PM All 5 Units

BA5028 PROJECT MANAGEMENT
Unit I
INTRODUCTION TO PROJECT MANAGEMENT
 The world as a whole spends nearly $10 trillion of its $40.7 trillion gross product on
projects of all kinds.
 More than sixteen million people regard project management as their profession; on
average, a project manager earns more than $82,000 per year.*
 The total cost of project overruns alone is put at several billions of dollars.
A project is “a temporary endeavor undertaken to accomplish a unique product or service”

Unique process consisting of a set of inter-related jobs or activities governed by precedence
relationships, undertaken to achieve an objective conforming to specific requirements, including
constraints of time, cost, quality and resources
A project is a temporary endeavor, having a defined beginning and end (usually constrained by
date, but can be by funding or deliverables), undertaken to meet unique goals and objectives,
usually to bring about beneficial change or added value. The temporary nature of projects stands
in contrast to business as usual (or operations), which are repetitive, permanent or semi-
permanent functional work to produce products or services.
Every project has two phases basically; the first is preparation and construction, and the second,
its operation. Project planning deals with specified tasks, operations or activities which must be
performed to achieved the project goals. Implementation of projects needs resources or inputs.
Every project converts the given inputs into outputs through a process of implementation
Project: “an organized undertaking”
– MBA Thesis Project
– Finding a job
– Building a house
– Buying a house
– Design and manufacture a car (Large Program)
– Put a man on the moon (Huge Program)
Features of a Project
 unique purpose (CMRL, computerized reservation)
 Temporary, non-repetitive, one time effort
 Defined start and finish (???)
 Consumes time and resources, often from various areas
 Coordination needed between individuals, groups and organizations
 involve uncertainty (80% of project overruns)
 Constant pressure of conformance to time/cost/performance goals
Volume vs Variety and Project
St. JOSEPH’S COLLEGE OF ENGINEERING Page 1

Triple constraints of project management

Scope goals: What is the project trying to accomplish?
Time goals: How long should it take to complete?
Cost goals: What should it cost?
What is project management?

• Project management is “the application of knowledge, skills, tools, and techniques to
project activities in order to meet project requirements” *
• The art of organising, leading, reporting and completing a project through people
Goal of project management

 Setting clear objectives,
 performance and quality,
 budget,
 time of completion.
Project management framework

Project stakeholders
• Stakeholders are the people involved in or affected by project activities
• Stakeholders include
– the project sponsor and project team, support staff, customers, users, suppliers,
opponents to the project
Project Life cycle
The Project Life Cycle refers to a series of activities which are necessary to fulfill project goals
or objectives. Projects vary in size and complexity, but, no matter how large or small, all projects
can be mapped to the following life cycle structure:
 Project Initiation: In this stage, the specifications of the project are defined along with the
clear cut project objectives. Project teams are formed and their major responsibilities are
assigned. More specifically, this stage defines the goals, specifications, tasks and
responsibilities.
 Project Planning: In this stage, the effort level increases and plans are developed to
determine what the project will entail, when it will be scheduled, whom it will benefit,
what quality level should be maintained and what the budget will be. More specifically,
this stage will include planning schedules, budgets, resources, risks and staffing.
 Scope of work & network development
 Basic scheduling
 Time cost tradeoffs
 Resource considerations
 Project Implementation (Project Execution): In this stage, a major portion of the project
work takes place. The physical product is produced (For eg., house, bridge, software
program, report, etc). Time, cost and specification measures are used for control. More
specifically, this stage will take care of status reports, changes, quality and forecasts.
 Project completion and audit (Project Closure): This is the final stage which includes two
activities, viz., delivering the outcome of the project to the customer and redeploying the
project resources. Delivery of the project might include customer training and
transferring documents. Redeployment usually involves releasing project equipment/
materials to other projects and finding new assignments for team members. More
specially, this stage will undertake activities relating to training the customer, transfer of
documents, releasing resources, releasing staff and learning lessons.

Project Initiation
 Project Identification
 Receptive to new ideas
 Vision for future
 Long term objectives
 SWOT analysis
 Preliminary project analysis
 Project Appraisal
 Market Appraisal
 Technical Appraisal
 Financial Appraisal
 Economic Appraisal
 Ecological Appraisal
 Feasibility report considers all these issues prior to project adoption
 Project Selection
 Investment
 Rate of return
 Likely profit
 Payback period
 Risk
 Similarity of existing business
 Expected life
 Flexibility
 Competition

 Environmental impact
Market appraisal
 Aggregate future demand
 Market share
 Current and future competition
 Location and accessibility of consumers
 Technological scenario/obsolescence
 Future pricing options
Technical appraisal
 Engineering aspect
 Location
 Size
 Production process
Financial appraisal
 Cash flow over time
 Profitability
 Breakeven point
 Net Present Value
 Internal Rate of Return
 Payback period
 Risk
Economic appraisal
 Cost benefit analysis
 Distribution of income
 Level of savings and investment
 Self-sufficiency, employment and social order
Ecological appraisal
 Environment damage
 Air
 Water
 Noise, etc.
 Restoration measures and cost
Project Planning
 Forming a project team with a leader
 Defining scope and terms of reference
 Work breakdown structure
 Basic scheduling
 Time cost tradeoff
 Resource considerations
Basic scheduling
 Project representation as a network
 Estimation of activity durations
 Forward and backward pass

 Determination of activity floats

 Critical path for selective control and minimum project duration
Time cost tradeoffs
 Normal and crash times
 Linear/non-linear/discontinuous/discrete time-cost relationships
 Total project (direct and indirect cost)
Resource leveling is the process of distributing the resources used in a project with the aim of
completing the project with the minimum possible utilization of the resource.
 Shifting the slack jobs in the project schedule to obtain balanced resource profile
 Project duration kept fixed
Resource allocation:
 Minimum duration schedule satisfying the limited resource availability
 Delaying some critical jobs to keep the resource profile within available limits
Project Implementation
 Organizing team and work
 Clear cost/time/performance goals
 Project monitoring in terms of cost, value of work and time
 Project control
Project Completion
 Disbanding of team
 Handing over of project to user
 Accounting and report writing
 Learning from experience
Advantages of using formal project management

• Better control of financial, physical, and human resources
• Improved customer relations
• Shorter development times
• Lower costs
• Higher quality and increased reliability
• Higher profit margins
• Improved productivity
• Better internal coordination
• Higher worker morale
Problems in project execution

 Organizational/behavioural
 Financial
 Legal
 Engineering
 Construction/installation
 Site evacuation/development
 Labour unrest/unavailability
 Non-availability of resources
 Weather conditions

Project Selection
 Project selection is the process of evaluating individual projects or groups of projects,
 and then choosing to implement some set of them so that the objectives of the parent
organization will be achieved.
 The proper choice of investment projects is crucial to the long-run survival of every firm.
 Daily we witness the results of both good and bad investment choices.
A Multi-Criteria Analysis (MCA) is when a project is evaluated by more than just monetary
terms. It is a form of appraisal that, in addition to monetary impacts, measures variable such as
material costs, time savings and project sustainability as well as the social and environmental
impacts that may be quantified but not so easily valued.
Model criteria
 Realism
 Capability
 Flexibility
 Ease of use
 Cost
 Easy computerization
Types of project selection models:
 Nonnumeric models
 Numeric models
Non-numeric Models:
Models that do not return a numeric value for a project to be compared with other projects. These
are really not “models” but rather justifications for projects. Just because they are not true
models does not make them all “bad”
Types
 Sacred Cow
– A project, often suggested by the top management, that has taken on a life of its
own
 Operating Necessity
– A project that is required in order to protect lives or property or to keep the
company in operation
 Competitive Necessity
– A project that is required in order to maintain the company’s position in the
marketplace
 Product Line Extension
A project to develop and distribute new products judged on the degree to
which it fits the firm’s existing product line, fills a gap, strengthens a weak link, or extends the
line in a new, desirable direction.
 Comparative Benefit
– Projects are subjectively rank ordered based on their perceived benefit to the
company
Numeric Models:
Models that return a numeric value for a project that can be easily compared with other projects
 Two major categories:
– Profit/profitability, Scoring

Profit/profitability Models
 A large majority of all firms using project evaluation and selection models use
profitability as the sole measure of acceptability.
 Models that look at costs and revenues
– Payback period
– Discounted cash flow (NPV)
– Internal rate of return (IRR)
– Profitability index
 NPV and IRR are the more common methods
Scoring Models:
In an attempt to overcome some of the disadvantages of profitability models, particularly their
focus on a single decision criterion, a number of evaluation/selection models that use multiple
criteria to evaluate a project have been developed. Such models vary widely in their complexity
and information requirements. The examples discussed illustrate some of the different types of
numeric scoring models.
 Unweighted 0–1 factor model
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Unweighted 0-1 Factor Model

 Factors selected
– Listed on a preprinted form
 Raters score the project on each factor
 Each project gets a total score
 Main advantage is that the model uses multiple criteria
 Major disadvantages are that it assumes all criteria are of equal importance
Unweighted Factor Scoring Model

 Replaces X’s with factor score
– Typically a 1-5 scale
 Column of scores is summed
 Projects with high scores are selected
Weighted Factor Model
 Each factor is weighted the same
 Less important factors are weighted the same as important ones
 Easy to compute
 Just total or average the scores
 Each factor is weighted relative to its importance

 Weighting allows important factors to stand out

 A good way to include nonnumeric data in the analysis
 Factors need to sum to one
 All weights must be set up, so higher values mean more desirable
 Small differences in totals are not meaningful
Advantages of scoring models

 Allow multiple criteria
 Structurally simple
 Direct reflection of managerial policy
 Easily altered
 Allow for more important factors
 Allow easy sensitivity analysis
Disadvantages of scoring models
 Relative measure
 Linear in form
 Can have large number of criteria
 Unweighted models assume equal importance
Project Portfolio Management

Project Portfolio Management System (PPM) is a term used by project managers and project
management (PM) organizations, (or PMO’s), to describe methods for analyzing and collectively
managing a group of current or proposed projects based on numerous key characteristics.
The fundamental objective of PPM is to determine the optimal mix and sequencing of proposed
projects to best achieve the organization’s overall goals - typically expressed in terms of hard
economic measures, business strategy goals, or technical strategy goals - while honoring
constraints imposed by management or external real-world factors.
Typical attributes of projects being analyzed in a PPM process include each project’s total
expected cost, consumption of scarce resources (human or otherwise) expected timeline and
schedule of investment, expected nature, magnitude and timing of benefits to be realized, and
relationship or interdependencies with other projects in the portfolio.
Project Portfolio Process (PPP)

The project portfolio management (PPM) process is an ongoing enterprise activity that ensures
projects across the portfolio are aligned with overall organizational strategy and ROI
expectations. Without an effective PPM process, enterprises can quickly find themselves
“chasing” projects rather keeping up, or staying ahead of them. This behavior ultimately
undermines the organization’s long-term success and survival.
Purpose
 Identify nonprojects
 Prioritize list of projects
 Limit number of projects
 Identify the real options for each project
 Identify projects with good fit
 Identify co-dependent projects
 Eliminate risky projects
 Eliminate projects that skip the formal selection process
 Keep from overloading the organization
 To balance the resources with needs
 To balance returns
 To balance short-, medium-, and long-term returns
PPP process:
1. Establish a project council
 Senior management
 The project managers of major projects
 The head of the Project Management Office
 Particularly relevant general managers
 Those who can identify key opportunities and risks facing the organization
 Anyone who can derail the PPP later on
2. Identify project categories and criteria
 Derivate projects
 Platform projects
 Breakthrough projects
 R&D projects
3. Collect project data
 Assemble the data
 Document assumptions
 Screen out weaker projects
 The fewer projects that need to be compared and analyzed, the easier the work of the
council
4. Assess resource availability
 Assess both internal and external resources
 Assess labor conservatively
 Timing is particularly important
5. Reduce the project and criteria set
 Organization’s goals
 Have competence

 Market for offering

 How risky the project is
 Potential partner
 Right resources
 Good fit
6. Prioritize the projects within categories
 Apply the scores and criterion weights
 Consider in terms of benefits first and resource costs second
 Summarize the returns from the projects
7. Select the projects to be funded and held in reserve
 Determine the mix of projects across the categories
 Leave some resources free for new opportunities
 Allocate the categorized projects in rank order
8. Implement the process
 Communicate results
 Repeat regularly
 Improve process
Project Manager
The Functional Manager vs. The Project Manager

Functional managers are usually specialists, analytically oriented and they know the details of
each operation for which they are responsible
 Analytical Approach
 Direct, technical supervisor
Project managers must be generalists that can oversee many functional areas and have the
ability to put the pieces of a task together to form a coherent whole
 Systems Approach
 Facilitator and generalist

