Kudzai Chibarinya, profile picture
Uploaded byKudzai Chibarinya
DOC, PDF3,699 views

MIDLANDS STATE Project management _notes

This document provides an overview of project management concepts. It defines a project as a collection of linked activities with a clear start and finish point, aimed at achieving specific results. Key aspects of projects discussed include their characteristic features, types of examples, and the project management process. The project life cycle is also outlined, including the idea generation, feasibility study, implementation, and handover phases that all projects progress through. Overall, the document introduces fundamental concepts relating to what constitutes a project and how projects are managed.

Embed presentation

Downloaded 131 times
1 / 105
2 / 105
3 / 105
4 / 105
5 / 105
6 / 105
7 / 105
8 / 105
9 / 105
10 / 105
11 / 105
12 / 105
13 / 105
14 / 105
15 / 105
16 / 105
17 / 105
18 / 105
19 / 105
20 / 105
21 / 105
22 / 105
23 / 105
24 / 105
25 / 105
26 / 105
27 / 105
28 / 105
29 / 105
30 / 105
31 / 105
32 / 105
33 / 105
34 / 105
35 / 105
36 / 105
37 / 105
38 / 105
39 / 105
40 / 105
41 / 105
42 / 105
43 / 105
44 / 105
45 / 105
46 / 105
47 / 105
48 / 105
49 / 105
50 / 105
51 / 105
52 / 105
53 / 105
54 / 105
55 / 105
56 / 105
57 / 105
58 / 105
59 / 105
60 / 105
61 / 105
62 / 105
63 / 105
64 / 105
65 / 105
66 / 105
67 / 105
68 / 105
69 / 105
70 / 105
71 / 105
72 / 105
73 / 105
74 / 105
75 / 105
76 / 105
77 / 105
78 / 105
79 / 105
80 / 105
81 / 105
82 / 105
83 / 105
84 / 105
85 / 105
86 / 105
87 / 105
88 / 105
89 / 105
90 / 105
91 / 105
92 / 105
93 / 105
94 / 105
95 / 105
96 / 105
97 / 105
98 / 105
99 / 105
100 / 105
101 / 105
102 / 105
103 / 105
104 / 105
105 / 105
PROJECT MANAGEMENT BM 404 STUDY NOTES 1
A. MAFUKA MIDLANDS STATE UNIVERSITY DEPARTMENT OF BUSINESS MANAGEMENT 2005 PROJECT MANAGEMENT CHAPTER 1 Introduction: Overview of project Management 1. WHAT IS AN INVESTMENT?  It is the current commitment of dollars for a period of time in order to derive future payments that will compensate the investor for 1. The time the funds are committed 2. The expected rate of inflation 3. The uncertainty of the future payments. 2. WHO IS AN INVESTOR? Investor can be an individual, a government, a pension fund or corporation. The investor is trading a known dollar amount today for some expected future stream of payments that will be greater than the current outlay. - Investors invest to earn a rate of return, which compensates for the time, the expected rate of inflation and the uncertainty of return. 3. Investment choices are a function of a investor’s risk appetite. Factors like • Inflation rate, interest rate 2
• Financial stability • Political – country risk • Legal and regulatory consensus • Liquidity needs and time horizon • Tax concerns • Time horizon – short term cash (liquid) • Tax concerns – taxable income (VAT) • Unique needs + personal preferences • Critical skills • Infrastructure 4. Organisations/institutions that promote development: • Zimbabwe Investment Centre (ZIC) • Zimbabwe Development Bank (ZBD) • Small Enterprises Development Corporation (SEDCO) • Industrial Development Corporation of Zimbabwe (IDC) • Department of small and medium Enterprise (SMES) • Ministry of Youth and Gender (MYG) • Welfare Organizations (NGO) -What are the functions? -What are the objectives? -What is the structure? 3
-What are the rules and regulations for the project requirements? -Is the role of project development being met? PROJECT ENVIRONMENT a) Project environment needs to be analysed, understood and addressed if project is to be implemented successfully. b) Project environment provides managers with a structured approach to analyzing and handling possible external constraints c). There must be continued interaction between the project and its environment, and the project itself affects the environment just as it in turn is affected by it, so that there is a two –way relationship between them. Physical environment:  Refers to the natural setting of the project, its geology, soils, landscape, climate, water resources and ecological systems  Many projects are sited in a particular location and surrounded by a specific physical setting. Sometimes this setting is the very reason why the projects exist e.g. mining project is established precisely to exploit deposits in physical environment, agricultural projects exist to maximize potential of the natural physical environment for agricultural production. Technologies: Technologies utilized for the exploitation or conservation of the natural resources. Availability –provision of these technologies is a key dimension of the project environment. Economic and Financial management: 4
Projects utilize resources to create assets. Resources utilized have a cost and these assets created have a value. Relative costs and values (worth of the projects) are directly affected by the economic and financial environment within which they are implemented . Such issues as budgetary constraints, foreign currency shortages, price controls, inflation, interest rates are constantly reviewed in order to complete project at stated cost, using resources to be acquired. Cost-over-runs often associated with time delays are very frequently encountered- and these are caused by constraints of the economic and financial environment. Institutional and political environment:  Institutional framework concerns such matters as the legal systems within which project managers are operating and aspects of social organization such as the land tenure and water rights system  Formal/less formalized organizations are crucial determinants of project outcome: Formal: government departments,marketing and credit institutions, local authorities have clear terms of references Less fomalised but official organizations- village level committees, political groups, religious institutions may be as important Political framework in the project environment needs to considered. Projects necessarily reflect the political priorities of the country within which they are implemented. Politics determine the progress of any project. Project managers need to be political –need to lobby, negotiate, use influence to gain political support for their project. The political environment surrounding 5
a project involves a complex web of political relationships which extends beyond individuals to organizations and geographical areas. Socio-cultural environment:  People –orientated projects e.g most agricultural projects, health,education and welfare projects,urban housing, water supply, rural industrialistion projects are implemented through people who are not directly part of the formal project organization  Project organization provides resources, training services and infrastructure to the population  For the project to be successful, its objectives will need to be consistent with values and practices of those people it is designed to assist  It is vital for project personnel to be sympathetic to the local culture and to have an understanding of “why things are done the way they are.” DISCUSSION: 1. Critically analyse the business operating environment of a project you are familiar with. What are the prospects of its success? Why? What are the areas of improvement, if any, would you recommend to the project sponsors for it to be a success? 2. Examine any one of the organizations/institutions that promotes project development. To what extend is it fulfilling its role in the current economic environment? 6
CHAPTER 2 NATURE OF PROJECTS What is a project? Definition: a) It is a collection of linked activities, carried out in an organized manner with a clearly defined start(ing) point and finish(ing) point to achieve some specific results that satisfy the needs of an organization as derived from the current business plans. b) It is organization of people and resources to meet objectives c) It is the investment of capital in a time – bound intervention to create productive assets. 2.2 Characteristic features of a project: • Involves new and unknown tasks • It is an instrument of change (has elements of risk) • It has clearly defined start and finish dates • It has specific aims • It should result in something being delivered • It is the responsibility of a project manager/ management team 7
• It involves costs, resources and time (subject to strict deadline) • It leads to a change in people’s daily work or living conditions • Requires the right people at the right time but people of different backgrounds who are not used to working together. Examples of a project • Writing and publication of a book • Relining of a blast furnace in steel works • Setting up a new department at a University • Supporting of a self help efforts of a rural community • Technical projects: construction of bridges, dams, water pipe line • Introducing a new product • Organizing a trade fair. Projects in Midlands • Unki platinum mine project • Relocation of Mtapa long distance bus terminus • Construction of MSU administration Block 2.3 PROJECT MANAGEMENT Definition 8
a) The dynamic process utilizing the appropriate resources of the organization in a controlled and structured manner, employed to achieve a change clearly defined with specific objectives identified as strategic needs. Characteristic features: - Objective oriented – without these you have no outcomes - Change oriented – creating something you need but do not have. - Multi disciplined – needs a wide range of skills to achieve success - Opportunistic – you must seek to take shortcuts and bypass old norms - Performance oriented – setting appropriate standards and quality of outputs - Control oriented – carefully designed controls to maintain the schedule - Avoid getting trapped by the old ways of doing things. 9
b) Project management is a tool for management to manage organization:  Interfaces between organization and its environment to achieve  stated goals Interfaces within an organisation 2.4 Sources of projects: 1. Corporate and strategic plans/business plans 2. Normal operations/ step changes 3. Continuous improvements/ programmes cross functional 4. Growth by projects addressing needs/ opportunities 5. Growth by incremental change of quality/performance 2.5 LIFE CYCLE OF A PROJECT All projects go through similar life cycle, comprising the following phases namely: Phase1: Idea generation and screening the idea It is done through feasibility study ie whether to go for the project or not(prefeasibility Go/and No Go) -Needs are clearly identified and project is defined with agreement of those people with an interest in the outcomes -Also called conception and definition stage -Organization realizes that a project may be needed or receives a request from a customer to propose a plan to perform a project. 10
Phase 2: feasibility study: Project formulation -Looks at techno-economic design stage aspects of the project -Looks into such issues like location, finance, commercial, institutional preliminary organizational/set up, economic financial aspects. -Also termed project formulation/design stage. -Here the planning phase becomes critical to derive a realistic schedule and budget taking into account the constraints imposed on the project Phase 3 Implementation/execution -Entails launching the project work -Manufacture, construction and installation of equipment and facilities -Entails procurement; production -Requires monitoring cost schedules and specifications, plan to be up to date Phase 4 Handover and start up stage - Preparing customer for acceptance and handover to ensure the project can deliver. Any follow- up activities are identified and assigned and project evaluation is completed 11
Phase 5 Post project evaluation done after project is handed over to the customer. It provides data for future projects. Contents of a project report(proposal) 1. INTRODUCTION: • -purpose • -scope(limits) 2. EXECUTIVE SUMMARY • -executive highlights • -summarises completed project report • -findings • -decisions 3. CONCLUSIONS/RECOMMENDATIONS 12
4. PROJECT DESCRIPTION • General objectives • Specific objectives -market analysis • Product/service description • Market position • Competition and marketing strategy Project structure • Work breakdown structure • Work packages Project costs • Capital and expense requirements • Financial plan (project budget) • Contingencies • Economic and financial analysis(viability) • Risk and sensitivity analysis Schedule • Time estimates • Calendar schedule • Bar chart schedule Network • List of activities 13
• Arrow diagram Resource allocation • Resource type • Resource availability and constraints Control systems • Project evaluation methods • Cost control • Cost minimizing (time/cost trade offs) • Status report • Milestones ORGANISATION AND ACCOUNTABILITY • Management capacity • Labour /employee plan • Responsibility/accountability matrix • Procedures • Special conditions/contractual aspects APPENDIX • Reference material • Calculations • Curriculum vitae (cv) NB a project plan (report) varies from organization to organization but any project must contain most of the above elements. 14
CHAPTER 3 3.0 PROJECT ORGANISATIONAL STRUCTURE - Hierarchical structure: organizational chart • Appropriate for very large, long-term projects which work on isolated tasks and are staffed mainly by full time employees. • Is not appropriate when project is to be integrated with the base organization. Advantages • Functional specialists easily share their knowledge and normally work together. • Easier to implement work rules and regulations for a group of similar functional experts. • Share a commonality of perspectives that will help the main thrust of a project. 15
Disadvantages Disadvantages of organizational projects according to hierarchical structure • Does not develop technology useful for the future. • Minimal career continuity for project personnel. • It often leads to:- - bureaucracy - inefficiency - poor use of resources - collapse of authority or the project usurping responsibility it should not have. - Little commitment from people outside the project - Little informal contact between the project and its surroundings MATRIX STRUCTURE Can be on full or part time basis. It is a high breed organization. It is characterized by having a pull of project managers who will be assigned to projects. It comprises of :- 16
- Core team members with previous experience who are not necessarily drawn from across the functional structures. - Extended team members who are drawn from across functional structures and do a specific part of a job for a relatively short time. Advantages • Response to changing needs is very rapid. • Functional experts are more part of a team and are more focused on project deliverables. • Team members have a functional department to return to after the project. • Their respective departments look after careers and specific development needs. Disadvantages • There can be conflict between functional line managers and project managers over the deployment of resources. • If the team is not physic ally located in the same area in a building, communications and control becomes a difficulty. • Matrix structures are frequently hindered by accusations of poor accountability and lack of clarity in responsibilities. Project organization 17
It is based on assigning projects to each organizational unit (department). The project make contribution to corporate strategy. Senior management is involved in project process and has defined roles and responsibilities. Senior management sponsor projects and have authority i.e. ownership over projects. Project sponsors can form project steering team. Advantages - It ensures everyone in the organization focuses on important active projects. - The reporting structure is clear - It priotises project for limited resources - Reaction to market changes if rapid as authority exists in project team - Functional specialists work with project managers Disadvantages - Duplication of functional experts will exist across the organization as they are each dedicated to a single project. - There is a lack of information exchange between functional experts as they are located in different parts of the organization. 18
Project sponsor (owns, commissions the project, chairs PST) The project sponsor for any project is accountable (to the PST) for the performance of their projects and must demonstrate their concern for success to everyone involved. Responsibilities include: • Ensuring project objectives are always aligned to corporate needs; • Selecting the project manager; • Approving the project definition; • Sustaining the project direction; • Ensuring priorities are maintained for all their projects; • Overseeing the project process and procedures, budget and control; finds and wins resource(s) for the project • Reacting promptly to issues escalating to them for decisions; • Maintaining support and commitment; • Approving project plans, changes and status reports. Project steering team (created by project sponsors has representatives from business + technical functions + user community) This group of project sponsors – the project steering team (PST) – meets at regular intervals to review the status of all active projects, initiate new projects and decide the prioritization of project activity in the organization. Responsibilities include:- • Ensuring projects are aligned to corporate objectives; 19
• Giving strategic direction; • Maintaining focus on customer and business needs; • Ensuring environmental influences are taken into account (internal and external); • Prioritizing all active projects and their resourcing; • Resolving escalating issues; • Providing the ultimate decision forum for all major problems and issues; • Approving start-up and abortion of projects. • Reviews overall project direction, schedule, costs, quality of deliverables) Project manager ( manager project, people + paper work, attends, steering committee meetings) The project manager is responsible for the project work from the initial kick-off through to closure. Responsibilities include: • Selecting the core team with the project sponsor; • Identifying and managing the project stakeholders; • Defining the project and securing stakeholder approval; • Planning then project and securing stakeholder approval identifying + managing the risks • Allocating + securing resource commitments • Monitoring and tracking project progress 20
• Solving the problems that interfere with progress • Controlling costs • Leading project team • Informing stakeholders of progress status • Delivering the project deliverables + benefits • Managing performance of everyone involved with project Project Manager’s deliverables i.e The physical items to be delivered from a project. This typically includes reports and plan as well as physical products and services project deliveries a product or service. • Terms of reference or project definition • Milestone plan • Budget • Work breakdown structure • Project organization chart • Responsibility • Task definitions • Deliverable definitions • Deliverablee definitions • Quality plan • Dependency chart 21
• Progress reporting standards • Change control standards • Lost of planning + estimating assumptions • Gantt chart • Progress reports • End of phase reports • Project review report Project Team Successful teams have to be built through effective leadership + commitment Criteria for selecting team members • Relevant technical experience/specialized knowledge are essential to project. • Have worked in project team before i.e have experience • Assets current non project work load • Do they get on easily with other people • Are they good team players • Is line manager in agreement with possible assignments. Project member • Technical expert qualified to complete project tasks • Gives regular feedback on progress to project manager 22
• Focuses on delivering quality contributes to teamwork and morale CHAPTER 4 4.0 PROJECT PLANNING “íf you fail to plan: you prepare to fail” 4.1 Purpose of planning • To achieve a common understanding of the task to be resolved • To obtain an overview of the work to be carried out • To lay the foundation for allocating and committing resources • To be able to form a suitable organization of work • To define a programme of monitoring and control. 4.2 Definition of Project Planning • Is “a continuous process which involved decisions and choices, about alternative ways using available resources with the aim of achieving particular goals at sometime in the future”( Conyers and Hill,1984). L.Young – planning is a process of creating order out of apparent chaos 23
Key aspects of the definition: • Making choices • Concerning use of limited resources • To achieve given goals and objectives • Pertaining to some future time NB: Goal – aim or objective towards which an endeavor is directed.(simply objective) 4.3 Project planning involves stating • Why a project should be undertaken • What should be done and • By whom, in order to achieve well-defined objectives by some future dates. 4.4 Products of planning • Plans consisting basically of graphics and text e.g. graphics – include charts, logic diagrams, sketches and in some cases photographs • Texts include narratives and tables. • Logic of planning = plan. • List of what jobs (activities) have to be done and the order of carrying them out. 24
4.5 Planning cycle and project cycle Like project cycle, planning cycle is made up of three main elements: 1. Clarity problems to be solved 2. Set out objectives and 3. Draw up the project plans 4.6 Planning procedures: (i) Establish objectives • State objectives – derived from requirements (problems that motivated the project • List interim objectives or milestones – these are significant events in meeting the main objectives • Designate responsible personnel or departments - These are important groups whose participation in planning and scheduling are required for successful project implementations. These participating activities used to be identified early in project developments. (ii) Develop a plan • List what jobs (or activities have to be done to complete the project • Delineate the jobs by determining their relationships: - determine which jobs proceed and succeed every other job - determine which jobs can be accomplished concurrently 25
