Om lect 07 (r3-jul 11)_basics of project management_mms-bharti_sies

Basics of Project Management

N.K.Agarwal

Project Management

• Project– A temporary endeavor undertaken to create a unique

product or service– A specific, finite task to be accomplished

• Large or small is immaterial but to be seen as a unit is relevant

• Modern project management said to have begun with the Manhattan project.

Schedule (Time)

Quantity (Planned Results)

Resource (Budget)

Nature of a Project

An Enterprise undertaken to

Achieve Planned Results

within a Time Limit, and

a Budgeted Resource

Historical Overview-Old to New• Mankind involved in project activities for a long time

– Designing and building the Pyramids in 2100 B.C. – Building the seven wonders of the world

• Modern Project Management(MPM) supposed to have its origin in the U.S.A. in the mid-to late 1950s with the Manhattan project – Two organisations working hard with the development of

solution systems to reduce risks in the undertaking of certain projects

• US Navy engaged in Polaris nuclear submarine programme

– Engaged the help of Booze Allen Hamilton, a management consultant, and the outcome was PERT in 1958

• Dupont trying to reduce the outage time during major maintenance at their chemical plant

– A mathematical technique CPM was developed using network diagrams to analyse the integration of activities and overall duration of the project

Historical Overview-Old to New

• Myth that Project Management covers only Planning and Scheduling

• In reality, Project Management covers, in addition, a wide range of management areas– Project scope,time, cost, quality, human resources,

communications, risk, procurement, etc.

Historical Overview-Old to New

• All projects require a degree in planning ( no matter what their size is) and this in turn requires forward thinking by the Project Manager

• No matter how well a project is planned, there are bound to be problems

• Successful projects need certain pre-requisites– Explicit goals– A skilled and knowledgeable project manager– Senior management support– Effective project team– Adequate resources– Effective means of communication– Feedback mechanism– Close liaison with clients

Project Management

• Project environment– Before people become involved in a project, they must be

aware of the environment in which it will operate– They will need to know and understand factors such as

• Location • Who the customers are and their individual

expectations?• End user requirements, and • The resources available

– A true project environment is unique to each project and cannot be highlighted in a few lines

Project Management

Project Phases

• Projects have to pass through 4 phases– Project Planning– Project Implementation– Project Monitoring– Project Evaluation

Client Requirement

Planning

Organising & Staffing

Directing & Leading

Controlling

Reprogramming Reporting

Basic Five Part Management Model

Project Phases-Planning

• Project Planning– Comprises of a series of steps to be taken to convert an idea

into a feasible plan of action– Aims at a systematic analysis of project potential with the

ultimate objective of arriving at an investment decision– An objective assessment from all possible angles starting

from identification of investment options up to its appraisal stage

– Includes identification, technical analysis, financial analysis and project appraisal

– A cyclic process

• Project planning– Planning helps us to know how the project is progressing– Lack of planning in projects can result in expensive errors

being made, particularly when there are huge funds are at stake

– Effective project planning will look at costing, non-financial resources, work allocation and possible changes that may have to be made later on

– All major projects need the services of a contractor to complete the project

• For getting the project executed through a contractor, the company has to sign a contract with the contractor

Project Phases-Planning

Project Phases- Implementation

• Project Implementation– Implies initiating the project , specifying and

scheduling the work, clarifying authority responsibility relationship, obtaining resources, establishing control system, directing and controlling

– Involves allocation of tasks to groups within the project organisation

– Deficiencies in implementation also found due to inadequate planning of projects at the initial stage

– Purpose is to ensure that the project activities are completed with in the schedule and the budgeted provision

• Leading to satisfactory quantum of benefits flowing there from

Project Phases- Implementation

Project Phases-Monitoring• Project Monitoring

– Involves watching the progress, resources and performance schedules during the execution of the project and identifying lagging areas requiring timely attention and action

– Enables a continuing critique of the project implementation

– Also facilitates imparting constructive suggestions like rescheduling the project, rebudgeting or reassessing the staff