Three major questions face the project manager:

1. What needs to be done?
2. When must it be done?
3. How are the resources required to do this jobgoing to be obtained?
Project manager is responsible for organizing, staffing, budgeting, directing, planning, and
controlling the project.
Responsibility to the Parent Organization
 Conservation of resources
 Timely and accurate project communications
 Careful, competent management of the project
 Protect the firm from high risk
 Accurate reporting of project status with regard to budget and schedule
Responsibility to the Client
 Preserve integrity of project and client
 Resolve conflict among interested parties
 Ensure performance, budgets, and deadlines are met
Responsibility to project team members
 Fairness, respect, honesty
 Concern for members’ future after project
PM Career Paths:
Most Project Managers get their training in one or more of three ways:
1. On-the-job
2. Project management seminars and workshops
3. Active participation in the programs of the local chapters of the Project
Management Institute
4. Formal education in degreed programs
 Experience as a project manager serves to teach the importance of:
1. An organized plan for reaching an objective
2. Negotiation with one’s co-workers
3. Follow through
4. Sensitivity to the political realities of organizational life
 The career path often starts with participation in small projects, and later in larger
projects, until the person is given control over small, then larger projects

A number of demands are critical to the management of projects:

1. Acquiring adequate resources
 Resources initially budgeted for projects are frequently insufficient
 Sometimes resource trade-offs are required
 Subcontracting is an option
 Project and functional managers perceive availability of resources to be
strictly limited
 Competition for resources often turns into “win-lose” propositions
between project and functional managers
2. Acquiring and motivating personnel
 A major problem for the project manager is that most people required for a
project must be “borrowed”
 At times, functional managers may become jealous if they perceive a
project as more glamorous than their own functional area
 Typically, the functional manager retains control of personnel evaluation,
salary, and promotion for those people lent out to projects
 Because the functional manager controls pay and promotion, the project
manager cannot promise much beyond the challenge of the work itself
3. Dealing with obstacles
One characteristic of any project is its uniqueness and with that come a series of crises:
 At the inception of a project, the “fires” tend to be associated with resources
 As a project nears completion, obstacles tend to be clustered around two
issues:
 1. Last minute schedule and technical changes
 2. Uncertainty surrounding what happens to members of the project
team when the project is completed
4. Making project goal trade offs
The project manager must make trade offs between the project goals of cost, time and
performance
 During the design or formation stage of the project life cycle, there is no
significant difference in the importance project managers place on the three
goals
 Schedule is the primary goal during the build up stage, being more important
than performance, which is in turn significantly more important than cost
 During the final stage, phaseout, performance is significantly more important
than cost

5. Dealing with failure and the risk and fear of failure

It is difficult, at times, to distinguish between project failure, partial failure, and success.
What appears to be a failure at one point in the life of a project may look like a
success at another
By dividing all projects into two general categories, interesting differences in the nature and
timing of perceived difficulties can be found. Two general types of projects:
Type 1 - these projects are generally well-understood, routine construction projects
 Appear simple at the beginning of the project
 Rarely fail because they are late or over budget, though commonly are
both
 They fail because they are not organized to handle unexpected crises and
deviations from the plan
 These projects often lack the appropriate technical expertise to handle
such crises
Type 2 - these are not well understood, and there may be considerable uncertainty about
specifically what must be done
 Many difficulties early in the life of the project
 Often considered planning problems
 Most of these problems result from a failure to define the mission
carefully
 Often fail to get the client’s acceptance on the project mission
6. Maintaining breadth of communication

 Most of the project manager’s time is spent communicating with the many groups
interested in the project
 Considerable time must be spent selling, reselling, and explaining the project
 Interested parties include:
 Top management
 Functional departments
 Clients
 Members of the project team
 To effectively deal with the demands, a project manager must understand and deal with
certain fundamental issues:
 Must understand why the project exists
 Critical to have the support of top management
 Build and maintain a solid information network
 Must be flexible in many ways, with as many people, and about as many activities
as possible throughout the life of the project
7. Negotiation
Some of the most popular attributes, skills, and qualities that have been sought in project
managers are:
 Strong technical background
 Hard-nosed manager
 A mature individual

 Someone who is currently available

 Someone on good terms with senior executives
 A person who can keep the project team happy
 One who has worked in several different departments
 A person who can walk on (or part) the waters
Four major categories of skills that are required for the project manager and serve as the key
criteria for selection:
1. Credibility
 Technical credibility - perceived by the client, senior executives, the functional
departments, and the project team as possessing sufficient technical knowledge to
direct the project
Administrative credibility - keeping the project on schedule and within costs
and making sure reports are accurate and timely. Must also make sure the project
team has material, equipment, and labor when needed
2. Sensitivity
There are several ways for project managers to display sensitivity:
a. Understanding the organization’s political structure
b. Sense interpersonal conflict on the project team or between team members and
outsiders
c. Does not avoid conflict, but confronts it and deals with it before it escalates
d. Keeps team members “cool”
e. Sensitive set of technical sensors - ability to sense when team members may try to
“sweep things under the rug”
3. Leadership and management style
Leadership has been defined as: “interpersonal influence, exercised in situation and
directed through the communication process, toward the attainment of a specified goal or
goals.”
 Other attributes may include:
 enthusiasm
 optimism
 energy
 tenacity
 courage
 personal maturity
 A project manager must also have a strong sense of ethics. Some common ethical
missteps are listed below:
 “wired” bids and contracts (the winner has been predetermined)
 “buy-in” (bidding low with the intention of cutting corners or forcing subsequent
contract changes)
 “kickbacks”
 “covering” for team members (group cohesiveness)
 taking “shortcuts” (to meet deadlines or budgets)
 using marginal (substandard) materials
 compromising on safety
 violating standards

 consultant (e.g., auditors) loyalties (to employer or to client or to public)

4. Ability to handle stress
 Four major causes of stress associated with the management of projects:
 1. Never developing a consistent set of procedures and techniques with which to
manage their work
 2. Many project managers have “too much on their plates”
 3. Some project managers have a high need to achievethat is consistently
frustrated
 4. The parent organization is in the middle of major change

Project Teams
A team is defined as “an interdependent collection of individuals who work together towards a
common goal and who share responsibility for specific outcomes of their organizations.
A project team is a team whose members usually belong to different groups, functions and are
assigned to activities for the same project. A team can be divided into sub-teams according to
need. Usually project teams are only used for a defined period of time. They are disbanded after
the project is deemed complete. Due to the nature of the specific formation and disbandment,
project teams are usually in organizations.
Most project teams require involvement from more than one department, therefore most project
teams can be classified as cross functional team. The project team usually consists of a variety of
members often working under the direction of a project manager or a senior member of the
organization. Projects that may not receive strong support initially often have the backing of
a project champion. Individual team members can either be involved on a part-time or full-time
basis. Their time commitment can change throughout the project depending on the project
development stage.
Project teams need to have the right combination of skills, abilities and personality types to
achieve collaborative tension. Teams can be formulated in a variety of ways. The most common
method is at the discretion of a senior member of the organization.
There are many components to becoming a top performing team, but the key is working on
highly cooperative relationship. The job of management is to create relaxed and comfortable
atmosphere where members are allowed to be themselves and are engaged and invested in the
project work. All team members are encourage for relationship building. Each member is
responsible to give constructive feedback, recognize,value and utilize unique strengths of each
other. The whole team is tuned on trust and cooperation.
Project team roles and responsibilities

Project Manager
The project manager plays a primary role in the project, and is responsible for its successful
completion. The manager’s job is to ensure that the project proceeds within the specified time
frame and under the established budget, while achieving its objectives. Project managers make
sure that projects are given sufficient resources, while managing relationships with contributors
and stakeholders.
Project manager duties:
Develop a project plan
Manage deliverables according to the plan
Recruit project staff
Lead and manage the project team
Determine the methodology used on the project
Establish a project schedule and determine each phase
Assign tasks to project team members
Provide regular updates to upper management

* Project Team Member

Project team members are the individuals who actively work on one or more phases of the
project. They may be in-house staff or external consultants, working on the project on a full-time
or part-time basis. Team member roles can vary according to each project.
Project team member duties may include:
Contributing to overall project objectives
Completing individual deliverables
Providing expertise
Working with users to establish and meet business needs & Documenting the process
* Project Sponsor
The project sponsor is the driver and in-house champion of the project. They are typically
members of senior management – those with a stake in the project’s outcome. Project sponsors
work closely with the project manager. They legitimize the project’s objectives and participate
in high-level project planning. In addition, they often help resolve conflicts and remove obstacles
that occur throughout the project, and they sign off on approvals needed to advance each phase.
Project sponsor duties:
Make key business decisions for the project
Approve the project budget
Ensure availability of resources
Communicate the project’s goals througout the organization
* Executive Sponsor
The executive sponsor is ideally a high-ranking member of management. He or she is the visible
champion of the project with the management team and is the ultimate decision-maker, with final
approval on all phases, deliverables and scope changes.
Executive sponsor duties typically include:
Carry ultimate responsibility for the project
Approve all changes to the project scope
Provide additional funds for scope changes
Approve project deliverables
* Business Analyst
The business analyst defines needs and recommends solutions to make an organization better.
When part of a project team, they ensure that the project’s objectives solve existing problems or
enhance performance, and add value to the organization. They can also help maximize the value
of the project deliverables.
Business analyst duties:
Assist in defining the project
Gather requirements from business units or users
Document technical and business requirements
Verify that project deliverables meet the requirements
Test solutions to validate objectives

UNIT II
Project Planning
The primary purpose of planning is to establish a set of directions in enough detail to tell the
project team exactly what must be done. The purpose of planning is to facilitate later
accomplishment.
Project Planning Process:
Step 1:Defining the Project Scope

Step 2:Establishing Project Priorities
Step 3:Creating the Work Breakdown Structure
Step 4:Integrating the WBS with the Organization
Step 5:Coding the WBS for the Information System
Step 1:Defining the Project Scope
Project Scope
– A definition of the end result or mission of the project—a product or service for
the client/customer—in specific, tangible, and measurable terms.
• Purpose of the Scope Statement
– To clearly define the deliverable(s) for the end user.
– To focus the project on successful completion of its goals.
– To be used by the project owner and participants as a planning tool and for
measuring project success.
Project scope checklist
1. Project objective
2. Deliverables
3. Milestones
4. Technical requirements
5. Limits and exclusions
6. Reviews with customer
• Scope Statements
– Also called statements of work (SOW)
• Project Charter
– Can contain an expanded version of scope statement
– A document authorizing the project manager to initiate and lead the project.
• Project Creep
– The tendency for the project scope to expand over time due to changing
requirements, specifications, and priorities.
Step 2:Establishing Project Priorities

• Causes of Project Trade-offs
– Shifts in the relative importance of criterions related to cost, time, and
performance parameters
• Budget–Cost
• Schedule–Time

• Performance–Scope
• Managing the Priorities of Project Trade-offs
– Constrain: a parameter is a fixed requirement.
– Enhance: optimizing a parameter over others.
– Accept: reducing (or not meeting) a parameter requirement.
Project Trade-offs
Project Priority Matrix
Step 3:Creating the Work Breakdown Structure

The WBS picture a project subdivided into hierarchical units of tasks, subtasks, work packages,
etc.The Work Breakdown Structure (WBS) can take a variety of forms that serve a variety of
purposes. The WBS often appears as an outline with Level I tasks on the left and successive
levels appropriately indented.
– An hierarchical outline (map) that identifies the products and work elements
involved in a project.
– Defines the relationship of the final deliverable (the project) to its subdeliverables,
and in turn, their relationships to work packages.
– Best suited for design and build projects that have tangible outcomes rather than
process-oriented projects.
– Facilitates evaluation of cost, time, and technical performance of the organization
on a project.
– Provides management with information appropriate to each organizational level.
– Helps in the development of the organization breakdown structure (OBS). which
assigns project responsibilities to organizational units and individuals
– Helps manage plan, schedule, and budget.
– Defines communication channels and assists in coordinating the various project
elements.

A work package is the lowest level of the WBS.

