Project Management

PROJECT MANAGEMENT
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MODULE 1 INTRODUCTION 1.1. What is a project A project is a one-off process with a single definable end result or product. o Finite life cycle, definite starting and completion points on time, within cost to required standards of quality Much of project management is concerned with planning and controlling three key variables o time, cost, quality 1.1.2 Projects and Other Production System 3 main categories of projection Mass Production Large number of repetitive items Capital-intensive and highly mechanistic, little active management intervention or control once system set up
Batch Production
Unlikely continual high demand for product or requires modification Re-tooled, reconfiguration process started up again for next batch Management intervention and control is greater control
Project (non-repetitive) production
One-off, non-repetitive item High level of complex management planning and
Project versus Programmes Programmes longer duration than individual project within it. 1.1.3 Characteristics of Projects 1. 1. It involves a single, definable purpose, product or result 2. 2. It usually has definable constraints or targets time limit 3. 3. It uses skills and talents from multiple professions and organizations multidisciplinary team 4. 4. It is unique one off activity never repeated exactly 5. 5. It is somewhat unfamiliar 6. 6. It is a temporary activity accomplish a goal in given period of time, once achieved project ceases to exist 7. 7. It is part of the process involved in working to achieve a goal clear start and finish points 8. 8. It is generally of secondary importance to the organization 9. 9. It is relatively complex Project management covers whole range of functional management areas Financial awareness Marketing appreciation Technical knowledge Planning skills Strategic awareness Quality management
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1.2 What is Project Management
1.2.2 Definition of Project Management The process of planning and executing a piece of work from inception to completion to achieve safe achievement of objectives on time, within cost limits and to the specified standard of quality And: The organizing, planning, directing, co-ordinating and controlling of all project resources from inception to completion to achieve project objectives on time, within cost, and to required quality standards. Achieving time, cost and quality targets, within the context of overall strategic and tactical client requirements by using project resources Concerned with the lifecycle of the project: planning, and controlling the project from start to finish
Typical project-management time-cost-quality continuum 1.2.3 The Basic Project Management Structures 1.2.3.1 Internal Project Management Project teams operating within functional units Single designated person, namely the project manager, responsible managing the project organization Project manager acts independently outside normal functional authority structure Project manager acts as a single leader brings together various functional and project resources Project require a number of different functional specialist work together multidisciplinary group under project manager Project manager responsible integrate multidisciplinary group into multidisciplinary project team Project manger has to negotiate with individual function manager to share resources Project manager concentrate on delivery of project objectives on time, cost quality, functional manger concentrate on pool resources conflicts between the 2 can arise Two lines of authority project manager and functional manager Decision-making, accountably rewards and potential benefits shared Project structure temporary project completed function units are permanent Project can originate from any level of organization Project structure requires assistance of the standard support function i.e. HR, finance, IT
Project manager given responsibility held accountable for project success. Project goals versus functional goal, distinguishing project and functional management roles, Project Manager depend on people who report directly to other manager. Project management is more complicated and diverse than in other management areas. 1.2.3.2 External Project Management External project manager acts as an agent on behalf of the client External system more flexible than internal system, external consultants hired as required Instructions and communication between external consultants and client cross the organizational boundary. This boundary represents a barrier to effective communication Team allegiance lower, owe no allegiance to client organization External project manager has direct control over project team Functional structure of the organization has no direct relevance to or impact on project Greater requirement for risk transfer and contractual control in external project management structure No in-built knowledge of the firm. Can be disadvantage 1.3 Characteristics of Project Management
1.3.1 Introduction International and industry specific benchmarks, professional provide advice in relation to full life cycle of a project from inception to completion. Important elements: 1.3.2 Multiple objectives Time, Cost, Quality 3way continuum Impact on each other alter one it impacts the other Success and failure criteria set by the client or executive of organization at the outset Cost-quality curve success failure criteria determined levels of performance International project management association (IPMA) International approach co-ordinates the activities of specific international professional association ensures that the codes of practice and bodies of knowledge of various national project management associations adhere to one standard as closely as possible, allowing only for essential cultural and economic differences Association of Project Management (APM ) in UK Project management Institute (PMI) in USA Time, Cost, Quality planning-and-control techniques used in project management is as applicable to agriculture as to process engineering Three largest member groups use APM are- IT, Process engineering then construction Standardize how projects are set up and managed, what cost control systems should be used and so on. Traditionally project mangers were select from functional specialist in the organization Modern concept include professional project manager is a specialist manager educated and trained in project management and relevant industrial experience in project management rather than in design or
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1.3.3 International cooperation and standards
1.3.4 Multi-industry/Multidisciplinary practitioners
1.3.5 Generic benchmarks 1.3.6 Specific Provisions
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some other specialization 1.3.7 Project life cycles Project manager concerned with following so that client can make informed decisions during design and manufacture on matters that may incure a cost penalty in future. Typical life cycle Inception - client decides to develop a project Feasibility - project team seeks to establish validity of proposal from all relevant perspectives, market research statement of viability Prototype fully tested and evaluated prior to full production Full design development developing detailed production information prepare drawings, define required standards Tendering and contractual arrangements common for own production facilities tender is a price given to contractor in return for doing work Manufacturing assembled during the manufacturing process Commissioning switching the system on Operation actively used for purpose it was originally intended Decommissioning system is switched off Removal and recycling environmental impact of recycling.
1.4 Potential Benefits and Challenges of Project management 1.4.1 Introduction International, interdisciplinary concern with whole life cycle of project, and uses time, cost, and quality. 1.4.2 Potential Benefits of Project Management Increased concentration on a specific objective More efficient use of company resources Increased accountability Potential for healthy competition between functional and project unit Reduced disruption of functional operations Enhanced visibility of strategy implementation Consideration of life-cycle costs Increased product development and release speed Improved formal and informal communication Control of simultaneous multiple objectives Improved security of project related information Improved team spirit and cohesion Improved innovation through the use of multidisciplinary decision making Opportunities to develop in-house interdisciplinary and multidisciplinary teams, individual and management skills
1.4.3 Potential Challenges of Project Management Key staff may be taken from the functional units Project and functional mangers compete for same resources detrimental effect on company as a whole Project team members receiving conflicting order from functional and project managers Powerful functional manger deprive project of necessary resources Need arises for an additional level of authority. Project sponsor ensures functional and project manger have equal authority over resources no destructive competition occurs Functional manger less flexible than project manger feel pressurized by project demands Staff develop different attitude have to develop flexible approach and used to working in multifunctional environment
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Project staff have problems in re-adjusting to functional work after project completed
1.5 The History of Project Management 1900 1944 1950 1957 1958 1960 1960 1967 1970 1980 1988 1996 1997 Gantt chart introduced Atomic Bomb first really complex, high tech project need for new management approach identified First network diagrams, further development of Los Alamo principal into now called Project Management Dupont created Critical path method (CPM) US Navy launched program evaluation and review technique (PERT) Computer technology provided improved capabilities Association of Project Management (APM) in UK and Project Management Institute (PMI) in US Graphical evaluation and review technique (GERT) Planning and costing based on an earned value concept widespread Project management software for PC Body of Knowledge for APM British standard BS6079 European International standard ISO 10006
1.6 Project Management Today Strategic project plan (SPP) allows accurate and standard recording and reporting of all aspects of a projects development, Standardization includes design, execution, implementation and use. Used by numerous different disciplines evolved into integral management component wide range of industries Fundamental contributor to operational process Internationally important discipline, As a profession growing rapidly in many countries
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Module 2 Individual and Team Issues 2.1 Introduction
People make projects succeed or fail they make the decisions, predict, plan for and control the progress. Most project management is team-based. Project Manager both team member and project tem leader. After motivation, communication most important single element in project team effectiveness, using informal and formal communications, and also internal and external communications.
2.2 The Project Manager 2.2.2.2 The Concept of the Project Manager Projects tend to be run outside the traditional hierarchy of the organisation. The project managers role is by its nature a temporary one, superimposed on the organisation. It does not have the power associated with traditional hierarchical positions. Biggest single issue faced by project managers arises because they have the authority to make decisions about project priorities, schedules, budgets, objectives and policies, but often do not have the official authority to give direct orders to the people who must carry out the work as a result of these decisions. must rely on other forms of influence, Source of Influence:
2.2.2.3 The Central Position of the Project Manager Focus on issues in detail while at same time keeping a clear view of the project as a whole. Focus within the overview ensures people and resources obtained and utilised in an integrated way. reorganizing to overcome problems and difficulties arise from time to time. Like a spider at the centre of a web Receiving and issuing more information than anyone else on the project. Highly paid messenger and primary decision-maker Project manager needs intellect to devise the project strategy and diligence ensure actions are taken. Directs the project and people toward the ends. Requires energy and ability to motivate staff to achieve project goals 2.2.2.4 The Role of Project Manager The primary requirements of the project managers role can be summarised as: Planning the project activities, schedules and budgets; Organising and selecting the project team; Interfacing with the client, the organisation and all other interested parties; Negotiating with suppliers and clients; Managing the project resources; Monitoring and controlling the project status; Identifying issues and problem areas; Finding the solutions to problems; Resolving conflicts.
Delivering the project: Within the agreed time limit; Within the agreed cost limit; To at least the minimum quality standards laid down; To the satisfaction of the client; In compliance with the strategic plan of the organisation; Within the agreed scope. These objectives are sometimes summarised as shown
project scope defines the limits of the project. It determines what is and, equally importantly, what is not part of the project. Cost, time and quality standards are established based on the agreed scope before the project commences. project creep Any changes, usually impact on one or more of the Cost, time and quality standards. interface management, navigating or controlling the boundaries between the project and functional teams/departments - maintains a balance between managerial and technical functions. Control system for formal and informal communications across interfaces, an authority system in regards to the distribution of information, broad generic tool for managing information flow across an organisation and Configuration Management System (CMS) often a part of the overall Interface Management System (IMS). Personal, Managerial and Leadership Skills soft management skills and attributes, the project manager should be flexible and adaptable; be able to concentrate on more than one thing at a time; demonstrate initiative; be persuasive; be a good communicator; be able to keep multiple objectives in sight and be able to balance them; be well organised; be prepared to generalize rather than (always) specialize; be a good planner and implementer; be able to identify problems, find solutions and make sure that they work; be a good time manager; be good at negotiating and influencing (rather than arguing or giving orders); be diplomatic. Technical and Business Skills harder characteristics include understanding how to set up a team and run it; the ability to develop complex time and cost plans and achieve them; understanding of contracts, procurement, purchasing and personnel;
active interest in training and development; understanding of the technology that is central to project success; ability to translate business strategy into project objectives. 2.2.2.5 Selecting the Project Manager A good functional manager with the skills required for project management is by far the best option because of the understanding of the industry and the organisation that is brought to the post. Such a person will be familiar with the technology and bring credibility built up during performance of the functional role. disadvantage that the project manager is not used to the organisation and there will therefore be a learning curve involved. In addition, the project manager does not owe any particular allegiance to the organisation and there may therefore be scope for some disparity of interest.
External consultant
2.2.3 Some Essential Project Manager Requirements 2.2.3.1 Introduction The project manager must have a reasonable command of: 2.2.3.2 project planning Planning is usually the first stage of any project and is one of its most critical. greatest during the early stages of a project. covers the activities to be accomplished and the sequence in which they are to be executed. Task Responsibility matrix (TRM). A TRM typically shows: key milestones; individual important activities; general responsibilities; specific responsibilities; dates. Responsibilities would include such detail as responsibility for: approval; preparation; checking; making and input; authorising. A project TRM has two axes On one axis is a list of activities and/or outputs required. On the other axis is a list of the various individuals or groups involved in delivering the activities or outputs. The intersections on the matrix defines the responsibilities of individuals or groups. This is carried out for all activities/outputs throughout the project life cycle. also clearly show dates for individual actions. In most cases, reports have to be produced by a certain date. 2.2.3.3 Authorising two perspectives: 1. Accumulating sufficient authority to get the job done; and, 2. Determining how much of their authority to delegate to others involved in delivering the project. Authority is a type of ability to control and direct that is delegated from higher levels in the organization; Power, in contrast, is given to an individual by subordinates at lower levels Organizing how the work is to be executed. This includes devising the organizational structures and team management approaches to support
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2.2.3.4 Team Organizing

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the project Dominant prevailing philosophies is to contrast the current practices with the main views on organizational procedures. Classical theory.(traditional view) Management is the process that is executed in order to meet some form of organizational objective or group of organizational goals. Simple components of a production process. Process is highly complex and automated and there is virtually no flexibility or potential for deviations within it; the process is self regulating Empirical theory. Basic and essential similarities between the systems and processes research is based on observation and interpretation The idea is that if enough observations are carried out, the correct process or approach will materialize from the sample and data set Behavioral theory. There are two main schools within behavioral theory. The human relations school considers the interpersonal relationship between people and their work. (Intrinsic links between the behaviour of individuals and the behaviour of the organization). Social system school considers the social characteristics of an organization and of its component individuals. As the social characteristics of the organization change, so there is a need for the social characteristics of the individuals who make up that organization to change. All organizations evolve and change. Decision theory. Studied mathematically. Organizations can be observed and modeled, and the models can then be used to interpolate and predict organizational efficiency in other organizations. Decision theory makes use of management science and operational research techniques. Systems management theory. Characterized by the throughput of resources, and each stage in the production process can be characterized separately. Inputs, processes, and outputs can be considered separately as component parts of the whole. The project manager has to take a number of different people with different backgrounds, qualifications, experience etc, and weld them into a team. Establishing a successful multidisciplinary team is a major undertaking 2.2.3.5 Controlling Being responsible for establishing desired targets for performance, measuring actual performance against the targets, and initiating corrective action where the actual performance deviates too far from that desired four stage process, Targeting. Establishing some kind of workable and achievable target or series of targets. Measuring. Extent to which actual progress is achieving targeted progress. Formal, such as by the use of earned value analysis or informal, Evaluating. Identification and isolation of areas where progress is not being made in accordance with the overall project plan, and consideration of any alternative options for appropriate corrective action. Important to use variance analysis retrospective tool in conjunction with a system for forecasting or predicting the future. Correcting. Proposed corrective actions for reducing or eliminating the effects of deviations from target identifies where problems are occurring. The correction process identifies why the problems are occurring, puts a programme in place for correcting them, and then monitors actual and planned correction performance (often called a second level variance analysis)
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2.2.3.6 Directing
converting organizational goals into reality through the use of organizational and project resources. Setting up the project team. Team Training and development Supervision Individual Team motivation Co-ordiation Ten primary sections in any good teambuilding process. 1. Individual and team commitment. 2. Developing a sense of team spirit. 3. Obtaining the necessary project resources. 4. Establishment of clear individual and team goals and success/failure criteria. 5. Formalization of visible senior management support. 6. Demonstration of effective programme leadership. 7. Development of open formal and informal communications. 8. Application of reward and retribution systems. 9. Identification and management of conflict. 10. Development of heterogeneity control and cohesiveness. Classical leadership traits are as set out next. Decision making ability. Problem solving ability. Ability to integrate new team members. Interpersonal skills. Ability to identify and manage conflict. Communication skills. Interface management skills. Factor-balancing skills. 1) 1) formed for specific project and last until project completed 2) 2) complete life cycle of project rather than just individual stages Apply a range of leadership skills and styles Phase 1 high task-related, low people related leadership (tell team members what to do) Phase 2 high task-oriented and high people oriented leadership (persuade them) Phase 3 low task-oriented and high people-oriented leadership (team to participate) Phase 4 low task-oriented and low people-oriented leadership (delegating control to other members) Task oriented leadership relates to the tasks itself, including the actual mechanics of the process. People oriented behaviour relates to the leadership of the individual members of the team and how they work as part of the team.
2.2.3.7 Team building
2.2.3.8 Leadership
2.2.3.9 Lifecycle Leadership
2.3 The Project Team Project management uses these functions in order to execute specific projects that are subject to: time constraints; cost limits; quality specifications; safety standards. The objectives are typical project success criteria. Let us consider each function in turn.
2.3.2 Project Teams within Functional Organizations Typical functional organization for a manufacturing company
Typical project organization structure
numerous advantages associated with operating project teams within functional organizations.: The structure provides excellent flexibility and full use of employees. Employees are given the opportunity to gain new experience and to develop new skills. The overall team and cross functional working attitude of employees is improved. Individual experts can share their expertise across a number of different projects. Experts working together can create new synergies that cannot evolve in the rigid functional structure. Employees working on projects are not prevented from following their primary career path within the function. Project membership offers new potential career paths within the organization. Making use of internal project team members is often less costly than employing a series of external consultants to provide the same service. The disadvantages associated with running project teams within an existing functional organization include the following: The function continues to operate as normal despite being depleted of resources (at least to some extent) by the project. This can become a serious problem where a number of key people are assigned to projects. Functional managers often try to offload their less efficient or productive people to projects in the hope that this will minimize the negative effects on the function. People who have worked for a long time in a functional environment may have difficulty in adapting to the demands of the project environment. Several projects are likely to be running simultaneously within organizations. A project manager sometimes has difficulty in ensuring that his project is given the priority and attention that it requires.
There are often communication buffers and bureaucratic layers between projects and senior management while functional units tend to have more clear and longer established communication channels. Motivation can be a problem unless the project is given high profile senior management support. Project team members tend to see their project responsibilities as secondary to those of the functional unit. 2.3.3 Team Multi-disciplinary and Heterogeneity Issues Sentience Interdependency Pooled interdependency Sequential interdependency or reciprocal interdependency Differentiation (specialism) Integration Is the tendency for individuals to identify with their own professions and background Tendency for teams to depend on inputs from more than one individual in order for the whole system to develop. Where individual sections or divisions make contributions to the whole. Where an input is required from a number of individuals or sections before the process or system can move past a milestone Contributes to sentience and causes teams to fragment. Is simply the process of defining responsibilities and control, and ensuring everyone adheres to the definition.
2.3.4 Group and Team Processes Groups are collections of individuals who work together in pursuance of a common objective. Teams are collections of individuals who work under the direction of a team leader in pursuance of a common objective. teams tend to: Brainstorm problems more effectively; Consider a wider range of factors; Develop an enhanced logic flow; Generate more new ideas and original thoughts; Discuss and consider a wider range of potential solutions and implications; Develop better approaches to weighing up the consequences of a range of potential actions; Solve problems more accurately and quickly. 2.3.5 Project Team Performance Heterogeneity is the extent to which the team members are unlike each other, either in terms of qualifications, experience, outlook Cohesiveness is a combination of how much the members of the team want to be members, how well their personal goals are aligned to the team goals, and to the overall commitment and morale of the team members.
2.4 Project Team Staffing Profile and Operation 2.4.2 Project Team Staffing balance of various skills and experience is sought in terms of technical skills;
management skills; administrative skills; interpersonal skills. Project manager recruits people from different functional teams typical factors for consideration include: immediate and long-term availability; ability; continuity requirements; team working skills; special skills. characteristics found in a successful project team staffing process include the following examples. Staffing is generally voluntary. The project team is staffed in relation to the value of the project. Project teams are staffed and operated in a less formal manner than functional teams. Project managers lead by example. Project teams are flexible and responsive. Project teams interface. Project teams innovate and evolve. Functional managers who provide resources for project teams receive recognition or credit when the project team performs well. There is some research evidence to suggest that conflict should be promoted during the staffing process. -forming, storming, norming and performing 2.4.3 Project Team profile 2.4.3.1 Project Team Mix project in widest possible terms include contractors personnel subcontractors clients in-house staff any other interested bodies ie inspectors, government, community groups, and lobby groups 2.4.3.2 Uniqueness of Project Teams positions that need to be filled: project manager; project planner; project controller. 2.4.4 Project Team Operation Enhance the operation of teams by improving team performance, typical common areas include Establishing measurable objectives. Identify and acknowledge the stakeholders, who will determine, Work with the stakeholders to determine and state explicitly what their dimensions of success are. agreeing criteria for success cannot be overemphasized. Stakeholders management. Stakeholders are sometimes referred to as the invisible team. Protect the image of the team. Develop a network of useful contacts who may be able to help or advise the project team as required. Use the network to identify and provide quality project resources when and where they are required.
Establishing and planning measurable targets. Plans understandable and used in practice Plan different levels overviews, detailed, contain as much information as is known Plan for unknown contingency arrangements Set realistic and achievable milestones Planning and establishing processes Establish ground rules Creating environment team members are energized to air their opinions, take responsibility Plan for managing and developing relationships Project team should operate within a flexible environment
Leadership Strong, credible leadership provide clear direction stimulate high performance from members Continual research to improve internal and external workings Rewarding good performance, poor performance not tolerated.
Membership and identity Team members support, requires respect Active fellowship Specialist Team members understand their roles and what entail Team members aware of their individual contribution, recognize their value to the team
Communication system
Formal or informal meetings, exchange information, solve problems and make decisions, confirm group identity, involvement, reinforcing rules and celebrating success Advance preparation taken place and well run Accept and address conflict Establish effective formal communication system use informal communication Efficient communication with external bodies, adequate communication functioning correctly. Interface with internal legal services department Result in action, time scales and individual or group responsibilities
Team separation
Expected to deliver on time Rely on ability of fellow team members to deliver Commitment and momentum maintained Regular contact enables clear communication lines
Information technology Advantage to making use of IT
Reduces need accommodation and facilities, video link conferences Reduced direct interaction fewer conflicts personality clashes Records accountability and audit become simpler Less direct supervision greater freedom of action Less control bureaucracy
Disadvantages Expensive, face-to-face contact may be necessary

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Loneliness - motivation no daily interaction with work mates fewer opportunities develop team spirit Manager lose control of work Time differences Video-link not the same as direct face-to-face Natural hostility towards advanced IT IT can go wrong Team building cohesion severely restricted
Teams in general optimum efficiency and effectiveness
Regular face-to-face meeting Performance measures and completion criteria are clear Team members given responsibility and accountability for their part of the project Clear time commitments are established members expected to adhere
2.5 Project Team Evolution 2.5.2 Project Life cycles Project progresses though life cycle, team adopt different perspectives appropriate to each stage. New product development cycle
Inception Feasibility Preliminary research and development Manufacturer of prototype Development and testing of prototype Feedback and analysis Second stage research and development Final trials and approvals Production Commissioning Use Decommissioning Recycling
Five clear stages Conception and feasibility Conception come up with the idea Feasibility evaluation need or demand project claim, what required in order to produce it how much it will cost, how long it will take Detail analysis defining precise scope of project requirements Time cost estimates, clear statement of manufacturing and production requirement, clear time scales, summary of project resources required. Approval process end of each major lifecycle stage, approval barriers sometimes referred to as gateways. Set up production system, tends to form a high proportion of project costs, lower proportion of mass production costs. Production phase. Produces whatever result of project requires, could contain numerous subsections, minor repetitions of whole
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Outline proposals and definition
Tooling up Operation and production