– Projects are relatively short lives and require control in order to minimise, if not eliminate, time as well as cost overruns

• Project control involves scheduling, estimating, cost control and material control

• Scheduling– Design and develop timetables that highlight times at which

different aspects of the project can be started and when they must be completed

• Estimating– Predict volumes of materials, numbers of employees and

costs that will be associated with a specific project• Cost control

– Calculates ongoing costs associated with a particular project, and ensure expenditure is in line with estimates

• Material control– Issue orders for materials and track their whereabouts and

usage throughout the life of the project– Ideally, materials are delivered only when needed

Project Phases-Control

Project Phases-Evaluation

• Project Evaluation– Primary purpose is to provide objective,

systematic and comprehensive evidence on the degree to which the project achieves its intended objectives, plus

– The degree to which it produces unanticipated consequences

– Designed to examine the worth, significance, degree or condition of any given project

– An integrated objective assessment of progress and its overall impact

Contract Agreement

• Contract agreement is a one sheet document binding both the contractor and the owner to execute the defined work at the agreed upon price in the manner stipulated in the contract as per details given in various annexure as under– The tender invitation– Instruction to tenderes– The tender– The tender drawings and specifications– Bills of quantities and schedule of rates– General contract conditions– Special conditions of contract– Letter of acceptance/intent– Contractor’s acceptance of letter of intent/allotment

Critical Path Analysis (CPA)• Most commonly used tool to manage any project, and

bring about its completion in the shortest possible time and most economical way

• CPA breaks a job into its component tasks, sequencing and allocating completion times for each of them

• This sequence is drawn up as a network that highlights the critical tasks that could delay the project as a whole

• The string of critical tasks is known as the Critical Path

• The duration of the project on the Critical Path is calculated through what is known and Forward pass and Backward pass

PERT / CPM Network

• Difference between PERT & CPM– PERT

• Event oriented• Interest is focused on the start , stop or completion of

events rather than activities themselves – CPM

• Activity oriented• No allowance is made for the uncertainties in the

duration of time involved • Times are related to costs

PERT / CPM Network

– The distinction between the two is fast diminishing • With minor modifications, both have given rise to various

programmes– PEP: Programme Evaluation Procedure– LESS: Least Cost Estimating & Scheduling– SCANS: Scheduling & Control by Automated

Network Systems

PERT / CPM Network

• Some basic terms– Activity

• Time consuming part of a project• Represents a job • Shown by an arrow

– Event• Also called node is either the beginning or end

of a job • Represented by a circle or rectangle• Does not consume time or resources

– Events and activities connected logically and sequentially to form a network

PERT / CPM Network• Events

– Predecessor events• Event/s that come immediately before another event without

any intervening event– Successor event

• Event/s that follows immediately another event without any intervening event

• Dummies– Activities that connects events showing their interdependencies

but do not take any real time or resources for themselves– Shown in dotted lines

• Activity duration– In CPM, this means the best estimated time to complete an

activity– In PERT, the expected time or average time to complete an

activity

A

B

C

DF

E

A

B

C

DF

E

EVENT

EVENT

EVENT EVENT

EVENT

EVENTACTIVITY

ACTIVITY

DUMMY ACTIVITY

PERT NETWORK-

EVENT ORIENTED

CPM NETWORK- ACTIVITY ORIENTED

BASIC NETWORK- EVENTS CONNECTED BY ACTIVITIES

A

B

C E

F

D

PERT NETWORK

Project Closure

• Project closure ensures and benefits as under– Ensures completion of the project– Work of the current project team is acknowledged and that

the lessons to be learned from the project are formally investigated and recorded for use on the next project

– Establishes mechanism for the continued development or improvement of the final product of the project

– Improves the standard process and estimating model for this type of future projects

– Facilitates resources redeployment

• Post Implementation Review– Items that are still open should be closed or resolved– All aspects of the project reviewed and lessons learned

documented for future use• Objectives, review, performance criteria, financial

criteria, resource utilisation, slips and gains of time, quality of work, adherence to the project definition and plans