– It is output-oriented in that it:
• Defines work (what).
• Identifies time to complete a work package (how long)
• Identifies a time-phased budget to complete a work package (cost)
• Identifies resources needed to complete a work package (how much)
• Identifies a single person responsible for units of work (who)
• Identifies monitoring points (milestones) for measuring success.
General steps for designing and using the WBS:

1. Using information from the action plan, list the task breakdown in successively finer
levels of detail. Continue until all meaningful tasks or work packages have been identified
2. For each such work package, identify the data relevant to the WBS. List the personnel
and organizations responsible for each task.
3. All work package information should be reviewed with the individuals or organizations
who have responsibilityfor doing or supporting the work in order to verify the accuracy of
the WBS

4. The total project budget should consist of four elements: direct budgets from each task; an
indirect cost budget for the project; a “contingency” reserve for unexpected emergencies; and
any residual, which includes the profit derived from the project
5. The project master schedule integrates the many different schedules relevant to the
various parts of the project
Items 1-5 focus on the WBS as a planning tool but it may also be used to monitor and
control the project
Items 6 and 7 focus on the WBS as an aid to monitor and control a project:
6. The project manager can examine actual resource use, by work element, work package,
task, up to the full project level. The project manager can identify problems, harden the
estimates of final cost, and make sure that relevant corrections have been designed andare
ready to implement
7. The project schedule may be subjected to the same comparisons as the project budget.
Actual progress is compared to scheduled and corrective action can be taken
Step 4:Integrating the WBS with the Organization
• Organizational Breakdown Structure (OBS)

– Depicts how the firm is organized to discharge its work responsibility for a
project.
• Provides a framework to summarize organization work unit performance.
• Identifies organization units responsible for work packages.

• Ties the organizational units to cost control accounts.
Step 5:Coding the WBS for the Information System
• WBS Coding System

– Defines:
• Levels and elements of the WBS
• Organization elements
• Work packages
• Budget and cost information
– Allows reports to be consolidated at any level in the organization structure

Work Package estimates

Project Roll-up
Cost Account
– The intersection of the WBS and the OBS that is a budgetary control point for
work packages.
– Used to provide a roll-up (summation) of costs incurred over time by a work
package across organization units and levels, and by deliverables.
Process Breakdown Structure

• Process-Oriented Projects
– Are driven by performance requirements in which the final outcome is the product
of a series of steps of phases in which one phase affects the next phase.
• Process Breakdown Structure (PBS)
– Defines deliverables as outputs required to move to the next phase .
– Checklists for managing PBS:
• Deliverables needed to exit one phase and begin the next.
• Quality checkpoints for complete and accurate deliverables.
• Sign-offs by responsible stakeholders to monitor progress.

Responsibility Matrix
– Also called a linear responsibility chart.
– Summarizes the tasks to be accomplished and who is responsible for what on the
project.
• Lists project activities and participants.
• Clarifies critical interfaces between units and individuals that need
coordination.
• Provide an means for all participants to view their responsibilities and
agree on their assignments.
• Clarifies the extent or type of authority that can be exercised by each
participant.

Project Plan Elements

 The process of developing the project plan varies among organizations, but any project
plan must contain the following elements:
 Overview - a short summary of the objectives and scope of the project
 Objectives - A more detailed statement of the general goals noted in the overview
section
 General Approach - describes both the managerial and technical approaches to
the work
 Contractual Aspects - includes a complete list and description of all reporting
requirements, customer supplied resources, liaison arrangements, advisory
committees, project review and cancellation procedures, etc.
 Schedules - this section outlines the various schedules and lists all the milestone
events
 Resources - this includes the budget (both capital and expense requirements) as
well as cost monitoring and control procedures
 Personnel - this section lists the expected personnel requirements of the project
including special skills, training needs, and security clearances
 Evaluation Methods - every project should be evaluated against standards and by
methods established at the project’s inception
 Potential Problems - this section should include any potential difficulties such as
subcontractor default, technical failure, tight deadlines, resource limitations and
the like. Preplanning may avert some crises
Role of Multidisciplinary Teams
A multidisciplinary team is a group of workers from different professional
backgrounds or work disciplines that collaborate on specific projects or on an ongoing
basis. This type of work team is common in an office setting because of its value in
discussing problems or challenges with varied perspectives.
Budget the Project
Estimating Cost
Importance
• Estimates are needed to support good decisions.
• Estimates are needed to schedule work.
• Estimates are needed to determine how long the project should take and its cost.
• Estimates are needed to determine whether the project is worth doing.
• Estimates are needed to develop cash flow needs.
• Estimates are needed to determine how well the project is progressing.
• Estimates are needed to develop time-phased budgets and establish the project baseline.
Guidelines for estimation
1. Have people familiar with the tasks make the estimate.
2. Use several people to make estimates (crowdsourcing).
3. Base estimates on normal conditions, efficient methods, and a normal level of resources.
4. Use consistent time units in estimating task times.
5. Treat each task as independent, don’t aggregate.
6. Don’t make allowances for contingencies.
7. Adding a risk assessment helps avoid surprises to stakeholders.

Methods of Project Estimation

Up to the point of delivery, teams use educated guesswork to predict the future. And the bigger and
more complex a project is, the hazier that future is. Faulty estimates mean missing deadlines and
breaking budgets—two of the main symptoms of project failure.
Being a skilled estimator is a crucial part of setting schedules, establishing budgets, managing
resources and running a thriving team and business. Using the best online project management
software for the job is a huge help, but knowing the methods and learning how to do them well is
how you become a great estimator. There are a number of estimation methodologies to choose
from—and here we’re going to look at five tried-and-trusted ones that work for all types of
projects.
1. Expert judgment
This is probably the most common way people get an estimate. Talk to the men and women with
the best hands-on experience and understanding of the project requirements. Just make sure that
everyone has the same understanding of what needs to be delivered. And try to find experts who
will actually be working on the project.
2. Comparative or analogous estimation
If your current project is similar to past ones, take the data from previous work and extrapolate it to
provide your estimates for the new job. Before proceeding, make sure to check whether those
projects were successful!
3. Top-down
Using a high-level work breakdown structure and data from previous projects, you can add
estimates for each project work item to determine the overall effort and cost. The top-down method
lacks detailed analysis, which makes it best suited for a quick first-pass at a prospective project to
assess its viability.
4. Bottom-up
This method uses a detailed work breakdown structure, and is best for projects you’re committed
to. Each task is estimated individually, and then those estimates are rolled up to give the higher-
level numbers. (If you use the right project management software, it will roll up the estimates for
you). This process makes you think about what’s required in order to take a step back to see if the
big picture still makes sense. You’ll receive more accurate results than the top-down method, but
it’s also a greater investment of time.
5. Parametric model estimating
This is a more scientific method that essentially auto-calculates estimates using detailed data from
previous activities. Let’s say you have data from your last three office network installation
projects. You can use this to get a days-per-workstation value or something similar. You then plug
in the number of workstations for your new installation and out pop the estimates.

This can be a quick method but needs robust data to feed it. And because it’s all about the math,
it’s hard to adjust for the environmental, political and cultural differences between projects.
Methods for Estimating Project Times and Costs

• Macro (Top-down) Approaches
– Consensus methods
– Ratio methods
– Apportion method
– Function point methods for software and system projects
– Learning curves
• Based on collective judgements and experiences of top and middle managers.
• Overall project cost estimated by estimating costs of major tasks
Advantages
– accuracy of estimating overall budget
– errors in funding small tasks need not be individually identified
• Micro (Bottom-up) Approaches

– Template method
– Parametric Procedures Applied to Specific Tasks
– Detailed Estimates for the WBS Work Packages
– Phase Estimating: A Hybrid
• WBS or action plan identifies elemental tasks
• Those responsible for executing these tasks estimate resource requirements
Advantage
– more accurate in the detailed tasks
Disadvantage
– risk of overlooking tasks
Conditions for Preferring Top-Down or Bottom-up Time and Cost Estimates
Condition Macro Estimates Micro Estimates

Strategic decision making X
Cost and time important X
High uncertainty X
Internal, small project X
Fixed-price contract X
Customer wants details X
Unstable scope X
Project Estimation Process

Work element costing
• Determine resource requirements and then costs for each task
– costs (e.g., materials)
– labor time
– labor rate
– equipment time

– equipment rate
– overhead
Developing Budgets
• Time-Phased Budgets
– A cost estimate is not a budget unless it is time-phased.
• Time phasing begins with the time estimate for a project.
• Time-phased budgets mirror how the project’s cash needs (costs) will
occur or when cash flows from the project can be expected.
• Budget variances occur when actual and forecast events do not coincide.
Three views of cost
Types of cost
• Direct Costs
– Costs that are clearly chargeable to a specific work package.
• Labor, materials, equipment, and other
• Direct (Project) Overhead Costs
– Costs incurred that are directly tied to an identifiable project deliverable or work
package.
• Salary, rents, supplies, specialized machinery
• General and Administrative Overhead Costs
– Organization costs indirectly linked to a specific package that are apportioned to
the project
Refining estimates
• Reasons for Adjusting Estimates
– Interaction costs are hidden in estimates.
– Normal conditions do not apply.
– Things go wrong on projects.
– Changes in project scope and plans.
• Adjusting Estimates
– Time and cost estimates of specific activities are adjusted as the risks, resources,
and situation particulars become more clearly defined.
• Contingency Funds and Time Buffers
– Are created independently to offset uncertainty.

– Reduce the likelihood of cost and completion time overruns for a project.
– Can be added to the overall project or to specific activities or work packages.
– Can be determined from previous similar projects.
• Changing Baseline Schedule and Budget
– Unforeseen events may dictate a reformulation of the budget and schedule.
Creating Database for estimates
BUDGET UNCERTAINTY AND RISK MANAGEMENT

Estimate Made at Project Start
Three Basic Causes for Change in Projects

• Errors made by cost estimator about how to achieve tasks.
• New knowledge about the nature of the performance goal or setting.
• A mandate.

Unit III
Critical Path Method
The critical path method (CPM) is a step-by-step project management technique for process planning that
defines critical and non-critical tasks with the goal of preventing time-frame problems and
process bottlenecks. The CPM is ideally suited to projects consisting of numerous activities that interact
in a complex manner.
CPM is commonly used with all forms of projects, including construction, aerospace and defense,
software development, research projects, product development, engineering, and plant maintenance,
among others. Any project with interdependent activities can apply this method of mathematical analysis.
The first time CPM was used for major skyscraper development was in 1966 while constructing the
former World Trade Center Twin Towers in NYC. Although the original CPM program and approach is
no longer used, the term is generally applied to any approach used to analyze a project network logic
diagram.
The essential technique for using CPM: is to construct a model of the project that includes the following:
A list of all activities required to complete the project (typically categorized within a work breakdown
structure),
The time (duration) that each activity will take to complete,
The dependencies between the activities and,
Logical end points such as milestones or deliverable items.
Using these values, CPM calculates the longest path of planned activities to logical end points or to the
end of the project, and the earliest and latest that each activity can start and finish without making the
project longer. This process determines which activities are "critical" (i.e., on the longest path) and which
have "total float" (i.e., can be delayed without making the project longer). In project management, a
critical path is the sequence of project network activities which add up to the longest overall duration,
regardless if that longest duration has float or not. This determines the shortest time possible to complete
the project. There can be 'total float' (unused time) within the critical path. For example, if a project is
testing a solar panel and task 'B' requires 'sunrise', there could be a scheduling constraint on the testing
activity so that it would not start until the scheduled time for sunrise. This might insert dead time (total
float) into the schedule on the activities on that path prior to the sunrise due to needing to wait for this
event. This path, with the constraint-generated total float would actually make the path longer, with total
float being part of the shortest possible duration for the overall project. In other words, individual tasks on
the critical path prior to the constraint might be able to be delayed without elongating the critical path;
this is the 'total float' of that task. However, the time added to the project duration by the constraint is
actually critical path drag, the amount by which the project's duration is extended by each critical path
activity and constraint.
A project can have several, parallel, near critical paths; and some or all of the tasks could have 'free float'
and/or 'total float'. An additional parallel path through the network with the total durations shorter than the

critical path is called a sub-critical or non-critical path. Activities on sub-critical paths have no drag, as
they are not extending the project's duration.
CPM analysis tools allow a user to select a logical end point in a project and quickly identify its longest
series of dependent activities (its longest path). These tools can display the critical path (and near critical
path activities if desired) as a cascading waterfall that flows from the project's start (or current status date)
to the selected logical end point.
In this diagram, Activities A, B, C, D, and E comprise the critical or longest path, while Activities F, G,
and H are off the critical path with floats of 15 days, 5 days, and 20 days respectively. Whereas activities
that are off the critical path have float and are therefore not delaying completion of the project, those on
the critical path will usually have critical path drag, i.e., they delay project completion. The drag of a
critical path activity can be computed using the following formula:
If a critical path activity has nothing in parallel, its drag is equal to its duration. Thus A and E have drags
of 10 days and 20 days respectively.
If a critical path activity has another activity in parallel, its drag is equal to whichever is less: its duration
or the total float of the parallel activity with the least total float. Thus since B and C are both parallel to F
(float of 15) and H (float of 20), B has a duration of 20 and drag of 15 (equal to F's float), while C has a

