontributionsofthedifferentdepartments,theauthoritystayswiththedepartment-directors.

Thebalancedmatrixliesinbetweentheothers.Projectandlinemanagersapproximatelyhaveequalcompetence
andagreeuponacommondecision.
 Theadvantagesare:

- Theadvantagesofafunctionalorganisationandprojectteamstructureareretained
- Resourcescanbeco-ordinatedinawaythatappliesthemeffectivelytodifferentprojects
-
TeamMemberscanmaintaincontactwithprojectteamsaswellaswiththeirfunctionaldepartmen
tcolleagues,theycanbechosenin-time,accordingtotheneedsoftheproject
- Theprojectteamwillbemoreagileandabletoviewproblemsinadifferentwayasspecialistshavebeenbro
ughttogetherinanewenvironment.
- Projectmanagersaredirectlyresponsibleforcompletingtheprojectbyaspecificdeadlineandbudget.
- TeammemberscanreturntotheiroldlineresponsibilityafterfinishingtheprojectThedisadvantages

are:

-Potentialforconflictbetweenfunctionalvs.projectgroupsduetounclearresponsibilitiesastheprinciple
ofunityofcommandisviolatedwithamatrixorganisation
- Aconflictofloyaltybetweenlinemanagersandprojectmanagersovertheallocationofresources
- Costscanbeincreasedifmore(project)managersarecreatedthroughtheuseofprojectteams
- Thebalanceofpowerbetweentheprojectandfunctionalareasisverydelicate
-Thedivisionofauthorityandresponsibilityinamatrixorganisationiscomplexanduncomfo
rtablefortheprojectmanager
- Projectworkershaveatleasttwobosses,theirfunctionalheadsandtheprojectmanager.
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 2.4 ChoosingtheProjectOrganisation

Choosingtherightprojectorganisationisthefirstandprobablythemostimportantkeytosuccessforprojectmana
gement.Thereforeagreatdealoftimeshouldbespentinconsideringthedecisionaboutformation,preparationa
ndinitiationoftheprojectorganisation.

Bestpracticeisastep-
wiseapproach,todefinethegoalsandimplicationsoftheprojectwithinthecurrentorganisationalstructure:

Step1:Definitionoftheproject,withastatementthatreflectsthemajoroutcomesfromalldifferentpointsofview(to
pmanagement,shareholder,stakeholderetc.)Standardizeddecisionmatrixesareavailableinawiderangewithexp
eriencedprojectmanagers.However,thefollowingpointsalreadywillgiveanindicationofwhatshouldbeconsider
ed:

- Sizeofproject
- Strategicimportance,howimportantistheprojecttothefirmssuccess?
- Noveltyandneedforinnovation
- Integrationrequirements(departmentsinvolved)
- Complexity(numberofexternalinterfaces)
- Budgetandtimeconstraints
- Whatlevelofresources(humanandphysical)isavailable?
- Stabilityofresourcerequirements

Step2:Determinationofthekeytaskswhicharelinkedwitheverysub-
goalorobjectiveandidentificationofthespecialist/individualswithintheparentorganisationandtheirhomedep
artments.

Step3:Breakingdowntheprojectintotasksanddeterminingwhichorganizationalunitsarerequiredtocarryoutthew
orkpackagesandwhichunitswillworkparticularlycloselywithwhichothers(thiswillbediscussedinmoredetailint
henextchapter).

Step4:Listofanyspecialcharacteristicorhamperingfactorassociatedwiththeproject.

Step5:Withthefindingsgainedfromsteps1-
4andtheknowledgeofalladvantagesanddisadvantageschoiceofstructuralorganisationform.

Recentdevelopmentsareshowingthatcompaniestendmoreandmoretochangetheprojectorganisationduringthep
roject,asshowninfigure2-5.
 Figure2-5:OrganisationalStructuresintheProjectLifeCycle

Theadvantagesofdifferentprojectorganisationsareutilisedbysuchanapproach.Duringtheplanningperiod,maxi
mumknowledgeofdifferentdepartmentscanbegiventotheproject,whilenotallteammembershavetobeinvolvedf
ull-
timeintheproject.Intherealisationphase,apureprojectorganisationhelpstheprojectteamtosolelyconcentrateont
hefulfilmentoftheprojectgoalsandinthelaststage,teammemberscanmoreeasilyreintegrateintotheirlinefunction
byselectingafunctionalprojectorganisationandcanhelptointegratethenewlyfoundknowledgeintotheirhomed
epartments.

Theorganizationalset-
updeterminesthewayaprojectisdelivered.Aneffectiveorganisationisthereforecrucialtothesuccessfuldeliveryofp
rojectsontime,tobudgetandtospecification.Thereforeagreatdealoftimeandattentionshouldbegiventoprojectorg
anisationswheninitiatingnewprojects.

Effectiveprojectorganisationshavetoidentifyallkeypositionsacrossthewiderorganisation,alsoincludingtheadv
isoryteam,thesteeringcommitteeandthesponsor,ifpossible.Afterdecidinguponthesekeyroles,cleartermsofrefe
renceandaccountabilitiesforallkeyrolesandbodies;e.g.projectmanager;steeringcommitteehavetobesetupanda
lsocommunicated(inwriting)totheprojectteam.Thepositionandtheroleoftheorganisationframework,likesuppl
ier,partnerorcustomerinterfaceshastobedefinedatalllevels,alongwiththeirspecificresponsibilitiestowardsthep
roject.

Theoperationalstructurealsohastoincludethewaysofworkingfortheteam,detailinghowtheworkwithkeypartn
ers,supplierandthecustomerwillbeexecutedand,lastbutnotleast,agovernancestructurefortheprojecthastobed
eveloped.
2.5 Conclusion

Theprojectorganisationisoneofthefirstvisiblepartswhenanewprojectisstarted.Manyindustriesarebeginning
torealisethebenefitsofcloserworkingrelationshipsandmoreintegratedworkingenvironmentsonprojects.Appro
acheslikecollaborationsandco-
operationshaveexistedforsometime,butmanyorganisationsresisted,oftenonthegroundsofcost,toadoptsuchme
thods.
 ProjectManagementisstartingtomatureatindividualandcorporatelevels,andbusinessesareunderstandingnotjustt
hebenefit,butthefundamentalneedtoadoptsuchpracticesiftheyaregoingtodeliverprojectsfaster,better,cheaper.
Suchaimsaretrulyattainable,butonlyiflesseffectiveorganisationalpracticesarereplacedbymoreconcurrentandint
egratedprojectorganisationduringkeyphasesofprojects.

Insomecases,thisinvolvesbusinessesworkingtogethermuchearlierintheprojectcycle,whichcanchallengetraditi
onalmethodsandthinking.Manyindustriesarenowrealisingthatthebenefitsfaroutweightherisks,andareembraci
ngnewwaysoforganisation.
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ProjectManageme ProjectScopeandEstimationofTimesandCos
nt t

3 ProjectScopeandEstimationofTi
mesandCost

3.1 Introduction

Thischapterwillprovideaframeworkastohowtodefinetheprojectscopeandhowtoestimatetimesandcosts.Project
Managementisusuallyalwaysaboutmeetingtheissuesinthemagictriangle:scope,timeandcost.Ifoneofthegoalsis
missedorwronglyplanned,theproject'ssuccessusuallycanonlybeachievedbyreallocationofmoreresources,whic
hcostsmoneyand/orwilltakemoretime.Planningisthekeytocarefuloverviewandbalancesthesethreeparallelgoals
.Top-downandBottom-
upapproachescanbeused.Thischapterillustrateswhichtoolsexisttoidentifyactivitiesandhowtosequenceandsche
duletheminapositivewayandhowabridgebetweenthesestepscanbebuilt.Lastbutnotleastmethodsforestimatingth
etime,theprogressandthecostforprojectsareshown.