(iii) Draw the arrow diagram • Show the sequence in a planning (arrow) diagram. The planning process becomes complete when the graphic display in the form of a planning diagram displays the project work items and their relationship. 4.7 Obstacles to project planning 4.7.1 Network planning Techniques Network analysis(planning) • This is a graphic analysis of the project showing the plan of action through the use of a graphic diagram (used in project planning) • Network planning techniques Common ones include: 4.7.2 Critical Path Analysis/Critical Path Method CPA/CPM • Developed by Rand corporation and Du Pont to improve the planning, scheduling and controlling of projects(as a means of scheduling shutdowns regular shutdowns at chemical processing plants) 4.7.3 Programme Evaluation Review Technique(PERT) 26
• Developed from work involving the US Navy for planning, coordinating the projects associated with the development of the missile programme Differences PERT CPM -event oriented -activity oriented -provides starting and finishing - provides starting and finishing times provided for the event times for the activity -provides the probability of -has no provision for determining meeting a scheduled date probabilities -uses three time estimates for -uses on estimate each activity 4.8 Network Terminology Activity – This is a task or job of work, which takes time and resources. it is represented by an arrow not arrow to scale. Tail of Head of the arrow arrow -Indicates where Where task ends Task begins e.g Build a wall - Verify debtors in a sales ledger. a) What activities are involved in the project. b) Establish their logical relationship i.e which activity comes after or before. c) Establish the estimate of time that the activity is expected to take. 27
EVENT- It is a just in time, it indicates the start or finish of an activity or activities. It is represented in a network by a circle or node. Establishing of activities automatically determines events which are the start of finish if activities e.g wall bulk, debtors verified, arrived city. Dummy Activity – It is an activity that does not consume time or resources. It is a fictitious activity with zero activity time used to create a PERT or CPM network. It is used merely to show clear logical dependents between activities so as not to violet the rules for drawing network. It is represented is a network by a dummy activities are not usually listed with led activities may become necessary as the network is drawn. CONCURRENT ACTIVITY – They are activities as tasks that are designed to be carried out in parallel i.e at the same time. SERIES ACTIVITIES – are activities or tasks that are designed to be carried out are after another each strictly dependent on compilation of the earlier activity. 28
NETWORK – A combination of activities, dummy activities and events in a logical sequence according to the rules for drawing networks. RULES FOR DRAWING NETWORKS A – A Complete network should have one part of entry i.e a start event and only Part of exist i.e a finish event. B – Every activity must have one preceding as task event and one succeeding or head event. NOTE :- that activities may use the same head event. Tail Head event Events Head Events Tail event - However an activity must not share the same tail event and the same head event with any other activities (use dummies) - An event is not complete until all activities leading into if are complete. - ‘Loops’ i.e a series of activities which lead back to the same event are not allowed because the essence of networks is a progression of activities away making onwards in time. - All activities must be tied into the network i.e they must contribute to the progression or be discussed as irrelevant. - Activities which do not link to the overall network are called ‘danglers’ they are not to be used. 29
Dangling activity not to be used. CONVENTIONS FOR DRAWING NETWORKS a) Networks proceed from left to right. b) Networks are not draws to scale i.e the length of the arrow does not represent the time elapsed. c) Arrows need not be draws in the horizontal plane. - If they are not already numbers events or nodes should be progressively numbered from left to right. Simple networks have events numbers in simple numeric progression i.e 0,1,2,3,e.t.c Activity identification Typical methods of presentation include:- a) Shortened description of the job of plaster wall e.g order raw material. b) Alphabetical or numeric code i.e A.B.C. D e.t.c or 100.101,102 e.t.c c) Identification by the fail and head event numbers e.g 0-1, 1-2, 2-3 30
Dummy activities Part of a network involves a car arriving at a service station during which 2 independent activities take place, filling petrol (A) and topping up with oil (B) Fill petrol A Dummy activity B Top up with oil EXAMPLE Assume that part of the network involves a man lighting a cigarette. Activities and there relationship are assumed to be as follows. ACTIVITY DESCRIPTION PRECEDING ACTIVITY A Remove cigarette from case - C Put cigarette case away A B Strike match - D Light cigarette A , B REQUIRED - A network diagram Remove cigarette from Put cigar away Case A C B D 31 Car arrives Car filled with Petrol Oil Topped up
Network Analysis: (Time Analysis) Assessing the time Once outline network has been drawn there is need to complete it by in settling the activity duration time. a) Time estimate – an estimate is a decision about how much time and resources are required to carry out a piece of work to acceptable standards of work performance – You determine the size of group of tasks, the amount of effort required to complete the work. Effort is measured in project time units, e.g hours days weeks. Sources of accurate estimates. - Use experience of others - Seek expert views (advice) - Historical data from other projects NETWORK TERMINOLOGY 3.1.3 Three time estimate approach This approach is used to offset bias. Before beginning scheduling of a project it is necessary to estimate the time required to complete each 32
activity. After completing the initial arrow diagram, a time estimate is obtained for each job in the project. Persons familiar with work to be performed make the time estimates based on their best judgment. Sources for accurate estimates: - Experience from others - The expert view - Historical data from other projects Estimate is a decision about how much time and resources are required to carry out a piece of work of performance. Determine: • The “size” of the task or group of tasks • The amount of “effort” required to complete the work; effort is measured in project time units (hours, days, weeks) Effort Duration Schedule 3.1.4 PROJECT SCHEDULING This is the second phase of a project after planning, detailing the time at which each job is to be started and completed. This phase represents when the work need to be done. 33
Scheduling Procedure: 1. After the sequence of jobs has been planned and laid in a network diagram, establish the timing a. Estimate the time required to complete each project item b. Calculate the scheduled time for each project c. Compare the required time (time estimate) with the available time to complete each job. d. Identify the critical jobs e. Determine the front times of non critical jobs 2. If the project duration time calculated initially is not acceptable make adjustments to the plan so as to meet project deadline that is acceptable. 3. Establish a time schedule (using a bias chart) EXPECTED TIME CALCULATION Expected time = Optimistic time +4 (normal time) + pessimistic time 6 Optimistic Time - is the shortest possible time required for completing an activity i.e. everything goes as planned; deliveries are on time, machines and equipment operate without breakdowns, personal work within the standards. 34
Normal Time - is the time most frequently required if activity were repeated many times under similar conditions. This is the estimate that should be used in an arrow diagram, as there is no contingency added. Pessimistic Time - is the maximum possible time required to complete an activity i.e. about everything goes wrong: delivery difficulties work delays, accidents. e.g. Assume that three estimates for an activity are : DAYS (O) Optimistic 11 Most likely 15 (P) Pessimistic 18 EXPECTED TIME = 11+18+4(15) 6 =14.8 days = 15 days a) Time Units Time estimates may be given in many unit i.e. minutes, hours, days, weeks depending on the project. All time estimates within a project must be in the same units to avoid confusion. b) Use of time estimates Project with multiple time estimates can be further analysed to give an estimates of the probability of completing the project by a scheduled date 35
BASIC TIME ANALYSIS - CRITICAL PATH CRITICAL PATH - critical path of a network gives the shortest time in which the whole project can be completed. - It is the chain of activities with the longest duration times - There may be more than one critical path in a network and it is possible for the critical path to run through a dummy. Step by step procedure for establishing critical path 1. Earliest start times (EST) - it is the earliest possible time at which a succeeding activity can start Method of calculation : FORWARD PASS a) EST of a head event is obtained by adding onto the EST of the tail event, the linking activity duration starting from event o, time o and working forward through the network. b) Where two or more routes arrive at an event the longest route time must be taken e.g. activity F depends on completion of D and E. E is completed by day 5 and D is not complete until day 7 ; F cannot start before day 7. c) The EST in the finish event no 5 is the project duration and is the shortest time which the whole project can be completed. 2 B 2 days 4days D A 1 C 3 E 4 F 5 1 day 3 days 1 day 2 days 36
A – F = Activities 0– 5 = Events Find the critical path (forward pass) 2 B 2 4 D A 1 C 3 E 4 F 5 1 3 1 2 The EST of the head event = Zero starting time + 1 day = 1 + 2 = 3 1 + 3 = 4 4 + 1 = 5 3 + 4 = 7 7 + 2 = 9 b) where two or more groups arrive at an event the longest route T must be taken e.g. Activity F dependent on compilation of ‘D’ and ‘E’. ‘E’ is completed by day 5 and D is not complete until day 7 therefore F cannot start before 37 0 0 0 09 98 l0 o0 00 2 3 1 1 3 4 4 7 5 9
day 7. c) The EST in the finishing event number 5 is the project duration and it is the shortest time in which the where project can be completed. 2. Latest start time (LST) (Backward pass) LST for each activity must be established to enable critical path to be isolated. LST is the latest possible time at which preceding activity can finish without project duration. Calculating LST (backward pass) a) starting at finish event no5 insert LST i.e. day a and work backwards through the network deducting each activity duration from previous calculated LST. b) Where tails of activities B & C join event no1, LST for C is day 3 and LST for B is day 1. The lowest number is taken as LST for event no 1 because if event no 1 occurred at day 3 then activities B and D could not be completed by day 7 as required and project would be delayed. 2 B 2 4 D A 1 C 3 E 4 F 5 1 3 1 2 38 0 0 0 0 09 98 l0 o0 3 3 1 1 4 6 7 7 5 9
CRITICAL PATH One path through the network (A, B, D,F) has EST’s and LST’s which are identical. This is the critical path (chain of activities which has the longest duration), which can be indicated by a different colour or by two small transverse lines across the arrows along the path. Critical path implications: - Activities along article path are vital activities which must be completed by their EST’s/LST’s otherwise project will be delayed. - Float is the spare time available on non critical activities(i.e. (C and E). C and /or E could takeuptoanadditional2daysintotalwithoutdelaying the project duration. - If required to reduce overall project duration then the time of using more labour, or more or better equipment or some other method of reducing job times must reduce one or more of the activities on critical path. Float Types of float a) Total Float - This is the amount of time a path of activities could be delayed without affecting the overall project duration. Total Float = Latest Heat time –Earliest Tail time –Activity duration Total float = 50-10-10 =30 days. 39 00
b) Free Float - This is the amount of time activity can be delayed without affecting the commencement of a subsequent activity at its earliest start time, but may affect float of a previous activity. Free float = Earliest Head Time –Earliest Tail Time – Activity Duration Free float = 40 – 10 - 10 20 days c) Independent Float - This is the amount of time an activity can be delayed when all preceding activities are completed as late as possible and all succeeding activities are completed as early as possible. Independent float does not affect the float of either preceding or subsequent activities. Independent Float = Earliest Head Time – Latest Tail Time – Activity duration. Independent float = 40 –20 –10 10 days. For examination purposes the most important type of float is Total Float. Calculate float (total) 1) Calculating separately 2) or calculating for total float over chains. Non –critical chain Time read time available total float over chain 40
C, E 3+1 = 4days 7 – 1 = 6days 2 days Slack This is the difference between EST and LST for each event. Strictly speaking it does not apply to activities but on occasions the terms are confused in exam questions. Exercise: A project has five activities as follows: Project data activity Preceding activity Duration (days) normal A - 4 B - 8 C A 5 D A 9 E B, C 5 a) Find critical path using EST’s /LST’s b) Calculate the floats of the network. NETWORK ANALYSIS a) Cost scheduling A further important feature of network analysis is concerned with costs of activities and of the project as a whole. Cost analysis objectives The primary objective of network cost analysis is to be able to calculate the cost of various project durations. Normal duration of a project numbers a given cost: More labour 41
Working overtime More equipment Network cost analysis seeks to find the cheapest way of reducing overall duration. b) Resource scheduling Management need to know what activities and what resources are critical to the project duration and if resources limitations e.g. (shortage of materials, limited number of skilled labour might delay the project. Resources scheduling requirements: i) resource requirements for each activity showing classification of the resource and quantity required ii) resources in each classification that are available to project iii) might need restrictions that need to be considered e.g. limitations on labour mobility iv) activity times, descriptions and sequences 1) Submissions of assignments – late submission not considered 2) Group presentation towards end of session 3) Lecture 4) Effort - schedule – duration 42
CONSTRUCTING THE NETWORK – Worked Example Tasks Precedence Time Cost Who does A - 5days - - B - 4days - - C a 6days - - D b 2days - - E b 5days - - F c, d 8days - - Find a) Critical path b) How long it will take to complete the project i) Node numbered I denotes event called “START” ii) Activities a and b have no predecessors, assume source is at “start” – Node 1 iii) Destination at nodes are numbered 2 and 3 respectively iv) Arrow heads show direction of flow. i) Activity c follows a activity d follows b activity e follows b Note Number event nodes sequentially from left to right as you construct the network ii) activity f follows both CTD but any given activity must have its source in one and only one node ‘ ctd finish in the same node. 43
Exercise Assume a small project with ten activities as follows: Project activity times and precedence’s Activity optimistic time most likely pessimistic immediate Time time time predecessor activity A 10 22 22 - B 20 20 20 - C 4 10 16 - D 2 14 32 a E 8 8 20 b, c F 8 14 20 b, c G 4 4 4 b, c H 2 12 16 c I 6 16 38 g, h J 2 8 14 d, e Question 1. Hints i) start network by finding those activities that have no predecessors - activities a, b, c meet the test: they can all be drawn emerging from the starting node ii) look for activities that only require a, b, or c or some combination of a, b, and c to precede them: 44
- activity d requires that a be completed and e, f and g all require that b and c completed - note that a dummy will be necessary unless we begin the network from separate nodes b and c - h requires only that c be completed iii) last activity I and j are drawn in the same manner. Activity I requires both g and h be completed; so g and h are directed to a single node (node 5) Similarly activity j requires completion of both d and e which are directed to node 6 iv) since no activities that f, I or j precede them the activities are directed to the project completion node 7. Question 2. Expected Time (TE) = (a+4m+b) 6 Where a = optimistic time estimate b = pessimistic time estimates m = most likely time estimate TE is estimate of the mean of the distribution It is the weighted average of a, m and b with weights 1 – 4 – 1 respectively. The same method can be used to find the expected level of resource usage given the 45
approximate estimates of the modal resource level as well as optimistic and pessimistic estimates. Activity Expected Time A 20 B 20 C 10 D 15 E 10 F 14 G 4 H 11 I 18 J 8 Longest of these paths is a-d-jusing43 days which means that 43 days is the shortest time in which the entire network can be completed. A – d – j is the critical path. Times and slacks for network Event Latest occurrence time earliest occurrence time Slack 1 0 0 0 2 20 20 0 3 21 20 1 46
4 14 10 4 5 25 24 1 6 35 35 0 7 43 43 0 Activity LST EST Slack A 0 0 0 B 1 0 1 C 4 0 4 D 20 20 0 E 25 20 5 F 29 20 9 G 21 20 1 H 14 10 4 I 25 24 1 J 35 35 0 Notes EST for an activity = for the event from which activity emanates e.g. activity I cannot start until event 5 has occurred . Event 5 has an EOT of 24 days and so activity I has an EST of 24 days Project has critical time of 43 days, activity I requires 18 days to be accomplished. Therefore I must be started no later than 25 (43 – 18 = 25) if the 47
project is to be completed on day 43.LSTfor activity I is day 25 because I cannot begin until event 5 has occurred, latest occurrence time (LOT) for event 5 is also 25. Slack or Float = difference between the LST and the EST for an activity - in the case of activity I it must be started no later than day 25 but could be started as early as day 24, so it has one day of slack - all activities on critical path have zero slack NB To find the slack for any activity or the LOT for any event - make a backward pass (right to left) To find the critical path and time and the EOT’s for al events make a forward pass (left to right) which are also EST’s for successor activities. Adopt the following convention: When there are two or more non-critical activities on a path, it is conventional to calculate the slack for each activity as if it were the only activity in the path. Problems 1. Given the following information, draw the PERT/CPM diagram. Activity Immediate Predecessor 1 - 2 - 3 1, 4 4 2 48
5 2 6 3, 5 2. Given the diagram below, find: a) Critical path b) How long it will take to complete the project 3. Given the following network a) What is the critical path b) How long will it take to complete this project c) Can activity B be delayed without delaying the completion or the project? If so, how many days? 4. Activity a m b AB 3 6 9 AC 1 4 7 CB 0 3 6 CD 3 3 3 CE 2 2 8 BD 0 0 6 BE 2 5 8 DF 4 4 10 DE 1 1 1 49
EF 1 4 7 Find: a) the critical path b) all event slacks c) critical path to event D d) the effect if CD slips to 6days, to 7days,to 8days. NB a = optimistic time estimate B = pessimistic time estimate M = most likely time estimate Calculating Earliest Start Time (EST) - this is the earliest possible time an activity can begin without interfering with the completion of any preceding activities - guidelines in calculating EST • calculation of EST commences with the beginning mode of arrow diagram (time O) and continues 50
• if only one arrow leads into a mode, EST for jobs starting at the mode is determined by adding EST for the preceding job to the time estimate for the preceding job. EST at mode 6 4 = 6 4 EST at mode 8 select 8 project ii project 2 8 • if more than one arrow leads into a mode, EST calculations is made through each end of the arrows as noted below. The largest total is the EST for the mode. EST at mode 3 EST at mode 7 13 23 pressure equipment 51
3 7 EST at mode 6 17 Develop operating procedures 6 6 Calculating latest finish time (LFT) - LFT an activity must be completed without delaying the end of the project. - Guidelines when calculating (LFT) • Project duration must first be determined by calculating EST • Project duration is the LFT of the end mode of the project • Calculation of LFT involves working from the end mode back through each mode to the first mode in the project 52
If more than one arrow originates at a mode, the calculation of LFT is made via each arrow and the smallest result is from each mode to the end of the diagram. LFT at mode 4 LFT at 6 select operating manager mode 4 6 17 6 9 hire operating train up personnel 10 personnel 5 4 7 Job 4, 6 17 LFT at mode 6 - 9 Time estimate for job 4, 6 8 Job4, 5 10 LFT at mode 5 - 4 Time estimate for job 4, 5 53
6  LFT at mode 4 is 6 days the smaller of the two results. Milestone dates can be set V12 P32 – 36 Float: optional start and finish times. A float is the difference between time available for performing a job and the time required for doing it. Available time = Latest finish time - earliest start time Required time = time estimate for completing a job DIAGRAMS Benefits from timing calculations: • Establishment of project duration for plan 54
