FUNDAMENTALS OF PROJECT MANAGEMENT

What is a Project?

Temporary with a beginning and end Creates a unique product, service or result Progressive elaboration Done for a purpose Has interrelated activities

Temporary ;Unique; Progressive elaboration

2 2

Temporary

Definite beginning and end End is reached when the project objectives have been achieved Market window Ad hoc team

DEFINATION

Unique

Something new
no two projects are the same, some degree of customization is there New airliner Bring a new drug to market

Size does not matter

Requires progressive elaboration

Progressive

Proceeding in steps Continuing steadily in increments Worked out with care and detail Developed thoroughly

Elaboration

Distinguishing characteristics first broadly defined will become more explicit and detailed as the team develops a better understanding
4

Characteristics of a Project

Conflict
Project

mgr. full of conflict; projects compete with functional dept. for resources & people Project members conflicting for projects resources & leadership roles in solving problems; deal with clients & org. Individuals conflict two bosses at the same time; different objectives & priorities
5

Characteristics of a Project
Purpose Project
usually

a one-time activity with a set of desired end result can be divided into subtasks, which required coordination & control

Life Cycle Project life cycle

slow beginning progress to a buildup of size peak begin decline finally must terminate

Characteristics of a Project
Interdependencies Projects interact with other project being carried out simultaneously by parent org., but always interacts with the parents standard, ongoing operations, etc. The patterns of interaction between functional dept. may change. Marketing Marketing e.g: Manufacturing Finance
Beginnin g of project

Finance
Intermediate of project End of project

Project mgr- keep these interactions clear & maintain

7

Projects Vs Business Process

Temporary has a beginning and an end Produces a unique output or deliverables Has no pre-defined work assignment

On going- the same process is repeated over and again Produces the same output each time the process is run Has a predefined work assignment

Projects Vs Operations
Projects Performed by people Constrained by limited resources Planned, executed and controlled Temporary Unique Operations Performed by people Constrained by limited resources Planned, executed and controlled Ongoing Repetitive
9

Programmes Vs Programme is simply a collection of Projects projects, each project several inter-related
in a programme has its own objectives and contributes to the objectives of the programme

Projects are simply manageable

components of a programme so arranged to meet the objectives of the programme
10

PROGRAM PROJECT1 TASKS1 TASKS2 TASKS1 PROJECT2 TASKS2

WORK PACKAGES1 WORK PACKAGES2 WORK PACKAGES1 WORK PACKAGES2

WORK UNITS1WORK UNITS2WORK UNITS3WORK UNITS1WORK UNITS2

A Project is: a unique set of coordinated activities, with definite starting and finishing points undertaken by an individual or organization to meet specific objectives within defined schedule, cost ad performance parameters
11

INTRODUCTION TO PROJECT MANAGEMENT

12

Project Management
Establishing clear and achievable objectives

Application of skills tools and techniques to meet or exceed stakeholders expectations while using resources efficiently & effectively and meeting project requirements

Balancing the competing demands for quality, scope, time and cost.

13

Managing a Project includes:

Identifying the requirements Establishing clear and achievable objectives Balancing the competing demands for quality, scoop, time, and cost Adapting specifications, plans, and concerns of the stakeholders

14

15

Who is a stakeholder?

Project manager Customer Performing organization Sponsor Team Internal/external End user Society, citizens

16

17

Need of Project Management

Projects worth billions of rupees undertaken every year. Effective management has bearing on overall growth of national economy. Experience with regard to project management is mixed. Some projects completed before time and most others completed with time and cost overrun. Time, resource, cost management are sine-qua-non of project

18

Advantages of Project Management customer relations Better control & better

Shorter

development times, lower costs, higher quality & reliability, higher profit margins Sharper orientation towards results, better interdepartmental coordination & higher worker morale

19

Disadvantages of Project Management

Increased organizational complexity Increase the likelihood that organizational policy being violated project mgr being autonomous Higher costs, management difficulties, low personnel utilization PM is difficult even when everything goes well - what more if things go badly Project organization is the only feasible way to accomplish certain goals - literally not possible to design & build a major weapon system in a timely & economically acceptable manner, except through project organization i.e. applying PM tools
20

Why Projects Fail Lack of user involvement

Lack of management system Lack of well-defined deliverables Poor communications Poor change management Incorrect technical architecture Inadequate planning Lack of sponsorship & functional commitment Inability to manage risk and uncertainty
21

Management Processes
The POLC Model

Planning Organising Leading Controlling

Planning Organising Leading

Controlling

22

Defined Life Cycles

Effort Cost

Concep t

Plannin g

Executi on

Terminat ion

23

Stages of Project Management Maturity

24

Project Initiation

25

Detailed Project Life Cycle

Initiating Planning Executing Controlling Closing Project Request Develop Project Plan Build Project Team Review Project Requirements Conduct Project Kickoff Meeting Baseline Project Plan Phase Assessment Manage Technical Performance Manage and Control Project Manage Cost, Schedule, Resource Variance Control Changes Manage Performance to Requirements Manage Risk Phase Assessment Deliverables Review Lessons Learned Post Implementation Project Completion

Project Charter

Control Changes Manage Project Team Manage Quality/ Performing to Requirements Manage Risk

Project Start Up

Phase Assessment

Phase Assessment

26

Project Initiation

Project Request Scope and objectives Business case Preliminary resource estimates Review & Authorization Requests prioritized and funded Project Charter Developed after request approval
27

The Project Charter

Purpose
Recognizes

existence of the

project Describes the project at a high level Explains the business need for project Authorizes use of resources for planning

Organization and timing

Completed

after an approved project request

28

The Project Charter

Content
Project

Typical Participants
Business

description Business background Project scope Objectives (ROI if not in request) Deliverables Constraints Assumptions Planning budget

Area

Manager Project Manager Steering Committee Core Project Team Others if relevant

29

Project Planning
Purpose: to determine What needs to be done Who will be involved How objectives will be met When it will be implemented How much it will cost Project Plan Statement of Work Project Organization Work Breakdown Structure Schedule Resource requirements Standards and Procedures Communications Risk Management 30

Project Planning Planning includes forecast of resource requirements of

people, materials and equipment, forecast of financial requirements and provision of milestones against which progress can be measured. All project management expertise areas are needed in planning: Resource Management Integration Management Environment Scope Management Participants Time Management Tools Cost Management Communications Management Quality Management Risk Management Procurement Management

31

Planning Principles
Plan should provide information in a readily understood form. be realistic. be flexible. serve as a basis for progress monitoring the control. be comprehensive.

32

Work Planning
Whole set of activities to be identified( work break down structure) Activities to be arranged in correct order or logical sequence Approaches for time estimates based on sound resource planning -Deterministic where previous experience is available ( CPM) -Probabilistic where no experience available or uncertainty (PERT) - Time estimates are made for each activity on a three-way basis: -Optimistic time -Most Likely time
33

Planning Techniques as Gantt charts. Bar Charts also known

Network analysis by Critical Path Method (CPM) or Programme Evaluation & Review Technique(PERT) provides a means to predict time required for completion identifies activities whose execution is crucial(critical activities) serves as guide for shortening if completion is to be advanced provide basis for scheduling of subcontractor&material delivery serve basis for scheduling of manpower,finance & equipment makes possible rapid evaluation of alternative const. Methods
34

Integration Management
Processes required to ensure that the various elements of the project are properly coordinated:
Project plan development Project plan execution Integrated change management

35

Scope Management
Processes required to ensure that the project includes all of the work required, and only the work required, to complete the project successfully: Initiation Scope planning Scope definition Scope verification Scope change control

36

Time Management
Processes required to ensure timely completion of the project: Activity identification Activity sequencing Activity duration Estimating Schedule development Schedule control

37

Cost Management
Processes required to ensure that the project is completed within the approved budget:
Financial resource Task Hours Rate planning Project 200 (1 person @ 40 Cost estimating Managemen 2hrs a wk for 100 Cost budgeting wks) t Cost control Requiremen 150 (10 people @ 35
ts 1 hrs a wk for 12 wks + 1 person for 30 hrs) 320 (1 person @ 40 hrs a wk for 8 wks) Cost 8000

5250

Design

40

12800

Developmen 640 (2 people @ t 40 hrs a wk for 8 wks)