3.2 ProjectKick-OffMeeting

Experiencedprojectmanagersknowthatitiscrucialtogetprojectsofftoasuccessfulstart.Accordingtooneveteranp
rojectmanager:Thefirstteammeetingsetsthetoneforhowtheteamwillworktogether.Ifitisdisorganized,orbecom
esboggeddownwithlittlesenseofclosure,thenthiscanoftenbecomeaself-
fulfillingprophecyforsubsequentgroupwork.Ontheotherhand,ifitiscrisplyrun,focusingonrealissuesandconcer
nsinanhonestandstraightforwardmanner,memberscomeawayexcitedaboutbeingpartoftheprojectteam.[Gray/
Larson2002].

Holdingagoodkick-offmeetingisanefficientwaytocommence.Akick-
offmeetingisameetingheldatthebeginningofaprojectbutnotuntilthefirsttasksoftheinitialphasearecompleted.Th
eprojectcharterisalreadysetupandtheprojectteamisawareofthepeculiaritiesofseveralstakeholders.Therearethre
etypicalobjectivesprojectmanagerstrytoachieveduringthefirstmeetingoftheprojectteam.Thefirstistoprovidean
overviewoftheproject,includingthescopeandobjectives,thegeneralschedule,methodsandprocedures.Itisimport
anttoestablishbasicrulesasguidelinesfortheupcomingwork.Thesecondistobegintoaddresssomeoftheinterperso
nalconcernscapturedintheteamdevelopmentmodel:

- Whoaretheotherteammembers?
- HowwillIfitin?
- WillIbeabletoworkwiththesepeople?

Thethirdandmostimportantobjectiveistobegintomodelhowtheteamisgoingtoworktogethertocompletetheprojec
t.Theprojectmanagerwillrecognizeandevaluateforthefirsttimethebehavioroftheteammembers.Thiscanbecritic
al,especiallyininterculturalteamswhereoftendifferentkindsofbehaviorsandpersonalitiescanbeobserved,whichc
anhaveahighpotentialtocollide.
ProjectManageme ProjectScopeandEstimationofTimesandCos
nt t
3.3 ProjectScopeManagement

Definingtheprojectscopesetsthestagefordevelopingaprojectplan.Projectscopeisapreciseexplanationoftheexpe
ctedresultoftheprojectorproductforthecustomerfromanexternalaswellasfromaninternalpointofviewinaspecifi
c,tangible,andmeasurableway.Thescopeshouldbedevelopedunderthejointdirectionoftheprojectmanagerandc
ustomer.Theprojectmanagerisresponsibleforanagreementwiththecustomeronprojectobjectives,deliverablesat
eachstageoftheproject,technicalrequirements,etc.Theprojectscopewillbefixedinadocument.Dependingonitsc
omplexityitisstatedintheprojectcharterifitisatamanageablelevel,orinaspecialprojectscopestatementfrequently
doneonlargeprojects.Thesedocumentsarenormallypublishedandusedbythecustomerandtheotherprojectpartici
pantsforplanningandmeasuringprojectsuccess.Scopedescribeswhatoneexpectstodelivertothecustomerwhenth
eprojectiscomplete.Duetothehighpriorityoftheprojectscope,achecklistincludingallelementsoftheprojectplani
safavorablewaytoensurethatscopedefinitioniscomplete.Aprojectscopeshouldcontainthefollowingelements:

1. Projectobjective
2. Deliverables
3. Milestones
4. Technicalrequirements
5. Limitsandexclusions
6. Reviewswithcustomer

Projectobjectivesanddeliverablesalreadyhavebeendiscussedseveraltimesinthisbook.Amilestoneisaspecialeve
ntinaprojectthatisreachedatapointintime.Themilestonescheduleshowsonlymajorsegmentsofwork.Itrepresentsf
irst,roughcutestimatesoftime,costandresourcesfortheproject.Themilestonescheduleisbuiltusingthedeliverables
,asaplatformtoidentifymajorsegmentsofworkandanend-
date.Thetechnicalrequirementshavetoensuretheproperperformance.Forexample,atechnicalrequirementforap
rojectwithauniversitylibrarycouldbethatastudentcanbeidentifiedwithhisComputerIP-
Addressifhelogsinintoaninternaldatabase,toenabletheuniversitytotrackdownanymisuse.Theimportanceoftech
nicalrequirementsisobviousbecausesuchamalfunctiononaprojectcouldcauseenormousdamage.Thelimitsande
xclusionsshouldbewelldefined.Failurecanleadtofalseexpectationsandtoexpendingresourcesandtimeonthewro
ngproblem.Thecompletionofthescopechecklistendswithareviewwiththecustomer,internalorexternal.Theobje
ctiveisthecommonunderstandingandagreementofexpectations.Isthecustomergettingwhatheorshedesiresindeliv
erables?Doestheprojectdefinitionidentifykeyaccomplishments,budgets,timing,andperformancerequirements?
Arequestionsoflimitsandexclusionscovered?
Clearcommunicationonalltheseissuesisimperativetoavoidclaimsormisunderstandings.

Manyprojectssufferfromscopecreep,whichisthetendencyfortheprojectscopetoexpandovertime,usuallybychan
gingrequirements,specifications,andpriorities.Scopecreepcanbereducedbycarefullywritingtheprojectcharter
orprojectscopestatement.Ascopethatistoobroadisaninvitationforscopecreep.Scopecreepcanhaveapositiveorn
egativeeffectontheproject,butinmostcasesscopecreepmeansaddedcostsandpossibleprojectdelays.Changesinr
equirements,specificationsandprioritiesoftenresultincostoverrunsanddelays.Examplesareabundant:theTrans
rapidtrainprojectinShanghai,theopeningofthenewterminalatHeathrowAirport,etc.
 Settingclearprojectpriorities,listeddependingontheirimportance,alsohelpstoavoidascopecreep.Themanageme
ntand/orthecostumerdefinetheorderofprioritiesinaccordancewiththeirneeds.Thereforetheprioritiescanbesetarb
itrarilyandvaryfromprojecttoproject.Thethreeimportantfactorsforthesuccessofaprojectarethemeetingorexceed
ingoftheexpectationsofthecostumerand/orthemanagementintermsofcosts(budget),time(schedule)andperform
ance(scope).Theinterrelationshipsamongthesecriteriavaryandcanbeseenastrade-
offsbetweentheprojectteamandthecustomer.Fig.3-1illustratesthisdilemma:

Figure3-1:MagicTriangle
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Thetrade-offsamongtime,costsandperformancehavetobeallocatedandmanagedbyprojectmanagers.Thetrade-
offsinaprojectoccurbetweenscope,costandtime.Itshouldmakeclearthatprojectmanagershavetobalancethesethr
eepoints(regardingthemagictriangle).Ifoneoftheseobjectivesismissed,aprojecteasilyfails.Inordertoevaluatepr
ioritiestherehastobeacandiddiscussionbetweenprojectmanagers,custumersanduppermanagementtoestablisht
herelativeimportanceofeachcriterion.Theworkbreakdownstructureandthepriority-
matrixaretoolswhichareusedinpracticetoidentifyanddefinewhichcriterionisconstrained,whichshouldbeenhan
cedandwhichcanbeaccepted.