• Identification of longest path (critical path) through the project • Identification of jobs for which there is scheduling flexibility without lengthening project duration. Formula for calculating optional starting and finishing times: Latest start = earliest start + total floats Earliest finish = Latest finish - total float. Tabulated schedule can be converted into a calendar schedule for reporting and monitoring the project. Bar Chart time schedule can be plotted after schedule is calculated. Procedure for constructing bar chart: 1. use earliest start time for each project activity. 2. The length of each bar is the duration of each activity. 3. Plot one activity per line (in some cases, a number of activities per time) 55
4.8 Benefits and limitations of network planning Benefits • A disciplined basis for planning a project • A clear picture of the scope of the project that be read and understood easily by someone who is not familiar( but knowledge of the network diagramming technique) with the project. • A means of communicating what is to be done in the project • A vehicle for use in evaluating alternative strategies and objectives • A means of defining relationships among the project items • A means of pinpointing those responsible for accomplishing the jobs that make up the project • An excellent vehicle for training project personnel 4.9 Limitations • Network is often difficult to interpret • A great deal of time is usually needed to prepare changes, often requiring a great deal of time for modifications to the network diagram • A network makes it difficult to note estimated costs versus actual costs • Individual skills are not recognized. 56
4.10 Bar chart/Gant Chart Construction • Is a graphic planning and control method • a project is broken down into separate tasks and for each task, estimates are made of the amount of time required and of the termination date necessary to meet the specified completion date for the project. • Information is shown as a pair of brackets indicating the start and end of dates for each task • Grant Chart enables a manager to make commitments based on the planned completion times, to acquire extra resources to shorten some of the times etc. • Grantt Chart enables manager to fill in the brackets (accomplishment) enabling him to see immediately what tasks are behind( or ahead of schedule and how far. Advantages – provides excellent communication to management Depicts more readily than network diagrams, a summary of status of project and thus are used extensively in reporting on progress of projects. 4.11 Deficiencies/weaknesses -Relationships among the jobs cannot be shown and questions cannot be answered regarding 57
• Parts of these jobs that can be done concurrently • Parts of each job that must be completed be for other parts begin • Certain jobs or parts of jobs that must be given priority so as not to hold up scheduled completion of project • Optional starting and end dates of some jobs or parts of jobs if any. To overcome above deficiencies during planning • Network diagrams explicitly show interrelationships between jobs. A network diagram shows which jobs can be done concurrently, which owes precede, and which ones follow other jobs • Jobs with critical schedules are specified with their required beginning and end dates Using computer calculations based on the network diagram also permits more rapid and accurate updating of project schedule. “While PERT/CPM and Gannt charts are both scheduling techniques, they are not merely different ways of achieving the same ends: they are complementary rather than competitive” Discuss The date may relate to when a decision is to be made concerning outside financing, when announcement of a project to the press is planned, when a thorough project review is scheduled on whatever. Milestone scheduling indicates seluted dates by which various phases of the entire project to be completed. 58
• Milestones add detail to Gantt chart • Milestones serve as formal review points where costs, progress and the need for replanning on schedule modification can be reviewed. Gantt chart shows the relationship between milestones within the same task but not within different tasks. 4.12 Milestone Planning Is the date when a certain accomplishment, decision or event is to take place as indicated on the horizontal bar of a chart . V12 p 14 4.13 PROJECT WORK BREAKDOWN STUCTURE (WBS) This is a dynamic tool which divides(segments) the project into parts before starting a project. It is updated as the work proceeds, particularly as minor changes affect the task analysis. Reasons for segmenting a project • Project is large • Project is long term • It is advantageous to have information to plan the whole project as one unit • We do not have information to plan the whole project as one unit 59
• The project has several natural phases with completing different contents. NB: a characteristic of a phase is that it is possible to plan it as a whole i.e. giving us an insight into the types of activities that should be done in this phase. A WBS does not show dependencies other than a grouping under the key stages. A WBS is not time based – there is no time scale on the drawing. e.g. feasibility(phase) study V implementation phase Preliminary project V (main project) -Defines precisely objectives and goals -it implements what has been on project decided -Requires thoroughness completeness 4.14 PROJECT RESPONSIBILITY CHART - It is a contract between the project and the parties involved (management other resource persons and members from the base organization who are drawn into the project) 60
- Each party must understand clearly the responsibilities for (work ending up to a milestone) and their roles. Each key stage must be owned by one of the team members. - Some milestones may require authority to make decisions. - Responsibility can consist of being responsible for progress, expecting work, making decisions, being available for consultation, receiving information or tutoring. - When project responsibility chart has been developed it is useful to evaluate the results. - External assistance can be included in the project on project members e.g. legal expertise, trade union representative, expert in economics and finance (if not found from within) - At this stage data to complete “duration” on plan “end date” is not yet in place. LINEAR RESPONSIBILITY CHART (LRC) - It is a contract between the project and the parties involved i.e right and member from the base organization who are drawn into the project as resource persons and each party must understand clearly for work leading up to a milestone (date of announcement) - Responsibilities can consist of being responsible for progress or implementing work, making decisions, being available for consultations, receiving information or tutoring as well as evaluating the results. 61
- External assistant can also be included in the project as project members such as legal practioners, TUs, economic experts if not found from within. - If summaries the relationships between project participants and their responsibilities in each element of a project and an element can be a specific activity an authorization to perform an activity, a decision or a report. The LRC has government column to represent organizational elements and roles which correspond to the project elements and roles which correspond to the project elements performed by the organization. - The LRC depicts authority, responsibility and communication channels. Activity Engineeri ng manager Manufacturi ng manager Contract s manager Project manag er Marketin g manager Quality assuranc e manager Negotiating Contract I, N I, N I, R P I A Preliminary Design P A R O, B I A Execution R P - O, B I R Delivery N N P A N A KEY A - Approval P - Preliminary responsibility – who is responsible for accomplishing R - Review N - Notification O - Output I - Input B - Initiation 4.0 PROJECT DOCUMENTATION Project work produces a large amount of data and it is important that you record essential material. Insist that the team keep all 62
essential project records on a standard set of templates (format 5) derived specifically for the purpose. • To ensure project data is resolved in a consistent and disciplined manner without reinventing every week. • To get the right information recorded for the project file to support your control system and aid project evaluation at completion. • Standard formats can be designed on the computer a) Project File - use a paper based system but more preferably on computer based file which makes distribution of information easier with a network. - Organize your project file into sections for different stages of the project e. g.  Background information  Project definition - project organization - stakeholders - project brief  Project plans and schedules - project risk management 63
- responsibility charts - schedules - work plans  Project execution and implementation - project status reports - changes to project plans - action plans for correction action - cost control data - supplier and subcontractor data - records of meetings  Project closure - handover checklist - acceptance pressure - follow up and post project responsibilities - project evaluation data - completion report b) Project logbook - open a project log book at the start of your project - book in an A4 bound …….book - log book is particularly valuable to record events with third parties like suppliers and contractors. When conflicts and differences occur the 64
logbook provides a record of events that can have a legal status in a dispute - log book is an addendum to the project file - the logbook is an invaluable record of what actually happened throughout the project. It is useful for post-project evaluation and a source of active data for other projects in the future. c) Project definition - process of turning the data into something more solid and realistic, something that is no longer a wish or a hope - a clear definition of your project is critical to success – a large number of projects (more than 75%) are perceived to fail as a consequence of poor or nuclear definition Documents required to effectively define project: I. a statement of requirements II. a stakeholder list – - all with an interest in the project, how or in the future : customer, endures, project sponsors, line managers of your core team members - finance department, sales and marketing department, consultants , contractors, suppliers, other divisions or sites. Project log book 65
Record events with essential relevant data: • date • time • who is involved • key points or content Events to record • Telephone calls – incoming and outgoing • Faxes – incoming and outgoing • Letters – sent and received • Memos – sent and received • E –mail - sent and received • Purchases instructions issued • Contracts signed • Action plans agreed • Decisions taken – how implemented • Solutions derived • Reports issued • Meetings – sponsor team, third party, one – to – one When using log book  Use every page and number them sequentially 66
 Never remove any pages  Start each day with anew page  Always write with ink, never with pencil  Write on very line  Rule out all unused lines at the end of each day and sign the page at the bottom  Do not allow anyone else to write in the logbook – even the project sponsor. - the public, other agencies/statutory bodies stakeholders used to be consulted for their inputs to give you a wider perspective of: - the real project needs and requirements - what is realistically available in the time scale demanded. III. Project brief – one page document with the following sub headings:  Project title – relevant title for identification (project number)  Project overall objective – describes project’s desired results in 25 –30 words  Project leader and sponsor to be identified  Project proposed start date: date when the real work starts after definition is approved and planning begins  Project required and date: and project is handled over to customer 67
 Project deliverables; tangibles outputs from the project which must be impabale of being measured through its lifecycle, apply SMART test to ensure that each deliverable is specific, measurable achievable, realistic and time bound  Project benefit  Lists benefits and quantity them in financial terms-cost savings, increased turnover, contribution or profitability in a specific time scale.  Project strategy –explore alternative, carry out feasibility study, set up site team, involve customers in the team  Project skills required: identify and highlight special experience and technical skills you expect to need, external skills, expertise from outside the organization.  Relationships with other active projects –any project interfaces with other projects in terms of inputs, outputs critical interface dates to be determined.  Project cost – if known or budget exists from earlier studies or feasibility with them state cost, if not give estimate cost o rleave blank.  Risk management – risk log and management forms attached Project brief is a document that summarizes all relevant facts about the project and is a source of definitive information: 68
Contents:  Projects origins –a need or opportunity statement  Project …….. – why is it necessary now?  Benefits of project –to customer and your organisation  Project budget if known at this stage  Current timescale and dead lines –subject always to detailed planning later Iv Scope of work statement (SOW) - it is a narrative description of the project objectives in more detail, giving more information about each deliverable and benefit identified. SOW must identify boundary limits of project clearly stating what is not going to be done as part of the project. It records all constraints made earlier and any assumptions made in each of the meetings, SOW is where the applicable specification list is recorded: - internal product specifications - external product specifications - mandatory standards imposed by legislation - process specification - customer specifications - standard operating procedures - purchasing procedures 69
- quality standards - testing specifications and procedures - sub contract terms and conditions imposed on third parties Its purpose: - to make sure that everyone knows from the offset which standards and specifications apply to your project - it identifies where actual document scan be found for reference - it identifies what exceptions, if any, apply to any specification for your project - if necessary record for reference purposes any other relevant documents that have been issued previously relating to project e.g. CBA fundability reports, studies carried out by consultants, project evaluation reports from previous projects v Risk Management - a risk is any event that could prevent the project from realizing expectations of the stakeholders as stated in the agreed project briefs or a agreed definition. A risk that becomes a reality is treated as an issue - there are risks to all projects and risk management is the process o identifying and containing them to ensure your project’s success. It is necessary to anticipate what might go wrong. Two types of risks 70
o project risks – associated with technical aspects of the work of the work to achieve the required customers o process risks – associated with project process, procedures, tools and techniques employed, the controls put in place, communication, stakeholders and team performances o can be due to external / internal factors Project manager is made an obligation with the team to,  identify and evaluate potential risks  obtain agreement for action plans to contain risks  take actions and monitor results  promptly resolve any issues arising from risks that happen Risk management is a continuous process throughout the life cycle of the project. Identify the triggers or signals that suggest a risk likely to happen, and you must maintain awareness of risk in the minds of all your project team;  should be started at definition phase.  Is essential to establishing project brief  Compile a complete list of a project risk log  Review the list at regular intervals as the project moves forward. Approval of project definition Requires following documents to be presented 71
 Project organization chart p56 T&Young  Project stakeholder list  Scope of work statement  Project risk management forms  Project brief. 5. PROJECT LAUNCHING After project definition, plan and schedule have been approved you are ready to launch the project work. i) ask key stage owners(people assigned with project work and own the work) to record their task lists -using WBS -use schedule start and end dates -note name of person responsible for carrying out the tasks. -prepare Gannt chart. ii) establish milestone scheduling –milestone should be considered as a flag or some signal at some clearly defined point in the project. There are selected key events that 72
are of major importance towards achieving objectives. Milestone are excellent tools for reporting project status in summary form to management. It summarizes the status of major events. e.g.  completion of key task  completion of one of the project deliverables  stage generation of benefits  completion of third party activity  financial audit point  project audit point  quality audit  significant decision point. Record list of milestone on a schedule and on Gantt chart. 5.1.3 IDENTIFYING CRITICAL SUCCESS FACTORS OF PROJECT Use process type CSF which include: - tools, techniques, processes and procedures you use to define, plan, execute and complete project on time, to the budget - these must be acceptable to the key stakeholders i.e. customer and project sponsor 73
Examples: - defining project objectives, deliverables, benefits - ensuring sponsor is appointed and sustains support and commitment to project - appropriate team is formed and right skill are utilized - scheduled plans exist, up to date - WBS is maintained - Control procedures are understood - Project risks regularly reviewed - Reporting and communication procedures are established –plan a meeting schedule (1 to 1)meetings for your project. 5.1.4. Launch Meeting: as a milestone in the project - get together all important people involved in a project  project sponsor  the customer  other stakeholders(key) –line managers  project team Consider preparing a document package for distribution containing:  project organization chart  project stakeholderlist  key stage Gantt chart  key stage responsibility chart 74
 project brief  any other relevant information CHAPTER 6: PROJECT WORTH INVESTMENT DECISIONS Decision to invest is based on 3 major factors. (a) Investor’s beliefs in the future – such beliefs would be based on forecasts of internal factors including: costs, revenues, inflation, interest rates, taxation etc. (b) Alternatives available in which to invent – appraisal techniques are used to assess competing investments. (c) Investor’s attitude to risk – analysis of project uncertainity, risk are critical given the size of investment. Appraisal techniques Payback is the period usually expressed in yeas which it takes for the project’s net cash inflows to recoup the original investment. e.g Calculate payback for the following projects: 75
Project 1 Project II Year Cash flow Cash flow 0 -1500 -1500 1 +600 +400 2 +500 -500 3 +400 +600 4 -1500 5 +300 6 +500 7 +400 8 +300 9 +300 10 +300 Advantages a) Simple to calculate + understand b) Uses project cash flows rather than accounting profits + hence is more objectively based. c) Favours quick return projects which may produce faster growth for waand enhance liquidity d) Choosing projects which payback quickest with tend to minimize those risks saving the way which are related to time. 76
Disadvantages a) Payback does not measure overall project worth because it does not consider cash flows after the payback period e.g project III is ranked after project I + II even though it produces cashflows over a 6 year period. b) Payback provides only a crude measure of project cashflows. eg project I + II are reached equally even though there are clear differences in timing of cash flows. In spite of above it is undoubtedly the most popular appraisal criteria in practice. Discounted cashflow (DCF) Use of Def overcomes some of the disadvantages of the traditional technique of payback. Two common features to DCF methods: a) Use of cash flows not accounting profit. This is preferred because:- - Cash flows are more objective and in the end are what actually count. Profits cannot be spent cash is the life blood of the company. - Accounting conventions regarding revenue/capital expenditure classifications, depreciation calculations, stock valuations become largely redundant. 77
- The whole life of the project is to be considered therefore it becomes unnecessary and misleading to consider accounting profits which are related to periods (period oriented- monthly, quarterly, annually) - Timing or expected timing of cash flows is more easily ascertained. Typical cash flow items include; 1. project revenues 2. cost grants 3. resale or scrap value of assets 4. tax receipts capital injection (contribution) 5. any other cash inflows caused by accepting the project. Cash outflows - initial investment in acquiring the assets - project costs (labour, materials etc) - working capital investment - tax payments - any other cash outflows caused by accepting project. 78
b) Time value of money (money received now is worth more than money received in use of money) It is preferable to receive a given sum of money earlier rather than later because the sum received earlier can be put to use by earning interest or some productive investment within the business. Assumptions in basic DCF Appraisal a) uncertainty does not exist b) inflation does not exist c) appropriate discount ate to use is known d) a perfect capital market existsi.e. unlimited funds can be raised at the market rate of interest. NPV method It calculates the present values of expected cash inflows and outflows (i.e the process of discounting) and finds out whether in total the present value of cashinflows is greater than the present value of cash out flows. NPV = ∑ C (1 + r) Where C = net cash flow ∑ = Summation of r = discount rate 79