– Methods used for review• Meetings,• Quality reviews,• Project closure meetings,• Group discussions

– Risk management plan to be updated

Project Closure

• Close out– A closing event to formally round off the project– Project review and project report– A note is sent to the finance department to ensure that they

are aware that the project is closed

Project Closure

Project Management

• Project management tools offers the means of implementing new or one-off scenarios with minimum disruption– An organisation moving offices will want to complete the task

as quickly as possible– By breaking the office move down into component tasks and

using critical path analysis, delays can be minimised

• Project management tools help in achieving efficiency and economy in business operations

Thank You

References

• Project Management : Jack R. Meredith / Samuel J. Mantel

• Projects – Planning, Analysis, Financing, Implementation & Review : Prasanna Chandra

• Project Management – A Comprehensive Handbook : R. Turner & S. Simister

• Operations Management : Sean Naughton• Project Management: Kerzner

– No matter what their size, all projects have defined starting and finishing dates- and a pre-determined end condition of course

• Construction of Channel Tunnel,• Construction of Worli-Bandra sea link• Organising a college-day event , etc

• While they may seem different, the above examples have many things in common– An objective– A degree of complexity– Each is a one-off– A degree of uncertainty– They are short-term– Each has a finite life cycle

Project Management

Project Management• Various aspects of Project Management include

– Linking project management with operations management– Project environment– Project definition– Project planning– Project implementation– Project control

• Linking project management with operations management– Many projects are run within Operations Management

environments– Projects are usually but not always concerned with

complicated and often large scale activities

• Project definition– Running projects requires clarity– Everyone must know precisely what tasks they are to

perform and when– Prior to issuing the workforce with such details, the project

manager must clarify what objectives and range the project will have

– Extra details may also be added including specified deadlines, any budgets and costs involved, and factors such as quality standards that must be met

Project Management

AEE LE

BEE LE

TEXT OF ACTIVITY A-B

D

Mode of representation

EVENT EVENT

• Activity duration– Optimistic or shortest time (to OR ts)

• Time for completing an activity if everything goes well –used in PERT

– Pessimistic or longest time (tp OR tl)• Time for completing an activity if everything goes wrong-

used in PERT– Most likely time (tm)

• Time for completing an activity that is the consensus best estimate- used in PERT

– Expected time (te)• Average time for completing an activity –used in PERT• For - Distribution, this is taken as te = (ts+4tm+tl) / 6 OR = (to+4tm+tp)/6

PERT / CPM Network

• Earliest start (Es)– Earliest an activity can start from the beginning of the project

• Earliest finish (EF)– Earliest an activity can finish from the beginning of the project

• Latest start (Ls)– Latest an activity can start from the beginning of the project, without

causing a delay in the completion of the project

• Latest finish (LF) – Latest an activity can finish from the beginning of the project, without

causing a delay in the completion of the project

PERT / CPM Network

• Forward Pass– The process of calculating the earliest time a project can

finish• Beginning with the first event- zero time- the earliest

starting time of each activity is added to its duration• This provides the earliest finish time

– When a single activity arrives at a node (an event), this is taken as the earliest start time for that event

– When more than one activity arrives at a node, the last of the earliest finish times is used

• This is because all activities arriving at the node must be complete before any activities leaving it can begin

– Once complete, the forward pass indicates the earliest completion time for the entire project which is then used for calculating the backward pass

Critical Path Analysis (CPA)

• Backward Pass– Shows the latest time the activities arriving at a node can

finish without delaying the project– The backward pass starts at the last event in the network,

and deducts each activity’s time away from the latest finishing time

– When only one activity leaves a node, this is the latest time for that particular event

– If there is more than one activity, the earliest of the latest start times is used

• If any other latest time were used, the project would get delayed

– This gives us the latest time the project can start

Critical Path Analysis (CPA)