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life cycle, Decommissioning Reassigning resources, remain after project competed, scrapping production equipment, recycling where possible.
2.5.4 Project Team Evolution and Leadership styles required
Team Evolution Forming
Description of Team Team meet, first time introductions, aims and objectives established Task responsibility matrix Organizational breakdown structure Project staff register Baseline set of team and project objectives establishing duality Ensure all team members know all other team members, the rule of operation are established, everyone know their own responsibilities and objectives. Establish cohesiveness. Build up a clearer picture of each person interim of ability commitment skill, interpersonal skills tendency for conflict as perceptions develop Development of a cohesive group ideal is imperative, essential to productivity and effectives. Other wise result in reduction of commitment and individual motivation and group; fragmentation Team standards formal and informal standards of behaviour expected. Starts as soon as storming process completed organizational hierarchy and power structure established. Only perform at full capacity has overcome internal fragmentation. Take place if a full set of norms in place all team members satisfied equitably balanced and contribution of each member are adequate resolved most of its interpersonal conflicts.
Leadership style required Telling: High task low people oriented This is necessary because the cohesion of the team has not yet occurred and they have to be driven with a high task orientation.
Storming
Persuading: high task high people Individual and group relationships are just starting to form have to continue with a high task orientation but also develop a high people orientation Participating: Low task high people continued high people orientation but with a reduced task orientation Delegating: low task low people team is established and the task understood. therefore adopt a low task orientation and a low people orientation.
Norming
Performing
Adjourning
All teams will come to an end, either naturally through the project or sooner via themselves! It is an important stage, people should be aware of what is expected of them when the project is complete, i.e. it is straightforward for contractors, but any internal secondments should be pro-actively managed.
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2.5.5 Group thinking Occurs when group of individuals become very highly sometimes totally committed and motivated toward a set of beliefs, aims and objectives that the group shares.
Absolute commitment to the project Lack of respect for competitors
Disproportionate perception of the value of their project negative propaganda - High cohesion commitment development of misdirected perception of direct and indirect competition. Intolerance of any dissenters people with alternative points of view. Follow the party line or leave the team Internal censorship can be extremely dangerous. Perceive something is wrong choose to censor themselves and remain silent rather than challenge the leader or be seen to be in conflict with the aims and objectives of the group Cohesion and commitment are very high, Information is filtered to portray only good results and nobody is willing to criticize the team and leadership. False sense of invincibility. Unwillingness to implant internal change. Team filters. Filter all information entering their system in order to ensure only positive information enters and negative information is suppressed or reduced. Negative feedback and criticism is unacceptable in group thinking
Intolerance
Fear
Self-delusion
Selective reporting
2.6 Project Team Motivation 2.6.2 McGregor and Maslow McGregor famous Theory X (lazy bastards) and Theory Y (willing to work and compete job without close supervision) Maslow hierarchy of needs Self-actualization Esteem Belongingness Safety Physiology Direct implications for project management. Hierarchy should be considered from a number of different perspectives Relative importance of the needs Time-based requirements Unsatisfied needs Complex needs
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Need for sense of belonging or togetherness satisfied functional settings Motivate team members at the lower needs levels rather than at the higher ones. Sense of self-actualization, influences cannot accommodate it result can be resentment, employee dissatisfaction higher level need more subjective than lower-level ones, easy to
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determine when person need food, more difficult for selfactualization. Anticipation Fulfilled needs are no longer motivators. Motivated by belief that the future will provide fulfillment of the next level of needs. Reward system needs to reflect this belief.
2.6.3 Equity Theory and Expectancy Theory 2.6.3.1 Equity Theory Equity theory based on the perception what they do and how they are rewarded. Any perception of receiving an inadequate personal reward generates a feeling of inequity (unfairness). Choices facing employee perceived inequity, Seek promotion Seek increase reward level Make a lesser contribution Increase other inputs Positive inequity individual perceives an inequity as being in his or her favour Negative inequity person feels undervalued. 2.6.3.2 Expectancy Theory Suggest that people are motivated to make efforts to achieve goals that they believe will result in obtaining the rewards they desire. 2.7 Project Team Communication 2.7.1 Introduction Information flows in two directions 1) 1) inwards to the project manger from other people and organisations 2) 2) outward from the project manger to others both formal and inform communications used.; 2.7.2 Project Communication Project manger sends out information directives and objectives and then monitors actual performance. Good communication involves high-quality information sharing and exchange Depends on quantity and quality of face-to-face meetings Wide range of communication include: Meetings Telephone conversations Letters and memos Email Notice boards Chats Seminars Project plans and reports Newsletters Message usually falls into two of four principal categories: formal or informal, and internal or external 2.7.3 Formal and Informal Communication Formal communication
Formal lines of communication ensuring that project stakeholders get whatever information they need, in suitable format when and where they need it. Accurate and timely information. Formal communication lines are strictly adhered to and rigorously maintained. Monitor and record the flow of information Formal communication tools include: Frequent issued reports on all aspects of the project, defined distribution lists Regular project meeting, information disseminated in person- encourage debate and discussion Project memos Project newsletters distributing information of lower urgency or social nature Project notice-board Project away-days and events Informal communication Less easy to mange and control essential revolve around the grapevine Informal communication tools include: Lunch and dinner appointments with colleagues Telephone conversations Coffee breaks Evenings in the bar after away-days Social events Influence channels in a positive way to encourage good working relationships between team members. 2.7.4 Internal and External Communications
Internal - project team members External to all other people Informal channels solely used for the purpose of internal communications Internal communication rely on team members willingness to communicate and disseminate information openly External communication - absolute control in the dissemination of information Essential to nominate an individual who responsible for all external communication. Individual approve all non-routine communication with outside parties. 2.8 Project Team Stress 2.8.2 Origins and Symptoms of Team Member stress Origins Typical reasons: Team members having project and functional bosses, who sometimes make conflicting demands on their time Having to work to strict time, cost and quality limits Teams having only a relatively short life span Projects tending to be relatively complex Operating within a frequently changing environment Main sources Characteristics of stress Domestic and family problems, financial problems, health Project manager control Outside
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Type of stress Personal

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concerns Work Environmental High workload, individual responsibility, conflict and leadership responsibility Outside both individual and work place, national economic activity, change in technology, new work practices, change in government, fear of unemployment Some control No control
Symptoms Physiological Symptoms Raised blood pressure, Increased heart rate, Advanced symptom Persistent nausea, Migraine headaches, Trembling limbs Sweating and visual disturbance Disorientation Memory loss Aggression and perceived physiological symptoms Absenteeism increases Attendance decreases Working patterns
Psychological
Sleep interruption, Depression, Anxiety Overall loss in energy and enthusiasm Increased number of complaints Listlessness
Behavioural
2.8.3 Stress Management 2.8.3.1 Individual Stress Management Healthy diet Reduced tobacco and alcohol consumption Regular exercise Physiological awareness and control Communication Periodic re-alignment and reconciliation between goals and self-limits Psychological self examination and seeking advice where necessary Breaks and holidays Poor diet, lack of exercise and higher stress levels linked. Physiological control seeks to counter and relieve stress by a range of methods including control breathing and respiratory function Communication talk about what is causing the stress. 2.8.3.2 Project-Team Stress Management Work practices that attempt to control work stress Deregulation Reasonableness
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Too rigidly defined and applied work practices can be a source of great stress for employees. Simple gestures such a understanding if someone needs time off work
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for family-related reasons, overlooking a short-term drop in productivity Fairness Open-mindedness Flexibility Approachableness Ensure fair play by balancing the workload across all team members Open minded attitude Peaks and troughs in work demand, use troughs to allow team to take a break or reduce output for a while Being immediately approachable a problem shared is a problem halved
2.9
Conflict Identification and Resolution
2.9.2 Sources of Conflict Conflict results to some extent from change however numerous reasons include: Onerous resource constraints and limitations Pressure to increase speed and/or reduce costs Pressure to meet demanding deadlines Imposition of new aims and objectives Change and consequent need for re-alignment Conflicting functional and project demands Personality clashes Misunderstanding and differing interpretations of requirements Incorrect or late information and communications Individual perceptions of inequalities Underlying resentment 2.9.3 Conflict Characteristics Relationship between conflict levels and organizational factors as follows: The greater the heterogeneity or multidisciplinary nature of the team the greater the potential for project team conflict The lower the project managers degree of power and authority within the functional organisation, the greater the degree of potential for project team conflict The lower the degree of specified and quantifiable objectives, the greater the degree of potential project team conflict The lower the level of individual communication and accountability within the project team, the higher the degree of potential project team conflict. The greater the degree of change required, the greater is the potential for conflict to arise. The lower the relative perceived prestige of the project, the greater the degree of potential conflict 2.9.4 Approaches to Conflict Traditional view is that conflict is always bad and avoid if possible resolve as quickly as possible Contemporary views, conflict may be useful, maintain group dynamics prevent team stagnation, divergences are monitored and managed contribute to team development and evolution In project environment six principle areas where conflicts regularly occur: 1. 1. When onerous deadlines have to be met 2. 2. Where change occurs
3. 4.
level
3. 4.
Where errors or omissions are discovered When resources are reduced or are supplied at an inadequate
5. 6. 7. 8.
5. Where people clash because of personalities 6. In agreeing areas for concentration 7. In agreeing priorities 8. Where uncertainty is high Conflict greatest during highly active phases When seeking to identify the source of conflict the following questions should be asked: What is the source of the conflict? Why is the conflict occurring? What is the potential impact of the conflict on the project? Can the conflict be reduced or eliminated and if so how? Could the conflict have been foreseen and can similar occurrences be avoided in future? As a general rule, project objectives should be: Clear and precise Realistic Related to each other (where appropriate) Achievable with the resources and constraints given Measurable Compatible with the overall strategic plan Agreed by senor management Communicated to everybody in the project team Communicated to stakeholders (where appropriate) 2.9.5 Conflict Management Alternative approaches for managing conflict Conflict Avoidance Conflict absorption Conflict resolution imposition Negotiated conflict resolution Avoid becoming involved, arise when no reasonable or acceptable solutions or insufficiently important Absorb the cost of conflict where mistake made, personalities of the individuals No alternative, extreme or emergency situation. Attempt to agree or negotiate a mutually acceptable solution.
Deal with conflict as quickly as possible ensure performance does not suffer. Process for dealing with conflict Calm everyone Clarify facts Acknowledge positions and feelings and respect viewpoints Focus on cause of conflict not apportion blame Establish best option priorities Attempt to get everyone to accept the decision Present as a win-win situation Look for evidence of personality clashes and speak to people involved Look for evidence of victimisation or specific targeting
Examine project-function interface working correctly Talk to everyone gather relevant background information Talk to functional managers concerned and ascertain functional involvement or connotations. Set a timetable for reconciliation Monitor system make sure things improve Learn from occurrence and try to avoid future conflicts, many arise from similar sets of circumstances
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Module 3 Project Risk Management 3.1 Introduction Identify the risks that are present. Transfer or reduce unacceptable risks and then set up monitoring and control systems so that residual risk can be managed effectively. 3.2 Background to Risk 3.2.1 Introduction 3.2.2 The Concept of Risk Risk in our context is a measure of the probability and consequence Likelihood (probability) of an event occurring and on the consequences (impact) if that event should it occur. Risk is therefore a function of the event, the probability of it occurring and the effect if it occurs Risk = f(event, uncertainty, consequence) First level equation for risk relates the probability of an event occurring and the consequences of that event occurring. Risk = f(event, hazard, safeguard) Second level equation for risk relates to source of danger is a hazard and the mitigation or defense against the hard is a safeguard. Both levels are likelihood of the event occurring is important Risk exposure is a measure of the vulnerability of the organization to specific risk types or impacts. Exposure is a function of a number of different variables. Sensitivity to risk is a function of three elements 1. Significance (or severity) exposure to realization of different events 2. Likelihood different events occurring and ability to mange the implication 3. Sensitivity - measure of likelihood and impact Greater the range of possible outcomes from a particular decision, the greater the risk that is associated with that decision. primarily concerned with the consequences of a specific risk impact, and especially the ability of the organization to take the hit and continue. As with exposure, two apparently similar companies can have different sensitivities Questions one may ask What can go wrong with the project? What possible outcomes do we face as a result of these risks? Where do these risks and consequent outcomes originate? Do we have any control over these risks and if so are we using it? Are the risks and consequent outcomes related to any extent? What is the degree of exposure of the organization to these risks? How sensitive is the organization to each degree of exposure? Do these risks affect the achievement of the overall strategic objectives of the organization? What response options do we have? What contingencies or emergency responses are in place? Can we match the worse case scenario? If not which scenario reaches the limit of our response abilities? What is the potential reward associated with each risk?
Are we prepared to accept a risk and corresponding outcome that is beyond our limits to absorb?
Facts about risk in general The world is uncertain Some cases risk cannot be eliminated - effectively mange them Risk is a function of opportunity Risk can intimidate the competition accept the higher level of risk may also be the opportunity to gain the greatest rewards. Risk management provides analytical tools Risk management operates at all levels requirement to consider unforeseeable or catastrophic risk at all level Companies have to take risk. Opportunities or overcome the threats Companies operate within a risk universe single risk should not be considered in isolation intrinsic links Risk control and managements is only possible up to a point, foreseeable, partial foreseeable and wholly unforeseeable. No risk management system is infallible, some external risk outside scope of even detailed risk analysis. Risk therefore both a good thing and a bad thing. Driving force behind innovation and enterprise, threat if not properly evaluated and managed. Significant where work is typically complex. 3.2.3 The Human Cognitive Process People make decisions in relation to perceived rewards and risk Pattern recognition compares information to previously stored information Attention filter relevant to the decision is considered. Memory stores the basic pattern recognition once interpreted and after subjective assessment stored in brains long term memory Information processing is know as bounded rationality . Cognitive process based on reasoning. All possible outcomes and separates outcomes into acceptable and unacceptable outcomes. Decision maker rejects actions that leads to unacceptable outcomes and considers those options to acceptable outcomes. Acceptable outcomes can be considered as goals of decision maker. Bounded rationality uses knowledge of past event to assess a current risk concept of risk forecasting Based on experience. Experience gained in past used to analyze and forecast what might happen in the future As much subjective as objective based Subject it to complex modeling as in chaos theory, restricted to complex mathematical modeling Best evaluated using a combination of modeling and subjective approaches Using data from past experience in order to allow extrapolation as a basis for predicting future trends Happen in past is happening in present will continue in future unless something happens to change it prediction momentum Various forecasting techniques important consideration Accurate data more accurate the data, more accurate the prediction Time limits longer the time scale, the more difficult to make
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3.2.3.1 Pattern Recognition and Attention
3.2.3.2 Bounded Rationality
3.2.3.3 Risk Forecasting and Prediction Momentum
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accurate predictions. Cost - fewer resources are provided, overall accuracy of the predication could be reduced. Vision predict future and identify possible events that are outside his or her experience 3.2.3.4 Intuition and Bias Intuition experience and extrapolation Bias - is tendency misinterpret data or observation because of own perception or outcome preferences
3.3 Risk Handling 3.3.1 Introduction Key factor to manage risk Decide what level of risk is acceptable, What level is not acceptable Risk that is not acceptable is transferred or reduced in some way. Residual risk is at an acceptable level, managed so as to ensure it does not affect the performance. 3.3.2 Risk Assessment and Control Risk assessment is part of the collective risk analysis process. Risk analysis involves determination of the probability of individual risky events occurring, establishing measure of potential consequences of each event occurring, monitoring and control system Risk handling is process of dealing with risks. Reduce the likelihood of individual events occurring Risk feedback is essential section in the process. Results of occurred risks are analyzed use in future strategies are fed back into the system. Risk analysis handling and feedback are often referred to collectively as risk control Risk assessment must proceed risk control.
3.3.2.1 Elements of Risk Assessment Identifying and assessing all potential risk areas within project. Constraints important to recognize and understood essence of project management is planning, forecasting, budgeting and estimating. Select only those areas of project with the most severe constraints and the greatest uncertainty. Impact is severity of the effect on either budgets, schedule project completion quality of work safety of project.
Whether severity of risk or probability of risk occurring at all is high or low difficult to make anything other than subjective. 3.3.2.2 Elements of Risk Control Risk control involves investigation of the entire project plans, documents and contract to identify areas of uncertainty or ambiguity. Risk control particularly important in monitoring the evolution of risks. 3.3.2.3 Risk Identification Persons perception of risk depends on numerous factors including: Where the individual is in the organization The power level of the individual The immediate area of authority of the individual The responsibilities of the individual Can be linked to project life cycle phases, risk diminish as project progresses Late change still occur tend to be increasing expensive as the life cycle continues. 3.3.3 Project and Strategic Risk Project risk limited to aspects of risk that are considered entirely in relation to the project. Cost limits, time limits, quality and performance limits, health and safety and other statutory or company requirements Examples: delay caused by error omissions in project documentation, cost overruns caused by changes, re-design caused by inadequate performance. necessary risk transfers take place as part of the project documentation. Examples include insurances and the establishment of performance warranties and bonds as required. Residual risk is treated as a project risk. Contingencies and provisional sums are established and are included within the overall project time and cost estimates tends to be applicable over the long term, complex and difficult to model and assess than project risk Foreseeable and unforeseeable risk relate to: sustaining or improving competitive advantages, maintain or increasing market share; developing and introducing new products, Examples: incorrect definition of strategic objective; incorrect alignment between strategic objectives and operational processes; failure to identify external strategicimpact change and re-align accordingly
Strategic Risk
Strategic Risk Management is concerned with the identification and management of risks ensures that the organization finishes up with an acceptable distance of the original goal. Project Risk Short term Less complex & difficult to model Error in contract document Day to day breakdown Absenteeism & Labour issues Risk considered entirely in relation to the project one component / element overall strategy for organization cost, time, quality, performance Strategic Risk Long term More complex and difficult to model & access Competitive behavior Change in economy Impact of IT & new technology Organization finsh up within acceptable distance of original goal
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3.4 Types of Risk 3.4.1 Generic Risk Headings Relates to the long-term performance
Strategic Risk Operational Risk Financial risk Knowledge risk Catastrophic risk
Process itself, asset base, people within project team and the legal controls within which organization operates Market, credit, capital structure and reporting risks. Includes IT hardware and software, information management, knowledge management, and planning. Cannot be predicted effectively and therefore cannot be quantified accurately.
3.4.2 Market Risk and Static Risk Primarily concerned with the risk to all the stakeholders can be positive or negative impact 2 primary components business and financial risk Market Business Risk (MBR) trading with its assets Market Financial Risk (MFR) gearing ratio risk, measure of the financing of the organization. of the annual dividend falling to zero
Market risk (busine ss risk or dynami c risk) Static risk (specific risk or insurable risk)
Considers losses only. Obvious example is an insurance policy. Generally concerned with making sure that the company performs at a given level.
3.4.3 External Risk and Internal Risk 3.4.3.1 External Risk Operates outside the organization, organization has virtually no control over it. Competitor Risk Market demand risk Innovation risk Exposure risk new kid on the bock
Demands of the customer base change and alter rapidly Fast track change and innovation Companies are exposed to different level of risk will affect them in different ways. High level of borrowing could result in problem if interest rate increased. Firm depends on shareholder equity to keep the shareholder happy, confidence declines effect on company can be significant. Ability to raise capital. Government of home country and of overseas countries has expanded can represent a major risk. Government fiscal policy and the consequent performance
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Shareholder risk
Political risk
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Statute risk Impact risk 3.4.3.2 Internal Risk
Government constantly change existing statutes and introduce new ones. Affect profitability of affect organizations. Some companies are better than other at withstanding big hits degree of diversification
There are very many possible internal risks. Within an organization at least in theory, the company should have some control. Operational processes Risk Financial Risk Management Risk IT and Technology risk 3.4.4 Predictable and Unpredictable Risks known unknown risks, such as changes in interest rate can be predicted with some accuracy although not with certainty unknown unknown cannot predict with any accuracy
Predictable Risks Unpredictable Risks
3.5 Risk Conditions and Decision making Risk assessment and control are really tools for decision making Conditions under which a decision is made is generally three main conditions Conditions of certainty Conditions of risk Outcome is known . known event
Reasonable probability that an event will occur and where some kind of assessment can be made - known unknown Forecast with reasonable accuracy but it is not a certainty. Transfer some risk associated with conditions of risk by taking out some form of insurance policy Risks are insurable while uncertainties are not outcome is not clear, but the risk can be evaluated in some way Not possible to identity any known event or predict outcomes with any accuracy. unknown event Not possible to transfer risk under conditions of uncertainty through insurance. risk cannot be evaluated with any accuracy strategy depends on the nature of the condition
Conditions of uncertainty
3.5.1 Conditions of Certainty Under conditions of certainty implies the decision maker knows with 100% accuracy what the outcome will be. Necessary decision making data and information are available to assist decision maker in making the right decision. no probability assigned.
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3.5.2 Decision making under Conditions of Risk In the absence of a dominant strategy, a probability is assigned to each individual state of nature. Expected payoff for each strategy now is the sum of the payoffs for each state of nature multiplied by the probability of that state occurring
3.5.3 Decision making under Conditions of Uncertainty Difference between conditions of uncertainty and conditions of risk is that under risk there are assigned probability that relate to known unknowns; under conditions of uncertainty, these probabilities do not apply. Several obvious sources of uncertainty Externally driven (environment) Internally driven (process) Decision driven (information) Inflation, economic activity, change interest rate, demographic changes, competitor changes Employee attitudes motivation loyalty, implementation of new technology, changed work practices, new products, innovation Corporate strategy, strategic planning, new market analysis, mergers and acquisitions, research and development, investment Maximum possible profits irrespective of loss Minimum profit with no loss minimize maximum losses, play it S3 200 million all or nothing ignore loss pick maximum gain S2 minimum profit 80 million play it safe loss of zero (0) with profit can have no chance of a loss
Hurwicz (maximax criterion) Wald (maximin criterion)
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safe Savage (minimax criterion) Minimum regret
S2 maximum regret, lowest end results (regrets) Laplace Maximum profit based on probabilities
S2 add all together divide by number of instances , average payoff based on equal probability of each individual payoff greatest payoff would be based on equal probability of occurrence Conditions of Uncertainty into conditions of risk Main difference between the two conditions is inability to predict probabilities in conditions of uncertainty Objective Probabilities based on long term frequency of occurrences record frequency of occurrence of past events may be possible to predict formally possibility of future event. Subjective Probabilities based on degree of belief or confidence as experienced by the decision taker compare requirement risk with hypothetic risk Offer risk take two options go ahead or take another option The process allow decision maker to engineer a variable with a known probability of success as a measure of the perceived subjective probability of success in another unknown condition Use 10 balls 5 black and 5 white 50% win 6 black 4 white 40% win, 7 black 3 white 30% win at some point not worth pulling ball and perform the work. Laplace does with probability of each state of nature is unknown, can assume to be equal 3.5.4 The Need for a Risk Management Strategy Total Strategic Risk Management (TSRM) applies to packaging and delivery as it does to process and manufacturing. Holistic and pre-emptive. Forwarding and predictive rather than reactive. Far better suited for strategic plan it than for tactical response. TSRM must be developed alongside, and integrated with strategic planning and management.
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3.6 The Concept of Risk Management 3.6.1 Introduction Without risk there is no reward, risk breeds innovation. Risk management system aims to identify and primary risks organization is exposed to, so that an informed assessment can be made and proper decisions made to safeguard the organization Risk management system must be: Practical Realistic Compliant with internal and external standards Cost-efficient Most Risk management systems contain five distinct areas 1. 2. 3.
4.
5. 6.
1. 2. 3. 4. 5.
Risk identification Risk classification Risk analysis Risk attitude Risk responds, control, policy and reporting
3.6.2 Risk Identification Find out all the risks that are likely to impact on a given project linkages and interdependencies between them. Build a risk profile Not all risks are high-Impact and high probability, However cumulative effect of small risk can have a similar effect to a high impact risk Risk identification typologies for purely project risk: Internal Risk External Risk Work breakdown structure (WBS) 3 or 4 level will allow identification Originate outside the project i.e. interest rate, levels of economic activity
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Project Management
Project Risk
Overlap internal and external risk, specific project administration and control techniques. Organizational breakdown structure (OBS), team membership, leadership, communication
Overall risk consider a combination of these three sources
Objective sources sum total of past experience Subjective sources sum total of current knowledge based on current experience Identification is concerned with the source of the risk rather than the event itself. You can do something about the sources of risk but not event or the effect. Most widely used method for risk identification is brainstorming 3.6.2.1 Brainstorming Phase 1: Creative phase invite ideas Phase 2 Evaluation phase list of ideas is completed each one is evaluated by all members of the team Specific methodologies for brainstorming using Delphi Technique Nominal group technique SWOT analysis
3.6.3 Risk Classification Once Risk is identified it needs to be classified, most work uses the so-called portfolio theory with a beta coefficient. Considers risk classification from a financial point of view. Example share with 10% beta coefficient will on average move 10% for each 1% move in the market. Risk can be considered in terms of different classifications. Primarily classified in terms of market risk or static risk can also be classified in terms of impact or affect on organization Thee-level classifications
1.
Static /Specific (insurable) negative only Market (Business) negative or positive Market Business Risk (MBR) trading with its assets Market Financial Risk (MFR) gearing ratio risk, measure of the financing of the organization 2. Risk probability 3. Risk impact Consequence or impact of risk is important consideration expressed as:
Risk Type
Maximum probable loss Most likely cost of the loss Likely cost of covering the loss (if uninsured) Cost of insuring against the event occurring Reliability of predictions about the event
3.6.4 Risk Analysis Most risk analysis methodologies comprise six basic steps Step 1. Evaluate all the options Step 2 Consider the risk attitude Step 3 Consider the characteristics of the risks Step 4 Establish a measurement system Step 5 Interpret the results Step 6 Make the decision
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All factors that could possibly affect the impact or likelihood of the risk should be identified Some decision makers are more or less risk-averse Identified and controllable risk impact. Apply controls to some that have been identified Measure and evaluate in some way, using a qualitative or quantitative (or combined approach) Extrapolation from observed data to try to make a prediction of future outcomes Decide which risk to retain and which to transfer to other parties
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Other methodologies adopt a slightly different approach Step 1: Identify and source the risk and extract all relevant information. Step 2: Identify all possible threats and opportunities (SWOT analysis) and map the risk drivers. Identify and brief risk holders where appropriate. Step 3: Assess the probability and impact of each risk and develop the actual risk map. Step 4: Consider all available options and develop a target risk map. Step 5: Assess the value added to the company by taking the recommended risk response action. Step 6: Set up monitoring and reporting systems to ensure effective evolution of the risk map. 3.6.4.1 Risk Map A risk map shows individual isolated risk on an axis of probability of occurrence against impact process something referred to as risk profiling or risk foot printing basically showing the relationship between risk probability and impact. For a range of given risks as function of time.
Four quadrants Quadrant 1: Red zone (high impact and high probability) Dangerous risk. Business cannot survive accepting these risks at this critical level over the long term. Addressed immediate action taken. Quadrant 2: Upper Yellow zone (high impact and low probability) Not as crucial as red zone. Require close attention, severe effects of extraordinary events. i.e. Severe storm on agricultural. typically driven by external or environmental factors beyond management control. Contingency planning appropriate for these risks. Generally insurable. Quadrant 3: Lower Yellow zone (low impact and high probability) Risk related to day-to-day operations and compliance issues. i.e. basic plant and machinery breakdown. If left unmanaged, great as the risk in quadrant 2. Cost control fall into this category. Based on monitoring and detection, identify a defect downstream from the risk. Cost overruns are virtually certain to occur. Quadrant 4: Green zone (low impact and low probability) Low severity / low likelihood. Generally insignificant and are acceptable at present level. Areas that may be outsourced. i.e. blocked toilets and vandalized windows in a station. Best solution is outsourcing the maintenance function for a fixed price problem is transferred to another organization. 3.6.4.2 Risk Grid Risk grid is an alternate to risk map. Probability of a risk occurring and the impact of the risk if it occurs. Probability of occurrence and the consequences can measured in several different ways.. most obvious ones are time, cost and quality ( quality is often referred to as performance)
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3.6.5 Risk Attitude Risk takers either neutral, risk-averse risk seeking. Err on the side of action Encourage risk Only increase effort once impact is very high Increase effort at a much earlier stage
Impact refers to maximum reward or opportunity available to the risk taker. As potential reward increases, the averse risk taker becomes more and more inclined to risk making a move, whereas the risk seeker increase effort earlier stage. 3.6.6 Risk Response 3.6.6.1 Response Consideration Variables that can affect risk response include: Company policy Lack of relevant information on cause and effect Length of time of exposure to the risk Individual versus team interests Involuntary risk (forced on the risk taker) Voluntary risk (risk that the risk taker is prepared to accept) Alternatives (cost-effective and non-cost-effective) Distribution of risk will depend on a number of non-contractual considerations Is the outcome of the project worth the risk? Who has the greatest risk control? Who has the greatest risk liability? Onus be least affected by it occurring What incentive does each party have? - Insurance company policy holder pay first so many dollars 3.6.6.2 Response Options Risk Avoidance Removing the risk in all forms from the project
Risk Acceptance (retention)
Third party insurance rather than comprehensive insurance. Likelihood of loss, carry are the low-probability low-impact ones. Rarely prudent to retain a high-probability high impact risk unless there is no choice. Use of warranties guarantees can be used by manufacturers , Reserve contingency to cover eventuality. Risk reduced by training and development, or defining the aims and objectives, Careful planning & put in place monitor & control system Transferring risk to other, liability transferred through contractual clauses, insurance contracts, outsource
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Risk Mitigation (reduction) Risk Transfer

