Master of Business Administration-MBA Semester 3 Introduction to Project Management PM0010

Assignment Set- 2

Q.1 Describe the various ways of representing network diagram logic. Ans: Network Logic Diagrams The logic development in project planning is an iterative process. Initial logic development starts after identification of the activities of the project and before scheduling process occurs. The logic development process is further refined during schedule development and optimization. There are two common methods of logic diagramming which are referred as network logic diagrams. Before knowing the types of network logic diagrams, we should be familiar with rules to be followed while developing and analyzing it. The rules are described in the table 1. Table 1: Rules to Develop a Network Logic Diagram

The two types of network logic diagram are: Precedence Diagramming Method This method is also known as Activities On Node (AON). In this network logic diagram, each activity is represented by a node and connecting lines represents the relationships between activities. Each preceding activity controls the start and finish of the succeeding activity. In precedence diagramming method, all the four dependency relationships can be implemented between the activities. Finish to Start dependency relationship is the most commonly used in this network logic diagram. Start to Finish dependency relationship is rarely used and it is typically used only by professional scheduling engineers. Usage of start-to-start, finish-to-finish, or start-to-finish relationship with project management software can produce unexpected results, since these relationships are not consistently implemented. The figure 1 shows the implementation of activities on node network logic diagram where the alphabets within the circle represents the activities of the project and linking lines shows the relationship between them.

Precedence Diagramming Method network logic diagram has the various advantages, they are: It is amendable with most of project management software. It is does not need introduction of a dummy activity in the network. It offers greater flexibility as it can incorporate any of the four dependency relationships.

Figure 1: Activity on Node Network Logic Diagram Arrow Diagramming Method This method of network logic diagram is also known as Activity On Arrow (AOA). This is the historical basis for network diagrams. It was used for the development of PERT networks in the 1950s by the Department of Navy for tracking very large, complex Polaris program. In this method, each activity of the project is represented by an arrow between the nodes of the network and the nodes are mere symbols representing the connection points. In AOA method of network logic diagram, finish to start relationships is used. The activities follow the order of precedence as defined by their immediate predecessors. When there is more than one immediate predecessor for an activity, the network must show that the activity can be started only after all of its immediate predecessors activities have been completed. The dummy activity defined above is used for this depiction in the network. In AOA network logic diagram, the important points mentioned below should be followed to ensure the correct representation: Activities of the project are represented by Arrows. Events are numbered and are represented by Nodes. Two dummy activities should be introduced to show the precedence relationships. The figure 2 shows the representation of AOA, where alphabets on the arrow are the activities of the project and nodes between them represents the relationships between the activities.

Figure 2: Activity on Arrow Network Logic Diagram Q.2 Explain the following: a. Organizational breakdown structure. Ans: Organization Breakdown Structure

Organization Breakdown Structure (OBS) depicts the relationships within the organization. It is used as a framework for assigning the work responsibilities for every person in an organization. OBS is the next step in project planning after developing the work breakdown structure. This process defines the responsibility of each team involved in the project. It assigns each work package identified in WBS to an individual team who are held responsible to deliver the expected output of the project. The OBS, groups similar project activities together and relates them to the organization structure. OBS also defines the responsibilities of project management, costing, budgeting, and project monitoring and control. It provides an organizational based perspective of the project rather than task oriented. The hierarchical structure of the OBS aggregates the project information to higher levels. After defining the responsibilities of the project, both the OBS and WBS of the project are merged and together assure that all the elements and scope of the project are assigned to a responsible team. OBS has various functions to perform. It helps to: Decompose the necessary resources to perform job. Identify and organize the resources responsible for carrying out the activities associated with the project. Keep the track of specific work assignments and resource allocations. To develop an organization breakdown structure of an organization. The steps given below should be followed: Draw the entire organization hierarchy structure for the resources involved in the project. Identify all the team members after drawing the structure. Assign each team member a position in the structure. If there are extra positions that have not been filled in the structure, fill them now. If there are additional resources left free, assign those resources so that all resources and positions are accounted for. Ensure that the OBS is structured from the most responsible department and followed by the performing departments at the lower levels. The lower levels of the structure are where the project responsibilities are matched up with the resource needed. Specify the functional group to every user where cost for the work the user does is allocated. Specify the approval group to every user who approves the work of the user and any leave approvals. The figure 1 shows the organizational structure of resources which depicts the various teams involved in a software development organization.