A

B

C

DF

E

A

B

C

DF

E

EVENT

EVENT

EVENT EVENT

EVENT

EVENTACTIVITY

ACTIVITY

DUMMY ACTIVITY

PERT NETWORK-

EVENT ORIENTED

CPM NETWORK- ACTIVITY ORIENTED

BASIC NETWORK- EVENTS CONNECTED BY ACTIVITIES

A

B

C E

F

D

• All projects must go through the following stages if they are to be successful– Stage 1: Project environment– Stage 2: Project definition– Stage 3: Project planning– Stage 4: Implementation– Stage 5: Project control

Project Management

Project Phases

• Projects have to pass through 4 phases– Project Planning– Project Implementation– Project Monitoring– Project Evaluation

Project Phases

• Project Planning– A cyclic process– Comprises of a series of steps to be taken to convert an idea

into a feasible plan of action– Aims at a systematic analysis of project potential with the

ultimate objective of arriving at an investment decision– An objective assessment from all possible angles starting

from identification of investment options up to its appraisal stage

– Includes identification, technical analysis, financial analysis and project appraisal

Project Phases

• Project Implementation– Involves allocation of tasks to groups within the

project organisation– Deficiencies in implementation also found due to

inadequate planning of projects at the initial stage– Purpose is to ensure that the project activities are

completed with in the schedule and the budgeted provision

• Leading to satisfactory quantum of benefits flowing there from

– Implies initiating the project , specifying and scheduling the work, clarifying authority responsibility relationship, obtaining resources, establishing control system, directing and controlling

Project Phases

Project Phases

• Project Monitoring– Enables a continuing critique of the project

implementation– Involves watching the progress, resources and

performance schedules during the execution of the project and identifying lagging areas requiring timely attention and action

– Also facilitates imparting constructive suggestions like rescheduling the project, rebudgeting or reassessing the staff

Project Phases

• Project Evaluation– Designed to examine the worth, significance,

degree or condition of any given project– Primary purpose is to provide objective,

systematic and comprehensive evidence on the degree to which the project achieves its intended objectives plus the degree to which it produces unanticipated consequences

– An integrated objective assessment of progress and its overall impact

• Project control– Projects are relatively short lived and require control- without

it they overrun from a time and cost perspective• Some projects could even be left incomplete

– Project control incorporates scheduling, estimating, cost control and material control

– Scheduling• Design and develop timetables that highlight times at

which different aspects of the project can be started and when they must be completed

– Estimating• Predict volumes of materials, numbers of employees and

costs that will be associated with a specific project

Project Management

– Cost control• Calculate ongoing costs associated with a particular

project, and ensure expenditure is in line with estimates– Material control

• Issue orders for materials and track their whereabouts and usage throughout the life of the project

• Ideally,materials are delivered only when needed on a JIT basis

• Various reports are generated to monitor and control the progress ( time and cost) of the project

Project Management

Time & Cost Control

• First major task in time and cost control is the preparation of master schedule and master budget for the project

• From these, detailed schedules of time and resources are prepared

• Some of the important schedules used for the time and cost control are– Master time schedule– Engineering / Procurement / Fabrication / Construction /

commissioning time schedules– Schedule of contracting– Integrated schedule of critical equipment with time phased

budgeted cost– Integrated schedule of all other materials with time phased

budgeted cost

Time & Cost Control– Labour, equipment and other resources schedules with

individual budgeted cost– All other project-specific schedules and budgets, both

integrated and independent, and time phased– Crashing economy analysis

• Some of the important reports generated– Progress reports– Total project cost till the achievement of every important

milestone– Progress and Cost build up curves for

• Total project implementation• Engineering, design and drafting• Purchase ordering• Construction

– Fund flow curve

Time & Cost Control

– Reports on• Progress status• Cost status• Bottlenecks and constraints• Cost trends• Change control and contingency rundown• Overall performance

• Review of progress on the construction activities made periodically at various levels of authorities

• Period of review for the progress by various authorities can be based on practical convenience ranging from weekly at the GM level to Six monthly or annually at the Board level