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Relevant factors when considering insurance The insurability of the risk - basis for making calculation data available The cost of the insurance premium- small proportion of insured loss The maximum probable loss - what is likely to be lost and a result of risk occurring The likely cost of the loss full cost of reinstatement to original condition The likely cost of paying for the loss if uninsured in some cases it can be cheaper to accept the loss and cover it rather than to insure ones assets. Seeking additional information about the risk Seeking additional decision relevant information. Level of perceived risk may be reduced if more information is made available
3.6.7 Risk Control, Policy and Reporting Risk control is process of using the information that has been learned on a project to assist in the later development of the project. Risk report level and frequency of reporting will depend on significance of the risk. Risk strategy has been developed and accessed; it is adapted formulated into an overall risk policy. Risk policy establishes a number of elements Overall aims and objectives Show what the required outcomes for each section or control unit are, aims and objectives could relate to the treatment or handling of specific risks Task responsibility matrix (TRM) Frequency, circulations, membership and individual responsibilities. Acceptable deviations and tolerances stated in the form of a direct variance envelope. Sets an alarm ringing if overall performance moves outside these limits. May not be immediately obvious who can authorize what.
Accountability for individual mangers Formalized reporting channels Risk tolerances
Authorization
Risk policy initially develop individual targets for individual sections within the organization. Then developed and worked up as a strategic document. 3.7 Risk, Contracts and Procurement 3.7.1 Introduction Contract is a classic way of managing risk. Formal agreement between two parties. Such, it records the rights and obligations of each party . Tool for risk transfer and mitigation. Purpose of the contract is to define the rights, dues, obligations liabilities of each party. Defining allocating risk. Main risk consideration in terms of contracts and contract low is commensurate risk. Commensurate risk is an obligation when accepting a contract. Risk of being unable to fulfill the obligation or duty because of ones own inadequacy, incapacity, inadvertence or error or because of interference from outside events or sources
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Contract defines only the ground rules. Execution of the contract depends on goodwill, intent and the relationship between the parties. Some depend on uberrimae fidei, or utmost good faith. 3.7.2 Basic Contract Theory Typical contract documents include the following: Signature block and project tile Definition of contract terms and scope Information and facilities to be provided by the client Project approvals various levels of consents and approvals Payment systems Working drawings show full design information Specification describes the technical performance Schedules describe and summarize various components and assembly requirements General conditions primary duties and obligations Specific conditions - i.e. restriction on noise, working times and access Provision for change and variations - include general and specific conditions Form of tender - fees and contingencies Dispute resolution dealing with disputes and arguments first resource to arbitration, followed by recourse litigation. Prevents wronged party from going directly to court. Or Alternative Dispute Resolution (ADR) Bonds and warranties provision is required how to be executed. Public finance often require bond cover, guarantees and warranties . In order for a contract to exist, there must be: Offer and acceptance Consideration - contract to be valid something of value must be exchanged deposit paid Capacity parties to perform their obligations under the contract Legal relations contract itself must be legal Communication communicated to the offeror can be no contract if the offeror is unaware that the acceptance has been made. Alternatives to performance include the following: Breach one party acts in contravention of one or more terms or conditions. Frustration contract cannot be preformed Rescission error or misunderstanding in the preparation of the original contract Rectification contract term has been wrongly worded or phrased Void contract goods are illegal Termination / determination determination means that both parties can cease their works under the contract party determined the contract has a right to seek reimbursement against the party who has been determined. 3.7.3 Procurement Procurement is the process by which goods and services are acquired. Procurement generally includes a number of individual life-cycle phases. Number of common phases Objectives of procurement process are established and reconciled with the Objective phase objectives of the project and with overall objectives of the company Exposure phase Suitable sources are identified from past experience and reliable ones listed. Expressing of interest invited. Various alternative sources available, type of contract to be adopted.
Alternatives phase
Document phase
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Contract documents which describe works in some way such as level of detail that all ambiguity, or much as is possible is removed.
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Tendering phase
Scrutinized, selected proceed invited to tender or bid . Formal document describes the liabilities and obligations
Award phase
Various bids are scrutinized, usually by a legal expert and by a cost expert
Contract administrati on phase
Ensure that both parties comply with its terms and conditions.
3.7.4 Characteristics of Contracts Controllable risk human error and decision making. Internal and are controllable by good management and good quality control procedures. Can generally be foreseen adequate provision can be made against its occurrence. Uncontrollable risk - outside the immediate control of the project, adverse weather conditions outside the control of the parties to the contract. Reduce risks by some form of insurance. Fundamental contractual risks: Adequacy of design: latent and patent defects Defects can be patent (obvious) or latent (hidden)
Project eventual cost
Cost limits - risk for cost overruns may be client or contractor based.
Safety and indemnificati on for accidents
Specific provisions for indemnity
Third party insurance
Insurance against damage to third parties . risk to adjacent properties or people , third party insurance covers this risk
Fire, flood etc
Insurance to cover these
Completion deadlines: liquidated and ascertained damages

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Projects completed by a specific and stated deadline. Completed late contractor or client will loose money. Clauses to protect against late completion. Damages for late completion may be punitive or (more likely) liquidated (i.e. cash) and ascertained (based on actual losses incurred)
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3.7.4.2 Express and Implied Terms Contracts contain both express and implied terms Express terms are those that clearly express within the wording of the contract Implied terms are those that can be implied from the working of the contract or from common usage Fundamental risks are generally covered by express terms. Liabilities are generally covered by implied terms. 3.7.5 Transfer of Risk in Contracts Contracts are vehicles for risk transfer Indemnity clause seeks to transfer specific risk for specific events onto a named party. Reasonable transfer of risk through a contract also depends on the ability of the risk bearer to absorb any damages The person who accepts the risk must have the ability to pay the costs incurred if the risk is realized. 3.7.6 Variation Orders and Change Notices There has to be some system in place for allowing agreed changes or variations to what was agreed in the contract. Variations allow for changes to be made to a contract with out invalidating it. Changes can be technical, or administrative. Main requirement is variation order notice is fair to both parties 3.7.7 Claims Risk Variations or delays may result in seek reimbursement from party that has caused the delay or change Client risk include: Failure to provide information within a reasonable time of the contractor requesting Late instructions Errors or omissions in the contract document Delays caused by nominated subcontractors Delays caused by client consultants Changes in statue No-availability of labour Civil commotion and disruption Declaration of war and/or war damage Exceptionally adverse weather (where appropriate) Determination of contract by contractor Allow the contractor to claim an extension of time. Some of them would also allow the contractor to claim direct loss and expense.
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Module 4 Project Management Organizational Structures and Standards 4.1 Introduction Organizational structure is sometimes summarized in the format of an organizational breakdown structure (OBS) An organization breakdown structure (OBS) shows the main components of the organization and how they relate to each other in terms of control and communication and any other linkages or connections that cement the various components together. Project management looks at existing organizational structures, look at proposed or required project structure, adapting and modifying the two structure to produce a new project containing structure Project teams are therefore established that are Wholly internal to the organization Wholly external to the organization Partly internal to the organization but with external specialist support
Internal project management known as operational or non-executive project management characteristic of larger organization with constant high volumes of repetitive work External project management known as executive project management used by smaller more responsive project teams such as professional consultancies 4.2 Organizational Theory and Structures 4.2.1 Introduction Project succeed or fail based on people.
Most common project management form is of a project team working within an existing functional organization. The project team draws member from various functional sections and uses them to work on the project until it is completed. 4.2.2 The Project within an Existing Organization 4.2.2.1 Introduction Project team working within an existing organization structure, once completed project team disbanded or absorbed back into main organization. Function of many elements including: The size of the project to the organization The relative status and importance of the project The resources that are made available The strategic fit of the project with the overall strategic objectives of the organization 4.2.2.2 The Functional Structure In functional arrangement, power or status is defined by a vertical hierarchy through the OBS Projects are likely to improve systems, procedures, methods or products, and they would tend to be internal rather than external projects. May be established for limited periods in order to address specific demands Functional structure common in large organizations typical examples Central government Local government Police forces The armed forces Most large private companies Typically of large organizations have continuous rolling programmes of similar repetitive or semi-repetitive work. Benefits of functional structure: Offer clear reliable reporting system and responsibilities are clearly defined. Mirror traditional authority structures section heads with lines of authority running down chain of command to individual operational units Simple and straightforward and is compatible with basic human instincts. Specialize in area rather than develop range of different advanced skills. Repetitive so people can use their experience from one aspect to the next aspect, Knowledge transfer Specialist knowledge shared around between the various functional members. Build up a library of specialist knowledge Direct relationships with various support services. Functional mangers agree works programmes and timetables directly with support services such as IT Preferred by highly inflexible organizations like government departments, hospital services. Clearly defined roles and responsibilities clearly defined chain of command Disadvantages of function structure: Inflexible. Result functional units difficult to innovate and respond to change Functional output tend to be primary objective of organization. Project structure attempts to operate within the functional structure considered as secondary importance Cross-functional activities are discouraged. Functional people stick to own specialization, avoid being involved in cross-functional activities Functional people tend to see function as their future. Career path tied to function rather than projects Functional sections develop sub-groups. Tend to develop boundaries act as barriers to effective communication
Cannot easily respond to fluctuations in workload Demand a greater degree of central support The main drawback with a pure functional structure is the development of operational or organizational islands. Organizational Island is a segment of the organization within the overall organizational structure, tend to act as a semi-independent sector . Control and communication tend to flow down through various functional divisions. Little communication and co-operation across the functional divisions, this is inefficient as cross-transfer of co-operation allow formation of horizontal units. 4.2.2.3 Pure Project Structure Self contained section or unit within an otherwise purely functional structure. Typically used for projects that are difficult to plan accurately and where resource requirement and provision levels cannot be accurately established beforehand. Project team disbanded upon completion of its project and individual project team members will return to the pool for use on other projects. Benefits of Pure project structure: System is flexible and responsive to change Innovation and evolution are not restricted Operational cost quickly adjusted Project manger in charge of any particular project is sole charge of project complete authority and control over project resources. No requirement for negotiating with functional manager or project sponsor Project staff clear reporting change Communication lines much shorter Informal communication lines shorter develop more quickly and efficiently Authority with the project Project team member do not have any functional loyalties Centralized support much simpler and the overall sizes of support function smaller Easier to incorporate external consultants Possible to execute a series of related projects. Projects point of view, pure project system appears to be the best supporting structure Disadvantages of Pure Project structure: Several projects running concurrently duplication of effort Initial operating costs may be high considerable time before projects completed Centralize direction is needed, from of command hierarchy. Higher levels of authority may have difficulty interfacing Project mangers (by definition) tend to think ahead A sense of competition develop between various project teams Project team members tend to have underlying concern about long term commitment Project deadlines may create a culture cut corners; maintain good performance records Difficult to compare the performance of individual projects Most staff in project structure has some form of original functional specialization prolonged absence from functional section lead to specialization becoming diluted over time. 4.2.2.4 Matrix structure (Internal or Non Executive Project Management Structure) Compromises between pure project and pure functional forms. It encourages horizontal communication and accountability. Popular structure for organizations undertaking projects. Combines benefits of the functional organization with those of the pure project organization, same time eliminating the disadvantages. Matrix structure is the pure project structure overlaid on the functional divisions.
Main characteristic of an internal project management structure are: Functional boundaries Run vertically through the system, defines the border or line of delineation between the engineering faculty and other faculties act as barrier to communication only gateway is through interfaces Run horizontally through the system, represented as a triangle Vertical (functional) and horizontal (power) boundaries Internal system the project manger and the functional manger are both using individual employees as a shared resources. Risk direct competition between the project manger and functional manger over such resources, this conflict can be controlled through a project sponsor moderator on any potential conflict Three different organizational interfaces Project manager project sponsor (subordinate-boss) Project manager functional manger (peer-peer) Project manger project team ( boss-subordinate) Horizontal and vertical boundaries act as barrier to communication and co-operation. Interfaces are like gateways through barriers. Tool for control communication Interface management system (IMS)
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Power or status boundaries Organizational islands Project sponsor
The project management chair
Interfaces
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Interface management
Is management of the processes of communication and action across and within the various organizational interfaces. Good communication systems are set up so information flows rapidly and accurately Resource allocation proposal calculate the approximate cost of labour, plant and material required for the project to be executed. Time spent on individual actives charged to the correct project or functional cost centre
The process of bidding Time recording and costcentre charging
Good points of an internal project management system include: Project operates as a self-contained unit and project manger has executive control over its operation and development Reasonable access to various functional units can access specialist input to the project Flexibility and adaptability . respond quickly to change Project stays in touch with operational objective of the functional units. Internal project management within a matrix structure offers the best of both the project and functional system to some extent Effectively spreads the risk between project and functional profitability Allows efficient balancing of functional and project resources provided the necessary control systems in place. Resources can be switched between one aspect and the other to absorb changes in demand Internal project management promotes innovation and evolution with organization while retaining the functional foundation Weaknesses of internal project management Balancing project and functional responsibilities, conflict can occur where relationship is not so good Team member often do not like having two bosses Matrix overlap means some responsibilities are effectively shared between the project and functional units Project management is complex specialist range of skills, reporting to a project sponsor only makes the job more complex Project tends to be depleted of resources toward the end of the implementation life cycle. Make completion very difficult Project team member have difficulty re-adjusting to functional units Project sponsor introduces new and additional level of authority and control 4.2.2.5 Mixed and Hybrid Structure This type of organization results in the project being spun off as a subsidiary company as it develops. 4.2.2.6 Summary comment on Internal Projects Choosing the most appropriate structure for a particular project depends on many elements and these should be considered : The project, its objectives task, location and required resources The existing structure of the organization Previous experience of the type of project The client and the contract The project life span 4.2.3 The Project External to the Existing Organization 4.2.3.1 Introduction External Project teams can be comprised as follows: All internal people, but be managed by an external project management consultant
A mixture of internal people and external consultants, all of who are managed by the consultant project manger All external consultants, some or all of whom have been appointed by consultant project manager Surrogacy in this sense refers to the extent to which the client whishes to delegate control or authority to running the project. 4.2.3.2 External (Executive) Project Management Structure External project mangers more applicable to smaller organizations with variable workload. Project manager is the only team lead full authority and control over all components of the project team. Including control and co-ordination of the design team Number of distinctive characteristics: Multidisciplinary and shared loyalty group characteristic Form of fees for their external project management system tend to be strongly multidisciplinary. Susceptible to shared loyalty characteristics, working for his own practice or company not the same as the objectives of the client conflict of loyalties between individual parts of the system more susceptible to the problems of differentiation and sentience than internal project management teams Open competitive fee structure, negotiated fee are now generally accepted. Use fee bid package approach Look at a outline of project make a bid in form of a plan or proposal. Hourly or percentage basis Typical fee schedule Completion of pre-contract works Completion of post-contract work Completion of final account
Fee structures
External contractual linkages

