04. Project Selection and Management

PROJECT SELECTION AND MANAGEMENTReporter:

HENDRIX R. ORTEGA, CE

Republic of the PhilippinesNORTHWEST SAMAR STATE

UNIVERSITYMain Campus, Calbayog City

A Report on the SubjectEngineering and Technology Management

Engr. Ramil CatamoraInstructor

Project Selection and Management

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Introduction

Project management has emerged because characteristics of our late twentieth-century society demanded the development of new methods and techniques of management, but its roots may be traced back to ancient times.


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Project selection

may simply be described as the process of evaluating projects, and then choosing to implement some of them to achieve the goals of the parent organization.


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Four objectives of project selection

choose only the viable projects reject the undesirable projects ensure that there is no damaging effect

on flow of project proposals and ensure that there is no rejection of

desirable projects


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Terms and Definitions

· Project. This is a plan of work job assignment, or task. · Project management. This is the art of directing and

coordinating material and human resources throughout the project life span by utilizing various management methods and techniques to achieve effectively predetermined goals of scope, quality, time, cost, and participant satisfaction.

· Project manager. This is a person with an assigned direct responsibility for project execution.

· Project organization. This is an establishment of people, procedures, responsibilities, and authority.

· Project selection. This is the process of evaluating projects and then choosing to implement some of them to achieve the goals of the parent organization.


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Terms and Definitions

· Project objectives. These are the goals, as measured by time parameters, constraints or targets, results, milestones, and control considerations, and usual project sequencing.

· Project team. This consists of all participants involved in the project (i.e., full or part time).

· Project parameters. These are the factors, specifications, or characteristics of the complete project or of its parts.

· Project proposal. This is a summary of a proposed project concerning its managerial, schedule, and technical contents.

· Project control report. This is a management report and an operations tool utilized to report manpower- or financial-related information in a summarized form both by program and organization


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Types of Information Required for Evaluating a Project

Main categories of information required for project evaluation.


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Project Selection Models

· Inadequate reliable estimates for cost, performance, utility, and time;

· Inadequate recognition of the interrelationships between projects;

· Dynamic nature of project selection and review;

· Poor handling of uncertainty and risk; · Poor consideration given to the relationship

between the effort applied to a project and the chance for success;

· Necessity for multiple criteria for evaluation.


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Types of Project Selection Models

Benefit-Cost Ratio Model Disman Model Pacifico Model Mottley and Newton Model Calculated-Risk Model Sobelman Model Manley Model Profitability Index Model Relative Worth Index Model Dean-Sengupta Model Net Income Present Value Model


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Types of Project Selection Models

Benefit-Cost Ratio Model This simple model is concerned with performing analysis to

determine if benefits from a given project outweigh its cost. More specifically, it is only worthwhile to consider a project for development if its benefits are far greater than the investments. Nonetheless, the benefit/cost ratio is defined by:

BCR = UB/TICwhere BCR is the benefit/cost ratio. TIC is the total investment cost including the operating cost. UB is the user benefits.

For a project to be beneficial, the value of BCR must be greater than unity.


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Example

Assume that a machine’s acquisition cost is P100,000 and its expected useful life is 15 years. The annual maintenance plus operation cost of the machine is estimated to be P4,000. The lifetime benefits of the machine are estimated to be P200,000. Calculate the value of the benefit/cost ratio.

The total investment cost of the machine is:

TIC = P100,000 + (P4,000) (15) = P160,000

Substituting the above and specified values

BCR = P200,000/P160,000 = 1.25 The value of the benefit/cost ratio is 1.25.


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Project Organization may be divided into the following phases

· Investigation phase · Start-up phase · Growth phase · Maturity phase · Decline phase · Phase-out phase


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Project management performs many functions , and they may be categorized into seven major areas.

The characteristics of a project management procedure include limited life project, dynamic changes in responsibilities and organization, project- oriented organization, frequent progress evaluation, poor project management control over participants from other firms, and clearly defined goal, task, and subtask responsibilities


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Three basic responsibilities of a project manager

· To ensure that the product under consideration is produced within the allocated budget;

· To ensure that the product under consideration is delivered to the customer within the limits of a defined time schedule;

· To ensure that the product under consideration satisfies fully all of the specified performance requirements.


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A successful project manager possesses qualifications

· Appropriate previous experience; · Thorough understanding of profitability

concepts; · Effective knowledge of management

problems · A burning desire to train and develop

supervisory personnel; · Sufficient working knowledge in

various areas of science.


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Project Management Methods

Critical Path Method (CPM) is used in situations where the duration

times of activities are quite certain. Program Evaluation and Review

Technique (PERT) is used in situations where the duration

times of activities are quite uncertain


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For both of these methods to be most applicable

a project must possess the following four characteristics · Independent jobs or tasks. · Full job completion. · Ordered jobs. · The defined jobs’ completion leads to

actual project completion.


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PERT Steps

1. Break down a given project into various jobs or tasks and identify each of these jobs or tasks.

2. Determine the sequence of these jobs or tasks and develop a network.

3. Estimate the duration time of each activity. 4. Obtain each activity’s expected duration

time. 5. Determine the time variance of each activity. 6. Determine the network’s critical path. 7. Calculate the probability of project

completion on a given time or date.


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General steps of PERT and CPM.


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CPM Steps

1. Break down the project into various jobs or activities and identify them.

2. Determine the sequence of jobs or activities and develop the network.

3. Estimate duration time of each activity.

4. Determine the network’s critical path.


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CPM/PERT Symbols

· Circle. · Continuous

arrow. · Dotted arrow. · Circle with

divisions.

CPM/PERT symbols: (a) circle; (b) continuous arrow; (c) dotted arrow; and (d) circle with divisions.