e.g An investment is being considered for which the net flows have been estainated as follows. Period cashflow PVF Discounted PV Yr 0 Yr 1 Yr2 Yr3 Yr4 -9500 +3000 +4700 +4500 +3200 What is the NPV if the discount rate is 20%. Is the project acceptable? NPV = -9500 + (0,833 x 3000) + (0,094 x 4700) + (0,579 x 14800) + (0,482 x 3200) = $582 Use tables To verify use calculator I 1 + r Investment acceptable because it has positive NPV at the firm’s cost of capital. Interpretation: the NPV means potential increase in consumption made possible by the project valued in present day terms. Internal Rate of return (IRR) Alternative names: - DCF yield - Marginal efficiency of capital - Trial and error method 80
- Discounted yield - Actual rate of return Definition - It is the discount rate which gives zero NPV. - It can be found by either i) drawing a graph known as a present value profile or ii) calculations involving lines interpolation. Present value profile - Is a graph of the project NPV’s at various discount rates - Plot two points one at a rate which gives positive NPV and one at a rate which gives a negative NPV e.g 20% gives + $ 582 NPV; and a higher rate is tried to see if a negative NPV is obtained e.g 25% discount rate gives –322 NP Plot these points and draw a line between them to see where it crosses the horizontal axis which gives then IRR 81
PRESENT VALUE PROFILE 700 - 600 - + VE 500 - NPV @ 20% = $ 582 400 - 300 – 200 - 100 - IRR i.e the discount rate which gives NPV 0 - zero NPV $ 100 - 5 10 15 20 25 30 35 40 - VE 200 - 300 - NPV @ 25% = $ -322 400 - 500 - Note a) at least out discount rate must be chosen which gives a negative NPV so that the present values line crosses the horizontal axis. 82
b) The present value line crosses the axis at approximately 23% which is close enough estimate for most practical purposes. Finding the IRR by linear interpolation IRR C = 20% + 5% 582 904 (a) (b) (d) Where a) is a discount rate which gives a positive NPV i.e 20% = $582 b) Is the difference between (a) and the rate which gives a negative NPV 25% - 20% = 5% c) Is the positive NPV at discount rate chosen in a) i.e $ 582 d) Is the total range of NPV at rates chosen i.e +582 to –322 = 904 Decision rule using IRR: Where calculated IRR is greater than company’s cost of capital then project is acceptable. NPV and IRR compared: a) Accept/reject decisions -where projects can be considered independently of each other and where the cashflows are conventional, then NPV and IRR give the same accept/reject decision. Accept project Reject project 83
NPV positive NPV negative NPV IRR IRR above cost of capital IRR below cost of capital b) absolute and relative measures NPV is an absolute measure of the return on a project whereas IRR is a relative measure relating the size and timing of the cashflows to the initial investment. Thus, the NPV reflects the scale of a project whereas the IRR does not. e.g. Assume a project has the following cashflows: year 0 year 5 project x -$20 000 + $40 241 NPV @ 10% = $4990 IRR = 15% Therefore, project is acceptable by both methods-assuming 10% is the cost of capital. Now assume that the project is scaled by a factor of 10: Year 0 year 5 Project 10x = 200 000 +402 410 NPV = 49 900 IRR = 15% NPV clearly distinguishes between project x and project 10x whereas IRR remains unchanged at 15%. c) Mutually Exclusive projects 84
This where only one of several alternative projects can be chosen. Projects are ranked in order of attractiveness and choice is made on the most profitable. In such circumstances NPV and IRR may give conflicting rankings. A property company wishes to develop a site it owns. Three sizes of property are considered and costs and revenues are as follows: Year 0 year 1 to perpetuity Expenditure rentals per annum $million $million small development 2 0,6 medium development 4 1 large development 6 1,35 The cost of capital is 10 % and it is required to rank the projects by NPV and IRR and to select the most profitable. The projects are mutually exclusive because the building of one size of development excludes the others. Perpetuity = is a constant stream of cashflows without end e.g. bonds give cashflow stream (yearly interest) PV = C + C + C 1 +r ( 1 + r) ( 1 + r) = C r NB ranking is preferred i.e. large development because it leads to the greatest increase in wealth for the company. Non-conventional cash-flows (the multiple rate problem) 85
Non-conventional cashflows –where cashflows vary; opposite of conventional cashflows i.e. an initial cashflow followed by a series of inflows. e.g. year 0 year 2 year 3 project x -2 000 +4 700 -2 750 project y +2 000 - 4 000 +4 000 Project x has 2 outflows and is thus no-conventional. Project y has an outflow in a year’s time instead of initially and is thus non- conventional. When a project has non-conventional cash-flows it may have: i. One IRR ii. Multiple IRRs iii. No IRR Multiple rates: Project x =two IRRs at 10% and 25% Project y =No IRR NPV Method gives clear, unambiguous results whatever the cash-flow pattern Project x has positive NPVs at discount rates between 10% and 25% and negative NPVs at lower and higher rates. Project y has a positive NPV at any discount rate. NPV @ 0% = -50 NPV @ 10% = 0 86
NPV @ 15% = +10 NPV @ 25% = 0 NPV @ 30% = -14 Annuity: This is a level of stream of regular payments that lasts for a fixed number of periods. PV annuity = C + C + C……..+ C 1+r 1+ r 1+r 1+r PV annuity = C Exercises: 1. Mr X has won a lottery paying $50 000 a year for twenty (20) years. He is to receive his first payment a year from now. If interest rate is 8%. What is the true value of lottery? 2. A firm can generate net cash flows of $500 000 in the first year and + $200 000 for each of the next five (5) years . Calculate the Present Value. 3. A firm is considering a project with a cash outlay of one million Zim.dollars now and a five (5) yearly cash inflows of $500 000. What is the NPV at 10%? 4. What is the Net Present Value and Internal Rate of Return of the following series at 10% Year 0 1 2 3 4 Cash-flows -2 000 +800 +600 +700 +500 87
Draw a present value profile of the above. Is the project acceptable at 10% cost of capital? 5. An entrepreneur is considering buying a freezit making machine Summary of NPV and IRR comparison: • NPV is technically superior to IRR and is simpler to calculate • Where cash-flow patterns are non-conventional there may be nil or several IRRs making the IRR impossible to apply • NPV is superior for ranking investments in order of attractiveness • With conventional cash-flow patterns both methods give the same accept or reject decision • Where discount rates are expected to differ over the life of the project such variations can be readily incorporated into NPV calculations but not in those for the IRR. • Notwithstanding the technical advantages of NPV over IRR is widely used in practice so that it is essential that students are aware of its inherent limitations. 7.1.0. EXECUTING THE PROJECT WORK PROJECT CONTROL – 3RD phase of project management cycle Consists of 1. – monitoring progress o f each project item 2. – assessing its effects on the total project 88
3. – taking the necessary action on the critical items to keep the project on the planned schedule. 7.1.1 Project control system and system design Control of a project environment involves three operating modes: • Measuring - determining progress through formal and informal reports • Evaluating - determining the cause of deviations from the plan and how to react • Correcting - taking actions to correct the situation System design Its purpose is to ensure that you and the team always have information to make an accurate assessment of: o What has happened and compare this with o What should have happened according to the plans. Controlling the project means managing the many problems that arise to maintain the project schedule. You do this on a day –to day basis through:  Monitoring the work – observing and checking what is happening  Identifying and resolving the problems that arise  Tracking the project – comparing with the plan and updating the records. Good control of any process is dependent on accurate data-keep project file up to date. This involves a regular check and up date of: 89
 Project organization chart  Stakeholder list  Key stage responsibility chart  Project brief  Key stage Gantt charts  Key stage work plan charts  Project risk log Control system must be capable of providing information on:  Resource required –availability and its effective use  Equipment and machinery required and used  Materials used, ordered and required  Costs incurred to date and forward commitments  The results achieved – tasks completed  A valuation of the results- as expected Monitoring Progress Monitor: - The team (talkings to them, holding meetings) - The stakeholders (hold 1 to 1 meetings) - Performance (checking activity) Do this by MBWA, observe and have conversations. Do this by written reports which provide a historical record Tools to use: working with WBS 90
Use of Gantt chart/bar charts Project status report Good monitoring and tracking (measuring) builds team confidence, anticipates problems and prepares future success. Taking corrective action: 1. rearrange work loads 2. put more effort into the job 3. put additional resources 4. more milestone date 5. lower scope /quality of results demanded. Go through problem solving process p158 - 161 Regular progress meetings  essential part of project control process  keep your meetings to the point  focus the team on what must be done next not history  come up with an action list  project control is dependant on good communication 7.1.4. Project status report a project status report is prepared on a regularly scheduled basis(usually monthly)and reflects programme content in a summary form. • Status of key project items • Assessment of key project items 91
• Resolution of “troubled” areas • Difficulties anticipated in the work waiting to be done Status report documents p50-55 spinner - many include 3 documents - cover letter - executive highlights (listing, in a sentence or two) - project summary - bar chart - project status - milestone report 7.1.3. Cost Control Measures Developing cost estimates - Cost estimates for project activities are provided by experienced personnel - Sum total of project costs relate to cost estimates as standards - Usually cost associated with activities on the network are reliable costs. A completed bar chart timing schedule is a prerequisite to developing a project cost schedule. You can use the WBS and Gantt chart as the basis of collecting data. Steps to develop a cost schedule 1. complete bar chart time schedule and add the cost value of each activity to its corresponding bar. 2. calculate the cost per unit 92
3. tabulate cost schedule 7.15. Managing time Time is the most valuable resource that, if lost or misplaced is gone forever. There is need to convert this constraint to a manageable resource Barriers to effective time management. - encourages good time management for:  self  the team  stakeholders 8.0 People problems and role of project manager 8.1.1 Qualities of a project manager Role of a project manager is a complex role because of involvement in a changing environment. It is a temporary management role with specific responsibilities that are linked only to the project. Project manager has to balance the demands and needs of :  Customer  The project  The organization  The project team Primary Responsibilities of a project manager include:  Selecting the core team with project sponsor  Identifying and managing project stakeholders  Defining the project and securing stakeholder approval  Identifying and managing the risks 93
 Allocating and securing resource commitments  Monitoring and tracking project progress  Solving the problems that interfere with progress  Controlling costs  Leading the project team  Informing stakeholders of progress status  Delivering the project deliverables and benefits  Managing the performance of everyone involved with the project 8.1.2. Managing project stakeholders Stakeholders are the people who have a specific and clearly definable interest in the project. They have influence in the management of the project as they provide some resources e.g. line managers. Other stakeholders include: (internal/external stakeholders) - Your customers - Your project sponsor - Customer’s user group - Finance department - Production - Marketing - Personnel e.t.c They need to be consulted and managed all stakeholders have a hidden agenda about what they expect from your project and you need to expose these expectations before you define the project. 94
External stakeholders also have an interest in the project  Suppliers  Contractors  Consultants  Government or agencies etc 8.1.3 Projects and conflicts Hopes, desire and needs of people across the organization as well as outside players are often in compatible with each other resulting in conflict where change takes place, conflict is inevitable. Most common types of conflict: - resources - equipment and facilities - budgets and costs - technical opinions - priorities - procedures - responsibilities - personality clashes Some common causes for conflict 1 diverse expertise in project team 2 low level of authority given to project leader 3 lack of understanding of project objectives by project team 95
4 unclear or shared responsibilities 5 unclear schedules and performance targets for team members 6 local interference from high level involvement 7 people do not like each other or do not get on together in their worst Conflict is good if it:- - brings problems and issues out into the open for discussion - brings the team together, screening loyalty - promotes creativity, generating new ideas and work practices - focuses people to give their work more detailed analysis Good conflict generates win-win relationship between individuals, promoting sharing of information and improved motivation. Bad conflict - creates stress, stiring up negative feelings - makes the working environment less pleasant - surely reduces effectiveness of communication processes - interferes with coordination of effort between groups and individuals - encourages an automatic approval to working Bad comfort generates a win-lose relationship between individuals. A team without conflict could be perceived as complaint and lethargic with little creativity. Projects and teamwork: 96
Successful teams do not just happen, they have to be built through effective leadership and commitment.  Select your core team carefully  You want creative, enthusiastic people with a strong sense of responsibility and commitment  A successful team consists of a carefully designed mixture of right skills and personalities who can work together without dissension and conflict. Take positive actions to build the team  Regularly review the performance  Test team working  Encourage participation 9.0 USE OF COMPUTERS IN PROJECT What can software do? Most software programmes are in project work designed around some fundamental features that include:  Tabulating a list of tasks at different levels of the WBS  Inputting duration data  Calculating critical path and float date  Deriving the Gantt chart  Deriving the logic diagram or Pert chart  On putting a list of resources  Assignment of resources by responsibility or capacity  Inputting of cost data as resources cost rates and materials costs  Deriving a budget and cost curves 97
 Scheduling the project based on input data  “what if” analysis of issues using a Gantt chart  reassignment of resources  identifying and correcting resource overloads  outputting a wide range of reports Software programmes can be used for: Graphics part - produces Gantt char t,logie diagram or Pert chart And graphics used for reporting Spread sheet part – is used for the forms, table, reports Database part - stores and manipulates the data provided for Calculations using the spread sheet section to Insert results into the tables, charts, diagrams Viewed on the screen. Selecting project software: Selection should not be based on price alone but includes are view of :  past track record of performance  ease of use  compatibility with other software in use  stand alone or networked and availability  platforms available  features for planning and scheduling  features for control and updating 98
 quality and eases of reporting  networking features-passwords , access restrictions etc  training available  helpline and back up available Using a software programme Steps:  open a new project file  insert project title, start date and project manager’s name  set up the master calendar giving public and organizational holidays  if possible design the specific formats for the tables you require  input the project organization – the core team on a resource listing  set up resource calendars – one for yourself and each team members to show their available capacity for the project, including holidays  input the list of key stages to a blank Gantt chart  assign responsibilities for the key stages –select by responsibility  input the durations for each key stage  input dependencies between the key stages  programme calculates the critical path, the key stage start and finish times and floats  Gantt chart produced, highlighting critical stages  Pert diagram produced  Table generated showing early and late start and finish times with total float  Total project time is now available 99
 Input cost data as resource lost rates and materials costs for key stages  Operating budget cumulative curve calculated Use “update mode” during implementation. 10.0 CLOSING, EVALUATING AND APPRAISING PROJECTS Closure of projects does not happen, it must be planned with care. The date may relate to when a decision is to be made concerning outside financing, when announcement of a project to the press is planned, when a thorough project review is scheduled on whatever. Milestone scheduling indicates seluted dates by which various phases of the entire project to be completed. • Milestones add detail to Gantt chart • Milestones serve as formal review points where costs, progress and the need for replanning on schedule modification can be reviewed. Gantt chart shows the relationship between milestones within the same task but not within different tasks. Establish with customer and user group the criteria they want to use to confirm completion. These must be measured by agreed methods to avoid conflict a) Acceptance process (handover) must be based on a checklist agreed with customer and user group. Acceptance process should identify customer representative with authority to assign the project completion report. 100
b) Hold a team meeting to review all tasks and present completion report for approval and sign – off c) Evaluate your project to learn what went well and what went wrong. PITFALLS IN PROJECT MANAGEMENT Possible flaws relate to the following: • Foundations of the project [PITFALLS IN TOR] a) Insufficient support for the project from the company or its executives. - project plans not aligned with business plans: project must fit into the overall plans for the company to avoid conflict between the direction in which the company’s management wants business to develop and the way in which project work contributes to that development. - Half hearted support chokes project through lack of necessary resources and decisions b) Undefined principles and policies of project work in terms of corporate and line management’s responsibility for the project; whose responsibility it is for committing resources; what the policies are for making resources available; what the tools and methods are to be used for management of the project and how coordination and cooperation are to be achieved? 101
c) Poor project definition - Goals for project are imprecise affecting adversely 4 phases to problem solving ie • Decision making • Decision taking • Implementation • Monitoring - Undefined limits of scope (use milestone plan and a clear responsibility chart. - Unbalanced levels of ambition. - Project manager has to balance technical aspects, the right people and system (physical products) using a milestone plan (PSO project mind set) (ii) Planning of Project • planning level is uniform: plan contains too much detail for some users and too little for others: use milestone plan at management level and activity plan at task level. • Planning tools are too unwieldy • Planning range is psychologically unsound 102
• Planning method discourages creativity and encourages bureaucratic – democratic process, free of jargon, tools and methods. • Planning of time and cost are over optimistic • Unrealistic, arbitrary plans. • Insufficient previous experience against which to judge the work content. • Planning of resources overestimates their competence and capacity. • Project calendar ignores lost time. • Plan omits activities: activity planning (iii) PITFALLS IN ORGANISING Alternative orgamisations for the project are not considered. - Distribution of responsibility is not defined - Principles of cooperation are unclear - Key resources are not committed - Communication is poor - Project manager is a technocrat, rather than a manager (iv) PITFALLS IN CONTROLLING 103
- purposes of control is not understood (difference between monitoring and controlling) - plan and progress reports are not integrated - no well defined formalized communication between project managers and project members - project manager has responsibility but no formal authority (v) PITFALLS IN EXECUTION OF PROJECT WORK (PROFESSIONAL COMPETENCE OF PROJECT MANAGER) - complexity of coordinating a variety of resources is under estimated - changes to the plan or specification are uncontrolled - activities are not completed and documented before others begin - the targets of time , cost and quality are unbalanced 104
DISCUSSION: Review a project that has failed. Examine the reasons for its failure. At what stage in the life cycle did this occur? What lessons can future project managers learn? 105

