Project Management-Unit 1

7/29/2019 Project Management-Unit 1

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What is a project

A project consists of a series of tasks or activities that have

several distinguishing characteristics:

-The project has specific starting and ending dates

-It has well defined objectives-It achieves a specified product or result

-It is unique in that it is not a routine operation, but a specific set

of operations designed to accomplish a singular goal

-Cost, time schedules and resources are consumed


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A project has an expected output, a start and end date, and

limited resources.

The unique characteristic of output of the project does not

mean that a project will not include various repetitive tasks.

Projects are composed of processes:A process is a series of

actions bringing a result oran output.


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PMI Definition

A temporary endeavor undertaken to createa unique product or service


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Project management is the discipline ofplanning, organizing, motivating, and controllingresources to achieve specific goals.

A project is a temporary endeavor with a definedbeginning and end (usually time-constrained,and often constrained by funding ordeliverables),1.undertaken to meet unique goals

and objectives,2. typically to bring aboutbeneficial change or added value.


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Project Attributes

A project:

Has a unique purpose.

Is temporary.

Is developed using progressive elaboration.

Requires resources.

Should have a primary sponsor. The project sponsorusually provides the

direction and funding for the project.

Involves uncertainty.


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Project managers work with projectsponsors, project teams, and other peopleinvolved in projects to meet project goals.


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The Triple Constraint

Every project is constrained in different ways by its:

Scope goals: What work will be done?

Time goals: How long should it take to complete?

Cost goals: What should it cost?

It is the project managers duty to balance these threeoften-competing goals.


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The Triple Constraint of ProjectManagement

Successful projectmanagement meansmeeting all threegoals (scope, time,and cost) and

satisfying theprojects sponsor.


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What is Project Management?

Project management is the applicationof knowledge, skills, tools and techniquesto project activities to meet project

requirements.


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Project Management Basics

No matter what the type of project, projectmanagement typically follows the same pattern:

Definition

Planning

Execution

Control Closure


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Defining the Project

-In this stage the project manager defineswhat the project is and what the usershope to achieve by undertaking theproject. This phase also includes a list ofproject deliverables, the outcome of a

specific set of activities


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Planning the Project- In this stage, the project manager lists allactivities or tasks, how the tasks are related,how long each task will take, and how each

tasks is tied to a specific deadline.- for example, if one task is x number of dayslate, the project tasks related to it will also reflecta comparable delay.

-Likewise, the project manager can setmilestones, dates by which important aspects ofthe project need to be met.


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Executing the Project

-In this phase, the project manager knowshow many resources and how much

budget he or she has to work with for theproject.

-The project manager then assigns those

resources and allocates budget to varioustasks in the project. Now the work of theproject begins.


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Controlling the Project

-The project manager is in charge ofupdating the project plans to reflect actualtime elapsed for each task.

-By keeping up with the details ofprogress, the project manager is able tounderstand how well the project isprogressing overall.


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Project Management

Complex and numerous activities

Unique - a one time set of events

Finite - a begin and end date Limited resources and budget

Many people involved

Sequenced activities End product or service must result


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Project A project is an endeavor to accomplish a specific objective

through a unique set of interrelated tasks and the effective

utilization of resources.

It has a well-defined objective stated in terms ofscope,

schedule, and costs.

Project s are born when a need is identified by the customer

the people or organization willing to provide funds to have

the need satisfied.

It is the people (project manager and project team), not the

procedures and techniques, that are critical to accomplishing

the project objective.

Procedures and techniques are merely tools to help the people

do their jobs.


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Examples of Projects

Planning a wedding

Designing and implementing a computer

system

Hosting a holiday party

Designing and producing a brochure Holding a high school reunion

Performing a series of surgeries on an

accident victim


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Phases of the Project LifeCycle

The first phase involves theidentification of a need, problem, or

opportunity. The need and requirements are usually written by

the customer into a document called a request for

proposal (RFP).


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The second phase is thedevelopment of a proposed solution

to the need or problem. This phase results in the submission of a

proposal.


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The third phase is performing theproject.

Different types of resources are utilized

Results in the accomplishment of the projectobjective


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The final phase is terminating theproject.

Perform close-out activities

Evaluate performance

Invite customer feedback


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The Project Team is the groupresponsible for planning and executing theproject.