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Wide range of contractual agreement systems, higher degree of risk of nonperformance. Take one of 3 primary forms
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Completion contracts one-off contract specified goods, service agreed cost by specified date. Term contracts long term agreement agrees to supply good agreed rate to an agreed standard for a fixed term. Service-level agreement (SLAs) where level of service is set rather than the performance. Priced and arranged in 2 primary ways Competitive contract put out tender Negotiated contract - not involved in direct competition, client negotiates price and condition with contractor. Contracts can take a number of different forms: Fixed price contract - cost of project agreed and fixed in some way in advance Cost or cost-plus contract - fixed fees vs. price used insufficient design or product information cost plus - contract fee is % of overall cost on final account, Reimbursement contract. Contractor perform the project at contractor expense and claim amount plus a fee every month Target Price contract target price plus a fee Contract types can take number of different forms Standard forms of contract Precise terms & conditions relate clearly to specific performance, aim establish absolute requirement form completion of the contract - Clauses carefully worded to cover all aspects of the contract layout established procedures for virtually all eventualities - Specific provisions within standard forms of contract, such as direct terms and conditions relating to loss and expense and extensions of time. -Set out specific level of damages for non compliance with various events ie late completion -Breaches - Clearly state remedial action & right in the event of non compliance (damages clause) Professional services contract implied terms interpret according to professional body, actual loss incurred Supply contracts Subcontract agreements Proforma contracts - Damages not set out beforehand & based on actual loss incurred - Less protection to the client therefore more risk - Carry professional indemnity insurance in event of negligence - either state directly or imply a liability for the consultant to act within the professional standards that are set by the relevant professional body. - Breaches / negligence or other act professional failed to act according to standards set out by the professional body - Most professional bodies produce a book of professional practice, which lays out the minimum standards and codes of conduct that members must observe - consultant is commissioned under a professional services contract that pertains to a given professional body, then any practice under the contract is deemed to be executed in accordance with that book of standards typical contractual links in an external system Client to project manager and other design team members Client to main contractor Client to service authorities Client to nominated subcontractors and suppliers Client to local authority
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Statutory Contracts Health and Safety -Implied common law, contract right or 3rd party -Maybe formal signed -Heavy favour authority little company do except comply with requirement i.e. Safety features on machinery must copy with HSE Proforma Contracts -generally written by one party for imposition on another party. -Typical examples are contracts for services by monopoly or near monopoly organisations. -the terms and conditions are largely written up by the service providers. -The onus of responsibility is therefore borne by the client. -Very risk clients point of view offer virtually no protection in the event of a default External no-contractual linkages Two type of linkage essential these are authority links and communication links Authority links define the power and control structure that operates with in system Communication links Configuration management system (CMS) define the authority and communication channels within a project system.
External project management advantages It is flexible and adaptive Can respond rapidly to change Use of external specialists can bring new ideas and approaches into the organization No in house specialization can be outsourced Appropriate structure can be established relatively quickly and easily staffed with the optimal range of specialist Disbanded quickly and easily if workload or demand change specialism demands can be met assembled from range of external specialists best fit of skills Internal risks such as key people being unavailable can be avoided External project management disadvantages External specialist expensive External specialist no loyalty to the organization or commitment to project Recourse against poor performance difficult level of authority control can be exercised is limited Whole new administrative and control system is required as soon as external contract are involved More rigid and controlled communication systems required communication across the organizational boundary. External specialist Additional internal sections may be required Risk profile of the organization in general and of the project in particular change significantly Possibility of arbitration and litigation enters the risk equation Complex job of the project manager becomes more complex still 4.2.4 Criteria for Selecting the Organizational Structure 4.2.4.1 Broad considerations
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Authority Communication
Pure functional form traditional reporting structure clear line of authority running down through the structure. Easiest in functional structure but informal communication encounter blocks. Authority boundaries may restrict both formal and informal vertical communication Matrix structure reduces blocks formal cross-function communication . pure project structure greatest use of informal communications offer flexible communication solution Easiest type of knowledge to store and use in future operation. Matrix structure allows function knowledge to be used in project Pure project tend to be restricted to areas of commonality between individual projects Functional structure develop greatest individual loyalty - career progression with functional section Matrix structure loyalty shared individual project team member Functional tend to rely on existing technology to manufacture or produce something Matrix structure - likely to use existing technology to innovate in addition generate new technological innovations Pure project greatest demand for innovation technology Pure functional structure - large fixed cost inflexible to changes in workload and structure Matrix structure more flexible increase or decreased size depends on workload variations Pure Project most flexible approach can produce the lowest running costs Pure Functional structure most formal reporting system co-ordination low Matrix generate higher co-ordination demand enhanced co-ordination is necessary because project run across functional boundaries and potential for destructive competition and conflict increase Pure project requires similar high levels of co-ordination in order to avoid the possibility of duplication of effort. Pure functional structure require well-developed centralized support functions functional manger concentrated on functional objectives in the knowledge decentralized support is areas such as it admin Matrix structure similar requirement but some level of support may be devolved to individual project mangers large projects own administration and IT support Pure project may require little or no centralized support
Knowledge transfer
Loyalty
Technology
Cost
Co-ordination
Support functions
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4.2.4.2 Project Objectives and Choice of Organizational Structure
A pure functional organizational structure should be chosen in the following circumstances. Where the workload is constant and only varies slightly; Where projects are required only infrequently; Where there are well developed centralized support functions; Where clearly defined authority structures are required; Where informal communication systems are not required; Where there is adequate backup for key personnel; Where the functional objectives are the primary concern of the organization; Where change is unlikely to be a major consideration; Where any projects are relatively small or insignificant; Where fast project response time is not required. A matrix organisational structure should be chosen in the following circumstances. Where workload is variable; Where projects are frequently required; Where a degree of research and innovation is required; Where centralised support functions are present or partially outsourced; Where split authority structures are acceptable; Where informal communication systems are acceptable; Where projects are secondary but of significant importance; Where some degree of change has to be accommodated; Where any projects are small to medium sized; Where fast project response time is not generally required. A pure project organisational structure should be chosen in the following circumstances. Where the workload varies significantly; Where projects occur frequently or are dominant; Where a high degree of research and innovation is required; Where there is little or no centralised support function; Where authority can be almost entirely devolved to project managers; Where projects are the primary concern of the organisation; Where high levels of change are present; Where projects are large and involve a lot of resources; Where fast project response time is standard.
4.2.5 Summary 4.3 Examples of Organizational Structures 4.3.1 Introduction 4.3.2 Example of an Internal Project Management Structure
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4.3.3 Example of an External Project Management Structure
4.4 Project Management Standards 4.4.1 Introduction What project management standards exist What the standards are meant to do How the standards interrelate
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4.4.2 The APM and the APM Body of Knowledge 4.4.2.1 Introduction Association for Project Management (APM) in UK is part of the International project management Association (IPMA) and strong links to similar international bodies . APM established a Body of Knowledge(BoK) that act as a standard for evaluated project management expertise and is a self assessment tool for project manager to measure their own professional competence for different levels of membership The Stated aims and objectives of the APM are: National authority through internet To act as first point of contact To lead the development of professionalism To Champion interest representation To establish standardization of qualifications To develop a functioning national branch network To establish practice and procedures for training 4.4.2.2 The APM Body of Knowledge profile Body of Knowledge (Bok) establishes national guidelines and standards for the profession, and is one of three levels of standards that are required for an effective project management system it has four primary areas qualified project manager must have relevant academic and experiential ability Project Management Organization and people Techniques and procedures
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Further project management practices Represent interest of UK project management in all sections of industry Standardize the academic and professional qualification / certificated Establish and maintain national branch network to facilitate participation Establish and maintain ongoing training programs
Includes specific aspects of understanding of project life cycle, project strategy and project environment understanding of wide range of issues that relate to project management practiced Include leadership, communication and team building, Leadership style has to evolve as the project develops Scheduling and estimating, planning, understand various control and monitoring procedures, latest approaches to planning and control earned value that link one or more success criteria variables
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General Management
Finance and law, basic understanding of procedures and approaches involved, basic contract law recognizes actions not permissible under terms and condition of contract.
4.4.3 BS6079 4.4.3.1 Introduction BS6079 is the British Standard guide to project management. Establishes guidelines and procedures for project management in the UK. Important single section is the standard strategic project plan (SPP) it is based on standardization. There is no standard requirement for document preparation, recording, cost planning and control or even of quality control . Projects are set up and executed in numerous ways. Generic project plan applied to all projects BS6079 SPP is a standard document operates at one level within project management, run in conjunction with the standards established by the professional association and institution and also in conjunction with sector or company-specific standards 4.4.3.2 Generic SPP of BS6079 Main element of the generic SPP Project aims and objectives Section for project aims, objectives clearly stated, objectives relate to time, cost, quality and a range of other objectives clearly defines everybody involved clear terms of reference to work to. Sub objectives run in parallel with the project objectives and carry equal importance may require different planning and control techniques. BS6079 gives a proposed numbering system for information presented under each heading. Laid out in the same way and each subject specific heading should address the same issues and present information in the same format. Specific sections for scheduling and cost control original plans and update and separate section maintained for the effects of change. Project History or diary, record all important communication events that occur during the course of the project, audit trail should the need arise, repository information for subsequent use in post-project review
Subject specific sections
SPP contains all relevant project information acts as both a record document and as a benchmark for project as originally developed and planned. Project progress and designs plans are implement, SPP updated . Typical contributors to the SPP are: The design engineers providing drawings and schedules Cost consultants providing estimates and cost plan Legal consultants providing copies of the various forms of contract Client providing information on aims and objective Project manger providing information on communication and other co-ordination systems External statutory bodies Assembled to a specific timetable, include all necessary project design and specification information. National standard for project management practices, it acts as a benchmark particularly in relation to standardizing procedures and documentation. Most import single standard document within BS6079 is the strategic project plan (SPP). Allows establish all projects in same basic format 4.4.4 PRINCE2 4.4.4.1 Introduction Project management IN a Controlled Environment, version 2 (PRINCE2) is a methodology that covers organization, management and control of projects. Introduced in 1996 original
PRINCE first developed by the Central Computer Telecommunication Agency (CCTA) in 1989. Intended for UK government standard for IT project management. 4.4.4.2 PRINCE2 Methodology Based on a process model for a project breaking project down into component processes. Each process is then defined in terms of its key inputs and outputs, and in terms of aims and objectives for each process, based on the life cycle of the project, each component evaluated and analyzed separately. Allows more efficient use of resource and accurate measuring of progress. Main advantages offered by a PRINCE2 approach are: Offers a standardized project structure with clear start, middle and end Allows regular and detailed reviews of actual progress against planned progress Allows regular and reviews of actual progress against the business case Identifies and makes use of flexible decision points Identifies and allows automatic control of any deviation from the project plan Ensures that the timing of involvement of management and stakeholders is optimized during the life cycle of the project Encourages and develops good communication channels between the project, project manager and the rest of the organization. 4.4.5 Summary Highlighted some of the primary standards that apply to project management practice, Project management highest level is International Project Management Association (IPMA) global body for project management practice. Attempt to establish and standardize areas of expertise that are required by practitioners in the respective countries. Level which standards used depend on individual company polices and level of adoption for standards by professional practices.
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Module 5 Project Time Planning and Control 5.1 The Concept of Project Time Planning and Control 5.1.1 Introduction Intrinsically linked to the other two variables of quality and cost, not generally possible to consider time planning in isolation. A change in any one variable will almost certainly impact one or both of the other two. Time planning is intrinsically linked to life cycle of the project. Planning is a distinct phase separate from implementation. Three phases. 1. Planning Phase 2. Implementation Phase 3. Replanning phase trade off between the three variables (time, cost, quality) 4.
5.1.2 Aims and Objectives of the Planning Process Goals of project planning are: Establish the desired end position (in terms of project outcomes); Establish the current position; Plot a course so that the project can move from the current position to reach the desired end position; Establish variance limits so that any significant divergences away from the plotted course are detected; Allow necessary resources so that divergences can be corrected; Ensure that all divergences are pulled back into line; Allow some kind of contingency to cover major divergences (especially unforeseen ones). Project planning and monitoring establishes where the project is now, where it is trying to get to, how far off course it is, and corrective action needed to bring things back on line. Larger the required course of change, more extreme the corrective actions The process of project planning should: consider the overall strategic objectives of the organization; establish project objectives that are clearly compatible with these strategic objectives; consider the work to be done and compartmentalize it (develop work packages) in some way; analyze the various work packages and work out the most logical sequence of execution; determine the various interdependencies between the work packages; determine the resources that are available or are required; integrate resources with work packages; determine the cost and duration of each work package;
establish a formal communication system; establish who does what, how and when; set up a suitable organizational structure; establish baselines; identify critical activities and communicate the importance of these activities; establish suitable motivation procedures; establish clear aims and objectives for each section of the project team; culminate with the production of a strategic project plan (SPP).
5.1.3 Project Time Planning and Control and the Generic Project Plan Other planning elements include: organizational and authority planning; risk management planning; communications systems planning; financial planning; conflict and stress management planning; authorization and compliance planning; health and safety planning; change management planning. Separate plans are required for each of these elements, and others as appropriate. The collective assembly of all these individual sub plans forms the generic SPP. Project time planning - involves identifying, sequencing and scheduling activities and resources. Final version can be substantially different from the first. Robust enough to respond to constantly changing environment in which project exits. Planner must never lose sight of project goals and objectives. Project time planning is only one element of project management. 5.1.4 Project Time Planning and the Project Life Cycle Planning is carried out throughout the project life cycle. Time plan is calculated at the outset of the project. Key dates and milestones established, delivery dates and calculating start and finish window, vary through out the life cycle of the project, Internal and external factors influence actual rate of progress and requirements can change. Possible examples of late stage Replanning Internal (optional) change External (imposed) change Sequential disruption Miscalculation Client introduced changes, new elements Significant re-panning subcontractor business fails need to replacement Shuffling temporarily re-allocation work package Miscalculation of amount of time or resources for a work package, over pessimistic estimating
5.2 The Process of Project Time Planning 5.2.1 Factors Affecting the Time Planning Process 5.2.1.1 Introduction Time planning not exact science. Approach to assessing activity start and finish time using a series of estimates and common sense Time planning influenced by a range of other variables. 5.2.1.2 Source of data Estimates for individual activities based on own knowledge and experience, similar projects , company strategy, shareholder preferences, process significant. Company policy, environmental
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conditions release product first, form of contract -range of key dates, final certification technical procedures. Government regulations 5.2.1.3 Project Uniqueness No two projects are exactly the same necessary to plan every project independently. Physical aspects appear identical but some difference may include uniqueness of project extent knowledge transfer can be used geographic location, local culture specific objectives relative priorities to be considered availability of contractors, subcontractors suppliers Contractual conditions liability Characteristic of the client and approach to project manager Under similar legal culture difference of a few miles Time of year (weather dependent project) Local conditions Local government regulations Environmental issues Client characteristics (operational policy) Before planning carefully defined objective made clear Look ahead and effectively integrate uncertainty with tangible aspects of planning such as estimating and scheduling. Stress and conflict, overall reduction in morale Predicting activities required to complete project with reasonable degree of accuracy. Involves reviewing work description breaking down into separate elements or components then determine Position of each work package within the immediate sequence of work Importance of each work package to the project as a whole Criticality of each work package Amount of cost or time overrun (slippage) that is acceptable for each work package The resources required by each work package. Uncertainty is inherent throughout any project plan. Identify and mitigate most likely risk. Impossible to mange all uncertainty. Fruitless to identify all potential risk It is not possible (or desirable) to eliminate them all Cost of eliminating some risk may be prohibitory high Eliminating some identified risks might give rise to new risks Some risks cannot be accurately assessed The relative importance of risks may change over time Nature of uncertainty is easily identifiable, predicting its force can be hazardous, mitigated to a limited degree. Requires in-depth knowledge of sophisticated planning techniques and systems. To achieve good workable plans, the planning skills are best complemented by sound operational and technological knowledge If team members lose faith in the planner they will have no faith in the plan and will not support it.
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5.2.1.4 People Issues
5.2.1.5 Complexity
5.2.1.6 Uncertainty and Change
5.2.1.7 Accuracy and Reliability
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5.2.1.8 Communication
Stakeholders must be fully aware of their responsibility. Format that is clear, understandable, and unambiguous. Produce reports with only information required
5.2.2 The Planning Process 5.2.2.1 Introduction Work package breakdown process: 1 evaluate the project through the Statement of Work (SOW); 2 generate a Work Breakdown Structure (WBS); 3 execute Project Logic Evaluation (PLE); 4 separate time, cost and quality planning; 5 use network analysis (chiefly CPM or PERT) to generate a draft master schedule (DMS); 6 use tradeoff analysis to replan; 7 produce the project master schedule (PMS).
5.2.2.2 The Statement of Work (SOW) Statement of work (SOW) descriptive document that defines the overall content and limits of the project. Signature block and project tile Definition of contract terms and scope Information and facilities to be
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Identify project and parties, Summarizes terms and conditions describes range and extent of works in sufficient detail to identify the limits of the project Additional obligations of the client under the contract, access to
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provided by the client Project approval requirements Terms of payment and interim valuations Working drawings Specifications Schedules General conditions Specific conditions
premises while works are cariend out and commissioned.
Payment system within th standard or specific conditions of contract. Monthly valuation., interim payment, final account Show full design information Describe technical performance and standards required. Schedules and summarize various component and assembly requirements Are standard forms of contract, standard contractual terms and conditions Drawn up for each particular project add specific terms and conditions based on own circumstances, restrictions on noise, working times and access Provision for change and variation approval method valuing variations and obtaining payment Legal offer to carry out the work, states project tile and parties, fees and contingencies Carry necessary summaries Process for dealing with disputes and arguments, arbitration process, recourse to litigation if arbitration unsuccessful. May use alternative dispute resolution (ADR) Provision is required involving public finance require detail bond cover stated percentage of contract sum, Guarantees and warranties
Method of handling variations Form of tender Appendices Dispute resolution procedure
Bonds and insurances to be provided
Following SOW now time to break SOW down into smaller units so that each can be evaluated separately 5.2.2.3 The Work Breakdown Structure Work breakdown structure (WBS) is simply a representation of how large tasks can be considered in terms of smaller sub-tasks. To work out the time cost, or quality objective of the large task by adding together the contributing sub-task. Breakdown is necessary in order to: Improve the accuracy of cost time and resource estimates Define a baseline for performance measurement and control Identify clear and achievable tasks and responsibilities Characteristic of WBS are threefold Level of definition fo the WBS Operate down 6 levels Level 1: The programme Level 2: The project Level 3: The element Level 4: The sub-element Level 5: The work package Level 6: The work package component Usually present in form of a tree diagram, number of WBS level
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required increase with sizes and complexity Numbering the WBS Dividing the WBS Each task is properly coded so that cost accounting code (CAC) identifiers for cost allocation and budget planning. WBS may be based on any of the following: Work type different elements type of work Responsibility - individual responsibility Location location
5.2.2.4 Project Logic Evaluation (PLE) Irrespective of whether planning for time, cost or quality, planning work sequence in which the works are to be executed PLE simply involves taking the WBS elements an deciding on the most efficient logical order in which they should be carried out. Logic progression activities involved in the process Resource driven activities may take longer due to restriction of resources to complete 5.2.2.5 Separate Time, Cost and Quality Planning Process of planning splits depending upon the aspect being considered. Planning technique specific to time control is known as scheduling. 5.2.2.6 Draft Master Schedule (DMS) Once PLE is in place next stage in process is networking and scheduling Networking defining the project logic in terms of sequences of required activities, assigning durations to these activities, This allow planner to calculate individual start and finish times for each activity and estimate overall project completion date. The DMS Concept Scheduling process of calculating individual activities times in order to allow an estimate for the completion date to be calculated. End result of scheduling process is the Draft master Schedule (DMS) DMS is a complete network analysis or programme, showing start and finish time for each activity. Using specific analysis techniques, also possible to calculate start and finish times for groups of activities, DMS also identifies the projects critical path, the path through the project that has the longest total activity duration, the path of activities that determines the overall project completion date Most obvious uses for a DMS are for: Identifying an overall project completion date; Identifying order and delivery dates for supplies; Identifying notification and start dates for nominated (client defined) subcontractors; Identifying key completion dates as a basis for progress planning; Acting as the basis for the implementation risk management system; Identifying logic incompatibilities; Use in crosschecking with subcontractor schedules; Use in checking contractual compatibilities; Providing the basis for replanning options and tradeoff analysis; Providing data for the establishment of possible consequences of delay; Providing the data for earned value analysis; Providing data for any necessary resource leveling.
Basic process involved is to assign durations to each activity in the PLE by considering each activity in relation to all the other activities. Identify start and finish window for each activity. Determine leeway (float) as to when they start and finish.
Scheduling involves the following primary stages: Assign durations to each activity; Identify the start and finish window for each activity; Identify those activities with no float (critical path); Replan as necessary; Rationalize resources; Form a Draft Master Schedule (DMS); Refine the draft to form a Project Master Schedule (PMS). Assigning durations, there are two primary alternatives Critical path method (CPM)deterministic approach, activity duration can be calculated or are known with reasonable accuracy Programme evaluation and review technique (PERT) probability approach, used where component activity times cannot be accurate calculated or are not know, might be a maximum time, a minimum time, most likely time, In both cases calculations are used as the basis for evaluating the individual and overall time. Used in both planning and replanning phases Gantt Charts Oldest simplest project network or plan is the Gantt chart or bar chart, for monitor progress effectively Gantt chart consists of; A horizontal time scale A vertical list of tasks A horizontal line or bar drawn to scale to represent the time needed to complete the activity.
Striped bar show task complete, heavy vertical lines represent time now, diamonds represent milestones Network Diagrams Precedence diagram with activity durations added to it. Enable planner to express visually the logic of a project plan by relationships between activities Two most common types
General rule for both types arrow run from left to right for start to finish, diagrams are not to scale in any way. Activity-onarc(AOA) Uses circles
Activity-onnode (AON) Uses boxes, No need for dummy activities Activates carried out parallel unless specific dependencies
AON Standard labeling Finish to start relationship Start to Start relationship Finish to Finish relationship Start to Finish relationship Simplest relationship Activity B cannot start until activity A completed Activity B can start as soon as Activity A has started Activity B cannot finish until Activity A has finished Activity B cannot finish until Activity A has started
Critical Path Method (CPM) assign durations to each activity Time needed for each activity five techniques for deterministic estimate 1. Modular technique time-estimate broken down into smaller and smaller units WBS progression 2. Benchmark technique basis of times for similar work 3. Modeling technique based on average or benchmark time multiplied by the weighted variable model total 4. Computerized database estimating system (CDSE) technique database of standard times for given activity 5. Parametric technique cannot be broken down any further where no standards for similar work are available, where the project manager has no experience, process isolate two variable, the dependent variable and independent variable plotted mathematically. Forward pass gives earliest start time (EST); backward pass gives latest event time (LET)
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Identify start and finish window for

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each activity
Precedence diagram with forward pass calculate the earliest event time (EET) carryout through the network, EET is finish time of preceding activity when dependent on two or more predecessors, use the later of the alternatives. Critical path is then calculated use a backward pass. Working back form right hand end of network and calculating the latest event times (LETs) latest time can finish without affecting the starting time of the following activities Network diagram contains activity duration (values on arrow) earliest event time (left-hand box number), latest event time (right-hand box number)
Identify those activities with no spare time contained within the duration (Critical Path) Replan as necessary
Difference between EET and LET the float. Path with zero float is critical path is the longest path. See diagram above dark arrow is critical path
If estimated date of completion unacceptable, client may authorize increase in cost, alternatives Import new (additional) resources and allocate them to the activity; Decrease the amount of work required (cut corners); Temporarily shuffle resources from other activities; Reevaluate the activity sequence and logic (if possible); Increase the workload demand on individual team members; Negotiate increased resource provision with subcontractors (where appropriate); overlap or phase activities (if possible); use any activity spare time reserves; speed up any associated approvals and consents. Resources should be leveled in order to make optimum use. Large peaks and troughs avoided First attempt at scheduling project, usually presented to the project team in preparation for subsequent brainstorming session and client for comment. Is not intended to be a final network. It is first step in preparing project master schedule (PMS) PMS is produced as a refined DMS contains firm times and dates for all activities, confirmed project logic, used by all members of the project team
Rationalize resources Form a draft master schedule (DMS);
Refine the draft to form a project master schedule (PMS)
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Draft Master Schedule
reduced by five weeks. Calculate the most cost efficient crash sequence.The critical path is: AB @ 1000 per week BE @ 6000 per week EF @ 12 000 per week FG @ 44 000 per week GI @ 12 000 per week
Program Evaluation and Review Technique (PERT) Assign three durations to each activity (optimistic, most likely and pessimistic); the expected time for an activity is taken as an average of the optimistic, most likely and pessimistic times. This average can also be expressed in terms of an activity standard deviation. The expected times are used as durations on a standard networking chart and the critical path is then calculated as in standard CPM
techniques. The sum of the individual durations for the critical path can then be used to calculate a project expected time and standard deviation. Calculate activity mean duration and standard deviation; Expected mean time for each activity The formula for a beta average is: T =(a + 4m + b) 6 where a = optimistic time, m = most likely time, and b = pessimistic time. For the train operating company example, a = 1.0 hours, m = 1.5 hours, and b = 3.0 hours. Thus we have that
As might be expected, the beta average give greatest weighting to the most likely outcome. Standard deviation for each activity The formula for a beta standard deviation is:
The critical path is the longest one through the PERT network, using average expected mean times. Calculate forward and backward pass values; Identify those activities with no spare time contained within the duration (critical path); Calculate project mean duration and standard deviation; same way as under the CPM approach, but using individual activity mean durations rather than deterministic durations. The mean duration for each activity is calculated using the formula for a beta average as detailed above. Exactly the same way as a CPM analysis. The critical path is the longest path through the PERT network. There is no float on this path.
Average project duration is calculated by adding all the expected durations of each activity on the critical path. The project standard deviation is the sum of the squares of each individual critical path activity standard deviation. The variance for a distribution is the square of its standard deviation, and the standard deviation for the distribution of activities represented by the network is the square root of the sum of the individual critical path variances. So the standard deviation for the network is the sum of the variances for each activity on the critical path.
(.33x.33) + (.2 x.2)