30

19200
38

Resource Budgeting
Task
Project Management Requirements

Hours

Rate

Cost
8000 5250

200 (1 person @ 2hrs a wk 40 for 100 wks) 150 (10 people @ 1 hrs a 35 wk for 12 wks + 1 person for 30 hrs) 320 (1 person @ 40 hrs a 40 wk for 8 wks) 640 (2 people @ 40 hrs a 30 wk for 8 wks) 480 (3 people @ 40 hrs a 30 wk for 4 wks)

Design Development Testing

12800 19200 14400

39

Quality Management
Processes required to ensure that the project will satisfy the needs for which it was undertaken:
Chartering Quality planning Quality assessment Quality control

40

HR Management
Processes required to make the most effective use of the people involved with the project: Organizational planning Team recruitment Team development

41

Communications Management timely and appropriate Processes required to ensure

generation, collection and dissemination, storage and ultimate disposition of project information:
Communications planning Information distribution Performance reporting Administrative closure Audience Who needs to know? Message What do they need to know? Intent Why do they need to know? Media How are they going to know? Timeframe When are they going to know? Responsibilities Who is delivering the message? Goals: No surprises Up and down the chain Repetition,

42

Risks and Constraints

Constraints are known in advance
budget schedule people the real world facilities and equipment
Constraints should be well-documented in the SOW as part of the scope statement

43

Risk Management
Processes required to systematically identify, analyze, and respond to project risks:

Risk management planning Reactive managing surprises, putting out fires Risk identification Qualitative Risk Analysis Proactive risk avoidance, buy Quantitative Risk Analysisoff risk Risk management Risk response planning Identify it Risk monitoring and control Analyze it Plan for it (mitigation planning)

44

Types of Risk
1) Uncertainty: an event may or may not happen 2) Loss: an event has unwanted consequences or losses

ll definitions of risk involve two characteristics

All of the risks in a project are either:

known risks predictable risks unpredictable risks
45

Basics of Risk Management

Identify the risks Analyse probability and impact

Determine the importance

Agree high risk list

Document response plan

Accept the risk Avoid the risk Monitor and develop contingency plan Transfer the risk

46

Procurement Management
Processes required to acquire goods and services from outside the performing organization:
Procurement planning Solicitation planning Source selection Contract administration Contract close-out

47

Change Management
A set of formal procedures that provide for the orderly control of change in a dynamic environment: Change includes: Added New standards / functionality practices Incorrect Environment alterations assumption Imposed delays Extended approval times Change management does not prohibit or inhibit change!!

48

Variance Analysis
Departure from the estimated project cost is known as variance (not the statistical variance). Called unfavorable if planned amount exceeded favorable if less cost incurred than planned Variance analysis is to be done for each activity in the network, where cost overrun occurs and they are to be done separately for the (i) Use of resources (such as material & labor) (ii) Prices of the above resources. This enables to pinpoint actual cause of cost overrun for taking corrective action or any further misuse of any resources

49

CONFLICT RESOLUTION

50

51

Why do Projects Fail?

Hughes (1986) identified three main reasons for projects failing.
a

lack of understanding of project management tools and an over reliance on project management software communication problems failure to adequately adjust to changes that occur during the course of the project

52

Change and Conflict

Successful Projects bring about Change

The forces within an organisation that resist change are: Personal Many people resist change!

Organisational Structures and System may not suit the Changes that are being introduced Environmental The culture, values and beliefs may be turned on their head.

53 of 21 53

Complexity and /or Unfamiliarity

Complex projects will have a number of activities running in parallel. Some parts of the project will need other parts of the project to be completed before they can begin or progress. Some projects will require a feasibility stage before the completion of a detailed plan.
Project Management
54

Project Contingency Planning anticipating the unforeseen, or Planning for and

the possibility that things may not go as expected, is called 'contingency planning'. planning is vital in any task when results and outcomes cannot be absolutely guaranteed. a contingency budget needs to be planned as there are usually costs associated. planning is about preparing fallback actions, and making sure that leeway for time, activity and resource exists to rectify or replace first-choice plans.
Contingency Often Contingency

55

Conflict Resolution

Ensure Buy in from core stakeholders Participation and active support from all stakeholders Communicate

At the end of your successful project hold a review with the team. Ensure you understand what happened and why. Reflect on any failures and mistakes positively, objectively, and without allocating personal blame. Reflect on successes gratefully and realistically.

56

The Transition Curve

57

Work Breakdown Structure

58

A WBS displays and defines the product, or products, to be developed and/or produced. It relates the elements of work to be accomplished to each other and to the end product. A WBS can be expressed down to any level of interest. However the top three levels are as far as any program or contract need go unless the items identified are high cost or high risk. Then, and only then, is it important to take the work breakdown structure to a lower level of definition.
59

Definition

What else is a WBS used for

Insuring that we didnt forget anything Matching staff skills to tasks Assignment of responsibilities Tracking progress via milestones
We

cannot know that coding is 90% complete until coding is finished

Communicating the big picture

60

Example WBS

61

Example WBS for Intranet Project

In t r a n e t P r o j e c t C o n c e p t W D D D e b S i t e e s i g n n n U S s e r W D e b S i t e e v e l o p m R e n t e s o ll O u t S u p p o r t

e s i g e s ig

I n t e D r fe a v c e e l o p P a g a n d L i n k s S e Dt u e p v e l o p F u n c t i o n a l it y

e r v e r

D e v e lo p S e r v e r C o n t e n t u p p o r t I n f r a s tM r u i g c r t au tr i eo n / I n t e g T e s t in g

r a t io

62

WBS Rules

Avoid too much detail break down until a group can do the activity in a week or month - a work package Only specify what you can manage Limit depth of indention to manageable level Use regular milestones Helps measure progress Break it down one level at a time Clearly describe each detailed level Make it a team effort Leverage past projects
63

Tool & Technique -WBS

Bottom-up approach This is the most appropriate method for projects involving untested methods and approaches OR where team members have not performed similar projects before Generate all activities you can think of that will have to be done and group into categories
64

Identifying Work Components

SOW Experience / Other WBSs Standards Documents

such

as IEEE 1074

65

Methods for Developing a WBS

Bottom-up approach (using Brainstorming) This is the most appropriate method for projects involving untested methods and approaches OR where team members have not performed similar projects before Generate all activities you can think of that will have to be done and group into categories
66

Gantt Charts

Gantt Charts are extremely useful project management tools. You can construct a Gantt Chart using MS/Excel or a similar spreadsheet. Every activity has a separate line. You can colour code the time blocks to denote type of activity You can schedule review and break points. At the end of each line you can show as many cost columns for the activities as you need.
67

Gantt chart example

Project Management

68

Project Team

69

Task Assessment
Individual components of WBS needs to be defined clearly Scope and methodology of Task Lifecycle critical Resource allocation a critical component of the function

70

Need for a Team

Projects rely on effective teamwork and team members should be selected on the bases of their: Relevant experience Technical knowledge Appreciation of project objectives Creative and innovative ability Enthusiasm and commitment Ability to work as a member of a team Ability to communicate Level of available of resources
71

Project Organization OverviewOrganization Functional

Matrix Organization Projectized Organization Balanced Matrix Organization Organic Projectized Organization

72

Functional Organization
Director Project Coordination

Functional Manager Staff Staff Staff

Functional Manager Staff Staff Staff

Functional Manager Staff Staff Staff Light colored boxes: involved in projects

73

Functional Organization

Specialists grouped by function Difficult to cross functional lines Barriers exist on horizontal information flow Functional emphasis loyalties may impede completion

Functional Manager: An individual responsible for activities in a specialized department or function

74

Matrix Organization
Director

Functional Manager Staff Staff Staff

Functional Manager Staff Staff Staff

Functional Manager Staff Staff Staff

Manager of Project Managers Project Manager Project Manager Project Manager

Light colored boxes: involved in projects

Project Coordination

75

Matrix Organization

Multiple-command system Individuals from functional areas assigned on temporary basis to Project Manager Individuals return to functional organization to

Careful plans and procedures needed Project Manager: An individual responsible for minimize effects of dual reporting managing a project

76

Matrix Organization

Advantages
Visible

objectives Efficient utilization of resources Better co-ordination Better information flow Retention of home after project

Disadvantages
More

than one boss Complex structure to control Differing priorities of Project Manager and Functional Manager Duplication of effort Conflict