duration of only 5 days and thus drag of only 5. Activity D, with a duration of 10 days, is parallel to G
(float of 5) and H (float of 20) and therefore its drag is equal to 5, the float of G.
These results, including the drag computations, allow managers to prioritize activities for the effective
management of project completion, and to shorten the planned critical path of a project by pruning critical
path activities, by "fast tracking" (i.e., performing more activities in parallel), and/or by "crashing the
critical path" (i.e., shortening the durations of critical path activities by adding resources).
Program Evaluation and Review Technique
PERT is a method of analyzing the tasks involved in completing a given project, especially the time
needed to complete each task, and to identify the minimum time needed to complete the total project. It
incorporates uncertainty by making it possible to schedule a project while not knowing precisely the
details and durations of all the activities. It is more of an event-oriented technique rather than start- and
completion-oriented, and is used more in projects where time is the major factor rather than cost. It is
applied to very large-scale, one-time, complex, non-routine infrastructure and Research and Development
projects.
Program Evaluation Review Technique (PERT) offers a management tool, which relies "on arrow and
node diagrams of activities and events: arrows represent the activities or work necessary to reach
the events or nodes that indicate each completed phase of the total project."
PERT and CPM are complementary tools, because "CPM employs one time estimate and one cost
estimate for each activity; PERT may utilize three time estimates (optimistic, expected, and pessimistic)
and no costs for each activity. Although these are distinct differences, the term PERT is applied
increasingly to all critical path scheduling.
Events and activities
In PERT diagram the event is the main building block, and it known predecessor events and successor
events:
PERT event: a point that marks the start or completion of one or more activities. It consumes no time and
uses no resources. When it marks the completion of one or more activities, it is not "reached" (does not
occur) until all of the activities leading to that event have been completed.
predecessor event: an event that immediately precedes some other event without any other events
intervening. An event can have multiple predecessor events and can be the predecessor of multiple events.
successor event: an event that immediately follows some other event without any other intervening
events. An event can have multiple successor events and can be the successor of multiple events.
Beside events PERT also knows activities and sub-activities:
PERT activity: the actual performance of a task which consumes time and requires resources (such as
labor, materials, space, machinery). It can be understood as representing the time, effort, and resources
required to move from one event to another. A PERT activity cannot be performed until the predecessor
event has occurred.

PERT sub-activity: a PERT activity can be further decomposed into a set of sub-activities. For example,
activity A1 can be decomposed into A1.1, A1.2 and A1.3. Sub-activities have all the properties of
activities; in particular, a sub-activity has predecessor or successor events just like an activity. A sub-
activity can be decomposed again into finer-grained sub-activities.
Time
PERT has defined four types of time required to accomplish an activity:
optimistic time: the minimum possible time required to accomplish an activity (o) or a path (O), assuming
everything proceeds better than is normally expected
pessimistic time: the maximum possible time required to accomplish an activity (p) or a path (P),
assuming everything goes wrong (but excluding major catastrophes).
most likely time: the best estimate of the time required to accomplish an activity (m) or a path (M),
assuming everything proceeds as normal.
expected time: the best estimate of the time required to accomplish an activity (te) or a path (TE),
accounting for the fact that things don't always proceed as normal (the implication being that the expected
time is the average time the task would require if the task were repeated on a number of occasions over an
extended period of time).
te = (o + 4m + p) ÷ 6
standard deviation of time : the variability of the time for accomplishing an activity (σte) or a path (σTE)
σte = √ [(p - o) ÷ 6]
PERT supplies a number of tools for management with determination of concepts, such as:
float or slack is a measure of the excess time and resources available to complete a task. It is the amount
of time that a project task can be delayed without causing a delay in any subsequent tasks (free float) or
the whole project (total float). Positive slack would indicate ahead of schedule; negative slack would
indicate behind schedule; and zero slack would indicate on schedule.
critical path: the longest possible continuous pathway taken from the initial event to the terminal event. It
determines the total calendar time required for the project; and, therefore, any time delays along the
critical path will delay the reaching of the terminal event by at least the same amount.
critical activity: An activity that has total float equal to zero. An activity with zero float is not necessarily
on the critical path since its path may not be the longest.
Lead time: the time by which a predecessor event must be completed in order to allow sufficient time for
the activities that must elapse before a specific PERT event reaches completion.
lag time: the earliest time by which a successor event can follow a specific PERT event.
fast tracking: performing more critical activities in parallel

crashing critical path: Shortening duration of critical activities
µ
Activity Predecessor a m b σ2
te
A - 6 7 8 7 0.11
B - 1 2 9 3 1.78
C - 1 4 7 4 1.00
D A 1 2 3 2 0.11
E A,B 1 2 9 3 1.78
F C 1 5 9 5 1.78
G C 2 2 8 3 1.00
H E,F 4 4 4 4 0
.aI E,F 4 4 10 5 1.00
J D,H 2 5 14 6 4.00
K G,I 2 2 8 3 1.00
Advantages
PERT chart explicitly defines and makes visible dependencies (precedence relationships) between the
work breakdown structure (commonly WBS) elements.
PERT facilitates identification of the critical path and makes this visible.
PERT facilitates identification of early start, late start, and slack for each activity.

PERT provides for potentially reduced project duration due to better understanding of dependencies
leading to improved overlapping of activities and tasks where feasible.
The large amount of project data can be organized and presented in diagram for use in decision making.
PERT can provide a probability of completing before a given time.
Disadvantages
There can be potentially hundreds or thousands of activities and individual dependency relationships.
PERT is not easily scalable for smaller projects.
The network charts tend to be large and unwieldy requiring several pages to print and requiring specially
sized paper.
The lack of a timeframe on most PERT/CPM charts makes it harder to show status although colours can
help (e.g., specific colour for completed nodes).
Crashing the Project

The project manager is frequently confronted with having to reduce the scheduled completion time of a
project to meet a deadline. In other words, the manager must finish the project sooner than indicated by
the CPM/PERT network analysis. Project duration can often be reduced by assigning more labor to
project activities, in the form of overtime, and by assigning more resources (material, equipment, and so
on). However, additional labor and resources increase the project cost. Thus, the decision to reduce the
project duration must be based on an analysis of the trade-off between time and cost. Project crashing is a
method for shortening the project duration by reducing the time of one (or more) of the critical project
activities to less than its normal activity time. This reduction in the normal activity time is referred to
as crashing. Crashing is achieved by devoting more resources, usually measured in terms of dollars, to the
activities to be crashed.
We will assume that the times (in weeks) shown on the network activities are the normal activity times.
For example, 12 weeks are normally required to complete activity 1-2. Further, we will assume that the
cost required to complete this activity in the time indicated is $3,000. This cost is referred to as
the normal activity cost. Next, we will assume that the building contractor has estimated that activity 1-2
can be completed in 7 weeks, but it will cost $5,000 instead of $3,000 to complete the activity. This new
estimated activity time is known as the crash time, and the cost to achieve the crash time is referred to as
the crash cost.
Activity 1-2 can be crashed a total of 5 weeks (normal time - crash time = 12-7 = 5 weeks) at a total crash
cost of $2,000 (crash cost - normal cost = $5,000-3,000 = $2,000). Dividing the total crash cost by the
total allowable crash time yields the crash cost per week:
If we assume that the relationship between crash cost and crash time is linear, then activity 1-2 can be
crashed by any amount of time (not exceeding the maximum allowable crash time) at a rate of $400 per

week. For example, if the contractor decided to crash activity 1-2 by only 2 weeks (reducing activity time
to 10 weeks), the crash cost would be $800 ($400 per week ¥ 2 weeks).
The objective of project crashing is to reduce project duration while minimizing the cost of crashing.
Since the project completion time can be shortened only by crashing activities on the critical path, it may
turn out that not all activities have to be crashed. However, as activities are crashed, the critical path may
change, requiring crashing of previously noncritical activities to reduce the project completion time even
further.
The normal times and costs, the crash times and costs, the total allowable crash times, and the crash cost
per week for each activity in the network in Figure 17.12 are summarized in the following table:
We start by looking at the critical path and seeing which activity has the minimum crash cost per week.
Observing the preceding table and the following figure, we see activity 1-2 has the minimum crash cost of
$400 (excluding the dummy activity 3-4, which cannot be reduced). Activity 1-2 will be reduced as much
as possible. The table shows that the maximum allowable reduction for activity 1-2 is 5 weeks, but we can
reduce activity 1-2 only to the point where another path becomes critical. When two paths simultaneously
become critical, activities on both must be reduced by the same amount. If we reduce the activity time
beyond the point where another path becomes critical, we may be incurring an unnecessary cost. This last
stipulation means that we must keep up with all the network paths as we reduce individual activities, a
condition that makes manual crashing very cumbersome. For that reason we will rely on the computer for
project crashing; however, for the moment we pursue this example in order to demonstrate the logic of
project crashing.

It turns out that activity 1-2 can be crashed by the total amount of 5 weeks without another path becoming
critical, since activity 1-2 is included in all four paths in the network. Crashing this activity results in a
revised project duration of 31 weeks at a crashing cost of $2,000. The revised network is shown in the
following figure
Since we have not reached our crashing goal of 30 weeks, we must continue and the process is repeated.
The critical path in the preceding figure remains the same, and the minimum activity crash cost on the
critical path is $500 for activity 2-3. Activity 2-3 can be crashed a total of 3 weeks, but since the
contractor desires to crash the network only to 30 weeks, we need to crash activity 2-3 by only 1 week.
Crashing activity 2-3 by 1 week does not result in any other path becoming critical, so we can safely
make this reduction. Crashing activity 2-3 to 7 weeks (i.e., a 1-week reduction) costs $500 and reduces
the project duration to 30 weeks.
The total cost of crashing the project to 30 weeks is $2,500. The contractor could inform the customer that
an additional cost of only $2,500 would be incurred to finish the house in 30 weeks.
Suppose we wanted to continue to crash this network, reducing the project duration down to the minimum
time possible; that is, crashing the network the maximum amount possible. We can determine how much
the network can be crashed by crashing each activity the maximum amount possible and then determining
the critical path of this completely crashed network. For example, activity 1-2 is 7 weeks, activity 2-3 is 5
weeks, 2-4 is 3 weeks, and so on. The critical path of this totally crashed network is 1-2-3-4-6-7 with a
project duration of 24 weeks. This is the least amount of time the project can be completed in. If we
crashed all the activities by their maximum amount, the total crashing cost is $35,700, computed by
subtracting the total normal cost of $75,000 from the total crash cost of $110,700 in the preceding table.
However, if we followed the crashing procedure outlined in this example, the network can be crashed to
24 weeks at a cost of $31,500, a savings of $4,000.
Gantt Chart
A chart in which a series of horizontal lines shows the amount of work done or production completed in
certain periods of time in relation to the amount planned for those periods.
Gantt charts illustrate the start and finish dates of the terminal elements and summary elements of a project.
Terminal elements and summary elements comprise the work breakdown structure of the project. Modern
Gantt charts also show the dependency (i.e., precedence network) relationships between activities. Gantt charts
can be used to show current schedule status using percent-complete shadings and a vertical "TODAY" line as
shown here.

Time estimates
Expected
Activity Predecessor
Opt. Normal Pess. time
(O) (M) (P)
a — 2 4 6 4.00
b — 3 5 9 5.33
c A 4 5 7 5.17
d A 4 6 10 6.33
e b, c 4 5 7 5.17
f D 3 4 8 4.50
g E 3 5 8 5.17
Applications: Baseline in Gantt chart is used for clear comparison picture of what and how was planned and
the current state of a project. Thus a manager or anyone who manages a project is able to see whether a

schedule deviates from the initial plan. A project will be successfully accomplished when everything goes
according to a baseline.
A baseline gives a manager possibility to understand and track project progress and forecast project results.
Generally baselines are a combination of project scope, cost and schedule (time) that are called triple
constraints of a project.
Thanks to baselines a project manager knows what exactly goes wrong and how much it takes. They help to
realize problematic points and minimize them.
Gantt charts can be used for scheduling generic resources as well as project management. They can also be
used for scheduling production processes and employee rostering. In the latter context, they may also be
known as timebar schedules. Gantt charts can be used to track shifts or tasks and also vacations or other types
of out-of-office time. Specialized employee scheduling software may output schedules as a Gantt chart, or they
may be created through popular desktop publishing software.
Managing Risk
In business, risk management is defined as theprocess of identifying, monitoring and managing
potential risks in order to minimize the negative impact they may have on an organization.
Risk Management Process

Risk response matrix
Risk response is the process of developing strategic options, and determining actions, to
enhance opportunities and reduce threats to the project’s objectives. A project team member is
assigned to take responsibility for each risk response. This process ensures that each risk
requiring a response has an owner monitoring the responses, although the owner may delegate
implementation of a response to someone else.
Risk severity matrix

Risk response matrix
Risk response strategies
ForThreats ForOpportunities
Avoid.Riskcanbeavoidedbyremovingthecause Exploit.Theaimistoensurethattheopportunity
oftheriskor executingtheprojectina different isrealized.Thisstrategyseekstoeliminatethe
waywhilestillaimingto achieveproject objectives. uncertaintyassociatedwithaparticularupside
Notallriskscanbeavoidedor riskbymakingtheopportunitydefinitelyhappen.
eliminated,andforothers,thisapproachmaybe Exploitisanaggressiveresponsestrategy,best
tooexpensiveortime‐consuming.However,this reservedforthose“goldenopportunities”having
shouldbethefirststrategyconsidered. highprobabilityandimpacts.