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Assume that the network diagram of a research and development project

A network with given activity duration times along with determined earliest and latest event times.


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CPM Advantages and Disadvantages

Some of the advantages of the CPM are as follows : · It is useful to show interrelationship in work flow. · It is useful in cost control and cost saving. · It is useful to determine project duration systematically. · It is useful to monitor project progress effectively. · It is useful to avoid duplications and omissions. · It is useful to improve communication and understanding. · It is useful to determine the need for labor and resources in advance. · It is useful to identify critical work activities for completing the project

on time.

By contrast, some of the disadvantages of the CPM are high cost, time consumption, poor time-estimate provision, and a bias to use pessimistic time estimates.


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Project Management Benefits

· It identifies a methodology for tradeoff analysis and time limits for scheduling.

· It minimizes the need for continuous reporting and improves the estimating capability for potential planning.

· It identifies functional responsibilities for ensuring that all activities are accounted for, irrespective of manpower turnover.

· It identifies problems early so that corrective measures may follow.

· It can measure accomplishments against plans.


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Obstacles to Achieve Benefits

The project management benefits can only be achieved by overcoming obstacles such as project complexity and risks, changes in technology, for- ward planning and pricing, special needs of customers, and organizational restructuring


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Project Management Failure Factors

· Failure to inform employees about the workings of project management;

· Failure to explain the effect of the project management organizational structure on the wage/salary administration program;

· Failure to convince employees that executives completely support the change;

· Failure of executives to choose appropriate projects and project managers for the first few times and projects;

· The project management was not needed.


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References [1] Cleland, D. I., Project Management, New York: McGraw-Hill, 1994. [2] Gaddis, P. O., “The Project Manager,” Harvard Business Review, May–June 1959, pp. 55–60. [3] Meredith, J. R., and S. J. Mantel, Project Management, New York: John Wiley and Sons, 1995. [4] Wearne, S. H., Control of Engineering Projects, London: Edward Arnold Publishers, 1974. [5] Banki, I. S., Dictionary of Administration and Management, Los Angeles, CA: Systems Research Institute, 1981. [6] Thamhain, H. J., Engineering Management, New York: John Wiley and Sons, 1992. [7] Brochure No. 7, Project Management Institute, Drexel Hill, PA. [8] Liberatore, M. I., and G. I. Titus, “The Practice of Management Science in R and D Project Management,” Management Science, August 1983, pp. 70–74. [9] Gee, R. E., “A Survey of Current Project Selection Practices,” Research Management, Vol. 14, No. 5, 1971, pp. 38–45. [10] Thomas, H., “Some Evidence on the Accuracy of Forecasts in R and D Projects,” R and D Management, Vol. 1, No. 2, 1971, pp. 55–69. [11] Shannon, R. E., Engineering Management, New York: John Wiley and Sons, 1980. [12] Souder, W. E., “Utility and Perceived Acceptability of R and D Project Selection Mod- els,” Management Science, August 1973, pp. 89–94. [13] Dhillon, B. S., Engineering Management, Lancaster, PA: Technomic Publishing Com- pany, 1987. [14] Cetron, M. J., and J. Martino, “The Selection of R and D Program Content: Survey of Quantitative Methods,” IEEE Trans. on Engineering Management, Vol.

14, 1967, pp. 4–13. [15] Clarke, T. E., “Decision-Making in Technologically Based Organizations: A Literature Survey of Present Practice,” IEEE Trans. on Engineering

Management, Vol. 21, 1974, pp. 9–23. [16] Baker, N. R., and W. J. Pound, “R and D Project Selection: Where We Stand,” IEEE Trans. on Engineering Management, Vol. 11, 1964, pp. 124–134. [17] Kasner, E., Essentials of Engineering Economics, New York: McGraw-Hill, 1979. [18] Baker, N. R., “R and D Project Selection Models: An Assessment,” IEEE Trans. On Engineering Management, November 1974, pp. 61–65. [19] Souder, W. E., “Comparative Analysis of R and D Investment Models,” AIIE Transac- tions, April 1972, pp. 20–26. [20] Disman, S., “Selecting R and D Projects for Profit,” Chemical Engineering, December 1962, pp. 87–90. [21] Mottley, C. M., and R. D. Newton, “The Selection of Projects for Industrial Research,” Operations Research, 1959, pp. 740–751. [22] Murdick, R. G., and E. W. Karger, “The Shoestring Approach to Rating New Prod- ucts,” Machine Design, January 1973, pp. 86–89. [23] Seiler, R. E., Improving the Effectiveness of Research and Development, New York: McGraw-Hill, 1975. [24] Sobelman, S. A., Modern Dynamic Approach to Product Development, Dover, NJ: Pica- tinny Arsena, 1958. [25] Martin, C. C., Project Management: How to Make It Work, New York: AMACOM, 1976. [26] Kerzner, H., Project Management: A Systems Approach to Planning, Scheduling, and Con- trolling, New York: Van Nostrand Reinhold, 1992. [27] Riggs, J. L., and M. S. Inoue, Introduction to Operations Research and Management Sci- ence: A General Systems Approach, New York: McGraw-Hill,

1975. [28] Chase, R. B., and N. J. Aquilano, Production and Operations Management: A Life Cycle Approach, Chicago, IL: Irwin, 1981. [29] Clark, C. E., “The PERT Model for the Distribution of an Activity Time,” Operations Research, Vol. 10, 1962, pp. 405–406. [30] Lomax, P. A., Network Analysis: Application to the Building Industry, London: The Eng- lish Universities Press Limited, 1969.


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THANK YOU!!!

04. Project Selection and Management

Documents

networks critical

duration times

benefitcost

project selection

operations

project manager

information

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