PS2S71 Managing Projects and

Aims:-
Operations
• To understand approaches to project
management

Objectives:-
• Lifecycles
• Costing
• Risk

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 Stages of a Typical Project
1. Initiation and definition
2. Planning
3. Organisation and implementation
4. Measurement, monitoring, control and
improvement
5. Closure
6. Review, evaluation and learning
Lysons
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 Project definition
• Describes the project
• Specifies the project deliverables
• Sets out the scope of what we have to do
• Provides the basis for our business plan.

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Project
Failures

Gobelli &
Larson

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 1An investor or customer needs to be clear on
what to expect in return for the investment.
2 Before a contractor can offer to carry out the
project, it must know its total commitment.
• How much work and materials will be needed?
• What are the risks?
• How much of the project shall we have to do?

3 If you've just been appointed project manager,

you will need answers to the above questions.

Some reasons for defining a project

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• General project description: what's it all
about?
• What is the required performance
specification?
• Scope of supply: how much shall we have
to do?
• What are the contract conditions?
• What will be our project strategy?
• How much will it cost?
• How long will it take?
Typical definition requirements
• Where is the project to be done?
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 Project definition

Begins before the project starts . . .

. . . and ends when the project is finished

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 Gantt Charting
Project phase Five-year periods
1 Original concept
2 Feasibility study
3 Business plan
4 Risk assessment
5 Public enquiry
6 Authorization
7 Organization
8 Planning
9 Design
10 Procurement
11 Fulfilment
12 Test/commission
13 Handover
14 Economic life
15 Disposal

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The customer or client

Changes
Original Design and Manufacture or Final testing or
objectives purchasing construction commissioning

Sales
engineering

Sales Increasing accuracy of definition As-built

specification records

Equipment Handover to the

Subcontractors
vendors customer or
client

The definition of an industrial project

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 Scoping the Project
Not only must the customer/clients
specification be met but also
commercial conditions – invoicing,
certification, quality standards,
delivery timescales etc. Any failure
– could accord damages (not
penalties!)
All this could be aided with an ‘action
plan’ as per Lock:38

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 Project strategy
Deciding the project strategy is part of
project definition.

Strategic decisions greatly affect project

costs and outcomes.

Not just can we do it?

But, should we do it?
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Some examples of strategic questions:
• Shall we bid for all the project or only a part of it?
• What manufacturing or building processes do we
prefer to use on this project?
• Shall we use our UK factory or the Far East?
• Are we going to build and test before shipping or
erect, test and debug on site?
• Can we accept the risks that we have assessed?
• Do we need a joint venture partner?

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 Or, for a business change project:
• Do we really need to move our head office away
from London?
• If we do move, should we stay in Britain?
• Which city looks most promising?
• Do we need to keep a small office in London or
must the move be complete?
• What kind of compensation do we envisage paying
staff who decide to leave?
• What kind of compensation do we envisage paying
staff who decide to move with us?
• and so on

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Stage–Gating to assess risk

(relates to Lock:30)
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Three-stage Project Life Cycle

Source: Meredith &

Mantel, 2003, Wiley

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 Four-stage Project Life Cycle
D1: Define the project
The brief

D2: Design the project process

Process &
product The proposal/PID
knowledge

D4: Develop D3: Deliver

the process the project
The outcomes

Source: Maylor

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 Maylor’s Four-phase Approach
Phase Key issues Key questions

Define the project Organisational & What is to be done?

project strategy; goal Why is it to be done?
definition
Design the project Modelling & How will it be done?
process planning; estimating; Who will be involved
resource analysis; in each part?
conflict resolution; When can it start and
business case finish?
Deliver the project Organisation; How should the
control; leadership; project be managed?
decision-making;
problem-solving
Develop the process Assessment of How can the process
process & outcomes; be continually
evaluation; changes improved?
for the future
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 Special Purpose Project Lifecycles
• Information System Development
– TSDLC
– RAD, JAD, Merise, SCRUM, Prototyping

• Sector Specialist Approaches

– Prince2 (government)
– PERT (NASA)
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 Stage 1 – Initiation and Definition

What’s involved • Identifying project goals

• Listing project objectives
• Determining preliminary resources
• Identifying assumptions and risks

Tools & techniques • Financial appraisal

• Project initiation document (PID)
• QFD
• Risk analysis & risk/impact matrix
• Suitability/feasibility/vulnerability
• Voice of the customer
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 Financial Appraisal
• Payback period – time to recover initial
investment through estimated cash inflows from
the project
• Average rate of return (ARR) – average annual
profit ÷ average investment
• Discounted cash flow (DCF) – present value
method
• Internal rate of return (IRR) – rate of return that
equates present value of cash inflows and outflows
• Profitability index – NPV of all future expected
cash flows ÷ initial cash investments
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 Stage 2 – Project Planning
What’s involved • Identifying activities
• Estimating time and cost
• Sequencing activities
• Identifying critical activities
• Refining the plan
• Updating the initial risk analysis
• Writing the project proposal
Tools and • Project initiation document (PID)
techniques • Work breakdown structure
• Network diagrams and CPA
• QFD
• Risk analysis & risk/impact matrix
• Suppliers Inputs Processes Outputs Customers