Transfer.Transferringriskinvolvesfinding Share.Allocateriskownershipofanopportunity
anotherpartywhoiswillingtotakeresponsibility toanotherpartywhoisbestabletomaximizeits
foritsmanagement,andwhowillbeartheliability probabilityofoccurrenceandincreasethe
oftheriskshoulditoccur.Theaimistoensure potentialbenefitsifitdoesoccur.Transferring
thattheriskisownedandmanagedbytheparty threatsandsharingopportunitiesaresimilarin
bestabletodealwithit effectively.Risktransfer thatathirdpartyisused.Thosetowhomthreats
usuallyinvolvespaymentofapremium,andthe aretransferredtakeontheliabilityandthoseto
cost‐effectivenessofthismustbeconsideredwhen whomopportunitiesareallocatedshouldbe
decidingwhethertoadoptatransferstrategy. allowedtoshareinthepotentialbenefits.
Mitigate.Riskmitigationreducestheprobability Enhance.Thisresponseaimstomodifythe“size”
and/orimpactofanadverseriskeventtoan ofthepositiverisk.Theopportunityis enhanced
acceptablethreshold.Takingearlyactionto byincreasingitsprobabilityand/orimpact,
reducetheprobabilityand/orimpactofariskis therebymaximizingbenefitsrealizedforthe
oftenmoreeffectivethantryingtorepairthe project.If theprobabilitycanbeincreasedto100
damageaftertheriskhasoccurred.Riskmitigation percent,thisiseffectivelyanexploitresponse.
mayrequireresourcesor timeandthuspresentsa
tradeoffbetweendoingnothingversusthecostof
mitigatingtherisk.
Acceptance.Thisstrategyisadoptedwhenitisnotpossibleor practicaltorespondtotheriskbythe
otherstrategies,oraresponseisnotwarrantedbytheimportanceoftherisk.Whentheproject
managerandtheprojectteamdecidetoacceptarisk,theyareagreeingtoaddresstheriskifandwhenit
occurs.Acontingencyplan,workaroundplanand/orcontingencyreservemaybedevelopedforthat eventuality.
What is Critical Chain?
Critical Chain Project Management (CCPM) is a methodology for planning, executing and managing
projects in single and multi-project environments.
Critical Chain Project Management was developed by Dr Eli Goldratt and was first introduced to the
market in his Theory of Constraints book “Critical Chain” in 1997. It was developed in response to many
projects being dogged by poor performance manifested in longer than expected durations, frequently
missed deadlines, increased costs in excess of budget, and substantially less deliverables than originally
promised.
The Critical Chain Method has its roots in another one of Dr. Goldratt’s inventions, namely, The Theory
of Constraints (TOC). This Project Management Method comes into force after the initial Project
Schedule is prepared, which includes establishment of the task dependencies. The evolved Critical path is
reworked based on the Critical Chain Method. To do so, the methodology assumes constraints related to
each task.

In CCPM the critical chain is the set of activities that defines the overall duration of the project,
taking into account precedence and also resource dependencies. Critical chain requires the
construction of a feasible schedule with only the time to do the work in each activity. This
estimate is usually described as corresponding to a 50% confidence level or an average
duration. Resource conflicts are resolved by moving tasks earlier in time.
The Critical Path Project Management Methodology is very effective in organizations which do not have
evolved Project Management Practices.
However, the methodology does not advocate multi-tasking, and in Projects with complex Schedule
Networks, the results of implementing the Critical path Methodology have proven to be deterrent to the
overall Project Schedule. In addition, there is no standard method for calculating and optimizing the
Project Buffers. The Critical Path Project Management Methodology has had a fair amount of success in
manufacturing domains though it has not achieved any noteworthy success in the IT Sector.
A few of these constraints are listed out below:
There is a certain amount of uncertainty in each task.
Task durations are often overestimated by the Team Members or Task Owners. This is typically done to
add a safety margin to the task so as to be certain of its completion in the decided duration.
In most cases, the tasks should not take the time estimated, which includes the safety margin, and should
be completed earlier.
If the Safety Margin assumed is not needed, it is actually wasted. If the task is finished sooner,it may not
necessarily mean that the successor task can start earlier as the resources required for the successor task
may not be available until their scheduled time. Hence, the saved time cannot be passed on to finish the
Project early. On the other hand, if there are delays over and above the estimated schedules, these delays
will most definitely get passed on, and, in most cases, will exponentially increase the Project Schedule.
Problems with traditional project management
When planning for an upcoming project, estimates for task durations are required. In order for the plan to
be treated as realistic, much time is spent ensuring estimates are accurate. Accurate estimates give us
increased probability and high-confidence in the task completing on time. This allows additional safety
time beyond the work content time required to be embedded within the task duration. The more safety in
a task the more there is a tendency to behave in the following ways:
Not starting the task until the last moment (Student Syndrome)
Delaying (or pacing) completion of the task (Parkinson’s Law)
Cherry picking tasks
As a result, the safety which was included at the planning stage is wasted and, if “Murphy” strikes and
problems do occur, tasks over-run.

In addition Management force (for intuitive but invalid reasons) people to work on more than one task at
once – creating multitasking. This drives people to switch between tasks leading them to elongate time
estimates in planning and further waste the embedded task safety in execution.
Resources working on tasks also naturally resist reporting any early finishes. If an early finish is reported,
the estimate for the task is recognised as too long. When a similar task on a different project is estimated,
the initial response will be to again use a worst case duration. This will inevitably be challenged as the
similar task was finished early last time. Increased pressure will be placed on the resource to accept a
shorter estimate this time. The risk is that this, shorter estimate will not offer sufficient safety to the
project should a problem occur. Hence resources ensure that sufficient safety is always embedded in each
task estimate and the entire safety is used in execution of the task. This game is played by management
and resources!
In summary, delays to tasks are passed on to the entire project however; benefits from tasks finishing
early are rarely passed on to the same project.
The traditional tools used to manage projects; Critical Path Method (CPM), Program Evaluation and
Review Technique (PERT), Gantt, Prince Etc. do not address the misuse of embedded safety and
consequently the behaviours they drive.
Critical Chain Project Management
Critical Chain Project Management addresses these issues in the following ways.
Planning
Critical Chain - the Critical Chain is defined as the longest chain [not path] of dependent tasks. In this
case, ‘dependent’ refers to resources and resource contention across tasks/projects as well as the sequence
and logical dependencies of the tasks themselves. This differs from the Critical Path Method.
Estimations – To reduce the behaviours and time wasting associated with having too much embedded
safety, Critical Chain Project Management recommends that task estimates are cut to half the length of a
“normal” duration.
Safety – Critical Chain Project Management uses safety ‘Buffers’ to manage the impact of variation and
uncertainty around projects. The safety at a task level is aggregated and moved to strategic points in the
project flow. There are three types of buffer/strategic points necessary to ensure the project has sufficient
safety:
Project Buffer – A project buffer is inserted at the end of the project network between the last task and
the completion date. Any delays on the longest chain of dependant tasks will consume some of the buffer
but will leave the completion date unchanged and so protect the project. The project buffer is typically
recommended to be half the size of the safety time taken out, resulting in a project that is planned to be
75% of a “traditional” project network.
Feeding Buffers – delays on paths of tasks feeding into the longest chain can impact the project by
delaying a subsequent task on the Critical Chain. To protect against this, feeding buffers are inserted

between the last task on a feeding path and the Critical Chain. The feeding buffer is typically
recommended to be half the size of the safety time taken out of the feeding path.
Resource Buffers – Resource buffers can be set alongside of the Critical Chain to ensure that the
appropriate people and skills are available to work on the Critical Chain tasks as soon as needed.
Execution
Priorities - All resources on a project are given clear and aligned priorities relating to the ‘health’ of the
Critical Chain relative to its associated buffer and hence the project as a whole. A resource with more
than one task open should normally be assigned to complete any task jeopardising any projects Critical
Chain before completing any feeding path task.
Completion – resources on a task are encouraged to follow the ‘roadrunner’ approach. When there is
work available it should be progressed at the fastest possible speed (without compromising quality) until
completed. Tasks are not left partially complete to remove the temptation to multitask. As task duration
estimates have reduced safety they drive resources to meet the more “aggressive” durations and limit the
behaviours of Student Syndrome and Parkinson’s Law.
As the Progress of the Project is reported, the Critical Chain is recalculated. In fact, monitoring and
controlling of the Project primarily focuses on utilization of the Buffers. Hence the Critical Chain
Method considers the basic Critical Path based Project Network and Schedule to derive a completely new
Schedule.
Resource loading and resource leveling:
A project manager has several choices on how to meet demands of his/her many projects. Two
simple choices are resource loading and resource leveling. But, what do these two terms mean? Learn
what resource loading and resource leveling are and the differences between the two.
Resource loading mainly involves your manpower or employees. In resource loading, each employee is
assigned a task or a percentage of a project (X percent of the whole). Usually, it's 25 percent of the whole.

Then the employee is assigned other tasks until he or she reaches 100 percent booked. This would then
mean that the employees cannot take on any additional work.
With resource loading, a project manager can predict an employee's hours for the year and see
how tasks can be assigned. This also allows the project manager to decide whether or not additional
employees or contractors are needed to complete the scheduled projects.
The downside to resource loading is that employees cannot be 100 percent booked. Other things
may arise to take away their time, such as unexpected problems that need to be fixed. An employee
should always be under 100 percent booked. Resource loading increases the chance that a project will not
be completed on time because employees are overloaded with projects.
While resource loading mainly deals with manpower, resource leveling deals with both time
(project starting and ending date) and resources, including manpower and budget. Resource leveling tries
to balance the conflicting interests of projects with the available resources.
Resource leveling generally breaks things down into two categories: time and available resources.
Some projects need to be finished within a certain time frame. These projects will use all the available
resources (money and manpower) to complete the project by a certain date.
Resource Levelling:
Projects that aren't as pressing can be spread out for an indefinite period of time until resources
do become available. These projects are usually ones that are not on the critical path and will not affect
the project completion date.
Like resource loading, resource leveling also has its problems. It is hard to determine in the
beginning which tasks will be on the critical path. Also, delaying a task could cause the entire project to
fall behind schedule.

When performing project planning activities, the manager will attempt to schedule certain
tasks simultaneously. When more resources such as machines or people are needed than are available, or
perhaps a specific person is needed in both tasks, the tasks will have to be rescheduled concurrently or
even sequentially to manage the constraint. Project planning resource leveling is the process of resolving
these conflicts. It can also be used to balance the workload of primary resources over the course of the
project[s], usually at the expense of one of the traditional triple constraints (time, cost, scope).
When using specially designed project software, leveling typically means resolving conflicts or
over allocations in the project plan by allowing the software to calculate delays and update tasks
automatically. Project management software leveling requires delaying tasks until resources are available.
In more complex environments, resources could be allocated across multiple, concurrent projects thus
requiring the process of resource leveling to be performed at company level.
In either definition, leveling could result in a later project finish date if the tasks affected are in the critical
path.
Resource leveling is also useful in the world of maintenance management. Many organizations
have maintenance backlogs. These backlogs consist of work orders. In a "planned state" these work
orders have estimates such as 2 electricians for 8 hours. These work orders have other attributes such as
report date, priority, asset operational requirements, and safety concerns. These same organizations have a
need to create weekly schedules. Resource-leveling can take the "work demand" and balance it against the
resource pool availability for the given week.
The goal is to create this weekly schedule in advance of performing the work. Without resource-
leveling the organization (planner, scheduler, supervisor) is most likely performing subjective selection.
For the most part, when it comes to maintenance scheduling, there is less, if any, task interdependence,
and therefore less need to calculate critical path and total float.