TheWorkBreakdownStructure(WBS)isagroupingoftheworkinvolvedinaprojectorientedtowardsthedeliver
ablesthatdefinesthetotalscopeoftheproject.TheWBScanbeimaginedasaroadmapoftheprojectwhichbreaksdo
wnthetotalworkrequiredfortheprojectintoseparatetasksandhelpsgroupthemintoalogicalhierarchy(seeexampl
efig.3-
2).Differentlevelsofdetailassuretheprojectmanagersthatallproductsandworktasksareidentifiedinordertointeg
ratetheprojectwiththecurrentorganisationandtoestablishabasisforcontrol.Furthermore,theWBSorganizesand
dividestheworkintologicalpartsbasedonhowtheworkwillbeperformed.Thisisimportantasusuallyalotofpeople
areinvolvedinaprojectandmanydifferentdeliverablesaresettoreachonemainobjectivetofulfilltheproject.

Inadditiontothis,theWBSservesasaframeworkfortrackingcostandworkperformancebecauseeveryelementwhic
hisdefinedanddescribedinitcanbeestimatedwithreferencetoitscostsandtimeneeded.Consequently,theWBSenab
lestheprojectmanagerstomakeasolidestimationofcosts,time,andtechnicalperformanceatalllevelsintheorganisati
onthroughallphasesoftheprojectlife-cycle.

Figure3-2:WorkBreakdownStructure
 DecompositionisthekeytosuccessincreatingaprofessionalWBS.Decompositiondescribestheprocessofsubdividi
ngprojectdeliverablesintosmaller,morecompactandmanageablecomponentsuntiltheworkanddeliverablesaredef
inedattheworkpackagelevel.ThisaforesaidworkpackageisthelowestlevelintheWBS,andisthebaseatwhichthecos
tandschedulefortheworkcanbeestimatedinareliableway.Thecomplexityoftheprojectdeterminesthelevelofdetail
forworkpackages.

Tofollowahierarchicalbreakdownitisreasonabletostartwiththeprojectasthefinaldeliverable.Afterwards,thediff
erentdeliverablescanbedecomposedintoworkpackages.Thedecompositiontoalowerlevelofdetailenhancesthea
bilitytoplan,manageandcontrolthework.Ontheotherhand,projectmanagershavetobecarefulwiththedecomposit
ionofsub-deliverablesbecauseanexaggerateddecompositioncanleadtonon-
productivemanagementeffort,inefficientuseofresources,anddecreasedefficiencyinperformingthework.Theref
oretheprojectteamhastofindthebalanceofthelevelofdetailduringtheplanningprocess.

OutputsaftercreatingaWBSareinmostcasesanupdateoftheprojectscopestatementandadraftofProjectCommuni
cationPlan(PCP).ChangerequestsasaresultofthecreatedWBScanbeaccepted.Afterwardstheprojectscopestate
mentisupdatedtoincludethoseapprovedchanges.ThekeydocumentgeneratedbytheWBSprocessistheactualWBS
.EachWBScomponentisgenerallyassignedauniqueidentifierfromthecodeofaccounts.Theseprovideastructurefo
rthehierarchicalsummationofcosts,scheduleandresourceinformation.

Whentheprojectdeliverablesandworkpackagesareclearlyidentifieditisessentialtocommunicatethemtoallprojec
tmembersintherightway.Poorcommunicationisamajorcontributortoprojectfailureinmostcases.Communicatio
nisakeycomponentinco-
ordinatingandtrackingprojectschedules,issues,andactiontimes.ThePCPisafundamentalpartoftheoverallprojec
tplanbecauseitmapsouttheflowofinformationtoalldifferentstakeholdersinaproject.WhendevelopingaPCPthefo
llowingpointsshouldbeconsidered:

- Stakeholdercommunicationsrequirements
- Informationtobecommunicated,includingformat,content,andlevelofdetail
- Identificationofwhowillreceivetheinformationandwhowillproduceit
- Suggestedmethodsorguidelinesforconveyingtheinformation
- Escalationproceduresforresolvingissues
- Revisionproceduresforupdatingthecommunicationsmanagementplans
- Aglossaryofcommonterminologyusedontheproject

TodevelopaPCPwhichconsidersthesepointsonehastofollowthesebasicsteps:

Stakeholderanalysis:Identifiesthetargetgroups.Typicalgroupscouldbethecustomer,sponsor,projectteam,proje
ctoffice,oranyonewhoneedsprojectinformationinordertomakedecisionsand/orcontributetotheprojectprocesses.
 Informationneeds:Whatinformationisimportantforwhom?
Forexample,topmanagementneedstoknowhowtheprojectisprogressing,whetheritisencounteringcriticalproble
msandtheextenttowhichprojectgoalsarebeingrealized.Thisinformationisrequiredsothattheycanmakestrategicd
ecisionsandmanagetheportfolioofprojects.Furthermore,teammembersneedtoseeschedules,tasklistsandspecific
ations,sothattheyknowwhatneedstobedonenext.Externalgroupsneedtoknowchangesinthescheduleaswellandthe
yneedtoknowperformancerequirementsofthecomponentstheyareproviding.

Sourcesofinformation:Whentheinformationneedsareidentified,thenextstepistodeterminethesourcesofinfor
mation.Informationcanbecollectedusingmilestonereports,teammeetings,andprojectstatusmeetings.

Distributionmodes:Oneofthemostcommondistributionchannelsinmoderncompaniesise-
mailing.Thereareofcourseothermethodsthroughwhichinformationcanbedistributed,forexamplethroughteleco
nferencing,LotusNotes,SharePoint,SAPandavarietyofdatabasesharingprograms.CompaniescanusetheWeb
tocreatevirtualprojectofficesinwhichtostoreprojectinformation.Projectmanagementsoftwareisusedbycomp
aniestotransferinformationdirectlytotheWebsitesothatdifferentpeoplehavecanimmediateaccesstorelevantproj
ectinformation.Insomecasesitisastandardisedroutinethatimportantinformationistransferreddirectlytokeystake
holders.

Responsibilityandtiming:Determinewhowillsendouttheinformation.Forexample,acommonpracticeistohav
eminutesofmeetingsorspecificinformationforwardardedtotheappropriatestakeholders.Othercentresofcompe
tencecanbetheprojectmanagerortheprojectoffice.Timingandfrequencyofallocationappropriatetotheinformati
onneedstobeestablished.

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OneadvantageofdevelopingaPCPisthattheflowofinformationiscontrolledbyacertainpersonordepartmentwhich
isresponsibleforit.Furthermore,itisnotnecessarytorespondtoinformationrequestsbecauseeveryonewhoisinvolv
edinaprojectissuppliedwiththerequisiteinformation.

3.4 ActivityResourceEstimating

Activityresourceestimating(ARE)iscloselyrelatedandco-
ordinatedwiththecostestimatingprocess.Thescheduleforactivityresourceestimatinginvolvesdeterminingwhat
resources(staff,equipment,ormaterial)andinwhatquantityeachresourceisneeded.

Inputsfortheestimationareingeneral:

EnterpriseEnvironmentalFactors:Theinfrastructureresourceavailabilityinformationcanalsobefoundinthep
rojectcharter.Thesefactorscanbe,forexample,theorganizationalorindustrystandard,theexistinghumanresource
orthepersonnelevaluationsystem.

ActivityList:Theactivitylistidentifiesthescheduleactivitiesforresourcesthatareestimated.

ActivityAttributes:Theactivityattributesprovidetheprimarydatainputforuseinestimatingthoseresourcesrequir
edforeachscheduleintheactivitylist.