77

Projectized Organization
Director Project Coordination Project Manager Staff Staff Staff Project Manager Staff Staff Staff Project Manager Staff Staff Staff Light colored boxes: involved in projects
78

Projectized Organization

Emerges from functional when latter impedes progress Line of authority is the Project Manager Uncertainty where to go on completion of project Tendency to retain assigned personnel too long Functional Managers feel threatened as people are removed from their areas
79

Balanced Matrix Organization

Director

Functional Manager Staff Staff Staff

Functional Manager Staff Staff Staff

Functional Manager Staff Staff

Project Coordination

Project Manager Light colored boxes: involved in projects 80

Organic Projectized Organization

F M A P M A PM B P M C

FM B

FM C

81

Organic Projectized Organization

Core teams Strategic alignments Functional and project managers work as a team Department /division boundaries are immaterial Requires permeating trust up and down

82

PROJECT SCHEDULING TECHNIQUES

83

PERT/CPM

PERT Program Evaluation and Review Technique Developed by U.S. Navy for Polaris missile project Developed to handle uncertain activity times CPM Critical Path Method Developed by Du Pont & Remington Rand Developed for industrial projects for which activity times generally were known Todays project management software packages have combined the best features of both approaches.

84

PERT/CPM

PERT/CPM is used to plan the scheduling of individual activities that make up a project. Projects may have as many as several thousand activities. A complicating factor in carrying out the activities is that some activities depend on the completion of other activities before they can be started. Project managers rely on PERT/CPM to help them answer questions such as: What is the total time to complete the project? What are the scheduled start and finish dates for each specific activity? Which activities are critical and must be completed exactly as scheduled to keep the project on schedule? How long can noncritical activities be delayed

85

Project Network

A project network can be constructed to model the precedence of the activities. The nodes of the network represent the activities. The arcs of the network reflect the precedence relationships of the activities. A critical path for the network is a path consisting of activities with zero slack. Slack is the amount of time that noncritical activities can be delayed without increasing the project completion time. Immediate predecessor(s) is (are) activities that must be completed immediately before the current activity can begin. 86

The Critical Path

A path through a network is one of the routes following the arrows (arcs) from the start node to the finish node. The length of a pathis the sum of the (estimated) durations of the activities on the path. The (estimated) project duration or project completion time equals the length of the longest path through the project network. This longest path is called the critical path. (If more than one path tie for the longest, they all are critical paths.)
87

Project Network Discussion

Project networks are not unique. A project network is considered valid provided all precedence relationships are preserved. Mohawks project network shows that no activities precede activities A and B. For this reason an arc goes directly from start to these activity nodes. The immediate predecessors of each node is (are) displayed on the network by arcs leading from these immediate predecessors to the node. Also notice that activity H is the only activity that has an arc that goes directly to the finish node. ONLY ACTIVITIES THAT ARE NOT IMMEDIATE PREDECESSORS TO ANY OTHER NETWORK 88 ACTIVITIES MAY HAVE A LINK DIRECTLY TO THE

Project Network Example

Bridge City Developers is coordinating the construction of an office complex. As part of the planning process, the company generated the following activity list. Draw a project network that can be used to assist in the scheduling activities. D Activity of the project B A C E F G H I

J
Immediate Predecessor

---

---

---

A,B

A, B

F,G,H,I

89

Start

Finish

H C

90

Overall Procedure for solving a Project Network

1. 1. 2.

3.

4.

Determine the sequence of activities. Construct the network or precedence diagram. Starting from the left, compute the Early Start (ES) and Early Finish (EF) time for each activity. Starting from the right, compute the Late Finish (LF) and Late Start (LS) time for each activity. Find the slack for each activity.

91

Project Network Notations

t Duration of an activity ES The earliest time an activity can start EF The earliest time an activity can finish (EF = ES + t) LS The latest time an activity can start and not delay the project LF The latest time an activity can finish and not delay the project Slack The extra time that could be made available to an activity without delaying the project (Slack = LS ES) 92 Critical Path The sequence(s) of activities with no

Earliest Start and Finish Times

Start Time = the maximum of the earliest finish times of all activities immediately preceding activity i. (This is 0 for an activity with no predecessors.) Earliest Finish Time = (Earliest Start Time) + (Time to complete activity i ). The project completion time is the maximum of the Earliest Finish Times at the Finish node.
Earliest

93

Latest Finish Time

Latest Finish Time Rule: LF = Smallest LS of the immediate successors. The immediate successors for a node are all nodes that immediately follow the current node. Procedure for obtaining latest times for all activities: 1. For each of the activities that link directly to the finish node, set LF equal to project completion time. 2. For each activity whose LF value has just been obtained, calculate LS=LF (the time to complete the current activity) 3. For each new activity whose immediate successors now have LS values, obtain its LF by applying the latest finish time rule. Apply step 2 to calculate its LS. 4. Repeat step 3 until LF and LS have been obtained

94

PERT/CPM WITH UNCERTAIN ACTIVITY TIMES

Experience and historical data can be used for projects that have be completed in the past (such as home and apartment construction) to provide accurate activity time estimates. In many cases, however, projects are new or unique and activity times are uncertain. In these cases estimating activity times could be difficult. When there is uncertainty associated with activity times, they are often best described by a range of possible values instead of one specific time estimate. Uncertain activity times are treated as random variables with associated probability distributions. These distribution allows us to form probability statements about the likelihood of meeting a specific completion date. 95 Three time estimates are collected for each activity to

Uncertainestimate approach,Timescomplete Activity the time to In the three-time

an activity is assumed to follow a Beta distribution. An activitys mean completion time is: t = (a + 4m + b) 6

a = the optimistic completion time estimate b = the pessimistic completion time estimate m = the most likely completion time estimate

96

Uncertain Activity Times

An activitys completion time variance is: (b a ) 6
2

a = the optimistic completion time estimate b = the pessimistic completion time estimate m = the most likely completion time estimate

97

Example: EarthMover, Inc.

EarthMover is a manufacturer of road construction equipment including pavers, rollers, and graders. The company is faced with a new project, introducing a new line of loaders. Management is concerned that the project might take longer than 26 weeks to complete without crashing some

98

Completion Activity Description Predecessors Time (wks) A Study Feasibility --6 B Purchase Building A 4 C Hire Project Leader A 3 D Select Advertising Staff B 6 E Purchase Materials B 3 F Hire Manufacturing Staff B,C 10 G Manufacture Prototype E,F 2

Immediate

99


Start

PERT Network
B A

6
E

4
C

8
G

I Finish

6 3

3
H F

10

100

Earliest/Latest Times Activity A B C D E F G H I ES EF LS LF Slack 0 6 0 6 0* 6 10 6 10 0* 6 9 7 10 1 10 16 16 22 6 10 13 17 20 7 10 20 10 20 0* 20 22 20 22 0* 22 28 24 30 2 22 30 22 30 0*

101

Critical Activities
16 616 22 13 317 20 20 10 20 10
F 10 E 10 D 10

S ta rt

0 6 0
A

6 6

6 10 4 6 10
B

22 30 822 30
I F in ish

6 9 3 7 10
C

22 220 22

G 20

28 624 30

H 22

102

Crashing

Deterministic times are more prone to changes Lat minute changes by clients, unforeseen situations make crashing away of life We need to crash the activities of some project to ensure timely completion

103

Project Crashing
Rules: only crash critical activities crash the cheapest critical activity first assume each task can be crashed one day at a time (simplifying assumption, but not necessary) all critical paths must decrease by one day, in order for the project duration to decrease by one day Crashing example
104

Crashing Sample Network

3 6 1 3 2 10 11 4 8 6 0 5 5 6 7

Critical Path = 3 + 6 + 8 + 6 = 23 Time Units

105

Crashing An Example
Activity Normal Time Normal Cost Crash Time Crash Cost Slope Max Crsh Tm

1-2 2-3 2-4 2-5 3-6 5-7 6-7

3 6 10 11 8 5 6

50 80 60 50 100 40 70

2 4 9 7 6 4 6

70 160 90 150 160 70 70

106

Cost/Time Slope

Step1 compute a cost /time slope that can be crashed. Slope is defined as Slope = (Crash cost Normal cost)/(Crash Time Normal time) Slope is the Cost Per day of crashing a project Slope is negative which means As time required for a project or task is reduced, cost is increased
107

Cost/Time Slope

In the above activity 6-7 can not be crashed Calculating the slope this way might give the impression that activities can be crashed in increments of one day But this is not true Example An activity could be carried out in eight days or Four days (No intermediary times are possible) The crash has to be four days in this case
108

Crashing Sample Network

3 80 1 50 2 4 5 Normal Project Total Cost = $50 + $80 + $100 + $70 + $60 + $50 + $40 = 109 $450 100 6 70 7

Crashing
First task Develop a table or graph of cost of the project as a function of the projects various completion dates Starting with the normal schedule, crash selected activities one at a time, to decrease the project duration at the minimum additional cost

110

Crashing

Two principles
1.