It consists of a Project Manager and avariable number of Project Teammembers, who are brought in to deliver

their tasks according to the projectschedule .


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The Project Team Members areresponsible for executing tasks andproducing deliverables as outlined in the

Project Plan and directed by the ProjectManager, at whatever level of effort orparticipation has been defined for them


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The Project Sponsoris a manager withdemonstrable interest in the outcome ofthe project who is responsible for securing

spending authority and resources for theproject.


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Stakeholders are all those groups, units,individuals, or organizations, internal orexternal to our organization, which are

impacted by, or can impact, the outcomesof the project.


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Deadlines:

A project manager must always be able tocarry out his role in a very effective

manner.Client Satisfaction:

Satisfaction of the client however does not

mean that you rush to finish the work ontime without ensuring that standards aremet.


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No Budget Overrun

Requirements Coverage:

Another goal of a project manager involvesmeeting all requirements of the client

Team Management


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The Oxford English Dictionary definesproject as An individual or collaborativeenterprise that is carefully planned and

designed to achieve a particular aim. As per PMI: A project is a temporary endeavor

undertaken to create a unique product, service,or result.

Project is a concept which serves to organiseaction.


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Projects have a purpose

Projects are realistic

Projects are limited in time and space

Projects are complex

Projects are collective

Projects are unique

Projects can be assessed

Projects are made up of stages


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Projects are authorized as a result of one or more of following

strategic considerations:

A market demand (e.g., a telecom service providerauthorizes a project to install a new tower in response tocustomer needs in an area)

An organizational need (e.g., a training companyauthorizes a project to create a new course in order to

increase its revenues) A customer request (e.g., an electric utility authorizes a

project to build a new substation to serve a new industrialpark)

A technological advance (e.g., a software firm authorizes

a new project to develop a new generation of video gamesafter the introduction of new game playing equipment byelectronics firms)

A legal requirement (e.g., a paint manufacturerauthorizes a project to establish guidelines for the handling

of a new toxic material).


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What is Project Management?

Project management is the application of knowledge, skills,tools and techniques to project activities to meet projectrequirements.

Project management is accomplished through the applicationand integration of the project management processes of

initiating, planning, executing, monitoring ,controlling, andclosing.

Managing a project includes: Identifying requirements

Establishing clear and achievable objectives

Balancing the competing demands for quality, scope, timeand cost

Adapting the specifications, plans, and approach to thedifferent concerns and expectations of the variousstakeholders.


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TRIPLE CONSTRAINT

Triple Constraint is the balance of the projects

scope, schedule (time) and cost.

It is sometimes called Dempsters triangle

wherein one of the sides or corners represent

the scope, time and cost of a project being

managed by the project managers.

Triple constraint is used to gauge whether a

projects objectives are being met.


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Project selection is the process ofevaluating individual projects or groups ofprojects, and then choosing to implement

some set of them so that the objectives ofthe organization will be achieved.

For example: - A television station canselect which of several syndicated comedyshows to rerun in its 7:30 p.m. weekdaytime-slot.

- A hospital can find the best mix of

psychiatric, orthopedic, obstetric, and


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Project Selection

Project selection is the process of evaluating

individual projects or groups of projects, and then

choosing to implement some set of them so that the

objectives of the parent organization will be achieved Managers often use decision-aiding models to extract

the relevant issues of a problem from the details in

which the problem is embedded

Models represent the problems structure and can be

useful in selecting and evaluating projects


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Realism: For example, Project A may strengthen a firm's

market share by extending its facilities, andProject B might improve its competitive position

by strengthening its technical staff. Other thingsbeing equal, which is better? The model should take into account the realities

of the firm's limitations on facilities, capital,personnel, and so forth.

The model should also include factors thatreflect project risks, including the technical risksof performance, cost, and time as well as themarket risks of customer rejection etc.


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Capability:

The model should be sophisticatedenough to deal with multiple time periods,simulate various situations both internaland external to the project and optimizethe decision.


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Flexibility:

It should have the ability to be easilymodified, or to be self-adjusting inresponse to changes in the firm'senvironment; for example, tax lawschange, new technological advancements

alter risk levels, and, above all, theorganization's goals change.