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 Stage 3 – Organisation and Implementation
What’s involved • Determining personnel needs
• Recruiting the project manager
• Recruiting the project team
• Organising the team
• Assigning work packages

Tools and • Network diagrams and CPA

techniques • Seven tools of quality control
• Problem-solving tools
• Risk analysis & risk/impact matrix
• Team roles (Belbin)

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 Stage 4 – Measurement, Monitoring and
Improvement
What’s involved • Defining (?) management style
• Establishing control tools
• Preparing status reports
• Reviewing the project schedule
• Issuing change orders
Tools & • SIPOC
techniques • Problem-solving tools
• Seven quality tools
• QFD

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 Stage 5 – Closure of the project
What’s involved • Obtaining client acceptance
• Installing deliverables
• Documenting the project
• Issuing the final report

Tools and • SIPOC

techniques • Seven quality tools

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 Stage 6 – Review, Evaluation and Learning
What’s involved • Conducting a project audit
• Learning lessons (from successes
and failures)
• Communicating the review,
evaluation and learning

Tools and • SIPOC

techniques • Seven quality tools (including cost of
quality)
• Project review

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 Project phase Five-year periods
1 Original concept
2 Feasibility study
3 Business plan
4 Risk assessment
5 Public enquiry
6 Authorization
7 Organization
8 Planning
9 Design
10 Procurement
11 Fulfilment
12 Test/commission
13 Handover
14 Economic life
15 Disposal
Project Costs – In early phases cost estimate provide for business case
budget. In commercial fixed price contracts – fixed for ever!. Some project
are not fully known and so cost content can change – should be continually
reviewed – finally being actual final cost.
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Some cost estimate categories
(each company will have its own system)

• Wild guess
• Ball park
• Informed guess Increasing
• Comparative
accuracy
• Feasibility
• Definitive
• Final recorded cost

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 Top down costing

Considers The project

the
whole
project
first. • Intuitive
• Probably ball-park
Greater
detail • Useful when there is:
might - little time available
not be - little information
possible

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 Project prime cost

Builds up
in detail
from the
bottom
of the
task list
or work
breakdown
structure

Bottom-up estimating
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 Risk Assessment
• What is the situation to be assessed?
• What can go wrong? (What are the hazards?)
• What is the probability that each hazard will
occur?
• What are the consequences if it does go wrong?
• What is the uncertainty of our risk assessment?
• Summary – probability, impact and uncertainty
• Recommendations

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 ‘Risk’ vs ‘Uncertainty’
• Risk – When the decision maker knows the
probability of each and every state of nature
and thus each and every outcome. An
expected value of each alternative action can
be determined
• Uncertainty – When a decision maker has
information that is not complete and
therefore cannot determine the expected
value of each alternative Meredith & Mantel, 2005
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 Risk/impact
Impact
Matrix
Low High
High
Probability

Tolerance
threshold
(depends on
organisation)
Low

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 Risk management
The principal risk management processes are:
1 Identify and list all the possible risks

2 Edit the initial list and start a risk register

3 Assess each risk qualitatively and

quantitatively
4 Decide and record strategies for dealing
with the risks
5 Keep the risk register up to date

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 Methods of risk assessment
The methods that follow are among those used
to identify and assess risks qualitatively.
Some of these methods have their origins in
quality or reliability engineering.
• Matrix solutions
• Ishikawa fishbone
• Failure mode and effect analysis (FMEA)

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 Appoint a ‘risk owner’ to be responsible, both for
taking action if the risk should happen and for
keeping its risk ranking under review.

Like Boy Scouts, ‘Be Prepared’: Decide now what

to do about the risk. Don’t wait until it happens

Sort the risks and put the highest-rank at the top.

Although these have a scale of 1 to

Optional 3, many people use 1 to 5 or 1 to 10
column
s
Risk Date Risk description and Probability Impact Detection Ranking Mitigating or avoiding action Action by:
ID registered consequences (Severity) difficulty (priority)
P = 1 to 3 S = 1 to 3 D = 1 to 3 PxSxD

Typical arrangement of a risk register

(repeated from Figure 7.6 of the book)
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 Some Important Lessons !
The absence of plans removes the period of anxiety which
precedes project failure!
(Sir John Harvey Jones)

The lack of revision removes the period of anxiety which

precedes exam failure !

(Me)

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 References
• Larson, E. W., and Gobeli, D. H., “Matrix Management: Contradictions and
Insights,” California Management Review, vol. 29, no. 4 (Summer 1987), p.
126-138.
• Belbin, R.M. (1981) Management Teams: Why they succeed and fail.
Burlington, MA: Elsevier Butterworth-Heinemann.
• Meredith, J. R., & Mantel, S. J. (2006). Project management: a managerial
approach. Hoboken, NJ, John Wiley.
• Maylor, H. (2003). Project Management, 3rd ed. Upper Saddle River, NJ:
Pearson.

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