Focus on critical path when trying to shorten the duration of the project. (with the exception that the resource needed for one activity, not on the critical path is needed for another project) 2. when shortening a project duration, select the least expensive way to do it.

AOA example is easier to illustrate than AON

111

Crashing An Example
Activity Normal Time 1-2 2-3 2-4 2-5 3-6 5-7 6-7 3 6 10 11 8 5 6 Normal Cost 50 80 60 50 100 40 70 Crash Time 2 4 9 7 6 4 6 Crash Cost 70 160 90 150 160 70 70 Slope -20 -40 -30 -25 -30 -30 0 Max Crsh Tm 1 2 1 4 2 1 0

112

Crashing Sample Network

Critical Path = 23 Days 6 3 1 50 2 80 60 10 4 50 11 5 40 5 3 100 8 6 6 70 7

Normal Project Total Cost = 50 + 80 + 100 + 70 + 60 + 50 + 40 = 450

113

Crashing Sample Network

Critical Path = 23 Days 6 2 1 70 2 80 60 10 4 50 11 5 40 5 3 CrashedPath = 20 Days 6 160 6 6 70 7

Crashed Project Total Cost = 70+ 80 + 160 + 70 + 60 + 50 + 40 = 530

114

Crashing Sample Network

Critical Path = 23 Days 4 2 1 70 160 2 60 10 4 50 11 5 40 5 3 CrashedPath = 18 Days 6 160 6 6 70 7

Crashed Project Total Cost = 70+ 160 + 160 + 70 + 60 + 50 + 40 = 610

115

Crashing Sample Network

Further crashing of CP is not possible as we have used up the complete (maximum) crash time possible. Crashing other paths will not shorten the project duration

116

RESOURCE ALLOCATION

117

A shortcoming of most scheduling procedures is that they do not address the issues of resource utilization and availability Scheduling procedures tend to focus on time rather than physical resources Time itself is always a critical resource in project management, one that is unique because it can neither be inventoried nor renewed

118

The Resource Allocation Problem

The Resource Allocation The extreme points of the relationship between Problem
time use and resource use are these: Time Limited: The project must be finished by a certain time, using as few resources as possible. But it is time, not resource usage, that is critical Resource Limited:The project must be finished as soon as possible, but without exceeding some specific level of resource usage or some general resource constraint If all three variables - time, cost, specifications are fixed, the system is over determined
119

Resource Loading

Resource loading describes the amounts of individual resources an existing schedule requires during specific time periods The loads (requirements) of each resource type are listed as a function of time period Resource loading gives a general understanding of the demands a project or set of projects will make on a firms resources Is an excellent guide for early, rough project planning Because the project action plan is the source of information on activity precedence's, durations, and resources requirements, it is the primary input for both the project schedule and its budget 120

Resource Leveling

Resource leveling aims to minimize the period-by-period variations in resource loading by shifting tasks within their slack allowances When resources are leveled, the associated costs also tend to be leveled The project manager must be aware of the cash flows associated with the project and of the means of shifting them in ways that are useful to the parent firm Resource leveling is a procedure that can be used for almost all projects, whether or not resources are constrained The purpose is to create a smoother distribution of resource usage Several advantages include:

121

Constrained Resource Scheduling There are two fundamental approaches to

constrained allocation problems: Heuristic Methods Optimization Models Heuristic approaches employ rules of thumb that have been found to work reasonably well in similar situations Optimization approaches seek the best solutions but are far more limited in their ability to handle complex situations and large problems
122

Heuristic Methods

Heuristic approaches to constrained resource scheduling problems are in wide, general use for a number of reasons:
1.

They are the only feasible methods of attacking the large, nonlinear, complex problems that tend to occur in the real world of project management 2. While the schedules that heuristics generate may not be optimal, they are usually quite good- certainly good enough for most purposes

123

Heuristic Methods

Most heuristic solution methods start with the PERT/CPM schedule and analyze resource usage period by period, resource by resource In a period when the available supply of a resource is exceeded, the heuristic examines the tasks in that period and allocates the scarce resource to them sequentially, according to some priority rule Technological necessities always take precedence 124

Heuristic Methods
Common priority rules:
As

soon as possible As late as possible Shortest task first Most resources first Minimum slack first Most critical followers Most successors Arbitrary
125

Heuristic Methods

Most priority rules are simple adaptations of the heuristics used for the traditional job shop scheduling problem of production/operations management Most heuristics use a combination of rules: a primary rule, and a secondary rule to break ties As the scheduling heuristic operates, one of two events will result: The routine runs out of activities before it runs out of resources The routine runs out of resources before all activities have been scheduled
126

Optimizing Methods

The methods to find an optimal solution to the constrained resource scheduling problem fall into two categories:
Mathematical Enumeration

programming

Mathematical programming can be thought of as liner programming (LP) for the most part

Linear programming is usually not feasible for reasonably large projects where there may be a dozen resources and thousands of activities
127

Multiproject Scheduling & Resource Allocation

The most common approach to scheduling and allocating resources to multiple projects is to treat the several projects as if they were each elements of a single large project Another way of attacking the problem is to consider all projects as completely independent To describe such a system properly, standards are needed by which to measure scheduling effectiveness 128

Multiproject Scheduling & Resource Allocation

Three important parameters affected by project scheduling are:

Schedule Resource

slippage utilization inventory

In-process

The organization (or the project manager) must select the criterion most appropriate for its situation

129

Multiproject Scheduling and Resource Allocation

Schedule slippage, often considered the most important of the criteria, is the time past a projects due date or delivery date when the project is completed Resource utilization is of particular concern to industrial firms because of the high cost of making resources available The amount of in-process inventory concerns the amount of work waiting to be processed because there is a shortage of some resource 130

PROCUREMENT MANAGEMENT

131

Estimate Resource Costs

Develop cost estimates for:
internal

& external labor (hrs,rates) during the refined materials course of the project , supplies definitive just prior to construction contracts special costs Estimat e ROM + 100% or 50% Intermediate + or - 30% Definitive + or - 20%

132

Organize and Acquire Staff

P o T l ic y a m C o m e n d P r a c t i c e ( S t e e r in g m it t e e ) a K O r i s t e I S O n v e D u uMs a u r e e n C a s t e r l in e r s i g B h ut s i n e s s S p o n s o r
D P e b r a H e r r l i r o j e c t M a n a g ( 1 0 0 % ) e r

B A

r y a n S y s t e r c h i t e c L e a d (

N e a l y T m t u r e T R 5 0 % )

i n T e e ea n e

S e s c h n i c sm o u r c e d e d

h a d r Pi a l A e ( aD s e v ) L e

e t e H a l e p p l i c a t i o n e l o p m e n t T a d ( 1 0 0 % )

a m

4 A

B n

1 C o n t u s i n e s s I n t e g a l y s t s D a t a D e v e

r a c t S y s t e r a t i o n / b a s e l o p e r

3 D

C e

o n t r a c t v e l o p e r s

133

Determine What to Procure & When

Procurement planning determines:
Actual solicitation whether, what, and how much, is part of execution how and when, how to manage solicitations, selection, contract administration, and closeout
SOW

Procurement documents:

- Statement of Work RFP - Request for Proposal Evaluation Criteria

134

Build Budget & Spending Plan Budgeting involves assigning the cost
estimates to all the tasks creating a cost Budget/Spending Plan baseline.
Jan Internal Labor External Labor HW/SW Contracts Training Total 5,000 Feb 5,000 Mar 5,000 7,000 3,000 June 6,000 15,000 20,000 9000 50,000 So on 10,000 15,000 20,000 30,000 5,000 80,000

5,000 10,000

5,000 10,000

15,000

135

Project Monitoring and Control

136

Level of Activity

Monitoring Execute and Control

Plan
Initiate

Close

Start

Time

Finish
137

Project Monitoring & Control

Monitor & Control Project Work Integrated Change Management Scope Verification & Control Prevent scope creep! You didnt budget for it! Schedule Control & Update Critical path monitoring Reschedule as needed to optimize resources Cost Control Quality Control Manage Project Team Make staffing updates are required Performance Reporting Communicate with Stakeholders & Executives Risk Monitoring & Control Risk Planning & Risk Mitigation Contract Administration

138

Project Control

Project control taking corrective actions to keep the project on target toward meeting its performance goals (time, cost, deliverables) The project manager has final responsibility for project control There are many ways to exert control; the PM must decide which is most appropriate Resource allocations, funding decisions, personnel assignments, change in priorities

139

Project Control 3 Steps

1.