Identify target completion date and calculate variance about target;
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If the client gives the project manager a target completion of (say) 33 weeks, the project manager will evaluate the probability that this project will be finished in 33 weeks. The target time of 33 weeks is the target that the client is looking for, as opposed to the project mean duration of (say) 35 weeks. The project manager will use the PERT technique to evaluate the probability of this target actually being achieved. Project mean duration = 35 weeks
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Project standard deviation = 2 weeks Target project duration = 33 weeks Project mean target duration = 35 33 = 2 weeks Standardizing mean difference yields Project mean difference = 2.0 Project standard deviation = 2.0 Standardized mean difference = 2.0/2.0. = 1.0 standard deviation With a project mean of 35 weeks and a project standard deviation of 2, the lower target value of 33 weeks is exactly 1.0 standard deviations below the average value. From statistical tables it can be ascertained that the mean duration will be achieved on 50 per cent of occasions. Replan as necessary; Carried out in more or less the same was as in CPM analysis. If the calculated probabilities for a given set of activities are not acceptable the project manager has to modify the activities so that the meet any minimum levels of success probability. recalculating the average and standard deviation for each activity on the critical path each time the analysis takes place. Changes in critical path activity mean duration and standard deviation results in changes in the project mean duration and standard deviation. This section is carried out in the same way as in CPM analysis. This section is carried out in the same way as in CPM analysis.
Rationalize resources; Form a draft master schedule (DMS); Refine the draft to form a project master schedule (PMS)
This section is carried out in the same way as in CPM analysis.
critical path method (CPM) is a deterministic approach. program evaluation and review technique (PERT) is a probablistic approach PERT is more suitable where the durations of the individual activities cannot be accurately estimated. The end result of a PERT analysis is a probability of completing by a certain given date, rather than an actual stated completion date SAMPLE:
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Network Diagram
Schedule and Critical Path
Standard Deviation
The project mean duration is seen to be 16 months, with a project standard deviation of 1.25. With a target completion time of 18 months, we have
The target completion time therefore is 1.6 standard deviations above the project mean completion time. From statistical tables, we know that events within 1 standard deviation above the normal mean occur 68 per cent of the time. Events within 2
standard deviations occur 95 per cent of the time, 3 standard deviation occur less than 98 per cent of the time. standard deviation of 1.6 above the mean equates to about 84 per cent probability (using linear interpolation). There is therefore something around 84 per cent probability that the project will be completed within 18 months
5.3 Project Replanning 5.3.1 Introduction The most common requirement for project replanning calculations concerns time and cost. Clients often ask for projects to be speeded up and need to know how much of an increase in speed is possible and what it will cost. The analysis and execution of this time change, and its attendant impact on cost, is commonly known as crash analysis. 5.3.2 Crash Analysis Replanning advice based on the relationships between time and cost. Assumes that performance or quality criteria are fixed. In most cases the specified outcome is fixed. Time Cost Curve (tradeoff curve)
Point A and is typical of optimum time and cost considerations for most types of project. In order to reduce the time estimate and save time on the project, there will almost certainly be a requirement to increase resources. This will allow the project to finish more quickly but will result in a cost increase. Work out which activity can be speeded up at least cost, and then crash (i.e. reduce the overall activity duration) that one first, followed by the next cheapest, and so on. This will result in the typical negative timecost curve, Point (A) represents the original starting point, where the project will take 20 weeks to complete. This is the agreed tender amount and the agreed project duration. In this case, the tender amount is 50 000 and the project duration is 20 weeks. Point (B) is where the time allocated is reduced to 15 weeks, and the cost increases to 60 000. Point (C) represents the shortest time possible, in this case 10 weeks, and cost increases to 100 000. Beyond point (C), no further timesavings are possible
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The basic process involved in generating a timecost (crash) curve is to: 1. 1. Define the project logic; Obtaining the overall SOW, which provides full information on the project. This information is then used to generate the project WBS. The PLE is then developed, based on either logic driven or resource driven constraints. The outcome of the PLE is an overall project precedence diagram. Be deterministic durations, generally based on past project records or on national standards or computerized database estimating system (CDES). Forward pass and backward pass would then be performed. In practice, this would normally be done using a suitable computer program. Programs generally cannot assist in PLE calculations and analyses, but they are of obvious use in calculating the critical path from a network with specified durations. In terms of project crashing, the critical path is of primary importance. There is no point in crashing any noncritical activities, as this will simply increase costs while giving no time saving. In most crash calculations, the starting point would be a list of all the critical activities, as identified by the forward and backward passes. increasing the rate, labour, equipment etc
2. 2. Add the duration for each activity; 3. 3. Establish the project critical path;
4. 4. Calculate the cost of crashing each activity;
5. 5. Calculate the cost of crashing per unit time;
The crash involves doubling the excavators involved in digging trenches; the cost of the additional excavator will be more or less the same as the original excavator. However, crashing one activity may reduce overall project time more than by crashing another activity. Crash A may cost 10 000 and save 2 weeks. Crash B may cost 25 000 and save 2 weeks Start with the cheapest unit crash cost item and progress to the most expensive unit crash cost item. This will generally appear as a negative curve, rising more and more steeply away from the origin (which represents original project time and cost). As critical path items are crashed, the overall length of the critical path will reduce. In most cases, this means that at some point the original critical path will no longer be critical, because it will become shorter than one or more parallel paths through the network. crash limit is the point at which no further crashing of activities can take place. The most common form of limitation is by critical path. All the activities on the critical path could be crashed and it still remains the critical path.
6. 6. Calculate the most cost effective, crash sequence 7. 7. Check the critical path;
8. 8. Crash the network up to crash limit .
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The main points on the curve will be the following: Optimum cost point This is the project starting point or trough point. The lowest cost will be established for a given time. In order to reduce time, costs will have to increase, as more resources will be required. If more time is taken, the project cost may not reduce because of fixed or overhead costs. First crash point This is the point (point A) to which the project can be crashed using the cheapest crash cost per unit of time for a critical path component. It therefore generates a negative curve with a shallow angle. The next part of the curve is normally steeper. Maximum crash point The maximum crash point (point D) is the point at which all critical path activities have been crashed right up to their limits. The only other items that can still be crashed after this are noncritical ones. Crashing these will result in cost increases but no time savings because the items are noncritical. This area corresponds to the vertical section of the curve. Fixed overhead curve This is the region in which additional time is allowed for the project although no extra resources are injected. Fixed overheads such as security, contributions to the centre and so on, continue to accrue, and hence overall costs increase. 5.3.3 Crash Example 5.4 Trade-off Analysis 5.4.1 Introduction Crash analysis is one type of trade-off analysis; consider relationship between time and cost variables only. Assumes that quality standards are constant. 5.4.2 Methodology for Trade-off Analysis six stage methodology for trade-off analysis 5.4.2.1 Identify the reason for the problem Important that whatever happened identified so does not recur Reason for problem identified and control system in place to avoid occurrence in future Pre-execution trade-offs result from changes in client requirements typical reasons: Change in client requirements Discover design incompatibility
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Changes imposed by subcontractors or suppliers Changes imposed by external consultants Misunderstanding resulting from poor communication Unforeseen problems such as sudden no-availability of important materials Change in organizational strategic objective Execution trade-offs work package seriously behind schedule typical reasons Change in client requirements (partial or additional work) Discovered human error (inaccurate time estimate) Discovered execution problem (work complications) Emerging risk (inaccurate risk assessment) Project-specific events (mechanical failure or ground conditions) 5.4.2.2 Revaluate the project objectives Pre execution and execution trade-offs it is necessary to revaluate project objective ensure original objective of project have not changed. Typical reason for relative change in project status change in organization strategy: Change in competitor behaviour Change in customer demand Change in the national and global economy Changes in strategic leadership and emphasis Change in available technology Introduction of new codes of practice Introduction of new legislation Any of above result in formulation of new strategic objectives. Typical examples A deterioration in industrial relations with the company Weather conditions (where relevant) Exchange rate (where applicable) Mechanical failure and breakdown Discovered errors or omission in the contract documentation Resource availability problems Consultant problems Consider all possible solution to problem. Develop a short list of most readily meet the demands of the problem. Possible within constraints. Cost problem extend time allocated to individual activities Time problem additional resources usually means increasing costs Performance problem increase time available completion increase cost limit Best trade off scenarios, normal practice for formal trade-off recommendation report (TORR) produced alternative prepare hit list of top 5 recommended scenarios higher level authority choose option they fell is best under the circumstances. Implement revision and producing a new DMS once approved revised DMS can act as the PMS if pre-execution revision end result is the PMS In case of execution revisions to original PMS with appropriated revision records and controls
5.4.2.3 Allow for any other relevant factors
5.4.2.4 Assemble a shortlist of solution scenarios
5.4.2.5 Select and test the best (or approved) alternative 5.4.2.6 Implement the best alternative
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5.4.3 Trade-o f Classification The one variable fixed, two fixed or even three fixed, several alternative scenarios. Type 1, 2, 3 one variable is fixed. Other two can be expressed as function Type 4,5,6 trade-off where tow variables are fixed Type 7 and 8 tradeoff where all fixed very extreme environmental conditions. 5.4.3.1 Type 1: Time is Fixed 5.4.3.2 Type 2: Cost is fixed 5.4.3.3 Type 3: Performance is fixed 5.4.3.4 Type 4: Time and Cost are fixed 5.4.3.5 Type 5: Time and Performance are fixed 5.4.3.6 Type 6 Cost and Performance are fixed 5.4.3.7 Type 7 Everything is fixed Fixed time element with variable cost and performance, time compliance primary project objective achieved by variation in cost and performance widely used in planning production systems. Cost is the primary condition where time and performance are variable, certain amount of money spent within set time scale Quality of process most import factor permissible to vary time and cost in order to meet minimum standard. Widely used in projection systems Performance is variable or not specified, open within limits rather unusual in a project context. Cost is variable date of completion and minimum standards; spend a variable amount of money in order to achieve these. Time is variable, company knows that it has to achieve some minimum stand but it has some flexibility over spending and how long it takes in achieving. No flexibility in time, cost nor quality, unusual and tends to be found in relatively small, simple projects only likely to occur where Project is relatively simple and small Extent of work can be accurately agreed before work starts There is unlikely to be much imposed change Overall duration is short and can be estimated more or less precisely Cost of works can be agreed accurately Performance requirements can be agreed in detail No variable are fixed relatively unusual largely to emergency work disaster-relief project
5.4.3.8 Type 8 Nothing is fixed
5.4.4 Example Trade-off Curves Trade off curve can be generated for virtually any application. Crash cost curve generated in the crash analysis is an example, could include Time-cost Curve A typical time-cost trade-off curve is negative with increasing gradient. Curve B large fixed overhead cost
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Performancecost
Curve A standard performance-cost relationship, possible to improve performance by investing in relevant projection system, linear relationship between cost and performance up to a point, beyond that point will be a change Curve B large injection of cash are needed in order to achieve small improvement in performance Curve C linear relationship between cost and performance. Curve A linear performance time curve up to a point produce something better if it is allowed to take more time beyond that point it requires lot more time to gain additional improvement of same size Curve B large improvements are initially possible by allowing more time, new adaptation Curve C large amounts of time are required to secure small increase in performance
Performancetime
5.5 Resource Scheduling 5.5.1 Introduction Once defining and sequencing task done, resources have to be allocated 7 main types of resources: 1. People 2. Materials 3. Equipment 4. Funds 5. Information 6. Technology 7. Space (where appropriate) two major considerations to be made in allocation resources Resource productivity How effectively team members work individually and collectively Reasons for varying level of productivity Individual held back by rest of team where average level of commitment and motivation is lower than individual Team need to have a balance of individual member ability, different skills required Personality clashes affect team Evolve through a forming process, learning curve, team performance
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Resource availability
to project life cycle. Synergies
Affect how well team can meet schedule
5.5.2 Resource Aggregation Way of estimating the total resources requirement on an ongoing basis throughout the life cycled of the project. Usually based on past experience of carrying out similar work. Main resources will be labour, equipment and materials. 5.5.3 Resource Utilization Expressed in term of an efficiency index known as resource utilization percentage. Total number of person days actually worked on project / total number persons days available for the project If it falls below certain level, example 70% then some degree of resource leveling must take place 5.5.4 Resource Leveling (or Smoothing) Leveling out the peaks the troughs in resource demand so that resource utilization approaches an average, software can be set to level automatically as activities and resource are entered 1. 1. The project completion date is fixed Carried out to limited extend, cannot affect the critical path so critical activities cannot have resources reallocated or delayed. Resource peaks in critical activities cannot be reduced. Only non-critical activities can be leveled All activity but only up to maximum duration. Critical-path activities are prioritized and leveling set sequence. Distribute demands in key resource over several parallel activities, lead to a resource demand that is in excess of limit allowed. No limitations on extent to which resources can be redistributed. Only occur in relatively small projects
2. 2. The project completion date is variable

3.
3.
Resources are limited
4. 4.
Resources are unrestricted
Resource leveling works by consuming float on each non-critical activity. Leveling process produces a better resource utilization percentage process also provides a number of associated advantages. Some of these would be: Reduce peaks in resource demand fewer people on any project at any one time Individual people work for a longer period on the project develop teamwork and learning curves. Reduce float time on individual activities lead to greater continuity between activities. Significant if link between activities Reduce activity duration, implication for external subcontractors. Reduce overall time particular subcontractor required. Overall cost reductions. Constantly check the network and monitor the development of new near-critical and critical paths. As float-consumed consequence of delay increase and so does the overall level of project risk.
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5.6 Project Planning Software 5.6.1 Introduction Provides effective management of costs an schedules, administrative cost savings, improved visibility, and reduced cycle time of analysis 5.6.2 Advantages of Computer-based Project Planning and Control Speed Can produce same planning information as whole team of specialist planner, time savings in replanning after trade-off analysis High performance software initially expensive training and development cost more potential cost saving, one skilled planner perform work of skilled planners on paper Limiting factor is the processing capacity and speed of computer used Only as reliable as information input Software to plan and control time and cost simultaneously
Cost
Capacity Reliability Combined analysis
5.6.3 Disadvantages of Computer-Based Project Planning and Control Reliance Over emphasis on system detail Information dump Potential misdirection Generate automatic reliance and a consequent risk. Ensure backups protect from loss or corrupt information Spend time on maintaining linkages rather than managing actual project, an ancillary support activity Degree of restriction an control over the output important facts not confused with mass information Accept well-presented material as being accurate. Incorrect will not lead to incorrect report degree or quality of report presentation does not alter this fact.
5.6.4 General Factors for Consideration Lead-in time Transition Training Long time for staff to develop full proficiency in use of system. Intensive training take 3 6 months installed and commissioned to level of reliable. Detail knowledge of one system tends to have natural reluctance to switch to a new system, main reason being effort involved. Time consuming and expensive process, reducing the availability of resources in existing system, can have an adverse effect on overall profitability of the organization Frequent updates considerable additional functions and adaptation. Hold regular training seminars - user can stay up to date Configuration management system (CMS) central server, which runs on centralized network software serving a number of remote users.
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Updates
Networking
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Wider compatibility
Security considerations
5.6.4.1 System Critical Success Factors Number of critical success factors System should be usable System should use familiar displays System should be CMS compatible System should be extendable user friendly Displays and outputs compatibles with what user expects. Cost report certain type of appearance Configuration management system (CMS) information centralized and distributed to all members Forward looking and try to incorporate next generation ideas so that innovation supply stay ahead of demand
5.6.5 General Features of Project Planning and Control Software Systems Project planning Resource management Tracking and monitoring Report generation Analysis and decision aiding Defined project activities produce Gantt charts and network diagrams, can reschedule and update information automatically when changes made Resources allocated to each project activity system will calculate the resource loading, leveling resources across the project Updating data, ongoing status, enable system to monitor project against original plan, highlight variances from the plan,. Establish baseline fixed reference point. Generate wide range of status reports covering most aspects of the project budgets and cash flows resources and schedules What if analysis, perform straight forward analysis - use in decision making
5.6.6 Common Commercial Project Planning and Control Software Large multi-project users include Power Project Professional Primavera Project Planner Artemis View 4 Open Plan Cobra Enterprise PM Micro Planner X-Pert Mid range products up to about 2000 tasks include: Microsoft project Micro-Planner Manager Primavera Suretrak
Low cost packages Milestone Simplicity Project Vision Quick Gantt