UNIT IV
PROJECT MONITORING AND CONTROL
Project monitoring and control are, in some ways, simply the opposite sides of project
selection and planning. The bases for selection dictate what to monitor and the details of
planning identify the elements to be controlled. Monitoring is the collection, recording, and
reporting of project information that is of importance to the project manager and other relevant
stakeholders. Control uses the monitored data and information to bring actual performance into
agreement with the plan. Clearly, the need to exert proper control mandates the need to monitor
the proper activities and elements of the project. Frequently, the distinction between monitoring
and control is blurred, and their interaction often makes us think we are working on a single task,
but they are highly distinct and serve significantly different purposes.
Although the data gathered from monitoring often serve many objectives—auditing,
keeping management informed, learning from mistakes—these are all secondary compared to the
purpose of control. The purpose of monitoring is to ensure that all interested parties have
available, when needed, the information required to exercise control over the project. Thus, the
key issue in designing an effective monitoring and control system is to create an information
system that gives the project manager and others the information they need to make informed,
timely decisions that will keep project performance as close as possible to the plan.
Plan-Monitor-Control cycle
Managing a project involves continually planning what to do, checking on progress, comparing
progress to plan, taking corrective action to bring progress into agreement with the plan if it is
not, replanning, and so on. As noted previously, the fundamental items to be planned, monitored,
and controlled are time, cost, and performance so that the project stays on schedule, does not
exceed its budget, and meets its specifications.
This plan-monitor-control cycle constitutes a “closed-loop” process that continues until the
project is completed.
Project monitoring and control provides an understanding of project progress, identifies

deviation from the plan and is a mechanism for making any necessary corrective actions.
Consider the ramifications of deviation and learn about ways to avoid it. It is during the monitor
and control process that we keep abreast of project progress, the quality of our efforts,
identifying deviations, determining necessary corrective action and implementing those
corrective actions.
• The plan–monitor-control cycle constitutes a “closed loop” process
– Continues until the project is completed

• With complex projects, there is a temptation to minimize the planning–monitoring–

controlling effort so that “real work” can be done
– It is these projects that need the planning–monitoring–controlling process the
most
It is often the case that when particularly complex, challenging, or uncertain projects are
initiated, the planning-monitoring controlling effort is minimized so that “the real work” can be
done. It is of great temptation to focus on doing something, anything, rather than to spend time
on planning, monitoring, and controlling, especially if the stakes are high and theproject is a
difficult one. It is precisely such projects, however, that most desperately need the maturity of a
project manager who realizes the importance.
Cost and schedule are of utmost importance in project monitoring and control. However,
the importance of scope, quality, and risk control as well as overall performance measurement
and reporting cannot be underestimated.
When the project’s performance deviation is identified significantly from the plan,
appropriate corrective actions and preventive actions will be taken. Project activity monitoring is
an aspect of project management that is performed throughout the project. Controlling is the
aspect of the project in which corrective and preventive actions are taken.
The key to setting up a monitoring system is to identify the special characteristics

performance, cost, and time that need to be controlled in order to achieve the project goals stated
in the action plan. Also, the exact boundaries within which the characteristics should be
controlled must be determined.

Moreover, performance characteristics should be specified for each level ofdetail in the
project: subtasks, tasks, and so all the way up to the project itself.In order to manage for overall
project success, control must be exercised at the detailed work level for each aspect of project
performance or no significant change will occur.
It is the action plan that identifies what is being done, when, and the planned level of
resource usage for each task and subtask in the project. Real time data must then be identified by
which to measure achievement against these plans. The mechanisms to gather and store such
data must he designed.
In addition to data collection systems for hard data, the monitoring system should include
telephone logs, change tracking/control systems, documentation processes for both formal (e.g.,
meetings) and informal communications, and other such softer data collection systems. The
monitoring system is the direct connection between project planning and control.
It is essential to spend time up front designing the planning-monitoring controlling process,

especially for more challenging projects. The action plan is the primary document to guide the
design of the monitoring system in terms of the detailed tasks and resources that need to be
controlled in order for the project to achieve its time, cost, and performance goals. Common
errors insetting up monitoring systems are monitoring easy measures instead of relevant
measures, monitoring activity in place of results, monitoring inputs as surrogates for outputs, and
monitoring measures that don’t change from one period to the next.
DATA COLLECTION AND REPORTING

For the monitoring system, data in various forms have to be collected, analyzed, and
reported. Data also need to be aggregated, manipulated in various ways, and compared with
planned values in order to allow effective control. The monitoring system helps PMs prevent
problems instead of having to solve them. Project reports vary in content and frequency,
depending on who the reports are targeted to and what controls they will exert. A special
consideration is the relationship between the organization’s information system and the project’s
system. In addition to printed reports, reports may also have to be given orally at meetings but
steps can be taken to maximize the effectiveness of such meetings. The Internet and the
organization’s local area network (intranet) have enhanced project communication and meetings
as well as facilitated the management of geographically dispersed virtual projects.
Once we have decided on the type of data we want to monitor, the next question is how to collect
this data and turn them into information useful for controlling the project. This is the activity of
data collection and reporting. In this section we cover the physical collection of data and the
analysis of that data, if necessary, to transform them into information. Once transformed,
however, there are many ways to present the information and these are covered underthe topic of
reporting, including a discussion of the three main types of reports.
A very special means of both collecting and disseminating data, and even sometimes
information, is the proverbial “meeting,” and we offer some advice for this often painful
phenomenon—both in-person and virtual meetings are included. The use of electronic means for
distributing information or reports is briefly examined.
At some point we have to decide what data we need to collect and precisely how to go about
collecting them. A number of questions are raised. Should we design and use special forms?

Should data be collected just before or after an important milestone? Should time and cost data
always be collected at the same time each month? There are many such issues that arise when
considering the data collection process and most of them can only be answered in the context of
a specific project. There are a few generalizations that can be made concerning the information
needed to control projects; these are described in the next section.
Data Collecting
The majority of data to be collected will eventually exist in one of the following five formats.
1. Frequency counts A simple tally of the occurrence of an event is common—for example, days
without an accident. Often a count of events per time period or as a fraction of some standard
number is used, such as complaints per month, defects per thousand products, and fraction of
luggage lost.
2. Raw numbers Actual amounts are used, usually in comparison to some expected or planned
amount, such as dollars spent, hours required, and pounds consumed. The comparison to plan
may take the form of variances, that is, differences between planned and actual, or ratios of one
to the other. The ratio format is particularly appealing for reporting on a control chart with
predetermined limits, as is described later in the chapter. When collecting raw amounts it is
important that the basis, time period, and collection process always be the same.
3. Subjective numeric ratings. These are usually subjective estimates of some quality offered by
specialists in the topic, such as ordinal “rankings” of performance. They can be reported in the
same ways as raw numbers, but they often cannot be mathematically processed in the same ways
raw numbers can.
4. Indicators and surrogates. When it is especially difficult to find a direct measure of a variable,
indicators or surrogates are frequently used instead. If this approach is taken, it is important that
the indicator or surrogate be as directly related to the variable as possible. For example, body
temperature is an indicator of infection and years of experience can be a surrogate for expertise.
The number of salespersons, however, would be a poor, and clearly indirect, measure for level of
customer service.
5. Verbal characterizations Other variables that are difficult to measure, such as team spirit or
client characterizations. These forms of data are acceptable and useful as long as the terminology
is limited and is uniformly understood by all parties.
Data Analysis
Following the collection of the data through the monitoring system, it will frequently be
necessary to analyze or process the data in some manner before reporting it for control purposes.
This may take the form of simple aggregation of the data, such as averaging the values, or
something as complex as fitting statistical distribution functions to the data to ascertain relation
and trends. Some of management techniques for the presentation and analysis of data are often
useful here.
Reporting and Report Types

After the data have been collected and analyzed, they need to be reported in some form.
There are many possible report formats, but the most popular are project status reports, time/cost
reports, presentations, and similar documents. All tables, charts (such as PERT/CPM and Gantt),
and especially action plans should be updated to reflect current reality. In addition to alerting
team members to potential problems, such updates help maintain team morale. Where known,
some form of “comparables” should also be reported such as distributions of previous data,

perhaps fromearlier but similar projects, so that the PM and others can better interpret thedata.
As we have noted before, any time project reports, plans, or otherdocuments are updated, great
care should be taken to preserve all documentsfrom earlier stages of the project’s life. When the
project is completed, a project“history” should be prepared and these materials will be
invaluable.
The reports delivered to those engaged in carrying out or managing theproject should be
timed to allow control to be exercised before completion of thetask in question. The project
action plan, again, identifies the level of tasks andresponsibilities according to the level of
management, and this providesguidance for both the level detail and the timing of reports.
In addition to WBS-determined data and information, individual managerswish to see
specific types of information in their reports and these should beincluded well. Moreover, they
may even have preferences on the timing ofreports, which should also be followed when they are
within reason. The PM,however, must make sure the relevant (for their level) information about
projectprogress is included in their ports, and in such a way that it cannot beoverlooked.
For projects, there are primarily three distinct types of reports: routine,which have been
describing so far, exception, and special analysis. Exceptionreports are primarily intended for
special decisions or unexpected situationswhere affected team member and outside managers
need to be made aware ofa change, and the change itself needs t be documented. Special
analysisreports are prepared to disseminate the results of a special study in a projectconcerning a
particular opportunity or problem for the project. They may bedistributed to top management,
other project managers who would bent fromthe knowledge, functional managers, or anyone who
might be affected orinterested. Typical subjects might include studies of new materials,
capabilitiesof new software, and descriptions of the impact of new government regulations.
PROJECT CONTROL
Control, the act of reducing differences between plan and actuality, is thefinal element in
the planning-monitoring-controlling cycle. Monitoring andcomparing activities with plan, and
reporting these findings is to no avail ifactions are not taken when reality deviates significantly
from what was planned.This is not to say that the act of noting and reporting discrepancies may
not byitself correct the deviations. Simply bringing discrepancies to light may be allthat is
needed to correct some problems. When it is not, however, active controlis needed to bring
performance, schedule, cost, or perhaps all three, back inline with plan.
Particularly in large projects with a wealth of detail and constanthubbub, it is all too easy
to lose sight of these three fundamental targets. Largeprojects develop their own momentum and
tend slowly to move out of hand,going their own way regardless of the wishes of the PM, top
management, andeven the client. In large projects early control is crucial!
Control is one of the PM’s most difficult tasks, invariably involving bothmechanistic and
human elements. Sometimes humans, through action orinaction, set in motion a chain of events
that eventually results in a discrepancybetween actuality and plan. Sometimes events occur that
affect people in anegative way leading to undesirable discrepancies. Anger, frustration,
irritation,helplessness, apathy, despair, and many other emotions arise during thecourse of a
normal project arid affect the activities of the project team memberswho experience them. It is
over this welter of confusion, emotion, inertia,fallibility, and general cussedness that the PM tries
to intervene and exert control.
Control is difficult for a number of reasons, perhaps the most important ofwhich is that it
involves human behavior. The problem that the human elementposes for control by the PM is

that it invariably involves the project team, a “we”group rather than a “they” group—a group we
perceive as our friends. Yet it isdifficult to criticize friends, which is exactly what control does.
Control meansinterceding in an activity that someone has been doing and “correcting” it,thereby
implying that someone was at fault and doing something wrong.
Purposes of Control
There are two primary purposes of control: the stewardship oforganizational assets and
the regulation of results through the alteration ofactivities. Thus, we take a moment to discuss the
firstpurpose, conserving the organization’s three primary assets: physical, human,and financial.
Physical asset control is concerned with the maintenance and use of theproject’s physical
assets. This includes the timing as well as quality ofmaintenance being conducted on the assets.
For example, it is important toconduct preventive maintenance prior to that last stage of the
project life cycleknown as the Last Minute Panic (LMP), even though the precise timing of
theLMP is usually unknown. And, of course, physical inventory must be received,inspected,
certified for payment to suppliers, and perhaps stored prior to use.
All project assets, even the project coffeepot, project team’s couch, and projectlibrary,
must be controlled. Most important, however, is the set of physicalequipment that was charged to
the client that must be delivered to the client atthe end of the project.
The stewardship of human resources primarily involves controlling andmaintaining the
growth and development of the project team. Fortunately,projects provide a particularly fertile
environment for cultivating humans, giventhat each project typically offers a unique professional
experience over a shortduration. These experiences, more than performance appraisals and
reports,foster growth and development of project team members.
Last, financial control involves stewardship of the organization’sexpenditures on the
project, including both conservation of financial resourcesand regulation of resource use. Most
accounting tools used for projects areexcellent in this area of control: current asset controls,
project budgets, capitalinvestment controls, audits, and even representation on the project
teamthrough the project accountant.
DESIGNING THE CONTROL SYSTEM