Measuring & Monitoring

Identifying/tracking key performance metrics

1.

Evaluating
Analyzing causes of problems and potential corrective actions

1.

Correcting
Taking corrective actions to bring project performance back in line with goals

140

Measuring & Monitoring System

Many issues must be decided for a good measuring and monitoring system What should be measured and monitored? How should it be measured? Who should monitor it? How should it be monitored? When should it be monitored? Where should info be stored? Who should have access to info?

141

Project Reports as a Control Tool

Reports are one way to give many different people a chance to look for potential problems They also can keep everyone updated about the current project status Everyone concerned with the project should receive reports containing info. relevant to issues under their control What types of info. should an engineer working on a project receive, vs. senior management? When should these reports be provided?
142

Resource Allocation

Resource allocation can be used as a control mechanism Allocating more, less, or different physical resources can affect the progress of activities, and can affect their cost and/or the quality of outputs/deliverables as well Assigning more, less, or different employees also can affect project performance Allocating more or less funds to an activity is yet another way to affect project performance

143

Resource Conflicts

Sometimes a limited resource is needed (at the same time) by several activities in one project or by different activities in multiple projects (so some of the activities must wait) Setting priority rules for which activity get the constrained resource first can be a means of project control In the case of multiple projects, the goals and importance of all the projects should be considered
144

Resource Conflict Rules

Example: Suppose two tasks from different projects need to use the radiation testing lab chamber at the same time. Which gets it first? task with the least slack time task that needs the least time in the lab task that needs the most time in the lab task with the most following activities task from the more important or profitable project arbitraryflip a coin 145

Project Accelerating/Crashing

Project crashing (or accelerating a project) is another way to exert project control Crashing a project means shortening its duration, or speeding it up (doing it quicker) Unfortunately, this almost always costs more Sometimes crashing is done because earlier activities were delayed; other times it is done because the customer is 146 willing to trade a higher cost for a

Resource Loading

For each resource during each time period, determine the total amount of resource time required by all activities combined Compare this total time with the capacity of the resource during each time period Identify resources that are over-utilized (or overloaded) during any time period What should be done about it?
147

Resource Leveling

Re-scheduling some activities to eliminate resource overloading in certain time periods Try to delay activities that have extra slack time firstthis will not delay the project If that doesnt work, then activities must be delayed which will delay the project due date Popular project management software 148

Project Tracking Tools

Popular project management software allows you to easily track cost and schedule performance as the project progresses This provides a useful tool for project control The current cost and schedule status must be entered routinely (daily or weekly) For each activity, you must estimate: actual cost so far, and percent complete Earned Value Analysis is a common tracking tool that provides performance 149

Earned Value Analysis

Earned Value Analysis compares the current project status with the original (baseline) plan It computes several performance metrics for individual activities and for the entire project It focuses on cost and schedule performance Its a useful tool for project control Popular project management software computes these metrics

150

Earned Value

Earned Value for a task = (budgeted cost of task)*(% completion of task) Its often difficult to estimate % completion of a task; 4 approaches once task is started:
assume

finished assume 0% until task is finished use % of budgeted cost or time used so far best guess of knowledgeable person (best)

50% completion until task is

Earned Value for the entire project is

151

Earned Value Metrics

BCWSBudgeted Cost of Work Scheduled (PV)

baseline

cost of scheduled work

ACWPActual Cost of Work Performed (AC)

actual

cost of work actually performed so far

BCWPBudgeted Cost of Work Performed (EV)

budgeted

cost of work actually performed so far

Cost variance (CV) = BCWP ACWP Schedule variance (SV) = BCWP BCWS

152

Earned Value Chart

3 lines on chart: Baselineplanned cost over time (BCWS) Actual Cost line (ACWP) Earned Value line (BCWP) Schedule variance (negative is bad) Cost variance (negative is bad) Example chart on next slide describe project performance in this example
153

Earned Value Chart 1

Rupees

Cost schedule plan (baseline) ACWP Actual cost BCWS BCWP Now Time Cost variance

Performance Cost Sched.

Schedule variance

Value completed (Earned Value)

154

Earned Value Chart 2

Rupees

ACWP BCWP =EV

BCWS baseline

Performance Cost Sched.

Now Time
155

Earned Value Chart 3

Rupees

BCWP = EV ACWP

BCWS baseline

Performance Cost Sched.

Now Time
156

Earned Value Metrics

BCWSBudgeted Cost of Work Scheduled (PV)

baseline

cost of scheduled work

ACWPActual Cost of Work Performed (AC)

actual

cost of work actually performed so far

BCWPBudgeted Cost of Work Performed (EV)

budgeted

cost of work actually performed so far

Cost variance (CV) = BCWP ACWP Schedule variance (SV) = BCWP BCWS

157

CPI and SPI

CPI and SPI give the same information as cost variance and schedule variance, except as a ratio instead of as a Rupee difference Cost Performance Index (CPI) CPI = BCWP / ACWP (or EV / AC) Schedule Performance Index (SPI) SPI = BCWP / BCWS (or EV /

158

Example

Example: Budgeted cost for finished task = Rs 850; Actual cost to date = Rs 550; Task is 70% complete, but was scheduled to be 80% complete by now BCWS = 0.8*(Rs 850) = Rs 680 PV (baseline) BCWP = 0.7*(Rs 850) = Rs 595 EV ACWP = Rs 550 AC Cost variance = BCWP ACWP = + Rs 45 (good) Schedule variance = BCWP BCWS = - Rs 85159 (bad)

ETC and EAC

Two more cost metrics are ETC and EAC Estimated (remaining cost) To Completion ETC = (BAC BCWP) / CPI

(note: Microsoft Project does not divide by CPI)

= budgeted cost at completion = Rs 850 ETC = (850 595) / 1.082 = Rs 235.67 Estimated (total cost) At Completion EAC = ETC + ACWP EAC = 235.67 + 550 = Rs 785.67
160

BAC

Scope Creep

PM must be cautious of scope creep. Why? Most common cause is due to the client or project team wanting to enhance the projects deliverables The later that changes are made, the more difficult and costly they become Scope creep is welcome if it lowers costs or enhances the firms competitiveness A change control system allows the PM to assess the impacts and desirability of potential changes before deciding to 161 implement them

Change Control System

Review suggested changes Assess all impacts to project goals Evaluate advantages and disadvantages Consider alternative changes that are better Allow responsible parties to make decision in light of all information Communicate changes to everyone involved Implement changes Summarize all changes and impacts in report 162

Project Risk Management

163

Sample Risk Register/ Risk Analysis

No. Rank Risk Description Category Root Cause Triggers Potential Risk Probability Responses Owner Impact Severity Status

R44 1 R21 2 R7 3

Project severity = expectation (1-10) * impact (1-10) When should risk analysis be formed? Is not a time activity Periodic update and reviewed
164

Calculating Severity
Problem
Staff Late delivery of hardware Communication and Networks problem

Expectatio Impact Severit n y 6 5 5 5 8 5 30 40 25

Project severity = expectation (1-10) * impact (1-10)

165

Qualitative Risk Analysis

Assess the likelihood and impact of identified risks to determine their magnitude and priority. Risk quantification tools and techniques include:

Probability/impact

matrixes The Top Ten Risk Item Tracking Expert judgment

166

Probability/Impact Matrix

A probability/impact matrix or chart lists the relative probability of a risk occurring on one side of a matrix or axis on a chart and the relative impact of the risk occurring on the other. List the risks and then label each one as high, medium, or low in terms of its probability of occurrence and its impact if it did occur. Can also calculate risk factors: Numbers that represent the overall risk of specific events based on their probability of occurring and the consequences to the project if they do occur.
167

Sample Probability/Impact Matrix

168

Sample Probability/Impact Matrix for Qualitative Risk Assessment

169

High-, Medium-, and Low-Risk Technologies

170

Top Ten Risk Item Tracking

Top Ten Risk Item Tracking is a qualitative risk analysis tool that helps to identify risks and maintain an awareness of risks throughout the life of a project. Establish a periodic review of the top ten project risk items. List the current ranking, previous ranking, number of times the risk appears on the list over a period of time, and a summary of progress made in resolving the risk item.
171

Example of Top Ten Risk Item Tracking

Monthly Ranking Last Month 2 3 Risk Item Inadequate planning Poor definition of scope Absence of leadership This Month 1 2 Number Risk Resolution of Months Progress 4 3 Working on revising the entire project plan Holding meetings with project customer and sponsor to clarify scope Just assigned a new project manager to lead the project after old one quit Revising cost estimates Revising schedule estimates
172

Poor cost estimates Poor time estimates

4 5

4 5

3 3

Quantitative Risk Analysis

Often follows qualitative risk analysis, but both can be done together. Large, complex projects involving leading edge technologies often require extensive quantitative risk analysis. Main techniques include:

Decision

tree analysis Simulation Sensitivity analysis

173

Decision Trees and Expected Monetary Value (EMV)

A decision tree is a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain. Estimated monetary value (EMV) is the product of a risk event probability and the risk events monetary value. You can draw a decision tree to help find the EMV.
174

Expected Monetary Value (EMV)

175

Sensitivity Analysis

Sensitivity analysis is a technique used to show the effects of changing one or more variables on an outcome. For example, many people use it to determine what the monthly payments for a loan will be given different interest rates or periods of the loan, or for determining breakeven points based on different assumptions. Spreadsheet software, such as Excel, is a common tool for performing sensitivity analysis.
176

Sensitivity Analysis for Determining Break-Even Point

177

Risk Response Planning

After identifying and quantifying risks, you must decide how to respond to them. Four main response strategies for negative risks:

Risk

avoidance Risk acceptance Risk transference Risk mitigation

178

General Risk Mitigation Strategies for Technical, Cost, and Schedule Risks

179

Response Strategies for Positive Risks

Risk Risk Risk Risk

exploitation sharing enhancement acceptance

180

Residual and Secondary Risks

Its also important to identify residual and secondary risks. Residual risks are risks that remain after all of the response strategies have been implemented. Secondary risks are a direct result of implementing a risk response.

181

Risk Monitoring and Control

Involves executing the risk management process to respond to risk events. Workarounds are unplanned responses to risk events that must be done when there are no contingency plans. Main outputs of risk monitoring and control are: Requested changes. Recommended corrective and preventive actions. Updates to the risk register, project management plan, and organizational process assets.
182

Results of Good Project Risk Management

Unlike crisis management, good project risk management often goes unnoticed. Well-run projects appear to be almost effortless, but a lot of work goes into running a project well. Project managers should strive to make their jobs look easy to reflect the results of well-run projects.

183

PROJECT CLOSURE

184

Level of Activity

Monitoring Execute and Control

Plan
Initiate

Close

Start

Time

Finish
185

Project Close Out

Successful transition into the organizations ongoing operation Administrative close-out

Evaluating

the project Compiling lessons learned

Contract close-out activities

186

Project Closing

Involves gaining stakeholder and customer acceptance of the final products and services. Even if projects are not completed, they should be formally closed in order to reflect on what can be learned to improve future projects. Outputs include project archives and lessons learned, which are part of organizational process assets. Most projects also include a final report and 187 presentation to the sponsor or senior

Closing a Project
Is

the project ready for close-out and/or transition? Is the Change management plan up-to-date? Are the deliverables / outputs complete and acceptable based on the quality standards? Is the documentation (training manuals, user guides, evaluation reports, etc.) ready for hand-over? Make sure Phase / Milestone reviews are captured, summarized and maintained in a Body of Knowledge.
188

Closing a Project
Obtain approvals proof of completion Ensure user and stakeholder satisfaction Lessons learned Improve estimates for future projects Improve project methodologies Recognize team members and contributions Evaluate project success according to (1) time, (2) cost (3) quality and (4) scope (deliverables) Establish transition plan for those providing ongoing implementation in local context Assess next steps if any
189

Project Close-Out Report

What is it? The Project Close Out Report formalizes closure of the project. This process assures that the Accountable Executives, Business Sponsor and Stakeholders have formally accepted the product or service by verifying that the outcomes met all the deliverables outlined in the Project Scope of Work. Summarily, the Project Close Out Report assesses project successes and areas for growth, and ensures that lessons learned/deliverable documents have been entered into appropriate databases. Why use it? The bookend counterpart to the Project Charter & Justification/Project Scope of Work, the Project Close Out Report ensures that all protocols necessary for project completion are followed. Furthermore, it helps ensure that the projects shared learnings are passed on 190 to the Partnershipand future projects.

PROJECT MANAGEMENT IN COMPLEX ENVIORNMENT

191

NEW AVENUES

PERT-based models not well suited for the present day multiproject environment. Complex models of "projects" cause unnecessary costs and low maneuverability in several cases. PM experts try to identify different "lightweight" models, like Agile Project Management methods.

192

Event Chain Methodology

Event chain methodology is an uncertainty modeling and schedule network analysis technique that is focused on identifying and managing events and event chains that affect project schedules. Event chain methodology helps to mitigate the negative impact of psychological heuristics and biases, as well as to allow for easy modeling of uncertainties in the project schedules. Event chain methodology is based on the following major principles. Probabilistic moment of risk: An activity (task) in most real life processes is not a continuous uniform process. Tasks are affected by external events, which can occur at some point in the middle of the task. Event chains: Events can cause other events, which will create event chains. These event chains can significantly affect the course of the project. Quantitative analysis is 193 used to determine a cumulative effect of these event chains

Event Chain Methodology

Critical events or event chains: The single events or the event chains that have the most potential to affect the projects are the critical events or critical chains of events. They can be determined by the analysis. Project tracking with events: If a project is partially completed and data about the project duration, cost, and events occurred is available, it is possible to refine information about future potential events and helps to forecast future project performance. Event chain visualization: Events and event chains can be visualized using event chain diagrams on a Gantt chart.

194

Project Auditing

195

Purposes of Evaluation - Goals of Project Audit

Another primary purpose of evaluation is to help translate the achievement of the projects goals into a contribution to the parent organizations goals To do this, all facets of the project are studied in order to identify and understand the projects strengths and weaknesses The result is a set of recommendations that can help both ongoing and future projects
196

Project Auditing

A major vehicle for evaluation is the project audit, a more or less formal inquiry into any aspect of the project
A

project audit is highly flexible and may focus on whatever matters senior management desires The evaluation of a project must have credibility in the eyes of the management group for whom it is performed and also in the eyes of the project team on whom it is performed
197

Evaluation Benefits of Project Audit

A successful project evaluation via audit can help an organization:

Identify

problems earlier Clarify performance, cost, and time relationships Improve project performance Locate opportunities for future technological advances Evaluate the quality of project management Reduce costs
198

Need for Project Audit

Organizational Benefits
Speed

the achievement of results Identify mistakes, remedy them, and avoid them in the future Provide information to the client Reconfirm the organizations interest in, and commitment to, the project

199

Purposes of Evaluation - Goals of the System

Evaluation often makes recommendations that relate to ancillary, unplanned, but important contributions to the project and its parent:
Improve

understanding of the ways in which projects may be of value to the organization Improve processes for organizing and managing projects Provide a congenial environment in which project team members can work creatively 200

Purposes of Evaluation Other Project Audit Outcomes

Ancillary goals
Identify

organizational strengths and weaknesses in project-related personnel, management, and decision-making techniques and systems Identify risk factors in the firms use of projects Improve the way projects contribute to the professional growth of project team members Identify project personnel who have high potential for managerial leadership
201