Module 6 Project Cost Planning and Control 6.1 Introduction Project cost and control system (PCCS) and primary evaluation technique is earned value analysis (EVA) make use of Project variance analysis reporting (PVAR) reviewing two cycles of the PCCS separately Planning cycle Control cycle Concerned with budgeting and cost planning Considers cost monitoring and control including suitable reporting systems
6.2 Project Cost Planning and Control Systems 6.2.1 Introduction Cost planning breaking total project down into individual element or work packages and assigning realistic estimate cost. Standard practice to develop cost limits for different levels of work. Cost are then rolled up. Provides a cost map for the project Cost control ensuring that the cost limits established by cost play are adhered to wherever possible. 6 Main stages involved: 1. 1. Monitoring on-going actual expenditure against cost limits 2. 2. Identifying any variances that occur 3. 3. Identifying the reason for any variances 4. 4. Taking appropriate corrective action 5. 5. Monitoring to ensure that the corrective action resaves the variance 6. 6. Taking further corrective action as necessary Cost planning and cost control function work together but are fundamentally different in approach Cost planning essentially a strategic project function in that it establishes aims and objectives before work actually starts. Cost Control is tactical or reactive function intended to monitor and control in order to ensure project strategic cost objectives are met. 6.2.2 Cost Planning and Control as a Concept Work breakdown structure (WBS) estimated and priced. Sets up a budget plan individual packages have target cost identified by an account code system. Actual cost charged against each packaged related to budgeted costs part of monitoring process. No direct time measurement involved. Time does affect performance of the cost control system regulates the rate of expenditure characteristic of expenditure and projected cashflow curves. Time and cost planning process linked and use the same basic work-package elements as derived in the initial development of the project WBS Top down strategic process, after which three aspects divided and separate, planning and control systems are developed for the specialized control of each aspect. 6.2.2.2 Cost Planning and Control as Management Function Involves establishment of cost targets success criteria. Variance analysis used determine how close actual performance is against planned performance. Deviation from plan
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6.2.2.3 General Requirements of a Cost Control System Cost control depends on accuracy of the budget plan number of important prerequisites The project schedule must be accurate The estimating system must be reliable The scope of the project must be clear The budget must be realistic The authorization system must be clear The system must be flexible and responsive There must be a reliable approach to cost tracking and variance analysis The variance detection sensitivity envelope must be time dependent There should be a flexible approach to the use of reserves and contingencies 6.2.3 Types of Control System 6.2.3.1 Introduction Three primary types of control system Cybernetic Analogue Feedback 6.2.3.2 Cybernetic Operates and different levels, Low-level process use pre-set information, basis for analysis while higher order systems use more advanced processes main differences between lower and higher order systems lie in: The range of information that can be used in the system memory The extent to which this data can be used to influence the decision The extent to which two-way connections between the elements can be developed. Low level cybernetic control is typical for simple response mechanisms Mid-level cybernetic control more complex or where greater degree of flexibility and response required. Decision making process relies on analysis, case is still directed by analysis but the analysis considers multiple variables. System includes range of pre-set responses , external factors are also interactive. Micro computer or advanced processor to carry out the level of analysis. Much greater degree of response flexibility than low-level systems. Can only operate within the limits set by the design of the control system itself. Only operate within a range of pre-programmed responses High-level cybernetic control process allow the system to move beyond any level of preprogrammed response Replaces the database of pre-set responses with reasoning process are fully interactive. Interact directly with the environment and bypass the reasoning process. Human brain uses control systems at all three levels. Examples of cybernetic control system as related to project teams: 1 Lowlevel cybernetic control systems: detecting time and cost variances; adjusting likely final time and cost estimates to allow for detected variances; reprogramming the project schedule following change. 2 Midlevel cybernetic control systems: adjusting estimates to allow for increases in individual cost rates; establishing the individual cost of change notices and variations; allowing the use of provisional and contingency sums.
3 Highlevel cybernetic control systems: generating original tactical solutions to discovered programming problems; updating the risk profile of the project following change; developing a strategy for required negotiations. 6.2.3.3 Analogue Control Appropriate for smaller elements or work packages Widely used in computers yes no questions. Depending on the answer system directs to another yes no. process of elimination When faced with complex problem, natural human reaction is to: Eliminate those solutions that are not feasible Take the solutions that are feasible and break them up into smaller sections Break the feasible solutions up into smaller and smaller subsections Tackle each subsection separately Set straightforward outcome criteria for individual work packages possible to set: Package start and finish times Package cost limits Package performance limits Analogue Control system tend to operate where there are rigidly defined time, cost, and performance limitations Rigid time limits Rigid cost limits Rigid performance limit Penalties related with late completion Often with public works project can be contained with set cost limit Quality of the product is paramount example pharmaceutical research company
6.2.3.4 Feedback Control Post-project evaluation and feedback. Involves assessment of completed projects with intention of feeding back any lessons learned to future projects. Essential to learn from past experiences in order to improve future project strategy. Use of formal reporting system. -Post occupancy evaluation review (POER) review involves detailed evaluation of the finished product including detailed feedback from users. 6.2.3.5 The General Design of a Control System Number of important consideration taken into account: Level of response require Flexibility of response require Level of innovation and original (thought) response required Reasonableness of any imposed standards in relation to project performance Level of detail required in reporting systems Degree to which responses can be automated Degree of variance that is acceptable (as a function of time) Range of acceptable solutions that are available Degree of time lag (between identification and response) that is acceptable Authority systems that are in place and associated time implications Extent to which corrective actions may be limited or controlled In addition good control system should: Be fully automated in the case of low-level systems Be flexible in the case of mid-level and high-level systems
save)
Be cost effective (some systems cost more to run than they actually Be accurate and reliable Be useful (not there just for the sake of being there) Be responsive within any time limits that may apply Be capable of extension Be user-friendly and easy to understand (or people will not use it) Be fully documented by generating detailed reports
6.2.4 Costs and Allowances 6.2.4.1 Introductions Cost planning and control system must allow for costs that are likely to be encountered during the course of a project. 6.2.4.2 Cost and Allowances Classification Costs that may or may not be incurred during the project
Fixed and variable cost
Incurred irrespective of the level of activity Fixed cost tend to form the major part of projects indirect (or overhead) costs. Variable costs are those that are incurred at a rate that depends on the level of work activity. These are usually direct costs. Direct costs are the costs directly attributable to the job or project takes- include labour, materials, equipment changes directly related to carryout the takes. Indirect cost spread over a project Backbone of a cost plan.<span style="mso-spacerun: y
Direct and indirect cost
Measured works
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Module 7 Project Quality Management 7.1 Introduction ISO 9000 defines quality as: The totality of feature an characteristics of a product or service that bears on its ability to satisfy stated or implied needs Once client and/or customer confidence in the product has been damaged, extremely difficult to recover confidence. Quality management extends beyond quality assurance and control systems. 7.2 Quality Management as a Concept 7.2.1 Introduction Quality management is increasingly important, and a primary objective. . Reached a point where it is a central factor in most project decision-making process it is about being able to produce a good to a guaranteed standard of quality for a given price. Basic objective in 1960s was to be maximize output at lowest possible cost. Consumers wanted goods at the lowest possible price and overrode any other consideration. Mid-1960s to the mid 1980s Japanese systematically dominated virtually every western industry that they targeted. This was based on quality not cheaper Total quality management (TQM) as being equal in status to cost and time planning and control 7.2.2 The Traditional Japanese View traditional Japanese philosophy considered the following main areas: 7.2.2.1 The Overall Value of Quality Quality management is expensive. Ability to guarantee the quality of product incurs a direct cost in manufacturing and production process. Clear function relationship between quality standards required and the unit cost of the product. Increase quality standard result in cost per unit tends to increase linear relationship between cost and quality. Quality-cost curve are curvilinear, cost per unit increasing more rapidly as process approaches zero defect. Acceptable defect rate vary depending on product True value of quality and the true cost of defects Apparent value of quality what people will pay to get a goodquality product Overall value of quality = apparent value + true value 7.2.2.2 The Overall Cost of Defects True cost of defect can be far greater that apparent cost of fixing it Seen to have high failure rate lose customer confidence Bad reputation builds up over time Traditional analyses ignored the cost implications of losing customers or of failing to attract customer first because of effects of defective work. Japanese view recognized importance of reputation, customer goodwill, and powerful influences of disaster such as loss customer trust and development of bad reputation. (Fragility of customer trust) crucial to investment, as the cost implications of losing trust can be great. Once true cost of defective work realized it is relatively easy to justify even fairly stringent quality management methods. Overall cost of defects = apparent cost + true cost Apparent cost is the actual cost of covering the warranties and
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guarantees issued, true cost is cost of loss of reputation and customer trust (very much greater than the apparent cost) 7.2.2.3 Quality dividends Improved company status and image Improved performance based demand from customers Increased respect by competitors Increased share price stability Improved staff attitudes and motivation Improved sales Better industrial relations Improved and more stable risk profile Improved goodwill Improved prospects in potential mergers and acquisitions Improved prospects in potential alliances and partnerships Employee motivation very important determinant of production efficiency. Pay direct financial incentives not same motivation as high quality product, applies across all industries. Goodwill another important dividend, in critical mass produce dividend benefits True payback = overall benefits implementation costs Based on employee commitment High degree of employee make system self regulating Employee commitment absence of expensive quality control systems Employee commitment and self-regulating more reliable then traditional quality control systems. Reinforce the bond between employees and company. Everybody share in overall success of the process Compatible with the cultural characteristic of Japanese society. Approaches based on co-operation and team work Japanese approach guarantee quality at a lower overall cost Prevention is better than cure. Forward-looking, planned, approaches rather than on retrospective sample-checking approach. In practice use a combination of preventive and responsive systems. Quality is company-wide consideration. Improving quality requires an improvement in quality attitude of people at all levels. Origin of Total quality management (TQM) include not production process activities i.e. office workers, production workers all develop quality management ideology and commitment. Permeate all levels of the company. Constantly improved and engineered, customers expect new products and options. Japanese companies educate the customer to demand higher standards than the competition could supply.
7.2.2.4 Involving People
7.2.2.5 Proactive Planning
7.2.2.6 Involving the Whole Organization
7.2.2.7 Educating the Customer to Expect Quality
7.2.3 Quality Standards 7.2.3.1 Introduction First real attempt at Quality assurance was US military standard MIL-Q-9858A released in 1963 dependence on inspectors. ISO9000 contains five main sections
Based upon a never-ending cycle, that includes planning, controlling and documentation. Shows necessary procedures are in place or at time of inspection. It s bureaucratic on and only measures performance at one point in time. Attempts to apply generic measure or standard across countries ISO9000: Quality Management and Quality Assurance Standards Guidelines for Selection and use key terms and acts as a pointer to the other standards with the series. ISO90001: Quality Systems Model for Quality Assurance in Design and Development, Production, Installation and Servicing. Defies a model quality management system as the basis for the approach of contractor or manufacturer in developing quality management systems for design, production or installation ISO 90002: Quality Systems Model for Quality Assurance in Production and Installation. Model for quality assurance in manufacture and installation ISO 90003: Quality Systems Model for Quality Assurance in Final Inspection and Test model for quality assurance in final inspection and testing ISO 90004: Quality Management and Quality System Elements Guidelines provides management guidelines for any organization wishing to develop and implement a quality system. Determine extent to which each quality system model is applicable 7.2.3.2 Brief Guide to ISO9000 What is ISO9000? Is concerned with quality assurance Why is it important? Quality is an important issue and more important all the time What is a quality plan? Formal document that reflects quality policy and objective of an organization What is quality assurance? Relates to the customer provides an ongoing assurance produce goods and services at required level Who is affected by quality assurance? Effective quality management has to operate organizational-wide What does ISO9000 look for? Quality management Twenty main points Requirement 1: Management responsibility and quality policy define strategy and programme communicated understood organization wide. Requirement 2: Quality system - documentation practical, accurate and reasonably easy to maintain Requirement 3: Contract review Requirement 4: Design control design product in line with customer requirements Requirement 5: Document control all working practices must be documented, and kept up to date, available to people part of the quality plan Requirement 6: Purchasing preassembled items, subject to some quality standards and checks, suppliers and subcontractors must be precisely aware of what standards are required. Requirement 7: Purchaser-supplier product material must be subject to same quality standards and checks imposed on product factory Requirement 8: Product identification and traceability each product have a separate identity, possible to track both moved through the system and work still to be done Requirement 9 Process control mechanism for production process stated. Checks and tests through the system
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Requirement 10: Inspection and testing carefully inspected and tested in order to ensure achieve minimum standards set. Defective product identified and removed, and accurate records maintained Requirement 11: Inspection measuring and test equipment records show testing and calibration records, deal with testing equipment that fails Requirement 12: Inspection and test status production cycle have clearly defined stages, clearly mark as it completes each stage, record show when a product passed each stage. Requirement 13: Control of non-conforming products Defective products must be accurately and immediately identified. Defective products cannot be confused or mixed in with goodquality products. Requirement 14 Corrective Action Process constantly monitored and checked be sure working properly. Corrective action applied when required. Requirement 15 Handling, storage, packing and delivery carefully packed in packaging provide adequate degree of protection. Products handled carefully and sorted in an appropriate protected area prior to shipping Requirement 16 Quality records Accurate records maintained, used in order to demonstrate improvements in quality against an agreed benchmark or standard. For fault tracing and other forms of problem analysis Requirement 17 Internal quality audits impartial and independent comprehensive inspections and reviews of all parts of the process Requirement 18 Training Full and appropriate training made available, accurate records of all training maintained. Requirement 19 Servicing well specified, carried out by fully trained and competent personnel, and completed within agreed lime limits. Requirement 20 Statistical techniques statistical sampling and data-processing techniques used to sample and test products. Samples must be statistically representative of whole product range. 7.3 The Quality Gurus What all the gurus agree on to some extend 1. Quality processes must be enterprise-wide 2. Process defects should be considered before employee defects 3. Quality process must be structured broken down into elements. 4. Quality processes must ensure that the product exceeds customer expectations demand margin 5. Quality processes must be able to rely on commitment Generally greater the level of commitment the more effective the quality management system will be 'approach' (in this case a method used for dealing with something) and 'philosophy'(a system of thought). 7.3.1 Deming If company improves its quality management then it automatically improvers its production intrinsic link between quality management and production. Operatives want to do a good job and will given the right equipment and processes. Most quality issues are controlled by management rather than operatives. Operatives may be motivated and want to do a good job, but are often prevented from doing so by defective plant and equipment or the supply of poor raw materials and/or components. Operatives do not naturally know how to do their best and have to be educated and trained in order to be able to do so. Deming particularly advocated the use of process charts in developing 'best value' in operatives. Operatives are basically motivated and will do a good job if given the right tools and equipment. Operatives, however, cannot naturally do their best (achieve optimum output). In order to achieve this they have to be shown how, and have to be supervised during the process'.
One application might be volunteer soldiers. They are highly motivated and want to be good soldiers. In order to become good soldiers, however, they have to undergo a rigorous (supervised) training regime because they are not 'naturally' good soldiers. Very few people are. Worker-oriented appeals to democratic type manger. Core of statistical analysis fourteen points: 1. Create common sense of purpose 2. Create a new mind-set 3. Build quality into the system 4. Review procurement strategy 5. Research and innovate 6. Invest in staff development 7. Enhance supervision 8. Develop a system of open communication 9. Encourage enterprise-wide open communication 10. Avoid the use of output standards 11. If standards are used, use them carefully 12. Encourage pride 13. Invest in training 14. Encourage commitment 7.3.2 Juran The approach is based on highly structured quality planning and control systems, using a similar approach to that used in time planning and control (WBS approach) and cost planning and control (a cost account code structure). Juran's philosophy (not approach) is arguably much less structured in that it argues that quality can be planned and controlled in much the same way as time and cost. Ten steps to quality improvement 1 develops an awareness that products must evolve and improvement is necessary; 2 establish a strategic plan for improvement and establish goals for improvement at different positions within the strategy; 3 plan an operational system that allows the goals for improvement to be achieved; 4 provide adequate staff training and development as required; 5 where there are major problems treat them as projects and set up a project team to resolve them; 6 establish a regular and detailed reporting system; 7 recognize good performance and reward it. Take appropriate corrective action in the case of poor performance; 8 develop an open communication system and communicate results; 9 maintain performance records and publish results. Use league tables; 10 drive the system maintaining momentum and constantly introducing improvements and innovations. Senior management must establish top-level strategic and annual plan for improvement in quality. Based on complex planning and implantation control. Appeal to boss-type manger who identify with rigid control system. Basic philosophy is plan improvement, control implementation and then improve. Directly analogous to time planning and control and cost planning and control. It is scientific and highly structured of the approaches Juran trilogy : 1. Quality planning and analogous to cost and schedule planning includes Identify and ranking all existing customers Identifying individual customer demands and requirements Developing a solution (product) that meets and exceeds these demands and requirements Planning the development and implementation of this product Establishing goals for achieving the product Ensuring that the system is accurate and reliable
2.
3.
Quality control Collection and analysis of data. Standard statistical techniques using meaningful sample sizes, measure, type of distribution performance measures and confidential limits. Baseline data and standards have to established to allow the monitoring process to occur Quality Improvement New levels of quality performance. Improve the system so that the ends result is a procedure that operates at a measurably higher level of quality performance than it did before, need for open communication at all levels
7.3.3 Crosby Based on philosophy that quality has to become universal goal of the organization and that senior management must provide the leadership. Human-resourced type of manger. Best achieved through prevention. Series of objectives and targets produces goods to meet these standard. Performance standard of zero defects. Fourteen stage process: 1. Establish commitment of all levels of management formal assessment current quality performance, relation to desired performance, formal quality policy and benchmarks 2. Establish specific quality teams specific teams to maintain and improve quality, people involved in the process 3. Establish measurement and evaluation systems standardize reward system performance is uniformly recognized and rewarded 4. Establish cost implications overall and true costs in relation to estimated and actual implementation costs Promote awareness of quality 5. Promote awareness of quality 6. Establish appropriate corrective action identification of problems, control responsive action, strategic exercise 7. Establish plans for zero-defects engineer process near to perfect as is possible safety critical area, difficult to produce a defective product 8. Initiate education programmes spreading concept of quality throughout the entire organization employees all level trained. Everybody responsible for quality and integral part of the job 9. Initiate zero-defect day - important milestone 10. Establish achievable quality improvement goals establish organizational goal, fair, reasonable and achievable. 11. Remove the sources of defects effective analysis 12. Recognize good performance and reward it recognize and reward quality improvements 13. Establish quality forums quality forums, quality steering groups, facilitate and guarantee open communication 14. Ensure evolution and feedback Customer demand changes, must be dynamic, effective feedback 7.3.4 Imai Philosophy based on continuous improvement with an emphasis on production system and the immediate environment rather than on the product itself. More structure that those of the other three gurus. Structured production-type managers. Production system aligned to the characteristics and demand of environment. Known as the P approach (the process approach) concentrate on the process rather than the results. This is at odds with classical motivation theorists, who tended to assume an R approach (results approach) sets target output results by a management by objectives plan. the P approach improve the system, leading to improved results., also referred to as Kaizen approach. Change is slow and consistent rather than sudden and dramatic. Entire system instead of individual or group performance on a particular task. Financial input low
improvement is so long term continuous and high-level management support to ensure change continues approach centers on the optimum design, operation and evolution of the production system itself in the assumption that high quality will follow philosophy is arguably the most structured in that it assumes that quality can effectively be engineered by concentrating on the characteristics and components of the production system itself 7.4 The Quality Management Six Pack 7.4.1 Introduction Quality is the level of performance required in order to win more of the same type of work and to acquire new customers . Quality Management is the process of managing quality in order to ensure that certain established standards are achieved. Is fully integrated and not treated as a separate process. By definition this process involves establishing some kind of standard and then measuring actual performance and comparing the performance to that standard. This approach is directly analogous to EVA systems used for cost variance analysis
Six pack form a coherent and interlinked operational system and is likely to fail if any element is missing. Quality policy stating point required image an division of organization. Quality assurance and control procedures contain the tools and techniques that allow quality standards to be set and performance to be monitored. Development of formal strategy takes place within planning and review section and the performance of the whole system is evaluated and monitored through the quality audit process. Effective measure and /or qualify the performance of the quality management system at any particular time are developed form the quality objectives.
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7.4.2 Quality Policy Quality Policy is a statement of the overall organization vision on quality. It clearly states the organizations attitude and approaches to quality and sets out overall success criteria for performance. These are usually stated as overall achievement goals and are designed to respond to customer objectives or concerns. The policy is a statement of overall strategic objectives. It does not specify individual performance requirements or the mechanics required to achieve the objectives. Primary components of the quality policy are: Clearly stated organizational quality objectives Established measurable minimum performance levels A clear reconciliation for the quality policy with the established strategy objectives of the organization Clear and unambiguous senior management support Stated penalties or consequences for no-compliance Reference to any central or statutory restraints Some form of measurement and evaluation procedure Stated responsibility and ownership Quality policy should be in the interest of everyone. 7.4.3 Quality Objectives Quality Objectives are effectively components of the quality policy. The objectives convert the overall policy into individual statements of what has to be done by individual sections in order to achieve the overall policy outcomes. The policy objectives represent individual performance control elements. They are analogous to work breakdown structure elements and cost accounting code elements Objectives must be clear and practical Clearly achievable and in context Linked to organizational and strategic goals Adequately resourced Associated with clear and unambiguous relevant operational support Related to some form of measurement and evaluation procedures Related to stated responsibility and ownership Related to any operational and/or statutory standards Related and apply to all relevant operational units Stated in the context of specific time scales for implementation Stated in the context of an implementation cost limits that may apply 7.4.4 Quality Assurance Quality assurance is a general term applied to a wide range of tools and processes that are used as drivers to ensure that the quality management system performs and produces results that comply with what has been specified. Quality assurance is a proactive concept. It is primarily concerned with setting the standards that are required of the system in order to ensure project success. Proactive concept good system will Clearly identify the minimum standards of performance that are acceptable Be proactive Be reactive Apply across all sections that are involved in production Establish procedures for the collection and analysis of performance data Establish in the context of any relevant audit and performance review procedures 7.4.5 Quality Control Collective term, main difference between quality control and quality assurance is in evaluations and physical measurement. Quality assurance is concerned with proactively establishing drivers and standards for performance
Quality control is concerned with evaluation of how well these standards or targets are actually being achieved, and reacting to any deviations. retrospective approach Measure and confirm actual performance Compare target and actual performance and generate performance variances Identify significant performance variances Identify the sources of significant performance variances Initiate suitable corrective e actions Assign ownership and specific responsibilities Monitor the effectiveness of corrective actions Generate suitable reports and control outputs Directly analogous to the generation of cost and schedule variances 7.4.6 Quality Audit Independent check is carried out by impartial personnel in order to ensure projected quality performance standards are being met. Internal and external audit. External audit generally provides stronger and more reliable measure of performance General terms audit system should confirm that Quality assurance procedures have been observed and complied with Quality control performance figures have been correctly assembled All relevant issues have been included All processes have complied with any relevant internal standards and with any external statutory regulation All analysis and reporting have complied with any relevant internal standards and with any external statutory regulations All proposed corrective actions have complied with any relevant internal standards and with any external statutory regulations All monitoring and control systems have complied with any relevant internal standards and with any external statutory regulations All reporting systems have complied with any relevant internal standards and with any external statutory regulations Any appropriate areas for improvement have been identified and correctly addressed All plans and strategies for improvement have been correctly assembled and implemented Any possible areas of misdirection or misinterpretation have been addressed The system is free of corruption 7.4.7 Quality Assurance Plan and Review Work content of the project is broken down to such a level that specific quality tools and techniques can be applied to each section and results and responses can be monitored and controlled to ensure compliance, allows to project mange both the implementation and the effectiveness of the quality management system Good quality Plan will Establish clear targets for the achievement of any stated objectives Ensure that all targets are achievable Allow for any interdependencies between activities Allow reasonable provision for response to change Include reasonable contingency planning Clearly specify performance objectives success criteria Establish relevant risk profiles for each affected section and activity Include provision for all performance variance corrective action Include ownership and specific responsibilities Include provision for the monitoring and control of the effectiveness of corrective actions Include provision for the generation of suitable reports and control outputs Be fully accountable for overall performance improvements
Plan and review has to be dynamic, relate the quality management system to customer requirements Provided plan is correctly designed and implemented it will perform the following valuable functions Strategic focus Long term aims and objectives, end result has to be clear definition of what each section and individual employee needs to do in order to achieve overall success, the quality assurance review (QAR) acts as on on-going control of the QAR ensure the QAP is being implemented correctly and remains aligned to overall strategic objectives QAP is a network of procedures, various actions for effective quality management are intrinsically linked, QAP acts as overall co-coordinating mechanism to ensure producers work together toward common set of objectives QAP set individual section procedures and performance levels, makes them known to all parts of the organization. Establishment of clear and fair internal benchmarks is very important, quality plans act to ensure people take notice of internal benchmark standards. Resource limit become a kind of benchmark, safeguard against future reductions in resources. Proposals for downsizing or reducing resources can be converted into a workable useable probability as to the effect based on information contained in the quality play QAP as a time and cost plan. States time and money required for each stage in process in order to meet specific target performance level. Establishes QAP as the standard contract document Trade-off link between time, cost, and quality. (EVA and PVAR report links only time and cost) QAP tends to generate uniform quality Several major problems associate with imposition of quality system onto an organization Early stages of project, performance management is often under-valued as there is an assumption that the specifications contains all relevant information Immediate time and cost constraints tend to dominate early stage decision-making Design team in particular tend to leave performance management until later stages of process Middle and late stages of implementation that client tend to become concerned about eventual performance of the system in relation to other project success criteria Performance measures tend to be related to the degree of implementation of the remainder of the project. Difficult to assess actual performance until various operational processes are in place and functioning Trade-offs place pressure on performance. First response of project manager faced with time / cost inconsistencies is to attempt to compromise performance Performance incorrectly interpreted as being function of time and cost more time or money must improve performance Performance management is a subjective approach. Not always possible to use such a direct and structured approach to performance planning and implementation Customer related than time or cost planning control Advanced software packages link time and cost as standards using EVA. No advanced software at present includes performance as a functional variable Performance management in general tends to suffer from a lack of
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Formal procedures and process Internal performance targets and benchmarking Support for tendered/bid resource allocation Data fro trade-off analysis
Standardization of procedures
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adequate planning Lack of planning most difficult problem to overcome, quality cannot be applied retrospectively. Needs to be built into the production cycle. QAP formulate fairly easily by production a quality assurance matrix using combined OBS and WBS elements, broken down into work packages and signed using task responsibility matrix (TRM). 7.4.8 Quality Control Tool Quality tools assist in all aspects form quality sampling to problem identification and diagnosis. Wide range of statistical approaches can be used the main ones used in quality management concentrate on either identification of the problem or analysis or both. 7.4.8.1 Identification Tools Identification tools are used to identify where problems are occurring fall into a number of categories Pareto Analysis Type of histogram, gives an approximation of relative value or size of the problem area. Isolates areas on nonconformity to standard and draw attention to the most frequently occurring element Typical graphical representation would show frequency, percentage and units on a three-way chart Basic Pareto analysis identifies those elements account for highest proportion of quality problems data table show frequency of occurrence Comparative Pareto analysis considers a range of processes are actions and compares them in order to determine a league table of problem causes Weighted Pareto analysis consideration of factors not obvious in initial analysis. Could include quality determinant such as time and cost Puerto diagrams can demonstrate the effect of proposed and actual corrective action to try to improve quality performance Phase 1 is the creative phase invite e as many ideas as possible Phase 2 is the Evaluation phase each one is evaluated by all members of the team identify those ideas that have the most potential an Two widely used methodologies for brainstorming The Delphi method a panel of experts given an identical statement participants do not interact and do not know each others existence purely as individuals make identification of predictions / risk submit to steering group. Steering group assess the evaluation and provide comprehensive feedback to experts. .Each expert then given the collective answer and knows what his or her individual response was. asked to make new identification and based on collective answer and repeated as necessary Based on the principal of groups approximate Nominal Group Technique Panel is convened. Brainstorm the problem and list proposed answers In writing. Whole group help develop list. Each idea is discussed openly and in detail. Each panel member then individually ranks each idea in terms of perceived suitability for particular problem. List in order of this collective rank. Then listed and discussed again until a final ranking can be arrived at. Error from this not least form bias and prejudgment: Loyalty to the project Consequences of group think Political alliances between group members Personality issues Team balance issues Prior knowledge and experience Failure to assimilate all relevant information Inability to reach an acceptable solution within time limits
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Brainstorming Techniques
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SWOT Analysis
Intuition Pre-established ideas and concepts
A strength, weaknesses, opportunities and threats (SWOT) analysis useful to identify defects and area potential weaknesses with prosecution system. Analysis provide both internal and external environment, Strengths and weaknesses are controllable internal factors, Opportunities and threats generally uncontrollable external factors, cannot be engineered by the organization. Works on same basis as a work breakdown structure (WBS). Operate at the top level or be used to consider performance as a whole or can move down to individual projects.
In order to reduce risk in any project, the organization needs to: Build on and exploit strengths Address and mitigate weaknesses Take advantage of opportunities Avoid and reduce threats. 7.4.8.2 Analysis Tools Scatter Diagram Based on concept dependent and independent variables. Variation in one as a function of the other shown on a simple two-axis graph. Used to illustrate trends. Act as basis for linear regression analysis. Exemplify a preventive approach; attempt to prevent defects rather than detecting and isolating them after they occur. Based on statistical concept of a standard normal distribution, used in a number of ways including concordance analysis, involves plotting the frequency of occurrence of two variables in concurrence.
Control charts
7.4.8.3 Identification and Analysis Tools Identify problem and advise why it occurred. Cause and Effect Analysis Data table identify the basic problem. Cause and effect analysis could provide the next level of analysis; use diagramming techniques in order to identify relationship between an effect and its causes. Cause and effect analysis comprises six major stages: Identify the source of the problem Brainstorm the source of the problem Establish the problem box and primary arrow Identify all possible primary causes and effect Identify the problem can use cause and effect or SWOT, EVA identify where there are forecost and/or scheduling variances but not identify the source of the problem. Multidisciplinary, cross-functional representative brainstorm process should analyze the problem and try to identify all factors that could have a cause and effect Problem box represents the end result of whatever is wrong with the system. Primary arrow represent the total input to the problem box within the system, reflects the relevant scope limitations. Identify and add all primary possible causes and effect of the problem. Could be large number of potential causes and corresponding effects. Series of elemental areas that are generally consider The production process The people who work as part of the production process The equipment and plant used The materials used
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Identify all possible primary cause and effect components
The quality control systems that are in place The primary environment
Series of cause components
Develop a proposed course of corrective action
Analysis now reversed so that the problem box becomes the solution box prime arrow now represents a solution strategy, The analysis takes a modular approach and develops solutions for each individual primary cause and effect component. The result is a corrected primary cause that acts as a corrective contributor. Uses a WBS approach where individual problems or concerns are broken down into smaller elements.
Trend Analysis Trend Analysis or linear regression analysis is work out a best-fit equation. Uses the assumption that the larger the sample size more accurate and representative the data become. The best fit, or trend line, is the line that most accurately represents the data. Most useful to identify strong trends over relatively long periods of time. 7.5 Total Quality Management 7.5.1 Introduction Total Quality Management (TQM) is another Japanese invention. It is the idea of quality built in
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7.5.2 Definition of TQM TQM is a structured approach to organizational-wide quality management. Combines enterprise-wide quality management with organizational control. Key element is enterprise-wide and continuous. Needs committed employees. Assumption most quality problems originate from process. 7.5.3 TQM Structure TQM has to have a formal structure comprised of eight major components 7.5.3.1 Commitment Phase Organization makes high-level commitment to implement the TQM approach TQM could be introduced to stay competitive Changed perception of customer demands and expectations Change organizational structures and policy The introduction of new high specifications products The introduction of revised industry standard The introduction of new technology and altered production processes Clearly defining the aims and objectives of the TQM system in terms of a strategic outcome. Clear and precise measurable objectives. Represents the process through which the organization has to pass in order to achieve the desired end position. Broken down into individual components that are definable and achievable. Components executed as part of a tactical execution programme. Review current customer and researches potential new customers in relation to the TQM implementation system. TQM is complex and expensive effectiveness will depend on customer base. Making research and marketing vitally important TQM assumes most defects arise from the process, very thorough scrutiny and examination of all aspects of production system., close look at the production system and evaluating the extent it is capable of meeting those expectations of customers. Takes customer and process phase results and establishes outcomes as firm parameters. Projecting alternative scenarios and alterations to the process choosing the optimum outcome. TQM is expensive and complex. Intrinsically linked to many parts of the organization needs to be carefully planned and monitored and controlled as it is implemented at different levels it needs to be designed to work within the organization. The TQM strategic project plan (SPP) covers both the design and implementation process. Both aspects are normally treated as separate projects. Tactical response plans sets out the operations and procedures available to cope with unplanned responses. Thorough and detailed risk assessment is required and detailed risk management system put in place. Always risk of failure somewhere in the system. Breakthrough forms the first part of the implementation phase,
7.5.3.2 Mission Phase
7.5.3.3 Customer Phase
7.5.3.4 Process Phase
7.5.3.5 Vision Phase 7.5.3.6 Planning Phase
7.5.3.7 Risk Management Phase 7.5.3.8 Breakthrough and Implementation Phase
7.5.4 TQM Implementation TQM implementation has three major components 7.5.4.1 Central to TQM, the mechanics that allow the strategic and annual plan to be
Breakthrough
put into operation. Involves clear and precise communication, each member will have clear objectives and frequent appraisal and review. Ensure system is implemented organization wide and communicated to employees. Vision objectives clearly established and communicated, what have to do in order to meet objectives; training and staff development establish gaps in knowledge or expertise are corrected. Steering committee to monitor implementation and respond to any problems, responsible for reviewing annual plan development and implementation. Breakthrough applies to each individual section or unit, generally large-scale, fundamental quality improvement, significant investments i.e. new plant resources, training coursed. Usually a number of immediate goals (5 or 6) quick-win activities make good impression contribute to TQM implementation, executed relatively quickly. Boosts confidence of employee Individuals each section aware of execution of breakthrough activities and fully aware of individual obligations and responsibilities. Establish structure for monitoring progress towards the vision Long-term implementation, establishing objectives continual assessment and monitoring in order to assess performance, comparing progress required the plan to meet overall goals and end vision. Co-operation and involvement of all member of staff, monitor performance continually. Study groups continuous feedback, actions required in order to satisfy client or customer demand on individual basis. Continuous improvement by use of problem solving teams. Identify customer requirements problems, analyze the problem find solutions and provide feedback to the system. Interdepartmental or cross functional management (CFM) is control of the TQM system across the different organizational and functional boundaries
7.5.4.2 Daily Application Management (DAM)
7.5.4.3 Interdepartmental (Cross Functional) Management
7.5.5 Advantages and Disadvantages of TQM Systems Main advantages of TQM: Increased organizational awareness involves everybody in organization Increased appreciation of the links between processes and performance quality culture tends to be greater understanding of links between people and performance of product Increased efficiencypeople look at detail Improved communication people to take greater understand of what other people doing formal communication system Improved employee performance more motivated and committed staff Improved operational system improve performance of operational system people analyze the process in more detail Improved external relationship Improved reputation Opening potential new market approved TQM in place before potential suppliers on their tendering list Main disadvantages of TQM Cost requires a lot of time / money design implement and operate, cost of system has to be less then the value that it adds to the company Inconvenience involves a lot of inconvenience to the company, largescale changes, disruption in operational process practices Selling tend to have natural skepticism about TQM system often seen as bureaucratic and inflexible and restrictive Distribution over significant geographical area
Training Dilution
only effective if correctly applied by employees distinction from competitor who achieve lower standard
7.6 Configuration Management 7.6.1 Introduction Configuration management or configuration change control is essential aspect of good quality management system. Configuration management is about controlling change and information that relates to change, rarely possible to take account of all possible contingencies, changes all involve time, cost or quality, affect overall success or failure criteria for the project. Revisions issued on time and circulated as required essential happens effectively Configuration management is a control technique for formal review and approval of changes proposed. Configuration should only be changed in a formal and systematic manner, or adversely affect project. Good configuration management system (CMS) provides comprehensive change control and management system. If managed effectively it controls the impact that individual changes have on the overall project. Large projects it is computerized, authority for approving established at several levels. 7.6.2 Configuration Management System Components For each change notice each drawing change would have separate identification codes, be traced by the CMS Main components of a CMS 7.6.2.1Configuration format and layout Formal change notice or variation order issued, cost implications, CMS acts as an electronic information network relay all relevant project information to the members of the project team require access, ensure right information to right people Clear identification system process of identifying each component of system three primary considerations 1. 1. System characteristic CMS assembled relation to environment characteristic of project, rigid cost limit change in cost may be restricted, scope limiting approach, cost limit or budget establish early stage design team works within cost limit common in engineering projects cost-effectiveness approach minimize ratio between cost of solution and cost of effectiveness, 2. 2. Project-relevant information - provide and communicate information typical drawing information a. a. Date of drawing, b. b. Revision number c. c. Author authorizers and checkers d. d. Date drawing received by project team member e. e. Electronic receipts form all recipients f. f. Flags for action 2. 3. Data analysis and classification simple code to each component to classify it in some way. a. a. Equipment specification number b. b. Equipment identification number c. c. Revision number and date of revision Typical change control system involves the development of procedures that cover three steps 1. 1. Identification of a change requirement and submission of a change request 2. 2. Appropriate consideration and approval or rejection of the
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7.6.2.2 Configuration identification specification
7.6.2.3 Configuration change control system
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change request 3. 3. Authorization and issue of an appropriate change order followed by implementation Special considerations related to these aspects Procedural consideration formal change request prepared and submitted change notice might specify Identity of WBS element Cost account code Current EVA and PVAR status Authority clearance evaluation by project manager or team representatives, change could be permanent or temporary. Costeffectiveness and risk of change Schedule constraints timing of change is generally important, accepted and proved as a CMS adjustment change becomes fixed without prior approval Gateways and checkpoints is a way of making sure that design changes are put into public domain and continuing design change not hidden or kept private. Designer agrees a series of pre-set dates where the latest version of the change design will be updated and issued. 7.6.2.4 Configuration status accounting and reporting(CSAR) Keep a record and history of all the changes being made to the project. Allow continuous comparison made against baseline, ensure traceability for changes provides updates showing actual project performance against projected performance, comparison between the baseline and current value, acts as monitor, accounting process normally be centralized on separate database Configuration item identity Relevant WBS elements, sub-element, or work package identity Date of creation of configuration items History of change requests relating to the configuration time History of approval or rejections of previous change request Reasons for previous rejection History of approved change requests and performance of subsequent work History of estimated impact on project time and cost objectives History of any previous monitoring and reporting outcomes Review and audit is essential to any quality management system, contains procedures and processes for providing team and customer effective guarantee. Provides level of performance, configuration audit process confirm complies in all respects with the specification, regardless of the changes that have been made.
7.6.2.5 Configuration auditing and feedback
7.6.3 Configuration Management Baselines Baselines are central to configuration management. Shows the performance of the project at any moment in time. Main function of the baseline is to act as a standard against which actual performance can be measured against the project progresses through its life cycle. Configuration management is centered on five main baselines for measurement of performance Project level 1 (project life cycle) base line
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Functional objective baseline or the project outcome requirement baseline. Developed for the project it is prepared early stages of project life cycle.
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Contains an order of magnitude estimate of overall project cost, typically contains a client brief and details about the basic contractual procedures and approaches that are to be used. Project level 2 (detail design) baseline Project level 3 (production information) baseline Project level 4 ( tender stage) baseline Allocation baseline or design requirements baseline, indicative estimate of the project cost together with detailed design information showing full design details Definitive estimate of the cost of the project and all other necessary design information that will allow the project to be implemented Definitive project product baseline or product configuration baseline. Contains all of the information contained in level 3 but updated to allow for agreed contractor, subcontractor and supplier tenders. Agreed programme of works and method statement by the main or prime contractor. Forms the SPP baseline and acts as a contract document Developed during the execution of the project, dynamic baseline constantly adjusted for changes a s the project continues.
Project level 5 (execution) baseline
Development and maintenance of accurate and representative baselines is crucial. Baselines form unalterable and permanent record of important stages in the development and implementation of the project. Central to review and feedback exercises for evaluating the project Relationship between these five baselines and the project life cycle shown below:
7.6.4 Summary Process by which information is communicated around the project system. Very important consideration. Allow the project manager to track information around the various project tame embers
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7.7 Concurrent Engineering and Time-Based Competition 7.7.1 Introduction Concurrent engineering is another specific quality management tool. Once approach to time-based competition (TBC). The underlying philosophy behind this is time-based competition. 7.7.2 The Concept of Concurrent Engineering Phase and fast track approaches to reduce the time taken to develop new products and get them to the market ahead of the competition. Sometimes refereed to as timebased competition Basic idea is to use project scheduling and resource management techniques in the entire life cycle of a project. Long been used in time and cost scheduling of production phase, extends this application to the entire life cycle of the project. Based on designing, developing, testing and building a sequence of concurrent activities, In contrast with the typical sequential engineering approach . Concurrent engineering is effectively overlapping and blurring of traditional life cycle phases. Basically takes the existing life cycle phase and blurs the edges and overlaps life cycle phases where practical. It is a beyond trade-off consideration Speeding up the project by overlapping of lifecycle elements, move toward time origin without incurring any greater costs. Does not allow completing any more cheaply just more quickly. Basic requirements of concurrent engineering system are: Parallel rather than sequential activity scheduling; Multiple and concurrent use of resources; Very careful monitoring and control; Immediate response to delay; Efficient and very reliable communications systems; Effective and proven use of a good CMS; Clear stated aims and objectives for all levels of the OBS; Detailed understanding of the complex linkages and dependencies within the WBS; Immediate response to change; Powerful change control; Immediate authorizations where required; Extensive sharing of information; Absence of any political influence and (especially) interference; Multidisciplinary and cross functional working; Ability to multitask; Fast and accurate reporting and report response; Blurring of element and package boundaries; Effective and efficient use of the IMS; Immediate cooperation from subcontractors suppliers and other external bodies; Close and immediate client interfacing.
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7.7.3 Phased and Fast-Track Concurrent Engineering Two most common forms are phased and fast track approach. Typical sequential process Work is designed as a single element, separate design and execution phases.
Typical passed concurrent Project is separated into individual packages each package retain a separate design and execution phase in sequential arrangement of the packages blurred and some overlap takes place between various packages, each package design is completed before package execution commences.
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Typical fast-track concurrent engineering arrangement Split design and execution for individual packages and run with design-execution overlaps, execution phase starts before the design phase is complete. Additional y each package overlaps. Individual work packages are still being designed when the execution phase starts, activities overlap.
7.7.4 Advantages and Disadvantages of Concurrent Engineering Concurrent Engineering Advantages Achievement of earlier completion datesdelivered more quickly use the same resources, high degree of competition Compliance with change design overlapped short lag, import change frequently, design changes assessed included quickly Change control flexibility react quickly with minimum administrative bureaucracy and support, process of change and design become blurred Early launch product gets there first will often be the winner Improved innovation think on their feet; developing new solution concept of moving the goalpost Improved break-even and revenue generation launching early opportunities for early revenue generation and faster break0even and subsequent profitability Improved design and execution integration engineering and designer and implementers have to work closely together. Shorter production periods and quicker launch, break even and revenue generation. Improved performance level of control greater degree of awareness and cross communication between engineering and designer and implementers
Concurrent Engineering Disadvantages Requirement for close internal control everybody has to work together and be aware of what everybody else is doing. Very careful communication, effective team building and conflict control in such circumstances Requirement for multi-functional working work across functional boundaries with different aspects of design and implantation Requirements to accept increased risk may be no design drawing or schedules covering the work being executed at any moment in time, lack of detailed design information often leads to lack of clear understanding of what is to happen, very little time to explain everything to everybody trust becomes extremely important, risk management system can become inoperative, responses such as risk mitigation and transfer may no longer be appropriate. Requirement for close external control secure same level of commitment and trust externally and internally negotiate external contract with subcontractors typically inflate cost and risk response.
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Project Management Condensed Notes Module 2 Ten primary sections in any good teambuilding process. 11. Individual and team commitment. 12. Developing a sense of team spirit. 13. Obtaining the necessary project resources. 14. Establishment of clear individual and team goals and success/failure criteria. 15. Formalization of visible senior management support. 16. Demonstration of effective programme leadership. 17. Development of open formal and informal communications. 18. Application of reward and retribution systems. 19. Identification and management of conflict. Development of heterogeneity control and cohesiveness 2.2.3.4 Team Organizing Organizing how the work is to be executed. This includes devising the organizational structures and team management approaches to support the project Dominant prevailing philosophies is to contrast the current practices with the main views on organizational procedures. Classical theory.(traditional view) Process is highly complex and automated no flexibility process is self regulating Empirical theory. observation and interpretation enough observations correct process materialize Behavioral theory. two main schools human relations school interpersonal relationship between people and their workSocial system school social characteristics of an organization and individuals.. Decision theory. Studied mathematically. interpolate and predict efficiency Systems management theory. each stage process characterized separately Targeting. target or series of targets. Measuring. actual progress is achieving targeted progress. Formal, earned value analysis or informal, Evaluating. Identification and isolation of areas where progress is not being made in accordance with the overall project plan, use variance analysis predicting the future. Correcting. actions for reducing or eliminating the effects of deviations where problems are occurring. identifies why the problems are occurring, puts a programme in place for correcting them, monitors correction performance (often called a second level variance analysis)
2.2.3.5 Controlling
2.4.4 Project Team Operation Improving team performance Establishing measurable objectives. Stakeholders management. Establishing and planning measurable targets.
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Planning and establishing processes Leadership Membership and identity Communication system Team separation Information technology
2.5.2 Project Life cycles Five clear stages Conception and feasibility Outline proposals and definition Tooling up Operation and production Decommissioning
2.5.4 Project Team Evolution and Leadership styles required Team Evolution Forming Description of Team Team meet, first time introductions, aims and objectives established Task responsibility matrix Organizational breakdown structure Project staff register Baseline set of team and project objectives establishing duality Ensure all team members know all other team members, the rule of operation are established, everyone know their own responsibilities and objectives. Establish cohesiveness. Build up a clearer picture of each person interim of ability commitment skill, interpersonal skills tendency for conflict as perceptions develop Development of a cohesive group ideal is imperative, essential to productivity and effectives. Other wise result in reduction of commitment and individual motivation and group; fragmentation Team standards formal and informal standards of behaviour expected. Starts as soon as storming process completed organizational hierarchy and power structure established. Only perform at full capacity has overcome internal fragmentation. Take place if a full set of norms in place all team members satisfied equitably balanced and contribution of each member are adequate resolved most of its interpersonal conflicts. Leadership style required Telling: High task low people oriented This is necessary because the cohesion of the team has not yet occurred and they have to be driven with a high task orientation.
Storming
Persuading: high task high people Individual and group relationships are just starting to form have to continue with a high task orientation but also develop a high people orientation Participating: Low task high people continued high people orientation but with a reduced task orientation Delegating: low task low people team is established and the task understood. therefore adopt a low task orientation and a low people orientation.
Norming
Performing
2.5.5 Group thinking Absolute commitment to the project Lack of respect for competitors
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Intolerance Fear Self-delusion Selective reporting
2.6.2 McGregor and Maslow McGregor famous Theory X (lazy bastards) and Theory Y (willing to work and compete job without close supervision Maslow hierarchy of needs Self-actualization Esteem Belongingness Safety Physiology 2.6.3.1 Equity Theory - perception what they do will be rewarded. - inadequate -reward - feeling of inequity (unfairness). 2.6.3.2 Expectancy Theory - motivated to make efforts to achieve goals result rewards they desire. 2.7.2 Project Communication falls into two of four principal categories: formal or informal, and internal or external Formal communication Formal lines of communication ensuring that project stakeholders get whatever information they need, in suitable format when and where they need it. Informal communication Less easy to mange and control essential revolve around the grapevine Internal - project team members External to all other people control in the dissemination nominate an individual who responsible for all 2.8 Project Team Stress Type of stress Personal Work Environmental Physiological Symptoms Raised blood pressure, Increased heart rate, Sleep interruption, Depression, Anxiety Overall loss in energy and enthusiasm Increased number of complaints Listlessness
Psychological
Behavioural
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2.8.3.2 Project-Team Stress Management Work practices that attempt to control work stress Deregulation Reasonableness Fairness Open-mindedness Flexibility Approachableness
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Module 3 Identify the risks that are present. Transfer or reduce unacceptable risks and then set up monitoring and control systems so that residual risk can be managed effectively. First level probability and consequence Second level source of danger and the mitigation or defense Risk exposure measure vulnerability to specific risk types or impacts. Sensitivity to risk is a function of three elements 4. Significance (or severity) exposure to realization of different events 5. Likelihood different events occurring and ability to mange the implication 6. Sensitivity - measure of likelihood and impact 3.2.3 The Human Cognitive Process Pattern recognition previously stored information Attention filter relevant to the decision is considered. Memory stores basic pattern recognition once interpreted and after subjective assessment stored in brains long term memory . Cognitive process based on reasoning. Bounded rationality uses knowledge of past event Experience gained in past used to analyze and forecast what might happen in the future As much subjective as objective based Subject it to complex modeling as in chaos theory, Best evaluated using modeling and subjective approaches Using data from past experience extrapolation for predicting future trends Happen in past is happening in present will continue in future unless something happens to change it prediction momentum Various forecasting techniques important consideration Accurate data more accurate the data, more accurate the prediction Time limits longer the time scale, the more difficult to make accurate predictions. Cost - fewer resources are provided, overall accuracy of the predication could be reduced. Vision predict future and identify possible events that are outside his or her experience Intuition experience and extrapolation Bias own perception or outcome preferences
3.2.3.1 Pattern Recognition and Attention
3.2.3.2 Bounded Rationality 3.2.3.3 Risk Forecasting and Prediction Momentum
3.2.3.4 Intuition and Bias
Risk Handling Key factor to manage risk Decide what level of risk is acceptable, What level is not acceptable Risk that is not acceptable is transferred or reduced in some way. Residual risk is at an acceptable level, managed so as to ensure it does not affect the performance.
3.3.3 Project and Strategic Risk Project risk risk relation to the project. Cost limits, time limits, quality and performance limits, health and safety and other statutory or company requirements long term, complex and difficult to model
Strategic Risk
3.4.1 Generic Risk Headings long-term performance
Strategic Risk Operational Risk Financial risk Knowledge risk Catastrophic risk
Process itself, asset base, people within project team and the legal controls within which organization operates Market, credit, capital structure and reporting risks. Includes IT hardware and software, information management, knowledge management, and planning. Cannot be predicted effectively and therefore cannot be quantified accurately.
3.4.2 Market Risk and Static Risk Positive or negative impact Market Business Risk (MBR) trading with its assets Market Financial Risk (MFR) gearing ratio risk, measure of the financing annual dividend falling to zero Considers losses only. Obvious example is an insurance policy. concerned with making sure company performs at a given level.
Market risk (business risk or dynamic risk) Static risk (specific risk or insurable risk) External Risk
Operates outside the organization, organization has virtually no control over it. new kid on the bock
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Market demand risk Innovation risk Exposure risk
Demands of the customer base change and alter rapidly Fast track change and innovation Companies are exposed to different level of risk will affect them in different ways. High level of borrowing could result in problem if interest rate increased. Firm depends on shareholder equity to keep the shareholder happy, confidence declines effect on company can be significant. Ability to raise capital. Government of home country and of overseas countries has expanded can represent a major risk. Government fiscal policy and the consequent performance Government constantly change existing statutes and introduce new ones. Affect profitability of affect organizations. Some companies are better than other at withstanding big hits degree of diversification
Shareholder risk
Political risk
Statute risk Impact risk
3.4.3.2 Internal Risk company should have some control. Operational processes Risk Financial Risk Management Risk IT and Technology risk 3.4.4 Predictable and Unpredictable Risks known unknown risks, such as changes in interest rate can be predicted with some accuracy although not with certainty unknown unknown cannot predict with any accuracy
Predictable Risks Unpredictable Risks
3.5.1 Conditions of Certainty Under conditions of certainty implies the decision maker knows with 100% accuracy what the outcome will be. Necessary decision making data and information are available to assist decision maker in making the right decision. no probability assigned.
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3.5.2 Decision making under Conditions of Risk In the absence of a dominant strategy, a probability is assigned to each individual state of nature. Expected payoff for each strategy now is the sum of the payoffs for each state of nature multiplied by the probability of that state occurring
3.5.3 Decision making under Conditions of Uncertainty Difference between conditions of uncertainty and conditions of risk is that under risk there are assigned probability that relate to known unknowns; under conditions of uncertainty, these probabilities do not apply. Several obvious sources of uncertainty Externally driven (environment) Internally driven (process) Decision driven (information) Inflation, economic activity, change interest rate, demographic changes, competitor changes Employee attitudes motivation loyalty, implementation of new technology, changed work practices, new products, innovation Corporate strategy, strategic planning, new market analysis, mergers and acquisitions, research and development, investment Maximum possible profits irrespective of loss Minimum profit with no loss minimise maximum losses, play it safe Minimum regret S3 200 million
Huwicz (maximax criterion) Wald (maximin criterion)
S2 minimum profit 80 million
Savage (minimax criterion)
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S2 Laplace Maximum profit based on probabilities
S2 Total Strategic Risk Management (TSRM) predictive rather than reactive. TSRM must be developed alongside, and integrated with strategic planning and management Risk management systems contain five distinct areas 7. 8. 9. 10. 11. 1. 2. 3. 4. 5. . Risk identification Risk classification Risk analysis Risk attitude Risk responds, control, policy and reporting
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Risk identification typologies for purely project risk: Internal Risk External Risk Project Risk Work breakdown structure (WBS) 3 or 4 level will allow identification
Originate outside the project i.e. interest rate, levels of economic activity
Overlap internal and external risk, specific project administration and control techniques. Organizational breakdown structure (OBS), team membership, leadership, communication Overall risk consider a combination of these three sources
Risk Classification Thee-level classifications 4. Risk Type 5. Risk extent 6. Risk impact Consequence or impact of risk is important consideration expressed as: Maximum probable loss Most likely cost of the loss Likely cost of covering the loss (if uninsured) Cost of insuring against the event occurring Reliability of predictions about the event
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3.6.4 Risk Analysis Step 1: Identify and source the risk and extract all relevant information. Step 2: Identify all possible threats and opportunities (SWOT analysis) and map the risk drivers. Identify and brief risk holders where appropriate. Step 3: Assess the probability and impact of each risk and develop the actual risk map. Step 4: Consider all available options and develop a target risk map. Step 5: Assess the value added to the company by taking the recommended risk response action. Step 6: Set up monitoring and reporting systems to ensure effective evolution of the risk map. 3.6.4.1 Risk Map A risk map shows individual isolated risk on an axis of probability of occurrence against
impact
Four quadrants Quadrant 1: Red zone (high impact and high probability) Addressed immediate action taken. Quadrant 2: Upper Yellow zone (high impact and low probability) Generally insurable. Quadrant 3: Lower Yellow zone (low impact and high probability) day-to-day operations and compliance issues Quadrant 4: Green zone (low impact and low probability) insignificant and are acceptable at present level. transferred to another organization. 3.6.4.2 Risk Grid Risk grid is an alternate to risk map. Probability of a risk occurring and the impact of the risk if it occurs. most obvious ones are time, cost and quality ( quality is often referred to as performance)
3.6.5 Risk Attitude Risk takers either neutral, riskaverse risk seeking. 3.6.6 Risk Response Risk retention Risk reduction Risk transfer Risk avoidance Seeking additional information about the risk Third party insurance Use of warranties guarantees on products reduced by training and development, or defining the aims and objectives Transferring risk to other, , insurance contracts Removing the risk in all forms from the project Seeking additional decision relevant information. err on the side of action Encourage risk Only increase effort once impact is very high Increase effort at a much earlier stage
3.6.7 Risk Control, Policy and Reporting Risk control using information learned on a project to assist in the later development of the project. Risk report level and frequency of reporting will depend on significance of the risk. Risk strategy developed and assessed, it is adapted formulated into an overall risk policy. Risk policy establishes a number of elements Overall aims and objectives Accountability for individual mangers Formalized reporting channels
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Show required outcomes for each section or control unit are, aims and objectives could relate to the treatment or handling of specific risks Task responsibility matrix (TRM) Frequency, circulations, membership and individual responsibilities.
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Risk tolerances Authorization
Acceptable deviations and tolerances stated in the form of a direct variance envelope. Sets an alarm ringing if overall performance moves outside these limits. May not be immediately obvious who can authorize what.
Risk policy initially develop individual targets for individual sections within the organization. Then developed and worked up as a strategic document. 3.7.3 Procurement Procurement is the process by which goods and services are acquired. Procurement generally includes a number of individual life-cycle phases. Number of common phases Objective phase Exposure phase Alternatives phase Document phase Tendering phase Award phase Contract administrati on phase Objectives of procurement process established and reconciled Suitable sources identified past experience reliable ones listed. Expressing of interest invited. Alternative sources available, type of contract to be adopted. Contract documents describe works such as level of detail ambiguity, as possible removed. Scrutinized, invited to tender or bid . Formal document describes liabilities and obligations Various bids are scrutinized, usually by a legal expert and by a cost expert Ensure that both parties comply with its terms and conditions.
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Module 4 Module 4 Project Management Organizational Structures and Standards 4.1 Introduction Organizational structure summarized in the format of an organizational breakdown structure (OBS) main components how they relate to each other in terms of control and communication Project teams are therefore established that are Wholly internal to the organization Wholly external to the organization Partly internal to the organization but with external specialist support
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Internal project management known as operational or non-executive project management External project management known as executive project management 4.2.2 The Project within an Existing Organization Functional arrangement, power or status is defined by a vertical hierarchy through the OBS Pure Project Structure Self contained section or unit within an otherwise purely functional structure Matrix structure (Internal or Non Executive Project Management Structure) Compromises between pure project and pure functional forms
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4.2.4.2 Project Objectives and Choice of Organizational Structure
4.4 Project Management Standards
Aims and objectives of the APM are: To act as first point of contact To lead the development of professionalism To Champion interest representation To establish standardization of qualifications To develop a functioning national branch network To establish practice and procedures for training National authority through internet Further project management practices Represent interest of UK project management in all sections of industry Standardize the academic and professional qualification / certificated Establish & maintain national branch network to facilitate participation Establish and maintain ongoing training programs
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4.4.2.2 The APM Body of Knowledge profile national guidelines and standards for the profession, and is one of three levels of standards that are required for an effective project management system it has four primary areas qualified project manager must have relevant academic and experiential ability Project Management Organization and people Techniques and procedures General Management understanding of project life cycle, project strategy and project environment issues relate to project management practiced leadership, communication and team building, Leadership style evolve as project develops Scheduling and estimating, planning, understand various control and monitoring procedures, latest approaches to planning and control earned value that link one or more Finance and law, basic understanding of procedures an d approaches involved, basic contract law recognize actions not permissible under terms and condition of contract.
BS6079 is the British Standard guide to project management Section for project aims, objectives clearly stated, BS6079 gives a proposed numbering system for information presented under each heading. Laid out in the same way and each subject Specific sections for scheduling and cost control original plans and update and separate section maintained for the effects of change. Project History or diary, record all important communication events that occur during the course of the project, audit trail should the need arise, repository information for subsequent use in post-project review Allows establish all projects in same basic format 4.4.4 PRINCE2 Project management IN a Controlled Environment, version 2 (PRINCE2) is a methodology that covers organization, management and control of projects. 1989. Intended for UK government standard for IT project management.
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Module 5 5.1 The Concept of Project Time Planning and Control . Three phases. 5. Planning Phase 6. Implementation Phase 7. Replanning phase trade off between the three variables (time, cost, quality)
5.1.2 Aims and Objectives of the Planning Process Project planning and monitoring establishes where the project is now, where it is trying to get to Project time planning - involves identifying, sequencing and scheduling activities and resources Source of data Project Uniqueness People Issues Complexity Uncertainty and Change Accuracy and reliability Communication
Work package breakdown process: 1 evaluate the project through the Statement of Work (SOW); 2 generate a Work Breakdown Structure (WBS); 3 execute Project Logic Evaluation (PLE); 4 separate time, cost and quality planning; 5 use network analysis (chiefly CPM or PERT) to generate a draft master schedule (DMS); 6 use tradeoff analysis to replan; 7 produce the project master schedule (PMS).
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Statement of work (SOW) descriptive document that defines the overall content and limits of the project. Work breakdown structure (WBS) is simply a representation of how large tasks can be considered in terms of smaller sub-tasks. Operate down 6 levels Level 1: The programme Level 2: The project Level 3: The element Level 4: The sub-element Level 5: The work package Level 6: The work package component Project Logic Evaluation (PLE) Irrespective of whether planning for time, cost or quality, planning work sequence in which the works are to be executed Separate Time, Cost and Quality Planning Process of planning splits Draft Master Schedule (DMS) Once PLE is in place next stage in process is networking and scheduling Networking sequences of required activities, The DMS Concept Scheduling process of calculating individual activities times in order to allow an estimate for the projects critical path, the path through the project that has the longest total activity duration,
Method of calculation is CPM or PERT CPM is a deterministic approach. It can be used where the duration of individual activities can be estimated with a reasonable degree of accuracy. The duration estimates are often based on past experience of similar work. Alternatively there are industry specific and national databases that contain pre-set activity durations for a wide range of different works PERT is a probabilistic approach. It can be used where it is not possible to estimate the durations of individual activities with any real accuracy Program Evaluation and Review Technique (PERT) calculate activity mean duration and standard deviation; Expected mean time for each activity The formula for a beta average is: T = (a + 4m + b) 6 where a = optimistic time, m = most likely time, and b = pessimistic time. For the train operating company example, a = 1.0 hours, m = 1.5 hours, and b = 3.0 hours. Thus we have that
As might be expected, the beta average give greatest weighting to the most likely outcome. Standard deviation for each activity The formula for a beta standard deviation is:
The critical path is the longest one through the PERT network, using average expected mean times. calculate project mean duration and standard deviation; Average project duration is calculated by adding all the expected durations of each activity on the critical path. The project standard deviation is the sum of the squares of each individual critical path activity standard deviation. The variance for a distribution is the square of its standard deviation, and the standard deviation for the distribution of activities represented by the network is the square root of the sum of the individual critical path variances. So the standard deviation for the network is the sum of the variances for each activity on the critical path.
(.33x.33) + (.12 x.12)