When designing the control system, there are certain helpful guidelines tokeep in mind.
For instance, the primary purpose of the control system is tocorrect error, not to identify and
punish the guilty. Managers must realize thatthe past cannot be changed, no matter how loudly
they yell. Moreover,investment in control is subject to sharply diminishing returns. The cost
ofcontrol increases faster and faster while the degree of control—and its value—increases more
and more slowly.We could, if we wished, control the quality of “hardware store” typewooden
yard- sticks, so that they were accurate to 1/10,000th of an inch. Butwho cares? Moreover, who
would be willing to invest the increased cost in aproduct that is usually given away as a gift?
Thus, there is some optimumamount of resources worth investing in the control process. The
control systemshould exert control only to the degree required to achieve its objectives;additional
control will not help and may be cost-inefficient.In the same vein, as the degree of control
increases beyond some difficultto-define point, innovation and creativity are discouraged until
they are finally shutoff completely. In general, the control system should employ the lowest
degree ofhassle consistent with accomplishing its goals. It is best to avoid annoying thosepeople
whose cooperation is needed to reach project goals. To summarize, thecontrol system should be

cost-effective and should operate with the minimumforce required to achieve the desired end
results.
There are three primary mechanisms by which the PM exerts control:process reviews,
personnel assignment, and resource allocation. The process review is directed to an analysis of
the process of reaching the projectobjectives rather than on the results, per Se. Because results
are largelydependent on the process used to achieve them, the process can be subjectedto control
even if the results cannot.
Control can also be exercised through personnel assignments based onpast project
productivity. Although it is relatively easy to separate workers in thetop and bottom quartiles by
measuring performance or productivity, separatingthe middle two quartiles is much more
difficult so this approach should be usedcarefully.
Controlling resource allocation can be a powerful motivator—anddemotivator. Resources
are usually allocated to the more productive orimportant tasks and this can significantly
influence the attainment of projectresults.
PROJECT EVALUATION
The term “evaluate” means to set the value of or appraise. A project evaluation appraises
the progress and performance relative to the project’s initial or revised plan. The evaluation also
appraises the project against the goals and objectives set for it during the selection process.
A project evaluation appraises the progress and performance relative to the project’s initial or
revised plan.
 Also appraises project against goals and objectives set for it during selection process.
 Projects should be evaluated at a number of crucial points.
 Purpose is to improve process of carrying out project.
Evaluation Criteria
There are many different measures that may be applied in a project evaluation. Project
management team may have particular areas that they want to evaluate for future planning and
decisions. One study identified four important dimensions of project success.

Evaluation Methods
PROJECT AUDIT
The main purpose of a project audit is to assist in satisfying the goals of the project in relation to
its contribution to the parent organization's goals. All elements of the project are reviewed in an
effort to identify and understand strengths and weaknesses.
Objective:
The project audit is a thorough examination of the management of a project, its methodology and
procedures, its records, properties, budgets, expenditures, progress, and so on.
The project audit is not a financial audit but is far broader in scope and may deal with the whole
or any part of the project.
The project audit thoroughly examines:
 Project management
 Methodologies and procedures
 Records
 Properties
 Budgets and expenditures
 Degree of completion
The result of this audit is a set of recommendations that can help both on-going and future
projects to:
 Anticipate and identify potential problems before they get out of hand
 Clarify performance, cost, and time relationships
 Improve project performance
 Locate opportunities for future technological advances
 Evaluate the quality of project management
 Reduce costs
 Speed the achievement of results
 Identify mistakes, remedy them, and avoid them in the future
 Provide information to the client
 Reconfirm the organization's interest in and commitment to the project
Typical steps in a project audit are:

Audit Levels:
An audit can be conducted at three levels:
AUDIT REPORT
Project Termination
Eventually the project is terminated, either quickly or slowly, but the manner in which it is
closed out will have a major impact on the quality of life in the organization. Occasionally, the
way project termination is managed can have an impact on the success of the project. As part of
the project termination, contracts will be closed with all the service providers.
When to terminate a project:
• Sunk Cost Approach
– whether organization is willing to invest the time and cost required to complete
the project
• Two Other Criteria
– the degree to which the project has met its goals
– the degree to which the project qualifies against a set of factors associated with
success or failure
Types of project termination:
• Project Extinction
– project activity suddenly stops
– either successfully completed or high expectation for failure
• Termination-By-Addition
– becomes a new formal part of organization
• Termination-By-Integration
– becomes standard part of operating systems
• Termination-By-Starvation
– a project in name only
Project Termination Process:
• Decision made by broad based committee of senior managers
• Termination process should be specified in project plan
• Termination manager
Project Final Report

• Project Performance
– what was achieved and reasons for resulting performance
• Administrative Performance
– review of how well administrative practices worked
• Organizational Structure
– identify modifications to help future projects
• Project Management Techniques
– recommendations for improvements in future projects

UNIT V
Organizational Structure:
Organizational structure refers to the way a company or organization is setup. It is
usually defined using a hierarchy chart that shows how groups or functions report within the
organization.
A project organization is a structure that facilitates the coordination and implementation of
project activities. Its main reason is to create an environment that fosters interactions among the team
members with a minimum amount of disruptions, overlaps and conflict. One of the important decisions of
project management is the form of organizational structure that will be used for the project.
Each project has its unique characteristics and the design of an organizational structure should consider
the organizational environment, the project characteristics in which it will operate, and the level of
authority the project manager is given. A project structure can take on various forms with each form
having its own advantages and disadvantages.
One of the main objectives of the structure is to reduce uncertainty and confusion that typically
occurs at the project initiation phase. The structure defines the relationships among members of the
project management and the relationships with the external environment. The structure defines the
authority by means of a graphical illustration called an organization chart.
A properly designed project organization chart is essential to projectsuccess. An organization
chart shows where each person is placed inthe project structure. An organization chart is drawn in
pyramid formwhere individuals located closer to the top of the pyramid have moreauthority and
responsibility than members located toward the bottom.It is the relative locations of the individuals on the
organization chartthat specifies the working relationships, and the lines connecting theboxes designate
formal supervision and lines of communicationbetween the individuals.
For Project Managers, a company's organizational structure will affect how resources are
allocated to the project and will be a factor in how much influence the Project Manager will have
within the organization.
Factors in designing organizational structure
There are two design factors that significantly influence the process of developing a project management
structure. These are the level of specialization, and the need for coordination. The project manager should
consider these factors at the moment of designing the project organization in order to maximize the
effectiveness of the structure.
Organizational Structure Types
There are three basic types of organizational structures...
Functional Organizational Structure
Project-Based Organizational Structure
Matrix Organizational Structure
FUNCTIONAL ORGANIZATIONAL STRUCTURE

Functional organizations are structured around the organization's primary functions. In a
functional structure, a common configuration, an organization is divided into smaller groups by
areas of specialty (such as IT, finance, operations, and marketing). Some refer to these functional
areas as ” silos “—entities that are vertical and disconnected from each other. Correspondingly,
the company’s top management team typically consists of several functional heads (such as the
chief financial officer and the chief operating officer). Communication generally occurs within
each functional department and is transmitted across departments through the department heads.
Advantages of a Functional Structure
Functional departments arguably permit greater operational efficiency because employees with
shared skills and knowledge are grouped together by functions performed. Each group of

specialists can therefore operate independently with management acting as the point of cross-
communication between functional areas. This arrangement allows for increased specialization.
Disadvantages of a Functional Structure

A disadvantage of this structure is that the different functional groups may not communicate with
one another, potentially decreasing flexibility and innovation. Functional structures may also be
susceptible to tunnel vision, with each function perceiving the organization only from within the
frame of its own operation. Recent trends that aim to combat these disadvantages include the use
of teams that cross traditional departmental lines and the promotion of cross-functional
communication.
Functional structures appear in a variety of organizations across many industries. They may be
most effective within large corporations that produce relatively homogeneous goods. Smaller
companies that require more adaptability and creativity may feel confined by the communicative
and creative silos functional structures tend to produce.
Examples of functions within a company are:

Advertising
Engineering
Human Resources
Manufacturing
In a functional organization, every employee is positioned within only one function and has one
manager they report to, the Functional Manager. The Functional Manager assigns and manages
the employees work and handles administrative tasks such as employee compensation.
PROJECT-BASED ORGANIZATIONAL STRUCTURE

Project-based organizations are structured around projects and not functions. This type of
structure is also called a projectized organizational structure. A project organization is a structure
that facilitates the coordination and implementation of project activities. Its main reason is to
create an environment that fosters interactions among the team members with a minimum
amount of disruptions, overlaps and conflict.

In a project-based organization most of the organization's resources are involved in project work.
Project Managers have high levels of independence and authority for the project and control the
project resources.
MATRIX ORGANIZATIONAL STRUCTURE

Matrix organizations blend features of project-based and functional organizational structures.
The key challenge with a matrix organization is that every employee has two (or more) managers
they report to, their Functional Manager and the Project Manager. If they are working on
multiple projects, they may have even more managers to report to. The matrix structure is a type
of organizational structure in which individuals are grouped by two different operational
perspectives simultaneously; this structure has both advantages and disadvantages but is
generally best employed by companies large enough to justify the increased complexity.
There are three types of matrix organizations:Weak Matrix, Balanced Matrix, Strong Matrix
WEAK MATRIX

A weak matrix organizational structure maintains many of the features of the functional
organizational structure. The role of the Project Manager is more that of a Project Coordinator.
Their ability to make or enforce decisions is low and most of the authority remains with the
Functional Manager.
BALANCED MATRIX
A balanced matrix organizational structure recognizes the need for a Project Manager. However,
the Project Manager does not have full authority over the project, project staff or project budget.
STRONG MATRIX
Advantages of a Matrix Structure

Proponents of matrix management suggest that this structure allows team members to share
information more readily across task boundaries, countering the “silo” critique of functional
management. Matrix structures also allow for specialization that can both increase depth of
knowledge and assign individuals according to project needs.
Disadvantages of a Matrix Structure

A disadvantage of the matrix structure is the increased complexity in the chain of command
when employees are assigned to both functional and project managers. This increase in
complexity can result in a higher manager-to-worker ratio, which can in turn increase costs or
lead to conflicting employee loyalties. It can also create a gridlock in decision making if a
manager on one end of the matrix disagrees with another manager. Blurred authority in a matrix
structure can result in reduced agility in decision making and conflict resolution.
Matrix structures should generally only be used when the operational complexity of the
organization demands it. A company that operates in various regions with various products may
require interaction between product development teams and geographic marketing specialists—
suggesting a matrix may be applicable. Generally speaking, larger companies with a need for a
great deal of cross-departmental communication benefit most from this model.
How Organizational Structure Influences Project Management
Two of the key project aspects affected by organizational structure types are Project Manager
Authority and Resource Availability.
As you move across the spectrum from Functional to Matrix to Project-Based

organizational structure types, the organization will move from favoring ongoing operations to
favoring projects.
On the left side of the spectrum are Functional Organizational Structures. As a Project
Manager, you will have limited positional authority in these type of organizations. You will need
to rely on expert authority and referent authority to get project tasks completed. Because of this,
you will need to develop your influencing and negotiating skills if you want to be successful.
From a Resource Availability perspective, you will be dependent on the Functional
Managers in your organization to provide you with resources. In these cases, the project
resources will report indirectly to you.
On the right side of the spectrum are Project-Based Organizations. As a Project Manager,
you will have more positional authority the further right your project sits on the spectrum. This
doesn't mean you can just command others, but you will have more formal authority for getting
project tasks completed.
From a Resource Availability perspective, you will also have greater control over your
project resources since they will be more likely to directly report to you and not to a functional
manager.Understanding what type of organizational structure is used by your company will help
you determine how you should manage your project.