Purposes of Evaluation - Goals of the System

A successful project evaluation can help an organization:

Identify

problems earlier Clarify performance, cost, and time relationships Improve project performance Locate opportunities for future technological advances Evaluate the quality of project management Reduce costs
202

Purposes of Evaluation - Goals of the System

A successful project evaluation can help an organization (cont.):

Speed the achievement of results Identify mistakes, remedy them, and avoid them in the future Provide information to the client Reconfirm the organizations interest in, and commitment to, the project

Evaluation often makes recommendations that relate to ancillary, unplanned, but important contributions to the project and its parent:
Improve understanding of the ways in which projects may be of value to the organization Improve processes for organizing and managing projects Provide a congenial environment in which project team members can work creatively together

203

Purposes of Evaluation - Goals of the System

Ancillary goals
Identify

organizational strengths and weaknesses in project-related personnel, management, and decision-making techniques and systems Identify risk factors in the firms use of projects Improve the way projects contribute to the professional growth of project team members Identify project personnel who have high potential for managerial leadership
204

The Project Audit

The project audit is a thorough examination of the management of a project, its methodology and procedures, its records, its properties, its budgets and expenditures and its degree of completion The formal report may be presented in various formats, but should, at a minimum contain comments on some specific points

205

The Project Audit

Six parts of a project audit:

1. 2. 3. 4. 5. 6.

Current status of the project Future status Status of crucial tasks Risk assessment Information pertinent to other projects Limitations of the audit

It is far broader in scope than a financial audit and may deal with the project as a whole or any component or set of components of the project
206

Depth of the Audit

Time and money are two of the most common limits on depth of investigation and level of detail presented in the audit report Accumulation, storage, and maintenance of auditable data are important cost elements Two often overlooked costs are the self protective activity of team members during an audit, and the potential for project morale to suffer as a result of a

207

Depth of the Audit

There are three distinct and easily recognized levels of project auditing:
General

audit - normally most constrained by time and resources and is usually a brief review of the project touching lightly on the six parts of an audit Detailed audit - usually conducted when a follow-up to the general audit is required Technical audit - generally carried out by a qualified technician under the direct guidance of the project auditor
208

Timing of the Audit

The first audits are usually done early in the projects life Early audits are often focused on the technical issues in order to make sure that key technical problems have been solved Audits done later in the life cycle of a project are of less immediate value to the project, but are more valuable to the parent organization 209

Timing of the Audit

As the project develops, technical issues are less likely to be matters of concern Conformity to the schedule and budget become the primary interests Management issues are major matters of interest for audits made late in the projects life Postproject audits are often a legal necessity because the client specified such an audit in the contract
210

Construction and Use of the Audit Report

The information should be arranged so as to facilitate the comparison of predicted versus actual results Significant deviations of actual from predicted results should be highlighted and explained in a set of footnotes or comments Negative comments about individuals or groups associated with the project should be avoided

211

Construction and Use of the Audit Report

Information that should be contained in the audit report:

1. 2. 3. 4. 5. 6.

Introduction Current status Future project status Critical Management issues Risk Analysis Caveats, Limitations, and Assumptions

212

Responsibilities of the Project Auditor/Evaluator

First and foremost, the auditor should tell the truth The auditor must approach the audit in an objective and ethical manner Must assume responsibility for what is included and excluded from consideration in the report The auditor/evaluator must maintain political and technical independence during the audit and treat all materials as 213 confidential

Responsibilities of the Project Auditor/Evaluator

Steps to carry out an audit:

Assemble Familiarize

a small team of experienced experts the team with the requirements of

the project
Audit After

the project on site

the completion, debrief the projects management

214

Responsibilities of the Project Auditor/Evaluator

Steps to carry out an audit (cont.):

Produce

a written report according to a prespecified format the report to the project manager and project team for their response up to see if the recommendations have been implemented

Distribute

Follow

215

The Project Audit Life Cycle

Like the project itself, the audit has a life cycle composed of an orderly progression of well-defined events:
Project

audit initiation Project baseline definition Establishing an audit database Preliminary analysis of the project Audit report preparation Project audit termination
216

Essentials of an Audit/ Evaluation

For an audit/evaluation to be conducted with skill and precision, and to be generally accepted by senior management, the client and the project team, several conditions must be met:
The

audit team must be properly selected All records and files must be accessible Free contact with project members must be preserved
217

Access to Records

In order for the audit/evaluation team to be effective, it must have free access to all information relevant to the project Most of the information needed will come from the project teams records or from various departments such as accounting, personnel, and purchasing Some of the most valuable information comes from documents that predate the project
218

Access to Records

Examples of documents that predate the project:

Correspondence

with the customer that led to

RFP Minutes of the project selection committee Minutes of senior management committees that decided to pursue a specific area of technical interest

Priorities must be set to ensure that important analyses are undertaken before those of lesser importance 219

Access to Project Personnel and Others

There are several rules that should be followed when contacting project personnel Care must be taken to avoid misunderstandings between the audit/evaluation team and project team members Project personnel should always be made aware of an in- progress audit Critical comments should be avoided
220

Measurement

Measurement is an integral part of the audit/evaluation process Performance against planned budget and schedule usually poses no major measurement problems Measuring the actual expenditure against the planned budget is harder and depends on an in-depth understanding of the procedures used by the accounting department
221

Measurement

It is a very difficult task to determine what revenues should be assigned to a project All cost/revenue allocation decisions must be made when the various projects are initiated The battles are fought up front and the equity of cost/revenue allocations ceases to be so serious an issue As long as allocations are made by a formula, major conflict is avoided-or at 222 least, mitigated

Project Auditing

223

Project Auditing

224

Project Auditing

225

Risk Event Graph

Risk High Cost

Chances of risks occurring

Cost to fix risk event

Low Project life cycle

226

Preparation and Use of Audit Report

The information should be arranged so as to facilitate the comparison of predicted versus actual results Significant deviations of actual from predicted results should be highlighted and explained in a set of footnotes or comments Negative comments about individuals or groups associated with the project should be avoided 227

Construction and Use of Audit Report

Information that should be contained in P the audit report:

1. 2. 3. 4. 5. 6.

Introduction Current status Future project status Critical Management issues Risk Analysis Caveats, Limitations, and Assumptions
228

Project Auditor/Evaluator Responsibilities

First and foremost, the auditor should tell the truth The auditor must approach the audit in an objective and ethical manner Must assume responsibility for what is included and excluded from consideration in the report The auditor/evaluator must maintain political and technical independence during the audit and treat all materials as 229 confidential

Audit/Evaluation Team

The choice of the audit/evaluation team is critical to the success of the entire process The size of the team will generally be a function of the size and complexity of the project For a small project, one person can often handle all the tasks of an audit, but for a large project, the team may require representatives from several 230

Summary

The purposes of the evaluation are both goal-directed and also aimed at achieving unspecified ancillary goals The audit report should contain at least the current status of the project, the expected future status, the status of crucial tasks, a risk assessment, information pertinent to other projects, and any caveats and limitations

231

Summary

Audit depth and timing are critical elements of the audit The difficult responsibility of the auditor is to be honest in fairly presenting the audit results The audit life cycle includes audit initiation, project baseline definition, establishing a database, preliminary project analysis, report preparation, and termination
232

Summary

Several essential conditions must be met for a credible audit: a credible audit/evaluation team, sufficient access to records, and sufficient access to personnel Measurement, particularly of revenues, is a special problem

233

Undesirable Effects in Projects

Big hassle at the end Estimates are rarely accurate Difficult to accurately determine project status (how long to completion) Often, theres no sense of urgency on a project until its too late Project schedules are often unrealistic Hard to see how decisions on one project impact other projects in the pipeline We are constantly in a reactive mode Projects are completed late and over-budget There are lots of changes

Todays Project Environment

Projects are more complex Require coordination of many independent resources Project managers rarely control all of the necessary resources Multi-project Environment Many projects occurring concurrently Competing for the same resources Managers have to constantly react to every bump in the road Managers have little or no visibility of how problems and decisions on one project impact

Successful, Challenged, or Failed?