More Related Content

PDF
Project Management for civil Engineering
byMr. Kiran R. Patil, D. Y. Patil College of Engineering & Technology, Kolhapur, Maharastra, India
 
PPT
CONSTRUCTION-PROJECT-MANAGEMENT-ppt.ppt
bypisal3
 
PDF
Ch6 resources
byTu Nguyen, PMP®,PMI-RMP®
 
PDF
CHAPTER-1 INTRODUCTION.pdf
byBereketgebreselassie3
 
DOCX
project Mangement
byAlex Jensen
 
PDF
CPM-Updating
byMr. Ramesh Nayaka
 
PPTX
Project proposal writing civil engg
byबुद्धिसागर बास्तोला
 
PPTX
Construction project delivery methods
byNitin Kumar
 
Project Management for civil Engineering
byMr. Kiran R. Patil, D. Y. Patil College of Engineering & Technology, Kolhapur, Maharastra, India
 
CONSTRUCTION-PROJECT-MANAGEMENT-ppt.ppt
bypisal3
 
Ch6 resources
byTu Nguyen, PMP®,PMI-RMP®
 
CHAPTER-1 INTRODUCTION.pdf
byBereketgebreselassie3
 
project Mangement
byAlex Jensen
 
CPM-Updating
byMr. Ramesh Nayaka
 
Project proposal writing civil engg
byबुद्धिसागर बास्तोला
 
Construction project delivery methods
byNitin Kumar
 

What's hot

PDF
Project environment
byDenise Fotopoulou
 
PPTX
Program management - Fundamentals
byJulen Mohanty
 
PPTX
Instructor Slides - PMP/CAPM PMBOK 6th Edition
byMnbianchi
 
PPTX
Project planning and scheduling
byMuhammad Umar Farooq
 
PPTX
Project Risk Management
byOleksa Stelmakh
 
PPTX
Elements of Project Management
byKevin Thomas
 
PPTX
00 Introduction of project scheduling
bySoe Naing Win
 
PPTX
Project Stakeholder Management - PMBOK6
byAgus Suhanto
 
PDF
Project Risk Management
byAndersson Lujan Ojeda
 
PDF
PMP_Project Cost Management
byHisham Haridy MBA, PMP®, RMP®, SP®
 
PPT
Project Risk Management
byIFAD International Fund for Agricultural Development
 
PPTX
PMBOK(R) sixth edition data flow diagrams r2
byKose Jumnichi
 
PPTX
Project Risk Management - PMBOK6
byAgus Suhanto
 
PPT
7. (lecture 5) Project scheduling..ppt
byPedadaSaikumar
 
PPT
Chap12 project procurement management
byDM's College, Assagao Goa
 
PPTX
Information Technology Project Management - part 10
byRizwan Khurram
 
PPT
Project Management: Importance in Detail
byNIILM University Online
 
PPTX
Project Management Foundations Course 101 - Project Management Concepts
byThink For A Change
 
PPT
Project Management
byHamdard University
 
PPTX
Project Cost Management - PMBOK6
byAgus Suhanto
 
Project environment
byDenise Fotopoulou
 
Program management - Fundamentals
byJulen Mohanty
 
Instructor Slides - PMP/CAPM PMBOK 6th Edition
byMnbianchi
 
Project planning and scheduling
byMuhammad Umar Farooq
 
Project Risk Management
byOleksa Stelmakh
 
Elements of Project Management
byKevin Thomas
 
00 Introduction of project scheduling
bySoe Naing Win
 
Project Stakeholder Management - PMBOK6
byAgus Suhanto
 
Project Risk Management
byAndersson Lujan Ojeda
 
PMP_Project Cost Management
byHisham Haridy MBA, PMP®, RMP®, SP®
 
Project Risk Management
byIFAD International Fund for Agricultural Development
 
PMBOK(R) sixth edition data flow diagrams r2
byKose Jumnichi
 
Project Risk Management - PMBOK6
byAgus Suhanto
 
7. (lecture 5) Project scheduling..ppt
byPedadaSaikumar
 
Chap12 project procurement management
byDM's College, Assagao Goa
 
Information Technology Project Management - part 10
byRizwan Khurram
 
Project Management: Importance in Detail
byNIILM University Online
 
Project Management Foundations Course 101 - Project Management Concepts
byThink For A Change
 
Project Management
byHamdard University
 
Project Cost Management - PMBOK6
byAgus Suhanto
 

Viewers also liked

PDF
Ch4 scheduling
byTu Nguyen, PMP®,PMI-RMP®
 
PPT
Critical path and pert
bydjoufack
 
PPT
The Network Diagram and Critical Path
bydmdk12
 
PPT
Constructing a network diagram
bynelramlawy
 
TXT
6455922 project-management-teacher-notes
byBhanu Singh
 
PPTX
Examine any one organization or institution that promote project development,...
byKudzai Chibarinya
 
PDF
JOT Case - CIMA 2013 - Gold Diggers
byThanh Vân Trịnh
 
DOC
Project Management
byirfan ali
 
DOCX
Jot case study - Report
byMidoTami
 
DOCX
Critically analyze the business operating environment of a project you are fa...
byKudzai Chibarinya
 
ODP
Critical path method
byDushyant Nasit
 
PDF
Your Brain Hates Project Management notes
byCarson Pierce
 
PDF
Project Management Summary 2012
byCPA Australia
 
PDF
RealWinWin Wholesale Rebate Administration Services
byRealWinWin, Inc.
 
PPT
Laws Affecting International Business and Travel Chapter 12
bySawyer Education & Training
 
DOCX
Questions
byvenkat27
 
PDF
PMP Study Guides
byPham Hong Nhuong, PMP #1481914
 
PPTX
Pmi dec 13
byVijay Raj
 
PDF
Unit 3
byMuhammad Ayyaz Iftikhar
 
PDF
IT Project Management - Study Notes
byMarius FAILLOT DEVARRE
 
Ch4 scheduling
byTu Nguyen, PMP®,PMI-RMP®
 
Critical path and pert
bydjoufack
 
The Network Diagram and Critical Path
bydmdk12
 
Constructing a network diagram
bynelramlawy
 
6455922 project-management-teacher-notes
byBhanu Singh
 
Examine any one organization or institution that promote project development,...
byKudzai Chibarinya
 
JOT Case - CIMA 2013 - Gold Diggers
byThanh Vân Trịnh
 
Project Management
byirfan ali
 
Jot case study - Report
byMidoTami
 
Critically analyze the business operating environment of a project you are fa...
byKudzai Chibarinya
 
Critical path method
byDushyant Nasit
 
Your Brain Hates Project Management notes
byCarson Pierce
 
Project Management Summary 2012
byCPA Australia
 
RealWinWin Wholesale Rebate Administration Services
byRealWinWin, Inc.
 
Laws Affecting International Business and Travel Chapter 12
bySawyer Education & Training
 
Questions
byvenkat27
 
PMP Study Guides
byPham Hong Nhuong, PMP #1481914
 
Pmi dec 13
byVijay Raj
 
Unit 3
byMuhammad Ayyaz Iftikhar
 
IT Project Management - Study Notes
byMarius FAILLOT DEVARRE
 

Similar to MIDLANDS STATE Project management _notes

PDF
Project management book for mba
byBikramjit Singh
 
PPTX
Unit-4.pptx
byPrabin Pandit
 
PDF
Project management-130717112230-phpapp02
bySyed Osama Rizvi
 
PDF
Project Management Notes 5
byGolam Bitonsir
 
PPTX
project mgmt chapter 1.pptx
byDejeneDay
 
DOC
Project management
byRana Ratnakar
 
PPTX
Chapter 1-Project Management power point pptx
byAlwanYusuf
 
PPTX
Project ManagementforstudentsCH 1 -.pptx
byayeleasefa866
 
PPT
Project Analysis & Management (CH 1 to 4).ppt
bymelakeyigezu
 
PPTX
INTRODUCTION TO PROJECT MANAGMENT
byHarihara puthiran
 
DOC
develomental Economics and economics and finance
bygizaw15
 
PPTX
Project Ch-1.pptx
bywalaansoodhokataa
 
PPTX
PM UNIT 1project management11111111.pptx
byLaxmiSah9
 
PPTX
MBA UNIT 1.pptx
byselam49
 
PPT
Project Panning and Management Intro.ppt
byBiancaBen3
 
PPTX
Second Chapter of Construction Project Management
byDiwasPoudel7
 
PPTX
Concept of Project and Project Management.pptx
byUmmy Habiba Ruma
 
DOCX
Chapter 1
byAbebe Manaye
 
PDF
component 1 defining the act of project management.pdf
byAnatole9
 
PPTX
project design
byDr Zubairul Islam
 
Project management book for mba
byBikramjit Singh
 
Unit-4.pptx
byPrabin Pandit
 
Project management-130717112230-phpapp02
bySyed Osama Rizvi
 
Project Management Notes 5
byGolam Bitonsir
 
project mgmt chapter 1.pptx
byDejeneDay
 
Project management
byRana Ratnakar
 
Chapter 1-Project Management power point pptx
byAlwanYusuf
 
Project ManagementforstudentsCH 1 -.pptx
byayeleasefa866
 
Project Analysis & Management (CH 1 to 4).ppt
bymelakeyigezu
 
INTRODUCTION TO PROJECT MANAGMENT
byHarihara puthiran
 
develomental Economics and economics and finance
bygizaw15
 
Project Ch-1.pptx
bywalaansoodhokataa
 
PM UNIT 1project management11111111.pptx
byLaxmiSah9
 
MBA UNIT 1.pptx
byselam49
 
Project Panning and Management Intro.ppt
byBiancaBen3
 
Second Chapter of Construction Project Management
byDiwasPoudel7
 
Concept of Project and Project Management.pptx
byUmmy Habiba Ruma
 
Chapter 1
byAbebe Manaye
 
component 1 defining the act of project management.pdf
byAnatole9
 
project design
byDr Zubairul Islam
 

Recently uploaded

PPTX
Business Improvement blue and white scribble art presentation
byAndrew Laurey
 
PDF
Bio, Pic and Speaker Vita for Attorney Dar'shun Kendrick
byKairos Capital Legal Advisors,LLC
 