identify target completion date and calculate variance about target; If the client gives the project manager a target completion of (say) 33 weeks, the project manager will evaluate the probability that this project will be finished in 33 weeks. The target time of 33 weeks is the target that the client is looking for, as opposed to the project mean duration of (say) 35 weeks. The project manager will use the PERT technique to evaluate the probability of this target actually being achieved. Project mean duration = 35 weeks
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Project standard deviation = 2 weeks Target project duration = 33 weeks Project mean target duration = 35 33 = 2 weeks Standardizing mean difference yields Project mean difference = 2.0 Project standard deviation = 2.0 Standardized mean difference = 2.0/2.0. = 1.0 standard deviation With a project mean of 35 weeks and a project standard deviation of 2, the lower target value of 33 weeks is exactly 1.0 standard deviations below the average value. From statistical tables it can be ascertained that the mean duration will be achieved on 50 per cent of occasions. From statistical tables, events within 1 standard deviation above or below the normal mean occur 68 per cent of the time. 2 standard deviations occur 95 per cent of the time. 3 standard deviations occur roughly 99 per cent of the time. A standard deviation of 1.32 above the mean equates to about 91 per cent. It can therefore be seen that there is a 91 per cent probability that this project The typical cost-time curve
point A and is typical of optimum time and cost considerations for most types of project. In order to reduce the time estimate and save time on the project, there will almost certainly be a requirement to increase resources. This will allow the project to finish more quickly but will result in a cost increase. work out which activity can be speeded up at least cost, and then crash (i.e. reduce the overall activity duration) that one first, followed by the next cheapest, and so on. This will result in the typical negative timecost curve, Point (A) represents the original starting point, where the project will take 20 weeks to complete. This is the agreed tender amount and the agreed project duration. In this case, the tender amount is 50 000 and the project duration is 20 weeks. Point (B) is where the time allocated is reduced to 15 weeks, and the cost increases to 60 000. Point (C) represents the shortest time possible, in this case 10 weeks, and cost increases to 100 000. Beyond point (C), no further time savings are possible
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5.4.3 Trade-off Classification Type 1: Time is Fixed Type 2: Cost is fixed Type 3: Performance is fixed Type 4: Time and Cost are fixed Type 5: Time and Performance are fixed Type 6 Cost and Performance are fixed Type 7 Everything is fixed Type 8 Nothing is fixed 5.5 Resource Scheduling 7 main types of resources: 8. people 9. materials 10. equipment 11. funds 12. information 13. technology 14. space (where appropriate) Leveling out the peaks the troughs in resource demand so that resource utilization approaches an average Resource leveling works by consuming float on each non-critical activity. Leveling process produces a better resource utilization percentage process
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Module 6 Project Cost Planning and Control 6.1 Introduction Project cost and control system (PCCS) and primary evaluation technique is earned value analysis (EVA) make use of Project variance analysis reporting (PVAR) reviewing two cycles of the PCCS separately Planning cycle Control cycle Concerned with budgeting and cost planning Considers cost monitoring and control including suitable reporting systems
6.2.3 Types of Control System Three primary types of control system Cybernetic Analogue Feedback Cybernetic Operates and different levels Lowlevel cybernetic control systems: detecting time and cost variances; adjusting likely final time and cost estimates to allow for detected variances; reprogramming the project schedule following change. Midlevel cybernetic control systems: adjusting estimates to allow for increases in individual cost rates; establishing the individual cost of change notices and variations; allowing the use of provisional and contingency sums. Highlevel cybernetic control systems: generating original tactical solutions to discovered programming problems; updating the risk profile of the project following change; developing a strategy for required negotiations. Analogue Control Appropriate for smaller elements or work packages Widely used in computers yes no questions. Depending on the answer system directs to another yes no. process of elimination Top-Down estimating Senior management setting the overall project budget by estimating the overall project costs as well as significant sub project costs Bottom-Down estimating Relies on budget being developed upwards from individual activity level, Each activity is estimated as accurately as possible in terms of labour and converted into a financial cost estimate Iterative estimating Based on negotiation. Compromise between top-down and bottom-up estimating. Element and package managers develop detailed action plans and corresponding estimates for the work responsible for. Action plans and estimates to senior management for approval. End result should be an action plan and estimate that lies somewhere between the market-driven conservative estimate of the senior manager and the process-driven generous estimate of the operational manager Earned value analysis make use of the following variables
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Actual cost of the work performed Actual cost in terms of payment or legal committed expenditure (ACWP) incurred in order to get the project to its current level of development Budgeted cost of the works performed (BCWP) Budget cost of work scheduled (BCWS) Some times known as actual earned value represents budgeted cost that should have been required in order to get the project to its current level of development Some times known as planned earned value represents budgeted cost that should be required in order to get the project to any specified level of completion Budgeted cost multiplied by the works scheduled percentage
Scheduled time for work performed Estimated time required to perform a defined amount of work (STWP) Actual time for work performed (ATWP) Cost Variance (CV) Actual time taken to perform a defined amount of work Budgeted cost of work performance (BCWP) minus the actual cost of work performed (ACWP) abbreviated CV = BCWP ACWP Comparison of how much the work has cost in relation to what it was budgeted to cost Difference between budgeted cost for the works performed (BCWP) minus budgeted cost of work scheduled (BCWS) SV = BCWP BCWS Measures the performance of the work in relation to budget Sum of all the individual budgets (BCWS) that make up the whole project. Sometimes know as project baseline. What the project should cost in total Estimated total cost of the project sum of all direct and indirect costs to date plus work remaining. EAC = ACWP + Estimated (ETC) Updated estimate of total project cost , sometimes known as planned estimate approach Expressed as budget at completion BAC as follows: EAC = BAC CV Expressed in terms of cost variance index (CVI):
Schedule Variance (SV)
Budget at completion (BAC)
Estimate at completion (EAC)
ACWP EAC= BAC BCWP