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Ease of Use:

The model should be reasonablyconvenient, not take a long time to

execute, and be easy to use andunderstand.

It should not require special interpretation,

data that are difficult to acquire, excessivepersonnel, or unavailable equipment.


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Cost:

Data gathering and modeling costs shouldbe low relative to the cost of the project

and must surely be less than the potentialbenefits of the project.

All costs should be considered, including

the costs of data management and ofrunning the model.


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Nature of Project Selection Models

2 Basic Types of Models

Numeric

Nonnumeric

Two Critical Facts:

Models do not make decisions - People do

All models, however sophisticated, are only

partial representations of the reality they aremeant to reflect


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Nonnumeric Models

Models that do not return a numeric valuefor a project to be compared with otherprojects.

These are really not models but ratherjustifications for projects.


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Nonnumeric Models

Sacred Cow - project is suggested by a senior and powerful official in the

organization

Operating Necessity - the project is required to keep the system running

Competitive Necessity - project is necessary to sustain a competitive

position Product Line Extension - projects are judged on how they fit with current

product line, fill a gap, strengthen a weak link, or extend the line in a new

desirable way.

Comparative Benefit Model- several projects are considered and the one

with the most benefit to the firm is selected


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SACRED COW

Sacred cow decisions are made becausesomeone-generally in upper managementreally wants a particular project to be

done. These decisions are not always in the best

interest of the organization but of one

individual or a group.


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SACRED COW

A senior manager from a non-ITdepartment picks up a trade magazineand reads about show all the best

companies are doing XYZ to becompetitive. He then schedules a meetingwith an IT manager and explains that XYZ

is something we have to implement.


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The Operating Necessity:

If a flood is threatening the plant, a projectto build a protective dike does not require

much formal evaluation.

If the project is required in order to keepthe system operating.


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The Competitive Necessity:Using this criterion, XYZ Steel undertook a major plant

rebuilding project in the late 1960s in its steel barmanufacturing facilities near Chicago. It had becomeapparent to XYZ's management that the company's bar

mill needed modernization if the firm was to maintain itscompetitive position in the Chicago market area.Although the planning process for the project was quite

sophisticated, the decision to undertake the project wasbased on a desire to maintain the company's competitive

position in that market.In a similar manner, many business schools arerestructuring their undergraduate and Masters inBusiness Administration (MBA) programs to staycompetitive with the more forward looking schools.


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The Product Line Extension:

In this case, a project to develop anddistribute new products would be judged

on the degree to which it fits the firm'sexisting product line, fills a gap,strengthens a weak link, or extends the

line in a new, desirable direction.


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Comparative Benefit Model:

-Assume that an organization has many projects toconsider, perhaps several dozen. Senior managementwould like to select a subset of the projects that would

most benefit the firm, but the projects do not seem to beeasily comparable.

-For example, some projects concern potential newproducts, some concern changes in production methods,others concern computerization of certain records etc.

-The organization has no formal method of selectingprojects, but members of the selection committee thinkthat some projects will benefit the firm more than others,even if they have no precise way to define or measure"benefit."


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Numeric Models

Models that return a numeric value for aproject that can be easily compared withother projects


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Payback Period

The length of time until the originalinvestment has been recouped by theproject

A shorter payback period is better


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Payback Period:

-The payback period for a project is the initial fixed

investment in the project divided by the

estimated annual net cash inflows from theproject. The ratio of these quantities is the

number of years required for the project to repay

its initial fixed investment.

The faster the investment is recovered, the lessthe risk to which the firm is exposed


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Payback Period Example

4000,25$

000,100$

PeriodPayback

FlowCashAnnual

CostProjectPeriodPayback

==

=


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Machine A Machine B

Payback

period 2 years 3 years

Machine A will recover its outlay one yearsooner than Machine B. Where machinesare ranked by the shortest Paybackperiod, machine A is selected inpreference to machine B.


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Average Rate of Return

Average annual profit/Average investment


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The Net Present Value (NPV) of a projectis defined as the difference betweenpresent value of cash inflow (revenue PV

in) and present value of cash outflow (costPV out) of that project over the project lifecycle time.


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The Profitability Index of a project is theratio of present value of cash inflow andpresent value of cash outflow of that

project over the project life cycle time.


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Internal Rate of Interest

Project Management-Unit 1

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