b. Cost breakdown structure

Ans: Cost Breakdown Structure Cost of a specific project activity refers to the monetary value or financial pricing. It includes all anticipated expenditures that are expected to be part of the entire project, as well as the monetary value of the total sum of resources to be expended during the process. Cost estimation and control is vital for success of a project. This is the reason that Cost Breakdown Structure (CBS) is considered to be a major part of project breakdown structure. CBS describes how different cost elements contribute to the total cost of a project. According to Hundal, the contributions to the cost of a product can be estimated in a variety of ways. These breakdowns are expressed in the forms of cost structures. A CBS is a document which outlines the criteria and activities that should be carried out as part of project management. It provides details about the input/output cost estimates and the amount of money being spent. It provides the plan and structure necessary to control costs of the project and keep them within the limits of the project budget. In CBS, a specific project cost is broken down into sub costs, which includes number of unique categories. The identified categories of cost breakdown structure include direct labor hours, indirect labor hours and other direct/indirect costs of the project. It also includes the purchased price of any specific materials and equipment which falls into resource cost category. In a business, providing a budget that is adjusted to time is referred as a cost baseline. It is the integral part of the cost breakdown structure. A cost baseline is an essential facet of the project management plan used by companies to ensure success of the project. Most larger projects have a variety of cost baselines which should be calculated. The basic cost baselines of a project are resources baselines and production variations baselines. These cost baselines measurement ensure that the cost is evaluated in regards to the overall yield of a specific project. CBS defines and arranges all relevant cost elements suitable for a specific project. It is a framework which shows the estimated cost requirement of the project divided among different activities of the project identified at work breakdown. A cost breakdown structure must have the following characteristics shown in the table 2. Table 2: Characteristics of Cost Breakdown Structure

There are five major forms of cost breakdown structures. They are: Grouped on the basis of the components that the product is made of and thus following the bill of materials. Divided on the basis of organizational departments. Divided based on the product functionalities which are very beneficial for a product development purposes. Divided based on the various activities and operations of the project. Divided based on any desired way and then the result is arranged using the Pareto chart rule. This indicates the most important and the least important cost elements from the desired point of view. The cost elements of a CBS are usually associated with the three basic elements. They are:

Resources Activities Product

Q.3 If optimistic time for an activity is 5 days, estimated time to complete the activity 85 and most likely time 10 days. What is the variance of the activity? Ans: to = 5 days te = 85 days tm = 10 days tp = ? Estimated time of the project (te) = (to + 4*tm + tp) 85 = (5 + 4*10 + tp) 85 = (45 + tp) tp = 85-45 tp = 40 Variance = [(tp - to) / 6]2 = [(40 5) / 6]2 = 35/6 * 2 Variance = 11.667 Q.4 Explain the following types of contract: a. Cost reimbursable and its variation b. Fixed price and lump sum contract c. Time & material contract Ans: a: Cost-reimbursable contracts: Here the seller is paid for his actual costs plus a fee to cover his profit. The actual cost includes direct cost (salaries of full-time project staff) and indirect cost (salaries of management and support staff indirectly involved in the project plus cost of office facilities like rent, electricity etc.). The variations in this category are: - Cost-Plus-Fee (CPF) or Cost-Plus-Percentage of Cost (CPPC): The payment is made for the actual cost plus an agreed percentage of the actual cost as fee. - Cost-Plus-Fixed-Fee (CPFF): This is same as CPPC except that the fee is fixed and does not increase or decrease with the actual cost unless project scope changes. - Cost-Plus-Incentive-Fee (CPIF); Here, in addition to the payment as per the CPPC or CPFF mode, an incentive is paid upon achieving certain specified performance levels of the project. b: Traditional lump sum fixed cost/time (Fixed Price Contracts) In fixed type contracts, the design is already developed by the owner (usually through a design consulting firm). Subsequently, the project is tendered and awarded to a construction contractor at a fixed price and then the construction delivery is completed. Theoretically, each of these phases, i.e., design, tendering and contract award is discrete and separate. First, the owner fixes a Design Consultant, based on which a design is generated which is as comprehensive as possible. Tenders for construction are invited for this design. Tendering can be either open tendering or pre-qualified tendering. By pre-qualified tendering, it is implied that bidders are pre-qualified. The evaluation of the bids received leads to selection of the seller at a fixed cost/time, on the premise that the design is complete and comprehensive. The advantage of this type of contract is that the owner is aware of the cost at the time of award based on which the design was finalized. In practice, however, the designs always have gaps which lead to the undermentioned possible disadvantages: The construction contractor makes extra cost claims to the owner if the design is not complete before tendering. Additional cost claims by the construction contractor on account of consequential damages due to the changes are also likely.

 The construction contractor is excluded from the design development phase, and thus a substantial value addition opportunity by valuable management and constructability information is lost. The construction contractor becomes answerable to the principal design consultant, while he cannot make suggestions on improved design for constructability[4]. Many owners perceive that they may be at the mercy of construction contractors looking for opportunities to create additional revenue and profit from such gaps in the tender. This may lead to a confrontational approach over disputes which may ultimately need to be settled by arbitration or a court of law. Notwithstanding these disadvantages, fixed contracts are in vogue where designs can be more or less frozen prior to tendering for construction, with some contractual provisions for price variations incorporated in the contract. c: Time and Material (T&M) contracts: Here the contract contains the feature of both cost reimbursable and fixed price contracts. Unit rate contracts are an example, where the unit rates for specific items of work are fixed, but the contractor is paid for the actual quantities executed, since quantities are not known at the time of signing the contract with the contractor. Q.5 Describe the factors to be considered when feasibility of a project is examined. Also explain the various qualities that a good project management process encompasses. Ans: Feasibility Study on Project Feasibility study on project defines the probabilities associated with it. Various measures are taken to identify whether a project is feasible or not. Initially, an analysis is performed to determine if the project meets all the requirements to proceed to next stage. However, when a feasibility of the project is to be examined, the following factors have to be taken into consideration: Cost: The project management team makes a cost analysis to ensure that the estimated costs of the project fall within the range set by the organization. However, there are certain factors that have to be considered while determining the costs of the projects. It includes the implications of the capital expenditure, the project costs, determining the effects of finances on the organization, determining the expenses required in the current year as well as the subsequent years. Timing: The project manager makes a timing analysis to ensure that the project meets its delivery date with the expected quality outcome. The timing phase of the project ensures that any legal or requirements from the government are complied on date. It also ensures that the finances are used by the company in the restricted period of time. Timing policies are also important for the operational concerns such as requirement of equipments or systems to meet the defined deadlines and specific procedures. Performance: The project manager fixes the job responsibilities to the members of the team based on the skill set they possess. It is vital to monitor the performance both technically and personally. It is necessary that the performance of the members participating in the project meet the standards as specified by the client as well as the organization internally. Quality of a Project Management Process The various qualities that a good Project Management process should encompass are as listed below:

Creativity: A good Project Management process should be creative that facilitates integrating various categories of the project into a unified structure. It should provide abilities to create enthusiasm and appeal in the process. Structure: The structure of the organization will have a set of specifications, parameters, limitations as well as certain guidelines that has to be followed. The members of the organizations are expected to work effectively within the defined framework and structure of the organization. Intuition: Intuition is very important part of maintaining a good Project Management process. It is that ability of understanding the uncertainties and the things forth coming without the use of any rational processes. It is the foundation of emotional intelligence. It is vital to have a stronger intuition that enables to sense what the other members are feeling and thinking. Knowledge: Knowledge is an important part of the Project Management process. It is required for the deeper understanding of the project with ease and also to delegate the technical aspects training to the other members participating in the project team. Commitment: The commitment of the project manager is responsible for holding the team together to pull the project to meet its delivery dates successfully. Commitment ensures that there are fixed allotted timings for every activity to be performed in the process. Being Considerate: Being considerate infers that a task allotted to the members of the team can be well completed in the allotted time. It ensures that no employee is heavily loaded with unnecessary work he is not responsible for. Thus, the loyalty and humbleness of the manager will further take the project team to meet its objectives defined. Versatility: The primary qualities of a Project Management process include flexibility to any kind of environment. It requires versatility that enables the project manager to change any decisions with respect to resources and other constraints quickly. Lightness: It complements the importance of the tasks as well as provides options to resolve them. This leads to strong team results and team maintenance. Discipline/focus: It is very essential to be self focused and disciplined to maintain the moralities and ethics of self and the company. Big picture, small actions: It is very essential for a good Project Management process to visualize things in a broader perspective. This leads to thinking in a wider range meanwhile paying attention to the details of the project. However, it requires good communication skills to interact with the team members in order to establish the clear expectations of the clients. It is required that the members of the team are also given the authority to make shared decisions regarding developing the project. It gives a clear picture of the people who are assigned to the specific tasks. Effective Project Management process adopts various customs and ways in order to correspond and share the relevant information such as conducting meetings and informal conversations with the relevant and concerned people such as with the other members of the team, the clients and other senior officials of the project. This requires that the manager of the project have good communication skills and believe in listening skills than talking skills. Q.6 Describe the following project management approaches: a. Critical chain project management approach b. Event chain methodology approach c. Incremental approach d. Phased approach

Ans:

a. Critical Chain Project Management Approach (CCPM): It is an approach

of scheduling and managing the projects with respect to resources. It ensures planning and structuring of projects so that resources are available when the critical chain begins. It ensures that the project plan undertakes resource leveling. Resource leveling is a part of the project management process. It inspects resources that are not balanced. These resources can include people or equipment. For example, when requirements of resources such as equipment or manpower are far more than that is available at that instant, the resources need to be rescheduled. When a team member is a critical resource for multiple tasks, the responsibilities of that person need to be redistributed among other personnel in order to complete the tasks simultaneously. Project resource leveling resolves such conflicts by balancing the resources and the workload.

b. Event Chain Methodology Approach: This method allows modeling of

uncertainties in an easy and simple way in the project. The various principles that event chain methodology works on are as follows: Probabilistic moment of risk: It monitors the uncertain risks that occur at the some point when the project is in flow. Event chains: An analysis is performed to determine an increasing effect of event chains in the project. Critical events or event chains: Critical events are defined as those events that have the ability to disturb the progressive workflow of the entire project. An analysis is performed to determine such uncertain situations in the project. Project tracking with events: tracking makes it possible to gather information about future events from the incomplete information available. Event chain visualization: Event chain diagrams are used to visualize events and event chains.

c. Incremental Approach: The incremental approach adopts a sequential

approach in preparing a project for delivery. The main objective of incremental approach is to reduce development time to a large extent. This is achieved by adopting measures such as finding the most deserving and suitable people for the task, facilitating good human relations and communication within the project team and providing solutions to anticipate customer wants and queries. This approach is very useful in situations where complete funding is not readily available or when there is a delay in the delivery of the deliverables.

d. Phased Approach: A project life cycle includes initiation, planning,

execution, control and close. The phased approach is responsible in fitting the requirements according to the need of the organizations of various sizes. There are various benefits of using phased approach in project development. This approach assists in laying down a firm and structured foundation for the project.