Sometimes referred to as the current estimate approach Estimated cost at completion (ECAC) Based on current performance
ACWP ECAC= BAC BCWP

Is the difference between what the project should have cost (BAC) and what is expected to actually cost (EAC) VAC = BAC - EAC
Variance at completion (VAC)
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Variance Interpretation In general terms: cost variance (CV) = BCWP ACWP Therefore BCWP > ACWP: work performed has cost less. BCWP < ACWP: work performed has cost more. BCWP = ACWP: work on cost plan. And schedule variance (SV) = BCWP BCWS Therefore BCWP > BCWS: works ahead of programme. BCWP < BCWS: works behind programme. BCWP = BCWS: works on programme. These values can also be shown as indices: Cost Variance Index (CVI) = so that CVI > 1.0: good CVI < 1.0: bad CVI = 1.0: ok And Schedule Variance Index (SVI) = so that SVI > 1.0: good SVI < 1.0: bad SVI = 1.0: ok Example interpretations as follow: CVI > 1.0, SVI > 1 Excellent: project is under cost and ahead on programme CVI > 1.0, SVI = 1 Good: project is under cost and on schedule CVI > 1.0, SVI < 1 Good/Bad: project is under cost and behind on programme CVI = 1.0, SVI > 1 Good: project is on cost and ahead of programme CVI = 1.0, SVI = 1 Good: project is on cost and on schedule CVI = 1.0, SVI < 1 Bad: project is on cost and behind schedule CVI < 1.0, SVI > 1 Good: caused by faster than expected work practice project is over cost and ahead of programme CVI < 1.0, SVI = 1 Poor: project is over cost and on schedule CVI < 1.0, SVI < 1 Very Bad: project is over cost and behind schedule
BCWP ACWP
BCWP BCWS
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Sketch a theoretical typical BCWS curve for a project. Add a line perpendicular to the time axis to indicate time now. Add an ACWP curve to show an increasing overspend up to time now. Add a BCWP curve to show performance falling behind programme up to time now. Extend the curves as projections to the project completion date and show:

Estimate at completion (EAC). Estimated cost to complete (ECTC) Budget at completion (BAC) Cost variance (CV). Schedule variance (SV) Projected eventual project cost overrun. Projected eventual project time slippage.
Suggested Answer The curve should appear similar to that shown below. The gradients of the various curves may differ depending on assumptions made. The positions of the curves and the relative gradients will affect the position of the corresponding end points.
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The BCWS curve should be more or less an s-shape in line with the characteristics of most common projects. The ACWP curve should be a similar shape but increasing in magnitude above the BCWS curve. The BCWP curve should be a similar shape again but diminishing in magnitude below the BCWS curve. The BCWP curve should extend below the BCWS curve eventually reaching the same (no greater) cost total as the end point of the BCWS curve but at a later point on the time axis. The vertical difference between the ACWP and BCWP curves represents the cost variance (negative). The horizontal difference between the BCWS and BCWP curve represents the schedule variance (negative). The end point of the BCWS curve represents the BAC. The end point of the ACWP curve represents the EAC. The difference between the EAC and the BAC represents the forecast overall project cost overrun. In this case EAC > BAC so the project is heading towards an eventual over spend. The difference between the current ACWP and EAC represents ECTC.
The Critical Ratio alarm system that operates in association with the variance envelope is critical. Alarm trigger itself often use critical ratio
The critical ratio uses EVA principles - includes consideration of both time and cost performance. This means that performance in one aspect is linked to performance in the other aspect.
Critical ratio will depend on extent to which the values of each element are greater or less than unity. A good time performance may be associated with a poor cost performance. Relative weighting to the time and cost elements can also be used example
Critical ration values are plotted month by month through the project as a curve. Curve dips below unity should evaluate the extend of the deficit and take action appropriate to the magnitude of the problem. Also need to watch value s above unity. Module 7
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7.3 The Quality Gurus What all the gurus agree on to some extend 6. Quality processes must be enterprise-wide 7. Process defects should be considered before employee defects 8. Quality process must be structured broken down into elements. 9. Quality processes smut ensure that the product exceeds customer expectations demand margin 10. Quality processes must be able to rely on commitment Generally greater the level of commitment the more effective the quality management system will be 7.3.1 Deming If company improves its quality management then it automatically improvers its production intrinsic link between quality management and production. Operatives want to do a good job and will given the right equipment and processes. Worker-oriented appeals to democratic type manger. Core of statistical analysis fourteen points: 15. create common sense of purpose 16. create a new mind-set 17. build quality into the system 18. review procurement strategy 19. research and innovate 20. invest in staff development 21. enhance supervision 22. develop a system of open communication 23. encourage enterprise-wide open communication 24. Avoid the use of output standards 25. If standards are used, use them carefully 26. Encourage pride 27. Invest in training 28. Encourage commitment 7.3.2 Juran Ten steps to quality improvement 1 develop an awareness that products must evolve and improvement is necessary; 2 establish a strategic plan for improvement and establish goals for improvement at different positions within the strategy; 3 plan an operational system that allows the goals for improvement to be achieved; 4 provide adequate staff training and development as required; 5 where there are major problems, treat them as projects and set up a project team to resolve them; 6 establish a regular and detailed reporting system; 7 recognize good performance and reward it. Take appropriate corrective action in the case of poor performance; 8 develop an open communication system and communicate results; 9 maintain performance records and publish results. Use league tables; 10 drive the system maintaining momentum and constantly introducing improvements and innovations. Senior management must establish top-level strategic and annual plan for improvement in quality. Based on complex planning and implantation control. Appeal to boss-type manger who identify with rigid control system. Basic philosophy is plan improvement, control implementation and then improve. Directly analogous to time planning and control and cost planning and control. It is scientific and highly structured of the approaches Juran trilogy : 4. Quality planning and analogous to cost and schedule planning includes Identify and ranking all existing customers Identifying individual customer demands and requirements
Developing a solution (product) that meets and exceeds these demands and requirements Planning the development and implementation of this product Establishing goals for achieving the product Ensuring that the system is accurate and reliable 5. Quality control Collection and analysis of data. Standard statistical techniques using meaningful sample sizes, measure, type of distribution performance measures and confidential limits. Baseline data and standards have to established to allow the monitoring process to occur 6. Quality Improvement New levels of quality performance. Improve the system so that the ends result is a procedure that operates at a measurably higher level of quality performance than it did before, need for open communication at all levels 7.3.3 Crosby Based on philosophy that quality has to become universal goal of the organization and that senior management must provide the leadership. Human-resourced type of manger. Best achieved through prevention. Series of objectives and targets produces goods to meet these standard. Performance standard of zero defects. Fourteen stage process: 15. Establish commitment of all levels of management formal assessment current quality performance , relation to desired performance, formal quality policy and benchmarks 16. Establish specific quality teams specific teams to maintain and improve quality, people involved in the process 17. Establish measurement and evaluation systems standardize reward system performance is uniformly recognized and rewarded 18. Establish cost implications overall and true costs in relation to estimated and actual implementation costs Promote awareness of quality 19. Promote awareness of quality 20. Establish appropriate corrective action identification of problems, control responsive action, strategic exercise 21. Establish plans for zero-defects engineer process near to perfect as is possible safety critical area, difficult to produce a defective product 22. Initiate education programmes spreading concept of quality throughout the entire organization employees all level trained. Everybody responsible for quality and integral part of the job 23. Initiate zero-defect day - important milesotne 24. Establish achievable quality improvement goals establish organizational goal, fair, reasonable and achievable. 25. Remove the sources of defects effective analysis 26. Recognize good performance and reward it recognize and reward quality improvements 27. Establish quality forums quality forums, quality steering groups, facilitate and guarantee open communication 28. Ensure evolution and feedback Customer demand changes, must be dynamic, effective feedback 7.3.4 Imai Philosophy based on continuous improvement with an emphasis on production system and the immediate environment rather than on the product itself. More structure that those of the other three gurus. Structured production-type managers. Production system aligned to the characteristics and demand of environment. Known as the P approach (the process approach) concentrate on the process rather than the results. This is at odds with classical motivation theorists, who tended to assume an R approach (results approach) set s target output results by a management by objectives plan.
the P approach improve the system, leading to improved results., also referred to as Kaizen approach. Change is slow and consistent rather than sudden and dramatic. Entire system instead of individual or group performance on a particular task. Financial input low improvement is so long term continuous and high-level management support to ensure change continues 7.4 The Quality Management Six Pack 7.4.1 Introduction Quality is the level of performance required in order to win more of the same type of work and to acquire new customers . Quality Management is the process of managing quality in order to ensure that certain established standards are achieved. Is fully integrated and not treated as a separate process. By definition this process involves establishing some kind of standard and ten measuring actual performance and comparing the performance to that standard. This approach is directly analogous to EVS systems used for cost variance analysis
Six pack form a coherent and interlinked operational system and is likely to fail if any element is missing. Quality policy stating point required image an division of organization. Quality assurance and control procedures contain the tools and techniques that allow quality standards to be set and performance to be monitored. Development of formal strategy takes place within planning and review section and the performance of the whole system is evaluated and monitored through the quality audit process. Effective measure and /or qualify the performance of the quality management system at any particular time are developed form the quality objectives. 7.4.2 Quality Policy Quality Policy is a statement of the overall organization vision on quality. It clearly states the organizations attitude and approaches to quality and sets out overall success criteria for performance. These are usually stated as overall achievement goals and are designed to respond to customer
objectives or concerns. The policy is a statement of overall strategic objectives. It does not specify individual performance requirements or the mechanics required to achieve the objectives. Primary components of the quality policy are: Clearly stated organizational quality objectives Established measurable minimum performance levels A clear reconciliation for the quality policy with the established strategy objectives of the organization Clear and unambiguous senior management support Stated penalties or consequences for no-compliance Reference to any central or statutory restraints Some form of measurement and evaluation procedure Stated responsibility and ownership Quality policy should be in the interest of everyone. 7.4.3 Quality Objectives Quality Objectives are effectively components of the quality policy. The objectives convert the overall policy into individual statements of what has to be done by individual sections in order to achieve the overall policy outcomes. The policy objectives represent individual performance control elements. They are analogous to work breakdown structure elements and cost accounting code elements Objectives must be clear and practical Clearly achievable and in context Linked to organizational and strategic goals Adequately resourced Associated with clear and unambiguous relevant operational support Related to some form of measurement and evaluation procedures Related to stated responsibility and ownership Related to any operational and/or statutory standards Related and apply to all relevant operational units Stated in the context of specific time scales for implementation Stated in the context of an implementation cost limits that may apply 7.4.4 Quality Assurance Quality assurance is a general term applied to a wide range of tools and processes that are used as drivers to ensure that the quality management system performs and produces results that comply with what has been specified. Quality assurance is a proactive concept. It is primarily concerned with setting the standards that are required of the system in order to ensure project success. Proactive concept good system will Clearly identify the minimum standards of performance that are acceptable Be proactive Be reactive Apply across all sections that are involved in production Establish procedures for the collection and analysis of performance data Establish in the context of any relevant audit and performance review procedures 7.4.5 Quality Control Collective term, main difference between quality control and quality assurance is in evaluations and physical measurement. Quality assurance is concerned with proactively establishing drivers and standards for performance Quality control is concerned with evaluation of how well these standards or targets are actually being achieved, and reacting to any deviations. retrospective approach Measure and confirm actual performance Compare target and actual performance and generate performance variances Identify significant performance variances Identify the sources of significant performance variances
Initiate suitable corrective e actions Assign ownership and specific responsibilities Monitor the effectiveness of corrective actions Generate suitable reports and control outputs Directly analogous to the generation of cost and schedule variances 7.4.6 Quality Audit Independent check is carried out by impartial personnel in order to ensure projected quality performance standards are being met. Internal and external audit. External audit generally provides stronger and more reliable measure of performance General terms audit system should confirm that Quality assurance procedures have been observed and complied with Quality control performance figures have been correctly assembled All relevant issues have been included All processes have complied with any relevant internal standards and with any external statutory regulation All analysis and reporting have complied with any relevant internal standards and with any external statutory regulations All proposed corrective actions have complied with any relevant internal standards and with any external statutory regulations All monitoring and control systems have complied with any relevant internal standards and with any external statutory regulations All reporting systems have complied with any relevant internal standards and with any external statutory regulations Any appropriate areas for improvement have been identified and correctly addressed All plans and strategies for improvement have been correctly assembled and implemented Any possible areas of misdirection or misinterpretation have been addressed The system is free of corruption 7.4.7 Quality Assurance Plan and Review Work content of the project is broken down to such a level that specific quality tools and techniques can be applied to each section and results and responses can be monitored and controlled to ensure compliance, allows to project mange both the implementation and the effectiveness of the quality management system Good quality Plan will Establish clear targets for the achievement of any stated objectives Ensure that all targets are achievable Allow for any interdependencies between activities Allow reasonable provision for response to change Include reasonable contingency planning Clearly specify performance objectives success criteria Establish relevant risk profiles for each affected section and activity Include provision for all performance variance corrective action Include ownership and specific responsibilities Include provision for the monitoring and control of the effectiveness of corrective actions Include provision for the generation of suitable reports and control outputs Be fully accountable for overall performance improvements Plan and review has to be dynamic, relate the quality management system to customer requirements Provided plan is correctly designed and implemented it will perform the following valuable functions Baseline Project level 1 (project life cycle)
Project Management
Functional objective baseline or the project outcome requirement baseline. Developed for the project it is prepared I early stages of project life cycle.
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Contains an order of magnitude estimate of overall project cost, typically contains a client brief and details about the basic contractual procedures and approaches that are to be used. Project level 2 (detail design) Project level 3 (production information) Project level 4 ( tender stage) Allocation baseline or design requirements baseline, indicative estimate of the project cost together with detailed design information showing full design details Definitive estimate of the cost of the project and all other necessary design information that will allow the project to be implemented Definitive project product baseline or product configuration baseline. Contains all of the information contained in level 3 but updated to allow for agreed contractor, subcontractor and supplier tenders. Agreed programme of works and method statement by the main or prime contractor. Forms the SPP baseline and acts as a contract document Developed during the execution of the project, dynamic baseline constantly adjusted for changes a s the project continues.
Project level 5 (execution)
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PROJECT MANAGEMENT

Project (non-repetitive) production

One-off, non-repetitive item High level of complex management planning and

1.2 What is Project Management

1.3.3 International cooperation and standards

1.3.4 Multi-industry/Multidisciplinary practitioners

1.3.5 Generic benchmarks 1.3.6 Specific Provisions

Module 2 Individual and Team Issues 2.1 Introduction

2.2.3.4 Team Organizing

2.2.3.7 Team building

2.2.3.9 Lifecycle Leadership

Typical project organization structure

Information technology Advantage to making use of IT

Disadvantages Expensive, face-to-face contact may be necessary

Teams in general optimum efficiency and effectiveness

Outline proposals and definition

Tooling up Operation and production

2.5.4 Project Team Evolution and Leadership styles required

Team Evolution Forming

Absolute commitment to the project Lack of respect for competitors

Type of stress Personal

Conflict Identification and Resolution

3.2.3.1 Pattern Recognition and Attention

3.2.3.2 Bounded Rationality

3.2.3.3 Risk Forecasting and Prediction Momentum

Statute risk Impact risk 3.4.3.2 Internal Risk

Predictable Risks Unpredictable Risks

Hurwicz (maximax criterion) Wald (maximin criterion)

safe Savage (minimax criterion) Minimum regret

Overall risk consider a combination of these three sources

Risk Acceptance (retention)

Risk Mitigation (reduction) Risk Transfer

Accountability for individual mangers Formalized reporting channels Risk tolerances

Contract administrati on phase

Project eventual cost

Safety and indemnificati on for accidents

Specific provisions for indemnity

Third party insurance

Fire, flood etc

Insurance to cover these

Completion deadlines: liquidated and ascertained damages

Power or status boundaries Organizational islands Project sponsor

The project management chair

The process of bidding Time recording and costcentre charging

External contractual linkages

4.2.4.2 Project Objectives and Choice of Organizational Structure

4.3.3 Example of an External Project Management Structure

Subject specific sections

5.2.1.4 People Issues

5.2.1.6 Uncertainty and Change

5.2.1.7 Accuracy and Reliability

premises while works are cariend out and commissioned.

Method of handling variations Form of tender Appendices Dispute resolution procedure

Bonds and insurances to be provided

Identify start and finish window for

Rationalize resources Form a draft master schedule (DMS);

Refine the draft to form a project master schedule (PMS)

Draft Master Schedule

(.33x.33) + (.2 x.2)

This section is carried out in the same way as in CPM analysis.

Schedule and Critical Path

4. 4. Calculate the cost of crashing each activity;