Resourceavailability:Informationonwhichresourcesarepotentiallyavailableisusedforestimatingtheresourcet
ypes.Thisknowledgeincludesconsiderationofvariousgeographicallocationsfromwhichtheresourcesoriginatea
ndwhentheymaybeavailable.

MajortoolsandtechniquesforsuchanAREare:

- Anexpertjudgmentwhichisusedtorehearsetheresource-
relatedinputs.Anygrouporpersonwithspecialisedknowledgeinresourceplanningandestimatingcanp
rovidesuchexpertise
- Analternativesanalysiswhichincludessuchthoughtsas,forinstance,makeorbuys,handversusautomated
,differentsizeortypeofmachine
- Publishedestimatingdatawhichareroutinelypublishedbyvariouscompanies,e.g.onproductionratesand
unitcostsofresourcesforanextensivearrayoflabourtrades,equipmentfordifferentcountriesandgeograp
hicallocationswithincountries
- PM-
Software,thathelpsplanning,organising,andmanagingresourcepoolsanddevelopsresourceesti
mates
- Bottom-
upestimationwhichisusedwhenascheduledactivitycannotbeestimatedwithareasonabledegreeofconfi
dence,wherebytheworkwithinthescheduledactivityisdecomposedinmoredetail.

Theoutputoftheactivityresourceestimatingprocessisanidentificationanddescriptionofthetypesandquantitie
sofresourcesrequiredforeachscheduledactivityinaworkpackage.
ResourcesBreakdownStructure:Theresourcebreakdownstructureisahierarchicalstructureoftheidentifiedreso
urcesbyresourcecategoryandresourcetype.
 ResourceCalendar:Acompositeresourcecalendarfortheprojectdocumentsworkingdaysandnon-
workingdaysthatdeterminethosedatesonwhichaspecificresource,whetherapersonorequipment,canbeactiveoris
idle.Theresourcecalendartypicallyidentifiesresource-specificholidaysandresourceavailabilityperiods.

RequestChanges:Theactivityresourceestimatingprocesscanresultinrequestchangestoaddordeleteplannedsch
eduledactivitieswithintheactivitylist.
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3.5 ProjectTimeManagement

Theprojecttimemanagementincludesthenecessaryprocessestofinishtheprojectontime.Fig.3-
3givesanoverviewofthedifferentprocesses:

Figure3-3:ProjectTimeManagement

Alloftheseprocessesinteractwitheachotherandwithprocessesintheotherorganisationalcompetence.Eachproce
sscaninvolveeffortfromoneormorepersonsorgroupsofpersons,basedontheneedsoftheproject.Eachprocessocc
ursatleastonceineveryprojectandoccursinoneormoreprojectphases,iftheprojectisdividedintophases.Although
theprocessesaredescribedasindividualitemswithclearlydefinedinterfaces,inpracticetheymayoverlapeachothe
randcorrelateininteractions.

Onsomeprojects,especiallyonesofasmallerscope,activitysequencing,activitydurationestimating,andschedulede
velopmentaresotightlylinkedthattheyareviewedasasingleprocessthatcanbeperformedbyapersonoverarelatively
shortperiodoftime.Theseprocessesarepresentedhereasdistinctprocessesbecausethetoolsandtechniquesforeachar
edifferent.
ActivityDefinition

Theessentialbasisofprojecttimemanagementisthedefinitionofoperations.Theactivitydefinitionisessentialandu
sedconsistentlyasthebasisforallfurtherstepsinprojecttimemanagement.Thedefinitionofoperationsincludesthe
determinationanddocumentationoftheirrespectiveoperations,thereforetransactionsarestructuredanddefinedini
ndividualworkpackages/tasks.Eachoperationidentifiesafixeddeferredactivity.Theexecutionrequirestimeandef
fort.Theoperationsmustbeaccomplishedtotheworkbreakdownstructuresothatthespecifiedandpartialdeliveryit
emscanbedeveloped.Thisprocessimperativelyimpliestheneedfordefiningtheprocessessothattheprojectobjecti
vescanbeachieved.Theworkbreakdownstructure(WBS)istheessentialtoolwithwhichtodescribetheactivitiesin
detail.

ActivitySchedule

Thedeterminationofanoperationsequenceenfoldsthedeterminationandthedocumentationoftherelationshipsbetw
eentheoperations.Theprocessflowmustexactlybedefined,sothatarealisticandpracticabletimeplancanbeputintoac
tionlater.Thatmaybedeterminedmanuallyorwiththehelpofspecialcomputersoftware.Iffewdetailsareknown,man
ualprocessesareoftenbettersuitedforsmallerprojectsandintheearlystagesoflargerprojects.Manualandautomaticp
rocedurescanalsobeusedincombination.

Inputsaretheactivitylistasatabulationofactivitiestobeincludedonaprojectscheduleandtheproductdescriptionwhi
chincludesproductcharacteristicsthatoftencanaffectactivitysequencing,suchasaphysicallayoutofaplanttobecons
tructedorsubsysteminterfacesonasoftwareproject.

Theprocessofestimatingscheduleactivitydurationsusesinformationonscheduleactivityscopeofwork,required
resourcetypes,estimatedresourcequantitiesandresourcecalendarswithresourceavailabilities.Theinputfortheesti
matesofscheduleactivitydurationoriginatefromthepersonorgroupontheprojectteamwhoismostfamiliarwiththen
atureoftheworkcontentinthespecificscheduleactivity.Thedurationestimatingisprogressivelyelaboratedupon,and
theprocessconsidersthequalityandavailabilityoftheinputdata.Theactivitydurationestimatingprocessrequiresthat
theamountofworkeffortrequired,theassumedamountofresourcestobeappliedtocompletethescheduleactivityises
timatedandthenumberofworkperiodsneededtocompletethescheduleactivityisdetermined.Alldataandassumptio
nsthatsupportdurationestimatingaredocumentedforeachactivitydurationestimating.

Thescheduledevelopmentistheinstructionregardingthestartandfinishdateforaprojectactivity.Ifthestartandthe
finishdatesarenotrealisable,theprojectwillprobablynotbefinishedontime.Thetimescheduledevelopmentproce
ssmustbeoftenrepeatedbeforetheprojecttimeschedulewillbefinished.

Schedulecontrolisconcernedwith(a)influencingthefactorsthatcreateschedulechanges,
determiningthecurrentstatusoftheprojectschedule,
(b)determiningthattheprojectschedulehaschanged,and(c)managingtheactualchangesastheyoccur.Scheduleco
ntrolmustbasicallybeconnectedwiththeothercontrolprocedures.
 3.6 EstimationofProjectCost

Animportantpartofprojectmanagementistheprojectcostmanagement.Itcoversthescopesofcostestimationsand
budgeting.Moreover,costcontrolensuresthattheprojectstayswithinthefinancialborderswhicharedefinedintheb
udgetingprocess.

Althoughtheestimation,budgetingandcontrolofcostsaredefinedasthreeunaffiliatedprocessesintheory,theyares
tronglyrelatedandinteracting.Significantfortheprojectcostmanagementisitsconcentrationonthecostgenerated
bytheperformanceoftheprojectschedule.Butinadditiontothis,itshouldalsodealwiththeeffectsofthecostmanage
mentdecisionsontheprojectdeliverable,intheformoflife-
cyclecosting.Forexample,savingcostsinresearchanddevelopmentintheconstructionphasecoulddecreasetheq
ualityofthefinalgoodsandthereforeputtheprojectsobjectivesatarisk.