According to the 2004 Standish report

Success = On time, within budget, committed scope Challenged = Late, overbudget, or lacking key scope Failed = Canceled before completion or never implemented 236

The answers
Failed

15% of projects were cancelled before they finished

237

The answers
Failed

51% of projects were late, overbudget, or lacked scope (probably due to schedule challenges)

Challenged

238

The answers
Failed Successful

Challenged

Only 31% of projects finished on-time, within budget, and with committed scope 239

Critical Chain and TOC

Critical Chain is a project management application of the Theory of Constraints (TOC) Unlike most continuous improvement methods, TOC doesnt focus on improving individual processes TOC takes a macro-approach How well its many individual processes work together determine an organizations ability Coordinates decisions to synchronize process behavior for maximum output and minimum waste Removes friction between processes, which is the root cause of waste in an organization Top down (globally) driven approach, not

Why Does Critical Chain Produce These Results?

Variability is the one constant on all projects Critical Chain changes how we protect a project from variability How do we establish project schedules? Determine project due date Estimate task lengths and flow dependencies How do we protect a project from variability? Safety factor at end of project Is this protection enough? Is there significant variability at the task level? Is there any variability protection at task level?

Consider this

The longer a project takes

The

more it costs

The longer it takes

The

more opportunities exist to change scope

The more changes in scope
The more it costs The longer it takes

Perhaps we should figure out a way to prevent projects from taking longer than they absolutely need to!
242

Critical Path Method

Wellabout 5 days Create list of tasks + I am working on another project + I get interrupted alot + Something usually goes wrong So10 days!

Project Manager asks, How long will each task take?

243

Critical Path Method

Track the project based on task due dates React when something is late REALLY react when something on the critical path is late Hope and pray that the project comes in on time

244

Laws of Project Management

Murphys Law
What

can go wrong will go wrong When things cannot get any worse, they will When things appear to be going well, you must have overlooked something Estimates each include Safety Buffer Estimates become Commitments
245

Estimation Variation
50% confidence

Safety

10% confidence

90% confidence

10

246

Estimation Variation
Task 1

Task 2

Task 3

Since all tasks are scheduled with 90% confidence, why are most projects still delivered late, overbudget, or with removed scope?

247

Laws of Project Management

Parkinsons Law
Work

expands to fill the time it is given Student Syndrome many people will start to fully apply themselves to a task just in the wake of a deadline Driven by focus on the task due dates

As long as I get it done on time, everything is dandy!

248

Now what?
Focus on the date that the task is due

Late starts Safety allows the task to start late if there is something else going on when we need to start

Interruptions during the task Safety that is built in allows distraction

If nothing goes wrong, task completes on time. If something goes wrong, task will be late. If this happens on the critical path, the project will be late.
249

Whats wrong with CPM?

Buffer built into each individual estimate is overkill and inefficient Tracking individual task due dates to indicate project health encourages:
Estimates

that are commitments Work expanding to fill the time available

Encourages individual ownership of individual commitments rather than team ownership of the team commitment
250

What is Critical Chain Project Management?

A way to schedule and track a project that encourages:

An

aggressive schedule that makes it more possible to deliver early Team focus Team ownership of the team commitment

251

What Critical Chain does differently

Effective utilization of safety buffers Focus on start dates Focus on aggressive, focused completion of tasks Take advantage of early finishes Focus on buffer utilization for project health

252

Effective utilization of safety buffers

Consider an insurance analogy

3

homes need to insure against risk The old way (CPM)

Assumes each home will suffer a serious problem So each home self-insures Not enough to cover a serious problem

The

Critical Chain Way

Assume that not every home will get hit with a serious problem Pool your resources Enough to cover a serious problem, possibly more
253

Effective utilization of safety buffers

Task 1 Do not use safety buffers in the tasks

Task 2

Task 3

254

Effective utilization of safety buffers

Task 1 Do not use safety buffers in the tasks

Task 2

Task 3

Move the safety buffer to protect the commitment

255

Effective utilization of safety buffers

Safety Safety
Safety

Safety

End

Remove the safety from the individual tasks Put it where the project benefits

Earliest Possible Finish

Expected Finish
256

Buffer Placement

Project Buffer
Between

the last task of the aggressive project schedule critical chain and the committed end date

Feeding Buffers
Protect

the critical chain from being impacted by non-critical chain Place at the end of non-critical chains before they connect to the critical chain
257

Buffer Sizing

There are multiple ways to size the buffers

50%

of the sum of task durations on the chain

Conservative Great for first timers thats us!

SSQ

Square root of the sum of the squares of the differences for the tasks along the chain (??!?!?!) 258

Creating a Critical Chain Schedule

Build the WBS Identify dependencies Gather estimates with 50% confidence

1 set 50% 2 sets 50% and 90% - check for difference 1 set 90% - and cut in half to get to 50%

Build your project schedule using LATE FINISH (rather than early start) Resolve resource contentions (leveling)

Start with the resources on the critical chain first!

259

Creating a Critical Chain Schedule

Identify the critical chain Exploit the critical chain to identify any resequencing that can shorten the duration Add the Project Buffer to the end of the critical chain Add Feeding Buffers to all non-critical chains that feed the critical chain Resolve new resource contentions

260

Critical Chain Project Tracking

For each task, collect:

Actual Start Date Days Remaining Actual End Date

Calculate the impact on the project and feeding buffers

If a task is late or expected to be late, consume days from the appropriate buffer and DOCUMENT WHY If a task is early (completes ahead of estimate), replenish the appropriate buffer

Monitor trends in buffer utilization for issues Use a fever chart to assess project health
261

262

% Buffer Utilization 100.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 0.0%

Execute contingency plan

PS 8.9 Upgrade Fever Chart

Identify contingency plan

Status Date

July October

All is good

December

263

9/27/2005 10/4/2005 10/11/2005 10/18/2005 10/25/2005 11/1/2005 11/8/2005 11/15/2005 11/22/2005 11/29/2005 12/6/2005 12/13/2005 12/20/2005 12/27/2005 1/3/2006 1/10/2006 1/17/2006 1/24/2006 1/31/2006 2/7/2006 2/14/2006 2/21/2006 2/28/2006 3/7/2006 3/14/2006 3/21/2006 3/28/2006 4/4/2006 4/11/2006 4/18/2006 4/25/2006 5/2/2006 5/9/2006 5/16/2006 5/23/2006 5/30/2006 6/6/2006 6/13/2006 6/20/2006 6/27/2006 7/4/2006 7/11/2006 7/18/2006 7/25/2006 8/1/2006 8/8/2006 8/15/2006 8/22/2006 8/29/2006 9/5/2006 9/12/2006 9/19/2006 9/26/2006 10/3/2006 10/10/2006 10/17/2006 10/24/2006 10/31/2006 11/7/2006 11/14/2006 11/21/2006 11/28/2006 12/5/2006 12/12/2006 12/19/2006

Take advantage of early finishes

Tasks may actually finish early! Treat the transition of tasks as a baton race Keep appropriate people informed that an early finish may be imminent so they can be prepared to grab the baton and run!

264

Focus On
Starting tasks on time Completing tasks as aggressively as possible Maintaining quality, despite aggressive push Amount of Project Buffer that is consumed

265

Differences
The Old Way Uses worst-case estimates Protects individual tasks with safety Starts and finishes tasks at scheduled start and finish times Individual ownership of task completion Project health is based on individual task completion Critical Chain Uses average-case estimates Protects project with buffers Starts tasks as soon as predecessors are done, finishes tasks as quickly as possible. Team ownership of project completion Project health is based on days used from the project buffer

266

Benefits of Critical Chain

Protection against Murphys Law Take advantage of early finishes Team protection of the buffer Opportunity for team to focus Visibility to aggressive, possible, and realistic schedule Better visibility to when project is in trouble Strong response to buffer changes
267

Challenges

Resource multi-tasking goes against key goal of requiring focus to complete tasks as quickly as possible Works best in an environment where everyones doing it Cultural change required Tools availability but a spreadsheet will help Moving target for a completion date
268

What Had to Change?

Educate the project and management team on the methodology to get buy-in Estimate aggressively by removing safety from individual tasks Trust management to not hold staff accountable to aggressive estimates without safety Minimize multi-tasking Track using buffer consumption
269

If its so great, why isnt everyone doing it?

Two economists and the hundred dollar bill

Healthy

level of skepticism to new solutions that make big promises

Process innovation brings unique challenges, compared to product innovation

You

can prove a light bulb works without showing how it works To prove a process works, people must 270 understand and accept how it works before the