PDF
_How to Safely Buy Instagram Accounts in 2025.pdf
byzze2jltsflran03jy3m
 
PDF
How to Buy Snapchat Account( 9.7) A Step-by-Step Guide ... (2).pdf
byxuexmv3qbymlv32ohdjf
 
PDF
How to Safely Buy Instagram Accounts in 2025 (1).pdf
byxuexmv3qbymlv32ohdjf
 
PDF
Dubai Multi Commodities Centre (DMCC) – Supplier Code of Conduct Policy
byDubai Multi Commodity Centre
 
PDF
Step-by-Step Process for Buying a Verified Apple Pay ....pdf
byndsfcm3nubx18jc4s6f4
 
PDF
5 Best Marketplaces to Buy and Sell Facebook Accounts ... in 25-26.pdf
bymarketing
 
PDF
LCP-Pension-Submisson-CDC-Superfund-December-2025.pdf
byHenry Tapper
 
PDF
Pension-Protection-Fund-Purple-Book-2025-accessible (1).pdf
byHenry Tapper
 
PDF
How to Safely Buy Instagram Accounts in 2025 (2).pdf
byxuexmv3qbymlv32ohdjf
 
PDF
Back to the future - the return of DB surpluses (slides) - 9 December 2025.pdf
byHenry Tapper
 
PDF
Where to Buy Verified Cash App Accounts for Long-term ... (1).pdf
byh55oga0kd25m12iaza2
 
PDF
BTP - GK 2025-4 (1) Consulting Marketing.pdf
byAyushNath13
 
PDF
6f0f6b8445ec521879693a52223a777er3e4.pdf
bytostyhazel456
 
PDF
Buy LinkedIn Connections _ Grow Your Network Fast (2).pdf
byxuexmv3qbymlv32ohdjf
 
PDF
Best 7 Sites to Buy Verified Venmo Accounts With Zero ....pdf
byndsfcm3nubx18jc4s6f4
 
PDF
Buy Verified Western Union Accounts - in the United States (1).pdf
bykeb2bq5cegc6m2xa32ay
 
PDF
Pengelolaan SDM Terintegrasi Berbasis Manajemen Risiko 2025
bySeta Wicaksana
 
PDF
How to Buy Snapchat Account( 9.7) A Step-by-Step Guide ... (1).pdf
byxuexmv3qbymlv32ohdjf
 
Business Improvement blue and white scribble art presentation
byAndrew Laurey
 
Bio, Pic and Speaker Vita for Attorney Dar'shun Kendrick
byKairos Capital Legal Advisors,LLC
 
_How to Safely Buy Instagram Accounts in 2025.pdf
byzze2jltsflran03jy3m
 
How to Buy Snapchat Account( 9.7) A Step-by-Step Guide ... (2).pdf
byxuexmv3qbymlv32ohdjf
 
How to Safely Buy Instagram Accounts in 2025 (1).pdf
byxuexmv3qbymlv32ohdjf
 
Dubai Multi Commodities Centre (DMCC) – Supplier Code of Conduct Policy
byDubai Multi Commodity Centre
 
Step-by-Step Process for Buying a Verified Apple Pay ....pdf
byndsfcm3nubx18jc4s6f4
 
5 Best Marketplaces to Buy and Sell Facebook Accounts ... in 25-26.pdf
bymarketing
 
LCP-Pension-Submisson-CDC-Superfund-December-2025.pdf
byHenry Tapper
 
Pension-Protection-Fund-Purple-Book-2025-accessible (1).pdf
byHenry Tapper
 
How to Safely Buy Instagram Accounts in 2025 (2).pdf
byxuexmv3qbymlv32ohdjf
 
Back to the future - the return of DB surpluses (slides) - 9 December 2025.pdf
byHenry Tapper
 
Where to Buy Verified Cash App Accounts for Long-term ... (1).pdf
byh55oga0kd25m12iaza2
 
BTP - GK 2025-4 (1) Consulting Marketing.pdf
byAyushNath13
 
6f0f6b8445ec521879693a52223a777er3e4.pdf
bytostyhazel456
 
Buy LinkedIn Connections _ Grow Your Network Fast (2).pdf
byxuexmv3qbymlv32ohdjf
 
Best 7 Sites to Buy Verified Venmo Accounts With Zero ....pdf
byndsfcm3nubx18jc4s6f4
 
Buy Verified Western Union Accounts - in the United States (1).pdf
bykeb2bq5cegc6m2xa32ay
 
Pengelolaan SDM Terintegrasi Berbasis Manajemen Risiko 2025
bySeta Wicaksana
 
How to Buy Snapchat Account( 9.7) A Step-by-Step Guide ... (1).pdf
byxuexmv3qbymlv32ohdjf
 