Conflict
Conflict is "a situation of competition in which the parties are aware of the incompatibility of
potential future positions and in which each party wishes to occupy a position which is
incompatible with the wishes of the other." Conflict is viewed as a cycle: "As with any social
process, there are causes; also, there is a core process, which has results or effects. These effects
feed back to effect the causes." To understand conflict further, the situation must include
elements of interdependence, emotions, perceptions, and behaviors. For example, conflict occurs
between parties whose tasks are interdependent, who are angry with each other, who perceive the
other party as being at fault, and whose actions cause a business problem.
Conflict can be constructive and healthy for an organization. It can aid in developing individuals
and improving the organization by building on the individual assets of its members. Conflict can
bring about underlying issues. It can force people to confront possible defects in a solution and
choose a better one. The understanding of real interests, goals and needs is enhanced and
ongoing communication around those issues is induced. In addition, it can prevent premature and
inappropriate resolution of conflict. Constructive conflict occurs when people change and grow
personally from the conflict, involvement of the individuals affected by the conflict is increased,
cohesiveness is formed among team members, and a solution to the problem is found. However,
if conflict is not managed properly, it can be detrimental to an organization by threatening
organizational unity, business partnerships, team relationships, and interpersonal connections.
Deconstructive conflict occurs when a decision has not been found and the problem remains,
energy is taken away from more important activities or issues, morale of teams or individuals is
destroyed, and groups of people or teams are polarized.
Destructive conflict has a predictable pattern known as the Drama Triangle. By learning how to
identify these unproductive roles and how to effectively handle each role player, managers can
prevent some conflicts from occurring and resolve those that do. Most individuals know how to
assume the following three roles:
Persecutor refers to a person who uses aggressive behavior against another person, attacking the
intended victim. An attack can be direct or indirect and be physical, verbal, or both. The
persecutor's actions deliver a message that "you are not okay" while making the persecutor feel
righteous and superior.
Victim refers to a person who uses nonassertive behavior so others view them as "I'm not okay."
This behavior encourages others to either rescue or persecute the victim. Victims will feel
helpless, inadequate, sad, scared, or guilty. The victim role is often used because the individual is
feeling stressed, has low self-esteem, or is being persecuted by another.
Rescuer refers to a person who uses either nonassertive or agressive behavior. Individuals
become rescuers because they will not say "no" and unwillingly assume the responsibility of
solving the victim's problem. In contrast, others will assume the rescuer role to demonstrate
superiority over the victim.
These roles are learned in early childhood and are used throughout adulthood. They involve the
perception of oneself or someone else as inadequate or not acceptable. The aggressive and
nonassertive behaviors that are present in these roles lead to win-lose outcomes and do not
provide an opportunity for a win-win resolution.

It is important for a project manager to understand the dynamics of conflict before being able to
resolve it. The internal characteristics of conflict include perception of the goal, perception of the
other, view of the other's actions, definition of problem, communication, and internal group
dynamics.
Perception of the goal becomes a problem when success becomes competitive or "doing better
than the other guy." The focus is placed on the solution rather than attaining the goal.
Perception of the other can create conflict when the attitude becomes "us versus them."
Similarities and differences are emphasized causing division within a group.
View of other's actions can be a problem when the situation is competitive instead of
cooperative. Behavior can be suspicious in a competitive environment.
Definition of problem can result in conflict when the size of the problem is escalated, issues are
misconstrued, and original issues are lost.
Communication in a competitive environment can cause mistrust and information may be
withheld or may be lacking. Communication is not open and honest.
Internal group dynamics can be negative when the group structure is centralized and rigid rather
than safe and open. Conformity is emphasized and tasks dominate over the needs of the team
members.
These characteristics can strongly influence the behavior style of group members and affect the
potential outcome of the conflict. In some instances, the project manager's lack of skills to
effectively manage and resolve conflict can be the problem.
Approaches to Conflict Resolution

In Project Management: A Systems Approach to Planning, Scheduling, and Controlling, five
modes for conflict resolution are explained and the situations when they are best utilized are
identified. These modes are Confronting, Compromising, Smoothing, Forcing, and Avoiding.
Confronting is also described as problem solving, integrating, collaborating or win-win style. It

involves the conflicting parties meeting face-to-face and collaborating to reach an agreement that
satifies the concerns of both parties. This style involves open and direct communication which
should lead the way to solving the problem. Confronting should be used when:
Both parties need to win.

You want to decrease cost.
You want create a common power base.
Skills are complementary.
Time is sufficent.
Trust is present.
Learning is the ultimate goal.
Compromising is also described as a "give and take" style. Conflicting parties bargain to reach a
mutually acceptable solution. Both parties give up something in order to reach a decision and
leave with some degree of satisfaction. Compromising should be used when:
Both parties need to win.

You are in a deadlock.
Time is not sufficient.

You want to maintain the relationship among the involved parties.

You will get nothing if you do not compromise.
Stakes are moderate.
Smoothing is also referred to as accommodating or obliging style. In this approach, the areas of
agreement are emphasized and the areas of disagreement are downplayed. Conflicts are not
always resolved in the smoothing mode. A party may sacrifice it's own concerns or goals in order
to satisfy the concerns or goals of the other party. Smoothing should be used when:
Goal to be reached is overarching.

You want to create obligation for a trade-off at a later time.
Stakes are low.
Liability is limited.
Any solution is adequate.
You want to be harmonious and create good will.
You would lose anyway.
You want to gain time.
Forcing is also known as competing, controlling, or dominating style. Forcing occurs when one
party goes all out to win it's position while ignoring the needs and concerns of the other party. As
the intesity of a conflict increases, the tendency for a forced conflict is more likely. This results
in a win-lose situation where one party wins at the expense of the other party. Forcing should be
used when:
A "do or die" situation is present.

Stakes are high.
Important principles are at stake.
Relationship among parties is not important.
A quick decision must be made.
Avoiding is also described as withdrawal style. This approach is viewed as postponing an issue
for later or withdrawing from the situation altogether. It is regarded as a temporary solution
because the problem and conflict continue to reoccur over and over again. Avoiding should be
used when:
You can not win.

Stakes are low.
Stakes are high, but you are not prepared.
You want to gain time.
You want to maintain neutrality or reputation.
You think problem will go away.
You win by delaying.
Researchers examined the impact of the conflict resolution styles used by individuals in shaping
their work environment and affecting the level of ongoing conflict and stress. Results of the
study showed that individuals who use a certain style to conflicts can create environments with
varied degrees of conflicts. Individuals who use more of a confronting style create an
environment with lower levels of task conflict, which reduces relationship conflict and stress.
Whereas, individuals who use more of the forcing or avoiding styles tend to create an
environment with more task conflict, which increases relationship conflict and stress. The study

suggests conflict develops not only in environmental circumstances but in the styles used by
individuals when confronted with a conflict. The manner in which a person responds to
organizational dissension and uncertainty will influence the responses of others and the
individual's work experience.
1. Mediate the conflict. The manager intervenes and tries to negotiate a resolution by using
reasoning and persuasion, suggesting alternatives and the like. One of the keys is trying to find
common ground. In some cases the project manager can make the argument that the widlose
interchange has escalated to the point that it has become losenose for everyone and now is the
time to make concessions.
2. Arbitrate the conflict. The manager imposes a solution to the conflict after listening to each party.
The goal is not to decide who wins but to have the project win. In doing so, it is important to seek
a solution that allows each party to save face; otherwise the decision may provide only
momentary relief. One project manager admits that she has had great success using a King
Solomon approach to resolving conflict. She confided she announces a solution that neither party
will like and gives the opponents two hours to come up with a better solution they can both agree
on.
3. Control the conflict. Reducing the intensity of the conflict by smoothing over differences or
interjecting humor is an effective strategy. If feelings are escalating, the manager can adjourn the
interaction and hope cooler heads prevail the next day. If the conflict continues to escalate,
project assignments may need to be rearranged if possible so that two parties don't have to work
together.
4. Accept it. In some cases the conflict will outlive the life of the project and, though a distraction, it
is one the manager has to live with.
5. Eliminate the conflict. Sometimes the conflict has escalated to the point that it is no longer
tolerable. In this case the manager removes the members involved from the project. If there is a
clear villain then only he or she should be removed. If, as is often the case, both parties are at
fault, then it would be wise if possible to elirninate both individuals. Their removal would give a
clear signal to the others on the team that this kind of behavior is unacceptable.
In summary, project managers establish the foundation for functional conflict by establishing clear roles
and responsibilities, developing common goals or a shared vision, and using group incentives that reward
collaboration. Project managers have to be adroit at reading body language to identify unspoken
disagreement. They also have to keep in touch with what is going on in a project to identify small
problems that might escalate into big conflicts. Well-timed humor and redirecting the focus to what is
best for the project can alleviate the interpersonal tensions that are likely to flare up on a project team
Negotiations
A project manager wears many hats during a project. One of two hats that the project manager always
seems to wear is that of a negotiator. Negotiations can occur during any phase of the project and multiple
times during each phase. Project managers can negotiate with the project team, customers, and
stakeholders. Some project managers are very good at negotiating, while others are not quite as good. A
good negotiator knows there are two main classifications of negotiations: competitive and collaborative.
A competitive negotiation is a type of negotiation that is like a winner-takes-all battle royal. One side tries
to get all of the resource and not share. This is a dangerous type of negotiation as bridges can be burned
and feelings hurt.
A collaborative negotiation is the opposite of a competitive negotiation. This type tries to make both
parties winners, also known as win-win negotiations. Most project managers look to use collaborative
negotiations, as it will build long term alliances and decrease the chance of conflict later.

Negotiation Among Conflicting Parties

The use of the cognitive analysis approach resulted in more agreement among the parties in
conflict. Cognitive feedback provided information on reasons why the disagreement occurred
among the parties and on areas that needed to be addressed to reach an agreement. This approach
allowed the project members involved in the conflict to concentrate on the real differences that
provoked the disagreement rather than only discussing the effects of the conflicting situation.
The findings from this study suggest the use of cognitive feedback can be effectively applied to
conflict resolution.
Active listening is a proven technique managers can use to help resolve conflict. Developing this
skill takes practice, but it can be extremely effective when mastered. Listening allows the
conflict to take its natural course by giving individuals the opportunity to disagree, express
strong opinions, and show passion for ideas. A respect for individual differences is demonstrated
and an environment of understanding is fostered. Listening is helpful in achieving a winning
resolution by enabling an employee to identify the criteria that is considered an acceptable
outcome. When a manager is able to understand the needs and interests of individuals, the
chances of satisfactorily resolving the conflict for both parties are increased. As a result of this
process, trust and a relationship bond will form preparing individuals to listen also to the needs
of the manager.
An awareness of the potential approaches to conflict resolution and the understanding of their
consequences can provide project managers with a invaluable set of tools to create an optimal
work environment.
Conflict Resolution
The second hat that a project manager always seems to wear is the conflict resolver. Conflict resolution,
just like negotiations, can occur during any stage of the project and can occur between the project team,
stakeholders, and customers. So how does a project manager resolve conflict? Well the first thing he
should do is:
Separate
The first item a project manager must do is separate the conflict down into issues and people. The project
manager must always remember that people have feelings and can harbor hard feelings for a while. The
project manager must remember people are people, and issues are, well, issues--that is a long-winded way
of saying work is work. After separation, the project manager can confront the parties, withdraw from the
conflict, or step in and provide a resolution.
Confront
On a project, the project manager (most of the time) is the final authority when it comes to conflict
resolutions. The project manager confronts both parties and hears them out for a quick resolution. The
project manager has the authority to make decisions in favor of one or the other party.
Withdraw from Conflict
This is where the project manager will withdraw from the conflict and let things work themselves out.
Years of experience have taught veteran project managers this is not a good way to solve conflict.
Compromise:
The project manager will negotiate a collaborative solution to the conflict. The project manager will try
to find a happy medium to allow both parties to walk away feeling as though they won. This will help
smooth things over with each side.
Concede:
Some conflicts are not worth the time of both parties. When the project manager determines what the
issue, he can arrange for one party to have a win and the other party to walk away. This is like
competitive negotiations.

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BA5028 PROJECT MANAGEMENT

A project is “a temporary endeavor undertaken to accomplish a unique product or service”

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Triple constraints of project management

What is project management?

Goal of project management

Project management framework

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Project Life cycle

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 Determination of activity floats

Advantages of using formal project management

Problems in project execution

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Unweighted 0-1 Factor Model

Unweighted Factor Scoring Model

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 Weighting allows important factors to stand out

Advantages of scoring models

Project Portfolio Management

Project Portfolio Process (PPP)

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 Market for offering

The Functional Manager vs. The Project Manager

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Three major questions face the project manager:

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A number of demands are critical to the management of projects:

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5. Dealing with failure and the risk and fear of failure

6. Maintaining breadth of communication

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 Someone who is currently available

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 consultant (e.g., auditors) loyalties (to employer or to client or to public)

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Project team roles and responsibilities

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* Project Team Member

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Step 1:Defining the Project Scope

Step 1:Defining the Project Scope

Step 2:Establishing Project Priorities

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Project Priority Matrix

Step 3:Creating the Work Breakdown Structure

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A work package is the lowest level of the WBS.

General steps for designing and using the WBS:

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Step 4:Integrating the WBS with the Organization

• Organizational Breakdown Structure (OBS)

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• Ties the organizational units to cost control accounts.

Step 5:Coding the WBS for the Information System

• WBS Coding System

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