Atthispointithastobementionedthatinmostindustrialapplicationsofprojectmanagement,forexampletheindustr
ialmanufacturingofproducts,thefinancialperformanceoftheprojectsdeliverableitselfisnottakenintodetailedco
nsideration.Theresponsibilitiesforthesecalculationsaredistributedoutsidetheproject.Incontrast,inprojectsinth
efinancialsectorstheanalysingandforecastingoftheproductisafixedtaskoftheprojectcostmanagement.Sooneca
nseethatthewaytheprojectcostmanagementisdealtwithvariesaccordingtothedifferentrequirementsofeachproj
ect.
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Also,thewaysandpointsoftimemeasuringoftheprojectcostshavetobeadaptedtotheprojectscharacterandalsototh
especialneedsoftheindividualstakeholders.Thismeans,indetail,thataroughcostestimatehastobedonebeforethem
anagementcangiveitsblessingtotheproject.Inthenextstep,theprojectmanagersshouldmakeanew,moredetailedest
imate,whichshouldbereportedtoallprojectstakeholders,especiallytheprojectsponsor,andmorethaneverinthecase
ofadeviationfromthefirstroughestimate.Inthiscasethebudgetortheprojectsscopeoraimshavetobechanged.Such
acontrolofestimatesshouldbedonecontinuouslybygatheringmoreandmoredetails.

Thestakeholdersalsowillbeinterestedinthebasisvaluesonwhichtheassumptionwasmade.Theseshouldbedocum
entedinadetailedwayasafoundationforrecalculationsandtoensuretheabilitytofindpotentialfault.Becauseofthet
raditionalhighvalueoflabourcosts,thiscalculationshouldbewellstructuredandcoverallneedsofdirectandindirec
tlabour.

Theoverallestimateofallcostsshouldbeallocatedtothesingleprojecttasks,sothattheindividualmanagersperforma
ncecanbemeasuredonthisbaseline.

Inordertoestimatetheprojectcostandtogenerateanappropriatebudget,itisnecessarytohaveanoverviewofthediffe
rentkindsofcoststhatareimplementedinthenatureofprojects.Onecandefinethreemaintypesofcosts,whicharethe
directcosts,e.g.costsfordirectlabourormaterial,thedirectoverheads,whicharealreadyabithardertograsp,andlast,
thegeneralandadministrativeoverheadcosts.Thedirectcostsarethemostimportantcostsinprojectcostmanagemen
t.Becauseoftheircloselinktoindividualstheyareeasytoinfluence.Thiscanbeanadvantageinprojectplanningorinb
udgetproblems,but,andthisisthekeyfactor,theyhavetobepaidclosetothedateofprogresstoo.Acloserlookattheorg
anisationalresourcesthatareusedinprojectperformanceisgiventhroughthedirectoverheadcosts.
Theseareallthosecostswhichcanbelinkedtotheproduct,butarenotdirectlycountableandmustnotdirectlybepaid.B
utofcoursetheprojectcostmanagementhastobeartheminmindinthelongrun,toensureprofitandstayingwithinbud
get.Theyareallocatedtotheprojectcostsbythedirectcostdriver.Furthermore,anorganisationwhichexecutesaproje
ctalsohasoverheadcoststhatcannotbelinkeddirectlytotheproject,obviously,althoughthosecosts,forexamplecost
sformaintenance,seniormanagerssalaryoraccounting,havetobecoveredbytheprojectsduringthetimeofprojectp
erformance.Accordingtothedirectoverheadcosts,thegeneralandadministrativeoverheadcostsareallocatedbythe
costdriverofthedirectcosts.

Theprojectcostmanagementstaskincostestimatingistoexaminethedifferentpossibilitiestospendcostsinvariou
sprojectsteps,withtheaim
ofascertainingwhichopportunitygeneratesthegreatestsavings.Soitmaybethattheprojectteamisabletosavesome
costsinproductionorexecution,forexamplethroughhigherproductivityorimprovementsinproductdevelopment
,byspendingalargeramountofmoneyintheengineeringphase.Furthermore,thesteadyimprovementoftheprojectc
ostestimatesaccuracyisanotherchallengetheprojectcostmanagementteamhastomeet.Thisisdonebycontinousl
yrefiningthecalculatedvalues,bytakingmoreandmoredetailsintoconsiderationwhicharediscoveredduringthep
erformanceoftheproject.Atypicalexperienceinthefieldisthedesiretohavea90to95percentprobabilityofmeetin
gtimeandcostestimates.Theremainingplanninggapwilloccurduetounforeseeablechallengeslikechangereques
tsetc.
Inputsfortheestimationofthecostsofasingleactivityfromtheproject'sschedulearetheamountsofallresourceswhi
charerequiredtoperformthatactivity.Iftheperformingorganisationdoesnotprovidetheseskills,theyhavetobesup
pliedbytheprojectmanagementteam.

AnotherdocumentwhichprovidesnecessaryinformationtofacilitatethecreationofthecostestimateistheWorkBre
akdownStructure.Itdescribesalltasksthatareincludedintheprojectsprogressesandtheirrelationship.Onecanfin
dadetaileddescriptionofthesetasksandofallrequirementsoftheprojectsdeliverablesintheworkbreakdownstruct
ure.Ageneraloverviewabouttheexecution,monitoringandcontrollingoftheprojectisprovidedbytheprojectmana
gementplan.

Manyinputsarerequiredtocreateacomprehensiveprojectcostplan:

Firstly,theenvironmentalfactorshavetobestated.Theseareforexamplethemarketplaceconditions.Themarketpl
aceconditionsincludeavailableproductsandservicesonthemarketandbywhomtheyaresupplied.Internalorcom
mercialdatabasescanbeusedtoobtaingeneralinformationaboutmaterialandequipmentpricesorotherresourceco
stinformation.

Thesecondimportantfactoristheconsiderationofwell-
knowndataandpredeterminedapproaches.Theseareoftenprearrangedpoliciesinorganisations,whichdefinetheop
erationboundariesandtemplateswhichweredevelopedtoguidetheprojectmanagementteamsperformanceofnece
ssarytasks.Informationcollectedfrompriorprojectsisoftenagreathelpinestimatingtheresourcestheactualproject
willneed.Thisinformationcouldconsistofdocuments,recordsorsimplytheexperiencetheteamhashadinearlierproj
ects.Neverthelesstheprojectcostmanagershavetobearinmindtheprojectsuniquenessinenvironmentandapplicati
on,andthatthereforethecompleteacquisitionandutilisationofthesehistoricaldatawillnotnecessarilyleadtoaresult.
Thoseuniquefactorsarestatedintheprojectscopestatement,forexample,specialcontracts,legalimplications,techni
calissuesorconstraintsindeliverytimes,availableresourcesorcostlimitsofaproject.

Thethirdandmostimportantpartoftheprojectcostplanistheschedulemanagementplan.Thisdocument,containing
theactivityresourceestimatingandtheactivitydurationestimating,listsallactivitiesthatarenecessarytocompletet
heproject,theirdurationsandresourcesrequirements.Thisisthebasisuponwhichtocalculatetheprojectsdirectcos
ts.Dependingonthedurationoftheproject,theexpensesforfinancingandinterestrateswillvaryandwithincreasingd
urationtheaccuracyoftheestimateswilldecrease.