MIDLANDS STATE Project management _notes

  • 1.
  • 2.
    A. MAFUKA MIDLANDS STATEUNIVERSITY DEPARTMENT OF BUSINESS MANAGEMENT 2005 PROJECT MANAGEMENT CHAPTER 1 Introduction: Overview of project Management 1. WHAT IS AN INVESTMENT?  It is the current commitment of dollars for a period of time in order to derive future payments that will compensate the investor for 1. The time the funds are committed 2. The expected rate of inflation 3. The uncertainty of the future payments. 2. WHO IS AN INVESTOR? Investor can be an individual, a government, a pension fund or corporation. The investor is trading a known dollar amount today for some expected future stream of payments that will be greater than the current outlay. - Investors invest to earn a rate of return, which compensates for the time, the expected rate of inflation and the uncertainty of return. 3. Investment choices are a function of a investor’s risk appetite. Factors like • Inflation rate, interest rate 2
  • 3.
    • Financial stability •Political – country risk • Legal and regulatory consensus • Liquidity needs and time horizon • Tax concerns • Time horizon – short term cash (liquid) • Tax concerns – taxable income (VAT) • Unique needs + personal preferences • Critical skills • Infrastructure 4. Organisations/institutions that promote development: • Zimbabwe Investment Centre (ZIC) • Zimbabwe Development Bank (ZBD) • Small Enterprises Development Corporation (SEDCO) • Industrial Development Corporation of Zimbabwe (IDC) • Department of small and medium Enterprise (SMES) • Ministry of Youth and Gender (MYG) • Welfare Organizations (NGO) -What are the functions? -What are the objectives? -What is the structure? 3
  • 4.
    -What are therules and regulations for the project requirements? -Is the role of project development being met? PROJECT ENVIRONMENT a) Project environment needs to be analysed, understood and addressed if project is to be implemented successfully. b) Project environment provides managers with a structured approach to analyzing and handling possible external constraints c). There must be continued interaction between the project and its environment, and the project itself affects the environment just as it in turn is affected by it, so that there is a two –way relationship between them. Physical environment:  Refers to the natural setting of the project, its geology, soils, landscape, climate, water resources and ecological systems  Many projects are sited in a particular location and surrounded by a specific physical setting. Sometimes this setting is the very reason why the projects exist e.g. mining project is established precisely to exploit deposits in physical environment, agricultural projects exist to maximize potential of the natural physical environment for agricultural production. Technologies: Technologies utilized for the exploitation or conservation of the natural resources. Availability –provision of these technologies is a key dimension of the project environment. Economic and Financial management: 4
  • 5.
    Projects utilize resourcesto create assets. Resources utilized have a cost and these assets created have a value. Relative costs and values (worth of the projects) are directly affected by the economic and financial environment within which they are implemented . Such issues as budgetary constraints, foreign currency shortages, price controls, inflation, interest rates are constantly reviewed in order to complete project at stated cost, using resources to be acquired. Cost-over-runs often associated with time delays are very frequently encountered- and these are caused by constraints of the economic and financial environment. Institutional and political environment:  Institutional framework concerns such matters as the legal systems within which project managers are operating and aspects of social organization such as the land tenure and water rights system  Formal/less formalized organizations are crucial determinants of project outcome: Formal: government departments,marketing and credit institutions, local authorities have clear terms of references Less fomalised but official organizations- village level committees, political groups, religious institutions may be as important Political framework in the project environment needs to considered. Projects necessarily reflect the political priorities of the country within which they are implemented. Politics determine the progress of any project. Project managers need to be political –need to lobby, negotiate, use influence to gain political support for their project. The political environment surrounding 5
  • 6.
    a project involvesa complex web of political relationships which extends beyond individuals to organizations and geographical areas. Socio-cultural environment:  People –orientated projects e.g most agricultural projects, health,education and welfare projects,urban housing, water supply, rural industrialistion projects are implemented through people who are not directly part of the formal project organization  Project organization provides resources, training services and infrastructure to the population  For the project to be successful, its objectives will need to be consistent with values and practices of those people it is designed to assist  It is vital for project personnel to be sympathetic to the local culture and to have an understanding of “why things are done the way they are.” DISCUSSION: 1. Critically analyse the business operating environment of a project you are familiar with. What are the prospects of its success? Why? What are the areas of improvement, if any, would you recommend to the project sponsors for it to be a success? 2. Examine any one of the organizations/institutions that promotes project development. To what extend is it fulfilling its role in the current economic environment? 6
  • 7.
    CHAPTER 2 NATURE OFPROJECTS What is a project? Definition: a) It is a collection of linked activities, carried out in an organized manner with a clearly defined start(ing) point and finish(ing) point to achieve some specific results that satisfy the needs of an organization as derived from the current business plans. b) It is organization of people and resources to meet objectives c) It is the investment of capital in a time – bound intervention to create productive assets. 2.2 Characteristic features of a project: • Involves new and unknown tasks • It is an instrument of change (has elements of risk) • It has clearly defined start and finish dates • It has specific aims • It should result in something being delivered • It is the responsibility of a project manager/ management team 7
  • 8.
    • It involvescosts, resources and time (subject to strict deadline) • It leads to a change in people’s daily work or living conditions • Requires the right people at the right time but people of different backgrounds who are not used to working together. Examples of a project • Writing and publication of a book • Relining of a blast furnace in steel works • Setting up a new department at a University • Supporting of a self help efforts of a rural community • Technical projects: construction of bridges, dams, water pipe line • Introducing a new product • Organizing a trade fair. Projects in Midlands • Unki platinum mine project • Relocation of Mtapa long distance bus terminus • Construction of MSU administration Block 2.3 PROJECT MANAGEMENT Definition 8
  • 9.
    a) The dynamicprocess utilizing the appropriate resources of the organization in a controlled and structured manner, employed to achieve a change clearly defined with specific objectives identified as strategic needs. Characteristic features: - Objective oriented – without these you have no outcomes - Change oriented – creating something you need but do not have. - Multi disciplined – needs a wide range of skills to achieve success - Opportunistic – you must seek to take shortcuts and bypass old norms - Performance oriented – setting appropriate standards and quality of outputs - Control oriented – carefully designed controls to maintain the schedule - Avoid getting trapped by the old ways of doing things. 9
  • 10.
    b) Project managementis a tool for management to manage organization:  Interfaces between organization and its environment to achieve  stated goals Interfaces within an organisation 2.4 Sources of projects: 1. Corporate and strategic plans/business plans 2. Normal operations/ step changes 3. Continuous improvements/ programmes cross functional 4. Growth by projects addressing needs/ opportunities 5. Growth by incremental change of quality/performance 2.5 LIFE CYCLE OF A PROJECT All projects go through similar life cycle, comprising the following phases namely: Phase1: Idea generation and screening the idea It is done through feasibility study ie whether to go for the project or not(prefeasibility Go/and No Go) -Needs are clearly identified and project is defined with agreement of those people with an interest in the outcomes -Also called conception and definition stage -Organization realizes that a project may be needed or receives a request from a customer to propose a plan to perform a project. 10
  • 11.
    Phase 2: feasibilitystudy: Project formulation -Looks at techno-economic design stage aspects of the project -Looks into such issues like location, finance, commercial, institutional preliminary organizational/set up, economic financial aspects. -Also termed project formulation/design stage. -Here the planning phase becomes critical to derive a realistic schedule and budget taking into account the constraints imposed on the project Phase 3 Implementation/execution -Entails launching the project work -Manufacture, construction and installation of equipment and facilities -Entails procurement; production -Requires monitoring cost schedules and specifications, plan to be up to date Phase 4 Handover and start up stage - Preparing customer for acceptance and handover to ensure the project can deliver. Any follow- up activities are identified and assigned and project evaluation is completed 11
  • 12.
    Phase 5 Postproject evaluation done after project is handed over to the customer. It provides data for future projects. Contents of a project report(proposal) 1. INTRODUCTION: • -purpose • -scope(limits) 2. EXECUTIVE SUMMARY • -executive highlights • -summarises completed project report • -findings • -decisions 3. CONCLUSIONS/RECOMMENDATIONS 12
  • 13.
    4. PROJECT DESCRIPTION •General objectives • Specific objectives -market analysis • Product/service description • Market position • Competition and marketing strategy Project structure • Work breakdown structure • Work packages Project costs • Capital and expense requirements • Financial plan (project budget) • Contingencies • Economic and financial analysis(viability) • Risk and sensitivity analysis Schedule • Time estimates • Calendar schedule • Bar chart schedule Network • List of activities 13
  • 14.
    • Arrow diagram Resourceallocation • Resource type • Resource availability and constraints Control systems • Project evaluation methods • Cost control • Cost minimizing (time/cost trade offs) • Status report • Milestones ORGANISATION AND ACCOUNTABILITY • Management capacity • Labour /employee plan • Responsibility/accountability matrix • Procedures • Special conditions/contractual aspects APPENDIX • Reference material • Calculations • Curriculum vitae (cv) NB a project plan (report) varies from organization to organization but any project must contain most of the above elements. 14
  • 15.
    CHAPTER 3 3.0 PROJECTORGANISATIONAL STRUCTURE - Hierarchical structure: organizational chart • Appropriate for very large, long-term projects which work on isolated tasks and are staffed mainly by full time employees. • Is not appropriate when project is to be integrated with the base organization. Advantages • Functional specialists easily share their knowledge and normally work together. • Easier to implement work rules and regulations for a group of similar functional experts. • Share a commonality of perspectives that will help the main thrust of a project. 15
  • 16.
    Disadvantages Disadvantages of organizationalprojects according to hierarchical structure • Does not develop technology useful for the future. • Minimal career continuity for project personnel. • It often leads to:- - bureaucracy - inefficiency - poor use of resources - collapse of authority or the project usurping responsibility it should not have. - Little commitment from people outside the project - Little informal contact between the project and its surroundings MATRIX STRUCTURE Can be on full or part time basis. It is a high breed organization. It is characterized by having a pull of project managers who will be assigned to projects. It comprises of :- 16
  • 17.
    - Core teammembers with previous experience who are not necessarily drawn from across the functional structures. - Extended team members who are drawn from across functional structures and do a specific part of a job for a relatively short time. Advantages • Response to changing needs is very rapid. • Functional experts are more part of a team and are more focused on project deliverables. • Team members have a functional department to return to after the project. • Their respective departments look after careers and specific development needs. Disadvantages • There can be conflict between functional line managers and project managers over the deployment of resources. • If the team is not physic ally located in the same area in a building, communications and control becomes a difficulty. • Matrix structures are frequently hindered by accusations of poor accountability and lack of clarity in responsibilities. Project organization 17
  • 18.
    It is basedon assigning projects to each organizational unit (department). The project make contribution to corporate strategy. Senior management is involved in project process and has defined roles and responsibilities. Senior management sponsor projects and have authority i.e. ownership over projects. Project sponsors can form project steering team. Advantages - It ensures everyone in the organization focuses on important active projects. - The reporting structure is clear - It priotises project for limited resources - Reaction to market changes if rapid as authority exists in project team - Functional specialists work with project managers Disadvantages - Duplication of functional experts will exist across the organization as they are each dedicated to a single project. - There is a lack of information exchange between functional experts as they are located in different parts of the organization. 18
  • 19.
    Project sponsor (owns,commissions the project, chairs PST) The project sponsor for any project is accountable (to the PST) for the performance of their projects and must demonstrate their concern for success to everyone involved. Responsibilities include: • Ensuring project objectives are always aligned to corporate needs; • Selecting the project manager; • Approving the project definition; • Sustaining the project direction; • Ensuring priorities are maintained for all their projects; • Overseeing the project process and procedures, budget and control; finds and wins resource(s) for the project • Reacting promptly to issues escalating to them for decisions; • Maintaining support and commitment; • Approving project plans, changes and status reports. Project steering team (created by project sponsors has representatives from business + technical functions + user community) This group of project sponsors – the project steering team (PST) – meets at regular intervals to review the status of all active projects, initiate new projects and decide the prioritization of project activity in the organization. Responsibilities include:- • Ensuring projects are aligned to corporate objectives; 19
  • 20.
    • Giving strategicdirection; • Maintaining focus on customer and business needs; • Ensuring environmental influences are taken into account (internal and external); • Prioritizing all active projects and their resourcing; • Resolving escalating issues; • Providing the ultimate decision forum for all major problems and issues; • Approving start-up and abortion of projects. • Reviews overall project direction, schedule, costs, quality of deliverables) Project manager ( manager project, people + paper work, attends, steering committee meetings) The project manager is responsible for the project work from the initial kick-off through to closure. Responsibilities include: • Selecting the core team with the project sponsor; • Identifying and managing the project stakeholders; • Defining the project and securing stakeholder approval; • Planning then project and securing stakeholder approval identifying + managing the risks • Allocating + securing resource commitments • Monitoring and tracking project progress 20
  • 21.
    • Solving theproblems that interfere with progress • Controlling costs • Leading project team • Informing stakeholders of progress status • Delivering the project deliverables + benefits • Managing performance of everyone involved with project Project Manager’s deliverables i.e The physical items to be delivered from a project. This typically includes reports and plan as well as physical products and services project deliveries a product or service. • Terms of reference or project definition • Milestone plan • Budget • Work breakdown structure • Project organization chart • Responsibility • Task definitions • Deliverable definitions • Deliverablee definitions • Quality plan • Dependency chart 21
  • 22.
    • Progress reportingstandards • Change control standards • Lost of planning + estimating assumptions • Gantt chart • Progress reports • End of phase reports • Project review report Project Team Successful teams have to be built through effective leadership + commitment Criteria for selecting team members • Relevant technical experience/specialized knowledge are essential to project. • Have worked in project team before i.e have experience • Assets current non project work load • Do they get on easily with other people • Are they good team players • Is line manager in agreement with possible assignments. Project member • Technical expert qualified to complete project tasks • Gives regular feedback on progress to project manager 22
  • 23.
    • Focuses ondelivering quality contributes to teamwork and morale CHAPTER 4 4.0 PROJECT PLANNING “íf you fail to plan: you prepare to fail” 4.1 Purpose of planning • To achieve a common understanding of the task to be resolved • To obtain an overview of the work to be carried out • To lay the foundation for allocating and committing resources • To be able to form a suitable organization of work • To define a programme of monitoring and control. 4.2 Definition of Project Planning • Is “a continuous process which involved decisions and choices, about alternative ways using available resources with the aim of achieving particular goals at sometime in the future”( Conyers and Hill,1984). L.Young – planning is a process of creating order out of apparent chaos 23
  • 24.
    Key aspects ofthe definition: • Making choices • Concerning use of limited resources • To achieve given goals and objectives • Pertaining to some future time NB: Goal – aim or objective towards which an endeavor is directed.(simply objective) 4.3 Project planning involves stating • Why a project should be undertaken • What should be done and • By whom, in order to achieve well-defined objectives by some future dates. 4.4 Products of planning • Plans consisting basically of graphics and text e.g. graphics – include charts, logic diagrams, sketches and in some cases photographs • Texts include narratives and tables. • Logic of planning = plan. • List of what jobs (activities) have to be done and the order of carrying them out. 24
  • 25.
    4.5 Planning cycleand project cycle Like project cycle, planning cycle is made up of three main elements: 1. Clarity problems to be solved 2. Set out objectives and 3. Draw up the project plans 4.6 Planning procedures: (i) Establish objectives • State objectives – derived from requirements (problems that motivated the project • List interim objectives or milestones – these are significant events in meeting the main objectives • Designate responsible personnel or departments - These are important groups whose participation in planning and scheduling are required for successful project implementations. These participating activities used to be identified early in project developments. (ii) Develop a plan • List what jobs (or activities have to be done to complete the project • Delineate the jobs by determining their relationships: - determine which jobs proceed and succeed every other job - determine which jobs can be accomplished concurrently 25
  • 26.
    (iii) Draw thearrow diagram • Show the sequence in a planning (arrow) diagram. The planning process becomes complete when the graphic display in the form of a planning diagram displays the project work items and their relationship. 4.7 Obstacles to project planning 4.7.1 Network planning Techniques Network analysis(planning) • This is a graphic analysis of the project showing the plan of action through the use of a graphic diagram (used in project planning) • Network planning techniques Common ones include: 4.7.2 Critical Path Analysis/Critical Path Method CPA/CPM • Developed by Rand corporation and Du Pont to improve the planning, scheduling and controlling of projects(as a means of scheduling shutdowns regular shutdowns at chemical processing plants) 4.7.3 Programme Evaluation Review Technique(PERT) 26
  • 27.
    • Developed fromwork involving the US Navy for planning, coordinating the projects associated with the development of the missile programme Differences PERT CPM -event oriented -activity oriented -provides starting and finishing - provides starting and finishing times provided for the event times for the activity -provides the probability of -has no provision for determining meeting a scheduled date probabilities -uses three time estimates for -uses on estimate each activity 4.8 Network Terminology Activity – This is a task or job of work, which takes time and resources. it is represented by an arrow not arrow to scale. Tail of Head of the arrow arrow -Indicates where Where task ends Task begins e.g Build a wall - Verify debtors in a sales ledger. a) What activities are involved in the project. b) Establish their logical relationship i.e which activity comes after or before. c) Establish the estimate of time that the activity is expected to take. 27
  • 28.
    EVENT- It isa just in time, it indicates the start or finish of an activity or activities. It is represented in a network by a circle or node. Establishing of activities automatically determines events which are the start of finish if activities e.g wall bulk, debtors verified, arrived city. Dummy Activity – It is an activity that does not consume time or resources. It is a fictitious activity with zero activity time used to create a PERT or CPM network. It is used merely to show clear logical dependents between activities so as not to violet the rules for drawing network. It is represented is a network by a dummy activities are not usually listed with led activities may become necessary as the network is drawn. CONCURRENT ACTIVITY – They are activities as tasks that are designed to be carried out in parallel i.e at the same time. SERIES ACTIVITIES – are activities or tasks that are designed to be carried out are after another each strictly dependent on compilation of the earlier activity. 28
  • 29.
    NETWORK – Acombination of activities, dummy activities and events in a logical sequence according to the rules for drawing networks. RULES FOR DRAWING NETWORKS A – A Complete network should have one part of entry i.e a start event and only Part of exist i.e a finish event. B – Every activity must have one preceding as task event and one succeeding or head event. NOTE :- that activities may use the same head event. Tail Head event Events Head Events Tail event - However an activity must not share the same tail event and the same head event with any other activities (use dummies) - An event is not complete until all activities leading into if are complete. - ‘Loops’ i.e a series of activities which lead back to the same event are not allowed because the essence of networks is a progression of activities away making onwards in time. - All activities must be tied into the network i.e they must contribute to the progression or be discussed as irrelevant. - Activities which do not link to the overall network are called ‘danglers’ they are not to be used. 29
  • 30.
    Dangling activity notto be used. CONVENTIONS FOR DRAWING NETWORKS a) Networks proceed from left to right. b) Networks are not draws to scale i.e the length of the arrow does not represent the time elapsed. c) Arrows need not be draws in the horizontal plane. - If they are not already numbers events or nodes should be progressively numbered from left to right. Simple networks have events numbers in simple numeric progression i.e 0,1,2,3,e.t.c Activity identification Typical methods of presentation include:- a) Shortened description of the job of plaster wall e.g order raw material. b) Alphabetical or numeric code i.e A.B.C. D e.t.c or 100.101,102 e.t.c c) Identification by the fail and head event numbers e.g 0-1, 1-2, 2-3 30
  • 31.
    Dummy activities Part ofa network involves a car arriving at a service station during which 2 independent activities take place, filling petrol (A) and topping up with oil (B) Fill petrol A Dummy activity B Top up with oil EXAMPLE Assume that part of the network involves a man lighting a cigarette. Activities and there relationship are assumed to be as follows. ACTIVITY DESCRIPTION PRECEDING ACTIVITY A Remove cigarette from case - C Put cigarette case away A B Strike match - D Light cigarette A , B REQUIRED - A network diagram Remove cigarette from Put cigar away Case A C B D 31 Car arrives Car filled with Petrol Oil Topped up
  • 32.
    Network Analysis: (TimeAnalysis) Assessing the time Once outline network has been drawn there is need to complete it by in settling the activity duration time. a) Time estimate – an estimate is a decision about how much time and resources are required to carry out a piece of work to acceptable standards of work performance – You determine the size of group of tasks, the amount of effort required to complete the work. Effort is measured in project time units, e.g hours days weeks. Sources of accurate estimates. - Use experience of others - Seek expert views (advice) - Historical data from other projects NETWORK TERMINOLOGY 3.1.3 Three time estimate approach This approach is used to offset bias. Before beginning scheduling of a project it is necessary to estimate the time required to complete each 32
  • 33.