Lastbutnotleast,theprojectteamitselfhasagreatinfluenceontheprojectsperformancequalityandtheaccuracyofth
eestimation.Themoreexperiencetheteamhasinexecutingprojectsandthebettertheyworktogetherasateam,theles
stime,andthereforecosts,willberequiredfortheplanningphase.
Furthermorepeoplewhoconcentrateonlyononeprojectatatatimewilldotheirworkmoreeffectivelythanpeoplew
hohavetosplittheirattentionbetweenvariousprojects.Also,theindividualpersonalskillsoftheteammemberswill
havegreatinfluenceonthereliabilityoftheirestimations.
 Manymanagersresponsibleforcertaintasksintheprojectsprogresstendtoextendtheirestimationsforacertainperc
entage,toensurethattheywillstaywithinbudgetorwillevenbeunderbudget.Thisbehaviouriscalledpadding.Sot
heprojectcostmanagementshouldknowabouttheseinclinationsandhandlethembynegotiationsorbyshorteningth
ebudgets.

Anoftenusedtime,costandresourceestimatemethod,especiallyinsoftware-
engineeringprojects,isthesocalledfunctionpointmethod.Itusesweightedvariables,calledfunctionpoints,forthe
mainrequirements,forexampleinputs,outputsorinterfaces.Everysingleitemoftheseitemsismultipliedwithacom
plexityfactorthatgivesavaluetothecomplexityofperformingorprogrammingtheitem.Thefactorsaredefinedonth
ebasisoftheinformationcollectedfrompriorcomparableprojects.Thetotalsumofthefunctionspointsmultipliedby
thecomplexityfactorsdescribestheworkloadoftheproject.

Now,theamountoffunctionpointsthatonepersoncandischargeinonemonthissetasoneperson-month.

Withafixednumberofpersonsworkingontheproject,theprojectmanagercancalculatehowmanymonthswillbethep
rojectsdurationandtherefore,bymultiplyingthenumberofmonthsbytheworkers'salaries,theestimatedlabourcost
s.Ofcoursethisapproachworkstheotherwayaroundto.Iftheprojectdurationisset,oneisabletocalculatehowmanyst
affmembersareneededtoperformtheproject.

Theestimatesaccuracyofcoursedependsonthereliabilityandthecomparabilityofthehistoricaldatatheestimateis
basedupon.
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Allthesetop-
downestimateshaveoneweakpointincommon:Theyhaveonlyscantregardtothedetailedworkstructures,basetheire
stimatesonexperienceandgivelittleduetoveryspecificindividualitiesincomparisonwithpriororstandardprojects.

Thereforeitisadvisabletousethetop-
downestimatingonlyforroughestimatesintheinitialphaseofaproject.Togeneratemoredetailedandaccurateestim
ates,thebottom-upmethodsareusedinlaterphasesoftheproject,whenmorespecifiedinformationisavailable.

Althoughthebottom-
upestimationscanclaimtobeveryaccurateinmeetingtheprojectsrequirements,experiencetellsusthattheactualtot
alcosttendstoexceedtheestimations.

Thereforemanycompaniesmultiplytheestimationsbyasecurityfactoraround120percent.
Thereasonsforthisinaccuracycanbetracedtotheestimationprocessitself(maybethetopmanagerpushedtheestim
atesdown)andthechangeablepredictabilityofthefuture.

Thefactorthatcausesthegreatestdifferencesbetweenestimationandrealityisthattheestimatesofthetasksaremos
tlydoneindependentlyfromothertasks.Butofcoursealltasksbelongingtotheproject'sperformancearelinkedand
thereforedependentoneachother.Thetimeandcoststhatarenecessarytoco-
ordinatetheinteractionsoftheindividualprogressesincreaseexponentiallythemorepeopleandthemoretasksarei
ntegratedintotheproject,butevensotheyareoftennottakenintoconsideration.

Furthermore,aretheestimationsbasedonnormalconditions?
Itisassumedthateverythingrunsthewayitshouldrun.Theproblemis,mostlynormalconditionsarenotthecaseinreal
ity.Bottlenecksinmaterialsupplyorrestructuresinhumanresourcesorsimplyfailuresinperformancewillcropupan
daffectthetimeandcostschedule.Thesesituationscanbetakenintoconsiderationincreatingthecostestimationsas
knownunknowns,buttheirextentandtheireffectsarestillunquantifiable.

3.7 Conclusion

Ittakesmorethanjustbeingagoodmanagertodealwiththeenvironmentandallotherimportantissueswhichmayco
mealongwithaprojectintheinitiationandplanningprocess.Throughsufficientattention,emphasisoninvolvedpeo
ple,tailoredtoolsandtechniquesandexperiencegainedfrompriorprojects,onetransformshimorherselfintoagoodp
rojectmanager.Ofcoursethiscanbealearningprocesswhichtakesawholeworkingcareer.

Atthebeginningthereisthecomplexprocessofidentifyingandprioritisingthepeoplewhoareinvolvedinoraffectedby
theproject.Thisisthefirstbenchmarkfortheprojectmanager.Onehastoseetheprojectfromdifferentpointsofviewto
getanideaofwhattheexpectationsanddesiresofparticularstakeholderscouldbe.Amutualexchangeoftheseexpectat
ionsandsufficientlytailoredcommunicationchannelsarerequiredtosetthebasisofsuccess.Additionalformaldocum
entsconcerningtheprojectareanadvantageandareanecessitysothatstakeholdersareabletoreverttostatedfactsshoul
dsomeissuesbecomeunclear.Onecanseethatacombinationofconservativeapproacheslikeformalissuestosetthefra
meworkandcreativeandopen-
mindedapproachestomanagethestakeholdersiscompulsorytofinishaninitiationprocesswhichisthekeyforasucces
sfulstarttotheplanningprocess.
 Theplanningprocesscomprisesissueslikeprojectscope,workbreak-
downstructure,andestimationmethodsfortimeandcostasmaintopics.So.asonecansee,thereisawiderangeofstepsi
nvolvedinplanningaproject.Forsuchalargenumberoftasksatahighlevelofcomplexityitisimportanttouseaguideli
ne.Tailoredapproachesforeachtaskandcompanywillfunctionbestbutoftenthereisalackofresourcesforsuchaperfe
ctapproach.Theestimationmethodsaredividedintotwomajorapproaches,thetop-downandthebottom-
upapproach.Oftenthequestionariseswhether,inthegeneralview,thetop-
downisthebestapproachorexactlytheotherwayaround.Probablybothapproachesarethecorrect.Atthebeginningof
aprojectitisfavourabletosetaframeworkandcreatethebigpictureusingthetop-
downapproach.Later,shortandquickdecisionsbasedonexpertisearerequiredandhereabottom-
upapproachismoresuitable.

Whattheauthorwantsthereadertorealiseisthatcurrentandfutureprojectmanagersshouldexpendmajoreffortsinlis
teningtopeoplewhoareintheprojectenvironmentandtrytoretainthebigpictureofaproject.
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ProjectManageme ProjectPla
nt n

4 ProjectPlan

4.1 Introduction

Projectworkingisthefulfilmentofataskundertheconstantsoftimepressure,sotimeisanextremelyimportantmeasu
rementforprojectefficiency.Becauseofallthesechallengesinexecutingprojectsitisimportanttohaveaprojectplan.
Aprojectplanprovidesagreatdealofinformationforeverystakeholderwhoseworkisrelatedtotheproject.Aproject
planinthebeginningisasimpleplanningtool,howeverwhileworkingontheprojectitwillbecomeoneofthemostim
portantcontrolinstrumentsandafterendingtheprojectitisameasurementofwhethertheprojecthasreacheditsgoal.
Thischapterwillexplainhowtodevelopaprojectplan,abouttheterminologyinprojectplansandwhatdifferentappr
oachestoprojectplansareusedinpractice.Thedifferentapproachestoprojectnetworkswillbeexplained:Pert,Crit
icalPathMethod,ActivityonArrow,ActivityonNodeNetworkandGanttCharts.Thesedifferentmethodsand
approacheshavebeenchosenbecausetheyallareusedinprojects,andmanyfirmshavedefinedonemethodasastand
ardwithintheirfirm.

4.2 DevelopingaProjectNetworkPlan

Aprojectnetworkisthebasisforschedulingbudget,equipment,labour,communications,theestimatedtimeconsu
mptionandthestartandthefinishdates.Tostructureaprojectnetworkanddefineastandardwhichmanypeopleareab
letouse,thefollowingterminologywasdefinedforuseinprojectnetworks.Figure4-
1showsanexampleofaprojectnetworkplan.

Anactivityisanelementoftheprojectnetwork;activitiesaretaskswhicharedefinedtocompleteandtomeetthegoals
oftheproject.Anactivityneedstimetobecompleted.Ithasresourceslikepersonnel,budget,spaceand,inmostinstan
ces,relationships.Anactivityinaprojectnetworkshowswhichtaskshavetobeperformedinordertoproceed,whichr
esourcesareneededandhowmanyofthem.Asthenameimplies,aparallelactivityisataskwhichisprocessedatthesa
metime,paralleltoothertasks.
Whenusingparallelactivities,theconsumptionofresourceswillrisebecausetheyarerequiredatthesametime.

Amergeactivityisoneactivitywhichfollowsonmoretasks;parallelactivitiescometogetherinthisactivity.Asuccee
dingactivitycanonlybestartedwhenallprecedingprocessesareready.

Aneventissomethingwhichdoesntconsumeprojecttime;aneventisgenerallyadate.Todefinethestartdateoradat
ewhensomethingisdeliveredisanevent.Aneventcanalsobethekick-offortheendingandmanydatesbetween.

Apathistheconnectionbetweenthedependingactivities.Ithasnodurationandisthevisualisingoftherelationshipbe
tweentheactivities.Thecriticalpathistheshortestdurationoftheproject.Itisonthispaththatthemostactivitieswitho
utbufferareplacedanditisextremelyimportanttoknowatwhichpointonthethecriticalpaththeprojectisbecauseifan
activityonthecriticalpathisdelayed,thatdelaywillalterthetotalprojectduration.
Thecriticalpathisprobablythemostimportantoutcomeafterdrawingaprojectnetworkplan.Everyprojecthassuch
apathandtheworkflowofallcriticaltaskssumuptothecritical(shortest)durationtime.Allothertaskswhicharenoton
thecriticalpathdonothave
animpactontheproject.Theycouldcauseadelaywhichwillhavenoimpactonthefinish,orinotherwords:thatdelayw
ouldbehighlyunlikelytobesolongastoaffectthecriticalpath.Withtheknowledgeaboutthecriticalpaththeprojectte
amcanactandreact.

Figure4-1:ExampleofaProjectNetworkPlan

Thefollowingbasicrulesshouldbeappliedwhendevelopingaprojectnetworkplan:

Networksflowtypicallyfromlefttoright.Thatisamustbecauseonlyacommonapproachensuresthattheprojecttea
mknowshowtoreadthenetwork,developedoutoftheWesternwritinglogic.

Anactivitycanonlybeusedonce:itisnotallowedtomakeloops,whereanactivityhastobefulfilledseveraltimes.Ifth
esametaskhastoberepeated,anewactivityhastobedrawnup.Anactivitycannotbeginuntilallprecedingconnecteda
ctivitieshavebeencompleted.Thisisratherlogicalasitisnotpossibletobeginsomethinguntiltheprecedingtasksha
vebeencompleted.Thisfacthastobeshowninthenetwork.

Arrowsonnetworksindicateprecedenceandflow;theycancross.Toshowtheflowoftheprocessandtoshowwhichta
skshavetobedone,arrowsareused.

Eachactivityhastohaveauniqueidentificationnumber:numbershelptosupportorientationinthenetwork.Thenum
beroftheactivityshowstheworkflow.Withnumberingofactivitiesitiseasytofollowthepaththroughaproject.Norm
allythenumberingofactivitiesshouldbedoneinanascendingorder,thatmeansthestartactivityshouldhavethelowes
tnumberandthelastactivityshouldhavethehighestnumber.Eachactivityneedsauniqueidentificationcode;mostco
mputerprogramsacceptnumericandalphabeticcodesoracombinationofthetwo.Theplannerorprojectmanagersho
uldleavegapsbetweennumbers(5,10,15,
),sohecanaddactivitieslater.Thisisnecessarybecauseitsnearlyimpossibletodrawaperfectprojectnetworkfrom
thebeginning.Mosttimesactivitiesareforgottenoractivitiesmustbedividedintosmallerpieces.Weshowedthatsitua
tionintheexampleabove.
Cleartaskshavetobeusedtoshowthebeginningandtheendingoftheproject.Theprojectnetworkisaplanwhichhast
osupporttheworkflowintheproject.Everybodyhastoknowwhathispartandtaskintheprojectis.Toshowthebeginn
ingdateisextremelyimportantbecauseitshowstheprojectteammembersthattheyhavetomeetthegoaloftheproject
withthebeginningofanewactivity.Itisalsoextremelyimportanttodefinetheenddate.Thedefiningofthebeginning
andendingtaskshastodowiththecontrollingoftheprojectandthedefinitionofdates,whichhavetomeetwhilethepro
jectisproceeding.

Milestonesareactivitieswhichhaveaspecialtaskintheproject.Theyarecontrolpointsoftheworkwhichisdoneupth
atdate.Themilestonesgivetheprojectteammembersandespeciallytheprojectmanagertheabilitytomeasurethewo
rkflowoftheprojectwhileworkingonit.Thishastheadvantagethattheycancontroltheprojectwhileworkingonit,th
usenablingthemtoreactwhensomethinggoeswrongandtodosomethingintheprecedingprojecttimesoastostillbea
bletomeetthegoaloftheprojectwithoutmissingthefinalday.Milestonesaretheimportantcontroltoolinusingproje
ctnetworks.

If-than-
else(conditional)statementsarenottobeusedinprojectnetworks.Thisruleisratherapsychologicalrule;condition
alstatementscanreflectpossibleinsecurityandthereaderoftheprojectnetworkmaygetthefeelingthatthetaskisnot
manageable.Toshowthattheprojectiswellorganizedandwillbesuccessfulitisimportanttousesentenceswhichsh
owthattheactivitywillbesuccessful.

Theworkbreakdownstructureisthefirststepinsettingupaprojectnetwork.Thesecondstepistoenhancetheactivitie
swithinformation.Theresourcesnecessarytocompleteanactivityarethemostimportant:needsoflabour,equipmen
t,time,costs,spaceetc.Itisalsoimportanttoascertainwhattherelationshipsandthedependenciesoftheactivitiesare.
Thethirdstepindevelopingtheprojectplancomeswiththeimplementationoftheinformationintotheprojectnetwor
kplan.

4.3 Activity-On-NodeNetworkTechniques

Easytohandlesoftwarewithagoodgraphicaloutputandtherisingavailabilityofpersonalcomputersincreasedthew
orkwithso-calledactivity-on-
node(AON)networkplans.Thefollowingfiguresandexplanationsoutlinethebasicprinciplesusedfordesigningan
AONnetwork:

Anactivityisrepresentedbyanodewhichcantakedifferentformsbutisnormallyrepresentedasarectangularbox.Th
eactivitiesareconnectedbyarrowsbetweentheseboxes.Thearrowsrepresentthedependenciesbetweenthediffere
ntactivitiesandthespecificsequenceinwhichtheestimatedtasksmustbeaccomplished.Thelengthandtheslopeoft
hesearrowsdonotprovideanyinformationaboutoperationalhours,workloadetc.,theyjustimprovethereadability
ofAON-
plansbyimprovingthevisualclarityofthedependenciesbetweentheactivitiesofaproject.Toestablishactivitiesinto
aprojecttheprojectmanageranditsteamhavetodefinetherelationshipsofeachactivityintheprojectcontext.Thisca
nbedonebyansweringthefollowingthreequestionsforeachsingletask:

- Whichactivitiesmustbefinishedbeforestartingthisone?
- Whichactivitiescandirectlystartafterfinishingthisone?
- Whichactivitiescanbedoneinparalleltothisone?
 Afteransweringthesequestionstheprojectteamknowstheso-
calledpredecessor,successorandparallelrelationshipsforeachtaskthathastobedone.Gatheringthisinformationis
essentialforthedevelopmentofagraphicflowchartfortheprojectactivitiesinordertomakeallthesedependenciesb
etweenthedifferentactivitiesvisible.

Figure4-2:AONExampleA

Figure4-
2showsastandardnetworkplan.AlltasksaresuccessivelydoneandtheprojectmanagerknowsthatactivityBcannotst
artuntilAisdone,andthatactivityChastowaitfortaskB.InthiscasetaskAisthepredecessoractivityfortaskBandactiv
ityAandBarethepredecessortasksforactivityC.

Figure4-3:AONExampleB
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he
International
reewor
or s
Figure4-
3showsthattheactivitiesYandZhavetowaituntilthetaskXisready.InthiscaseactivityYandactivityZcanbedonein
parallel.Thegraphicshowsthatitispossibletorunthesetwoactivitiesatthesametimeinordertosavetime,forexampl
e.Thefinaldecisionastohowtoorganizethesetasksismadebytheprojectmanager.Sometimestheavailabilityofres
ourcesleadsaprojectmanagertoorganizeactivitiesinarowinsteadofusingthechanceofworkinginparallel.

Aprojectmanagerwhoorganisestheactivitiesforhousebuilding,forexample,hasoftentodealwithlimitationsontheavail
abilityofconstructionworkers.Hehastodecidewhethere.g.thefoundationforthehouseorthegarageisdonefirst,although
thesetaskscouldbedoneatthesametime.

ThenumberofarrowsrunningoutofanodeinanAON-
Planindicateshowmanyactivitiesareimmediatelyfollowing.TheactivityXinfigure4-
3iscalledburstactivitybecausemorethanonearrowburstsfromitsnode.

Figure4-4:AONExampleC

Figure4-4showsanotherpossiblesituationinanAON-
network.TaskJ,KandLcanbedoneinparallelifenoughresourcesareavailableandnootherconstraintsareexisting.A
ctivityMhastowaitfortaskJ,KandLtobedoneuntilitcanbestarted.Forexample,aroofercannotstarthisworkforahou
seuntilthefoundationsandthewallsareready.

Inthiscase,activityMiscalledamergeactivitybecausemorethanonetaskmustbecompletedbeforeitcanstart.Infigur
e4-
5activitiesXandYcanbedoneinparallel.Also,taskZandtaskAcantakeplaceatthesametimebuthavetowaituntilthep
redecessoractivitiesXandYhavebeendone.

Figure4-5:AONExampleD

Knowingthisbasicinformation,itisimportanttofollowthenextexampleindevelopinganAON-
network.Itisalsoimportanttoremembertheessentialrulesnamedbefore.
Arrowscancrossovereachotherlikeinfigure4-
4;thelengthsofthearrowsmakenostatementabouttaskduration.Itisimportanttocreatealogicalandaccurateinclusi
onofallprojectactivitiesincludingalltheirdependenciesandtimeestimations.Table4-
1containsinformationaboutsimplifiedactivitiesthathavetobedonetoinstallanewsuspensionbridge.

Activity Description PrecedingActivity

A Toapplyforapproval None

B Installationoffundaments A

C Fabricatesteelelements A

D Fabricatetowerelements A

E Fabricatesteelropes A

Fabricatesupportin
F A
gelements

Transportalltogetherfrom
G C,D,E,F
plantstobuildingsite

Erectionofthesuspension
H B,G
bridge

I Finetuning H

J Testing I

Table4-1:ActivityList

ThefirststepsinbuildinganAONnetworkbasedontheinformationgiveninTable4-1areshowninfigure4-
6.TaskAisthefirstnodethatisdrawn,becauseithasnoprecedingactivity.ActivitiesB,C,D,EandFaredirectlydepen
dentupontaskA.Theprojectteammembershavetowaituntiltheyobtainapprovalforbuildingsuchasuspensionbri
dgebeforetheystarttheinstallationofthefoundationandfabricationofallunitsneeded.Eachoftheprecedingactiviti
esisconnectedbyanarrowwithtaskA,becausetheremainingsucceedingactivitiescanbedoneatthesametimewhe
ntaskAisready.Figure4-
6showsthecompletenetworkofourexampleproject.Theprojectmanagercanfindallactivitiesandtheirdependenc
iesingraphicalway.
 Figure4-6:AONExampleSuspensionBridge

4.4 TimeCalculations

DevelopinganAON-
networkisthefirststepincalculatingthestartandfinishtimesoftheactivities.Thetimesestimatedforeachactivitynee
darealisticbasetocreateareliableAONnetwork.

Thetimesestimatedforthesuspensionbridgeexample(Table4-
1)aresimplifiedandprovideonlythebasisforexplainingtherulesforcalculationsinAON-
networks.Aprojectmanageronlyneedstomakesomeeasytohandlecomputationstocreatetheso-
calledforwardpassearliesttimesandbackwardpasslatesttimes.

Theforwardpassquestionstobeansweredare:

I. Howsooncantheactivitybestarted?(EarlyStartES)
II. Howsooncantheactivitybefinished?(EarlyFinishEF)
III. Howsooncantheprojectbefinished?(ExpectedTimeET)
Thebackwardpassquestionstobeansweredare:

I. Howlatecantheactivitybestarted?(latestartLS)
II. Howlatecantheactivitybefinished?(latefinishLF)
III. Whichactivitiesrepresentthecriticalpath(CP)?
(Thisisthelongestpathinthenetworkwhich,whendelayed,willdelaytheproject.)
IV. Howlongcantheactivitybedelayed?(slackorfloatSL)

4.4.1 ForwardPassEarliestTimes

Theforwardpassstartswiththefirstprojectactivityanddetectseachpath(chainofsequentialactivities)throughthen
etworkuntilthelastprojectactivityisreached.Asthepathistracedtheactivitytimesareadded.Thelongestpathdenot
estheprojectcompletiontimefortheplanandiscalledthecriticalpath.

Precedi Durati
Activity Description
ngActi on(ind
vity ays)
A Toapplyforapproval None 5

B Installationoffoundation A 10

C Fabricatesteelelements A 10

D Fabricatetowerelements A 20

E Fabricatesteelropes A 15

F Fabricatesupportingelements A 10

Transportalltogetherfromplantstob
G C,D,E,F 5
uildingsite

H Erectionofthesuspensionbridge B,G 10

I FineTuning H 5

J Testing I 5

Table4-2:TimeEstimation

Table4-
2providesinformationaboutthedurationofeachactivitythathastobedonetocompletethewindenergyplantexamp
leproject.