    activity. After completingthe initial arrow diagram, a time estimate is obtained for each job in the project. Persons familiar with work to be performed make the time estimates based on their best judgment. Sources for accurate estimates: - Experience from others - The expert view - Historical data from other projects Estimate is a decision about how much time and resources are required to carry out a piece of work of performance. Determine: • The “size” of the task or group of tasks • The amount of “effort” required to complete the work; effort is measured in project time units (hours, days, weeks) Effort Duration Schedule 3.1.4 PROJECT SCHEDULING This is the second phase of a project after planning, detailing the time at which each job is to be started and completed. This phase represents when the work need to be done. 33
  • 34.
    Scheduling Procedure: 1. Afterthe sequence of jobs has been planned and laid in a network diagram, establish the timing a. Estimate the time required to complete each project item b. Calculate the scheduled time for each project c. Compare the required time (time estimate) with the available time to complete each job. d. Identify the critical jobs e. Determine the front times of non critical jobs 2. If the project duration time calculated initially is not acceptable make adjustments to the plan so as to meet project deadline that is acceptable. 3. Establish a time schedule (using a bias chart) EXPECTED TIME CALCULATION Expected time = Optimistic time +4 (normal time) + pessimistic time 6 Optimistic Time - is the shortest possible time required for completing an activity i.e. everything goes as planned; deliveries are on time, machines and equipment operate without breakdowns, personal work within the standards. 34
  • 35.
    Normal Time -is the time most frequently required if activity were repeated many times under similar conditions. This is the estimate that should be used in an arrow diagram, as there is no contingency added. Pessimistic Time - is the maximum possible time required to complete an activity i.e. about everything goes wrong: delivery difficulties work delays, accidents. e.g. Assume that three estimates for an activity are : DAYS (O) Optimistic 11 Most likely 15 (P) Pessimistic 18 EXPECTED TIME = 11+18+4(15) 6 =14.8 days = 15 days a) Time Units Time estimates may be given in many unit i.e. minutes, hours, days, weeks depending on the project. All time estimates within a project must be in the same units to avoid confusion. b) Use of time estimates Project with multiple time estimates can be further analysed to give an estimates of the probability of completing the project by a scheduled date 35
  • 36.
    BASIC TIME ANALYSIS- CRITICAL PATH CRITICAL PATH - critical path of a network gives the shortest time in which the whole project can be completed. - It is the chain of activities with the longest duration times - There may be more than one critical path in a network and it is possible for the critical path to run through a dummy. Step by step procedure for establishing critical path 1. Earliest start times (EST) - it is the earliest possible time at which a succeeding activity can start Method of calculation : FORWARD PASS a) EST of a head event is obtained by adding onto the EST of the tail event, the linking activity duration starting from event o, time o and working forward through the network. b) Where two or more routes arrive at an event the longest route time must be taken e.g. activity F depends on completion of D and E. E is completed by day 5 and D is not complete until day 7 ; F cannot start before day 7. c) The EST in the finish event no 5 is the project duration and is the shortest time which the whole project can be completed. 2 B 2 days 4days D A 1 C 3 E 4 F 5 1 day 3 days 1 day 2 days 36
  • 37.
    A – F= Activities 0– 5 = Events Find the critical path (forward pass) 2 B 2 4 D A 1 C 3 E 4 F 5 1 3 1 2 The EST of the head event = Zero starting time + 1 day = 1 + 2 = 3 1 + 3 = 4 4 + 1 = 5 3 + 4 = 7 7 + 2 = 9 b) where two or more groups arrive at an event the longest route T must be taken e.g. Activity F dependent on compilation of ‘D’ and ‘E’. ‘E’ is completed by day 5 and D is not complete until day 7 therefore F cannot start before 37 0 0 0 09 98 l0 o0 00 2 3 1 1 3 4 4 7 5 9
  • 38.
    day 7. c) TheEST in the finishing event number 5 is the project duration and it is the shortest time in which the where project can be completed. 2. Latest start time (LST) (Backward pass) LST for each activity must be established to enable critical path to be isolated. LST is the latest possible time at which preceding activity can finish without project duration. Calculating LST (backward pass) a) starting at finish event no5 insert LST i.e. day a and work backwards through the network deducting each activity duration from previous calculated LST. b) Where tails of activities B & C join event no1, LST for C is day 3 and LST for B is day 1. The lowest number is taken as LST for event no 1 because if event no 1 occurred at day 3 then activities B and D could not be completed by day 7 as required and project would be delayed. 2 B 2 4 D A 1 C 3 E 4 F 5 1 3 1 2 38 0 0 0 0 09 98 l0 o0 3 3 1 1 4 6 7 7 5 9
  • 39.
    CRITICAL PATH One paththrough the network (A, B, D,F) has EST’s and LST’s which are identical. This is the critical path (chain of activities which has the longest duration), which can be indicated by a different colour or by two small transverse lines across the arrows along the path. Critical path implications: - Activities along article path are vital activities which must be completed by their EST’s/LST’s otherwise project will be delayed. - Float is the spare time available on non critical activities(i.e. (C and E). C and /or E could takeuptoanadditional2daysintotalwithoutdelaying the project duration. - If required to reduce overall project duration then the time of using more labour, or more or better equipment or some other method of reducing job times must reduce one or more of the activities on critical path. Float Types of float a) Total Float - This is the amount of time a path of activities could be delayed without affecting the overall project duration. Total Float = Latest Heat time –Earliest Tail time –Activity duration Total float = 50-10-10 =30 days. 39 00
  • 40.
    b) Free Float- This is the amount of time activity can be delayed without affecting the commencement of a subsequent activity at its earliest start time, but may affect float of a previous activity. Free float = Earliest Head Time –Earliest Tail Time – Activity Duration Free float = 40 – 10 - 10 20 days c) Independent Float - This is the amount of time an activity can be delayed when all preceding activities are completed as late as possible and all succeeding activities are completed as early as possible. Independent float does not affect the float of either preceding or subsequent activities. Independent Float = Earliest Head Time – Latest Tail Time – Activity duration. Independent float = 40 –20 –10 10 days. For examination purposes the most important type of float is Total Float. Calculate float (total) 1) Calculating separately 2) or calculating for total float over chains. Non –critical chain Time read time available total float over chain 40
  • 41.
    C, E 3+1= 4days 7 – 1 = 6days 2 days Slack This is the difference between EST and LST for each event. Strictly speaking it does not apply to activities but on occasions the terms are confused in exam questions. Exercise: A project has five activities as follows: Project data activity Preceding activity Duration (days) normal A - 4 B - 8 C A 5 D A 9 E B, C 5 a) Find critical path using EST’s /LST’s b) Calculate the floats of the network. NETWORK ANALYSIS a) Cost scheduling A further important feature of network analysis is concerned with costs of activities and of the project as a whole. Cost analysis objectives The primary objective of network cost analysis is to be able to calculate the cost of various project durations. Normal duration of a project numbers a given cost: More labour 41
  • 42.
    Working overtime More equipment Networkcost analysis seeks to find the cheapest way of reducing overall duration. b) Resource scheduling Management need to know what activities and what resources are critical to the project duration and if resources limitations e.g. (shortage of materials, limited number of skilled labour might delay the project. Resources scheduling requirements: i) resource requirements for each activity showing classification of the resource and quantity required ii) resources in each classification that are available to project iii) might need restrictions that need to be considered e.g. limitations on labour mobility iv) activity times, descriptions and sequences 1) Submissions of assignments – late submission not considered 2) Group presentation towards end of session 3) Lecture 4) Effort - schedule – duration 42
  • 43.
    CONSTRUCTING THE NETWORK– Worked Example Tasks Precedence Time Cost Who does A - 5days - - B - 4days - - C a 6days - - D b 2days - - E b 5days - - F c, d 8days - - Find a) Critical path b) How long it will take to complete the project i) Node numbered I denotes event called “START” ii) Activities a and b have no predecessors, assume source is at “start” – Node 1 iii) Destination at nodes are numbered 2 and 3 respectively iv) Arrow heads show direction of flow. i) Activity c follows a activity d follows b activity e follows b Note Number event nodes sequentially from left to right as you construct the network ii) activity f follows both CTD but any given activity must have its source in one and only one node ‘ ctd finish in the same node. 43
  • 44.
    Exercise Assume a smallproject with ten activities as follows: Project activity times and precedence’s Activity optimistic time most likely pessimistic immediate Time time time predecessor activity A 10 22 22 - B 20 20 20 - C 4 10 16 - D 2 14 32 a E 8 8 20 b, c F 8 14 20 b, c G 4 4 4 b, c H 2 12 16 c I 6 16 38 g, h J 2 8 14 d, e Question 1. Hints i) start network by finding those activities that have no predecessors - activities a, b, c meet the test: they can all be drawn emerging from the starting node ii) look for activities that only require a, b, or c or some combination of a, b, and c to precede them: 44
  • 45.
    - activity drequires that a be completed and e, f and g all require that b and c completed - note that a dummy will be necessary unless we begin the network from separate nodes b and c - h requires only that c be completed iii) last activity I and j are drawn in the same manner. Activity I requires both g and h be completed; so g and h are directed to a single node (node 5) Similarly activity j requires completion of both d and e which are directed to node 6 iv) since no activities that f, I or j precede them the activities are directed to the project completion node 7. Question 2. Expected Time (TE) = (a+4m+b) 6 Where a = optimistic time estimate b = pessimistic time estimates m = most likely time estimate TE is estimate of the mean of the distribution It is the weighted average of a, m and b with weights 1 – 4 – 1 respectively. The same method can be used to find the expected level of resource usage given the 45
  • 46.
    approximate estimates ofthe modal resource level as well as optimistic and pessimistic estimates. Activity Expected Time A 20 B 20 C 10 D 15 E 10 F 14 G 4 H 11 I 18 J 8 Longest of these paths is a-d-jusing43 days which means that 43 days is the shortest time in which the entire network can be completed. A – d – j is the critical path. Times and slacks for network Event Latest occurrence time earliest occurrence time Slack 1 0 0 0 2 20 20 0 3 21 20 1 46
  • 47.
    4 14 104 5 25 24 1 6 35 35 0 7 43 43 0 Activity LST EST Slack A 0 0 0 B 1 0 1 C 4 0 4 D 20 20 0 E 25 20 5 F 29 20 9 G 21 20 1 H 14 10 4 I 25 24 1 J 35 35 0 Notes EST for an activity = for the event from which activity emanates e.g. activity I cannot start until event 5 has occurred . Event 5 has an EOT of 24 days and so activity I has an EST of 24 days Project has critical time of 43 days, activity I requires 18 days to be accomplished. Therefore I must be started no later than 25 (43 – 18 = 25) if the 47
  • 48.
    project is tobe completed on day 43.LSTfor activity I is day 25 because I cannot begin until event 5 has occurred, latest occurrence time (LOT) for event 5 is also 25. Slack or Float = difference between the LST and the EST for an activity - in the case of activity I it must be started no later than day 25 but could be started as early as day 24, so it has one day of slack - all activities on critical path have zero slack NB To find the slack for any activity or the LOT for any event - make a backward pass (right to left) To find the critical path and time and the EOT’s for al events make a forward pass (left to right) which are also EST’s for successor activities. Adopt the following convention: When there are two or more non-critical activities on a path, it is conventional to calculate the slack for each activity as if it were the only activity in the path. Problems 1. Given the following information, draw the PERT/CPM diagram. Activity Immediate Predecessor 1 - 2 - 3 1, 4 4 2 48
  • 49.
    5 2 6 3,5 2. Given the diagram below, find: a) Critical path b) How long it will take to complete the project 3. Given the following network a) What is the critical path b) How long will it take to complete this project c) Can activity B be delayed without delaying the completion or the project? If so, how many days? 4. Activity a m b AB 3 6 9 AC 1 4 7 CB 0 3 6 CD 3 3 3 CE 2 2 8 BD 0 0 6 BE 2 5 8 DF 4 4 10 DE 1 1 1 49
  • 50.
    EF 1 47 Find: a) the critical path b) all event slacks c) critical path to event D d) the effect if CD slips to 6days, to 7days,to 8days. NB a = optimistic time estimate B = pessimistic time estimate M = most likely time estimate Calculating Earliest Start Time (EST) - this is the earliest possible time an activity can begin without interfering with the completion of any preceding activities - guidelines in calculating EST • calculation of EST commences with the beginning mode of arrow diagram (time O) and continues 50
  • 51.
    • if onlyone arrow leads into a mode, EST for jobs starting at the mode is determined by adding EST for the preceding job to the time estimate for the preceding job. EST at mode 6 4 = 6 4 EST at mode 8 select 8 project ii project 2 8 • if more than one arrow leads into a mode, EST calculations is made through each end of the arrows as noted below. The largest total is the EST for the mode. EST at mode 3 EST at mode 7 13 23 pressure equipment 51
  • 52.
    3 7 EST atmode 6 17 Develop operating procedures 6 6 Calculating latest finish time (LFT) - LFT an activity must be completed without delaying the end of the project. - Guidelines when calculating (LFT) • Project duration must first be determined by calculating EST • Project duration is the LFT of the end mode of the project • Calculation of LFT involves working from the end mode back through each mode to the first mode in the project 52
  • 53.
    If more thanone arrow originates at a mode, the calculation of LFT is made via each arrow and the smallest result is from each mode to the end of the diagram. LFT at mode 4 LFT at 6 select operating manager mode 4 6 17 6 9 hire operating train up personnel 10 personnel 5 4 7 Job 4, 6 17 LFT at mode 6 - 9 Time estimate for job 4, 6 8 Job4, 5 10 LFT at mode 5 - 4 Time estimate for job 4, 5 53
  • 54.
    6  LFT atmode 4 is 6 days the smaller of the two results. Milestone dates can be set V12 P32 – 36 Float: optional start and finish times. A float is the difference between time available for performing a job and the time required for doing it. Available time = Latest finish time - earliest start time Required time = time estimate for completing a job DIAGRAMS Benefits from timing calculations: • Establishment of project duration for plan 54
  • 55.
    • Identification oflongest path (critical path) through the project • Identification of jobs for which there is scheduling flexibility without lengthening project duration. Formula for calculating optional starting and finishing times: Latest start = earliest start + total floats Earliest finish = Latest finish - total float. Tabulated schedule can be converted into a calendar schedule for reporting and monitoring the project. Bar Chart time schedule can be plotted after schedule is calculated. Procedure for constructing bar chart: 1. use earliest start time for each project activity. 2. The length of each bar is the duration of each activity. 3. Plot one activity per line (in some cases, a number of activities per time) 55
  • 56.
    4.8 Benefits andlimitations of network planning Benefits • A disciplined basis for planning a project • A clear picture of the scope of the project that be read and understood easily by someone who is not familiar( but knowledge of the network diagramming technique) with the project. • A means of communicating what is to be done in the project • A vehicle for use in evaluating alternative strategies and objectives • A means of defining relationships among the project items • A means of pinpointing those responsible for accomplishing the jobs that make up the project • An excellent vehicle for training project personnel 4.9 Limitations • Network is often difficult to interpret • A great deal of time is usually needed to prepare changes, often requiring a great deal of time for modifications to the network diagram • A network makes it difficult to note estimated costs versus actual costs • Individual skills are not recognized. 56
  • 57.
    4.10 Bar chart/GantChart Construction • Is a graphic planning and control method • a project is broken down into separate tasks and for each task, estimates are made of the amount of time required and of the termination date necessary to meet the specified completion date for the project. • Information is shown as a pair of brackets indicating the start and end of dates for each task • Grant Chart enables a manager to make commitments based on the planned completion times, to acquire extra resources to shorten some of the times etc. • Grantt Chart enables manager to fill in the brackets (accomplishment) enabling him to see immediately what tasks are behind( or ahead of schedule and how far. Advantages – provides excellent communication to management Depicts more readily than network diagrams, a summary of status of project and thus are used extensively in reporting on progress of projects. 4.11 Deficiencies/weaknesses -Relationships among the jobs cannot be shown and questions cannot be answered regarding 57
  • 58.
    • Parts ofthese jobs that can be done concurrently • Parts of each job that must be completed be for other parts begin • Certain jobs or parts of jobs that must be given priority so as not to hold up scheduled completion of project • Optional starting and end dates of some jobs or parts of jobs if any. To overcome above deficiencies during planning • Network diagrams explicitly show interrelationships between jobs. A network diagram shows which jobs can be done concurrently, which owes precede, and which ones follow other jobs • Jobs with critical schedules are specified with their required beginning and end dates Using computer calculations based on the network diagram also permits more rapid and accurate updating of project schedule. “While PERT/CPM and Gannt charts are both scheduling techniques, they are not merely different ways of achieving the same ends: they are complementary rather than competitive” Discuss The date may relate to when a decision is to be made concerning outside financing, when announcement of a project to the press is planned, when a thorough project review is scheduled on whatever. Milestone scheduling indicates seluted dates by which various phases of the entire project to be completed. 58
  • 59.
    • Milestones adddetail to Gantt chart • Milestones serve as formal review points where costs, progress and the need for replanning on schedule modification can be reviewed. Gantt chart shows the relationship between milestones within the same task but not within different tasks. 4.12 Milestone Planning Is the date when a certain accomplishment, decision or event is to take place as indicated on the horizontal bar of a chart . V12 p 14 4.13 PROJECT WORK BREAKDOWN STUCTURE (WBS) This is a dynamic tool which divides(segments) the project into parts before starting a project. It is updated as the work proceeds, particularly as minor changes affect the task analysis. Reasons for segmenting a project • Project is large • Project is long term • It is advantageous to have information to plan the whole project as one unit • We do not have information to plan the whole project as one unit 59
  • 60.
    • The projecthas several natural phases with completing different contents. NB: a characteristic of a phase is that it is possible to plan it as a whole i.e. giving us an insight into the types of activities that should be done in this phase. A WBS does not show dependencies other than a grouping under the key stages. A WBS is not time based – there is no time scale on the drawing. e.g. feasibility(phase) study V implementation phase Preliminary project V (main project) -Defines precisely objectives and goals -it implements what has been on project decided -Requires thoroughness completeness 4.14 PROJECT RESPONSIBILITY CHART - It is a contract between the project and the parties involved (management other resource persons and members from the base organization who are drawn into the project) 60
  • 61.
    - Each partymust understand clearly the responsibilities for (work ending up to a milestone) and their roles. Each key stage must be owned by one of the team members. - Some milestones may require authority to make decisions. - Responsibility can consist of being responsible for progress, expecting work, making decisions, being available for consultation, receiving information or tutoring. - When project responsibility chart has been developed it is useful to evaluate the results. - External assistance can be included in the project on project members e.g. legal expertise, trade union representative, expert in economics and finance (if not found from within) - At this stage data to complete “duration” on plan “end date” is not yet in place. LINEAR RESPONSIBILITY CHART (LRC) - It is a contract between the project and the parties involved i.e right and member from the base organization who are drawn into the project as resource persons and each party must understand clearly for work leading up to a milestone (date of announcement) - Responsibilities can consist of being responsible for progress or implementing work, making decisions, being available for consultations, receiving information or tutoring as well as evaluating the results. 61
  • 62.
    - External assistantcan also be included in the project as project members such as legal practioners, TUs, economic experts if not found from within. - If summaries the relationships between project participants and their responsibilities in each element of a project and an element can be a specific activity an authorization to perform an activity, a decision or a report. The LRC has government column to represent organizational elements and roles which correspond to the project elements and roles which correspond to the project elements performed by the organization. - The LRC depicts authority, responsibility and communication channels. Activity Engineeri ng manager Manufacturi ng manager Contract s manager Project manag er Marketin g manager Quality assuranc e manager Negotiating Contract I, N I, N I, R P I A Preliminary Design P A R O, B I A Execution R P - O, B I R Delivery N N P A N A KEY A - Approval P - Preliminary responsibility – who is responsible for accomplishing R - Review N - Notification O - Output I - Input B - Initiation 4.0 PROJECT DOCUMENTATION Project work produces a large amount of data and it is important that you record essential material. Insist that the team keep all 62
  • 63.
    essential project recordson a standard set of templates (format 5) derived specifically for the purpose. • To ensure project data is resolved in a consistent and disciplined manner without reinventing every week. • To get the right information recorded for the project file to support your control system and aid project evaluation at completion. • Standard formats can be designed on the computer a) Project File - use a paper based system but more preferably on computer based file which makes distribution of information easier with a network. - Organize your project file into sections for different stages of the project e. g.  Background information  Project definition - project organization - stakeholders - project brief  Project plans and schedules - project risk management 63
  • 64.
    - responsibility charts -schedules - work plans  Project execution and implementation - project status reports - changes to project plans - action plans for correction action - cost control data - supplier and subcontractor data - records of meetings  Project closure - handover checklist - acceptance pressure - follow up and post project responsibilities - project evaluation data - completion report b) Project logbook - open a project log book at the start of your project - book in an A4 bound …….book - log book is particularly valuable to record events with third parties like suppliers and contractors. When conflicts and differences occur the 64
  • 65.
    logbook provides arecord of events that can have a legal status in a dispute - log book is an addendum to the project file - the logbook is an invaluable record of what actually happened throughout the project. It is useful for post-project evaluation and a source of active data for other projects in the future. c) Project definition - process of turning the data into something more solid and realistic, something that is no longer a wish or a hope - a clear definition of your project is critical to success – a large number of projects (more than 75%) are perceived to fail as a consequence of poor or nuclear definition Documents required to effectively define project: I. a statement of requirements II. a stakeholder list – - all with an interest in the project, how or in the future : customer, endures, project sponsors, line managers of your core team members - finance department, sales and marketing department, consultants , contractors, suppliers, other divisions or sites. Project log book 65
  • 66.
    Record events withessential relevant data: • date • time • who is involved • key points or content Events to record • Telephone calls – incoming and outgoing • Faxes – incoming and outgoing • Letters – sent and received • Memos – sent and received • E –mail - sent and received • Purchases instructions issued • Contracts signed • Action plans agreed • Decisions taken – how implemented • Solutions derived • Reports issued • Meetings – sponsor team, third party, one – to – one When using log book  Use every page and number them sequentially 66
  • 67.
     Never removeany pages  Start each day with anew page  Always write with ink, never with pencil  Write on very line  Rule out all unused lines at the end of each day and sign the page at the bottom  Do not allow anyone else to write in the logbook – even the project sponsor. - the public, other agencies/statutory bodies stakeholders used to be consulted for their inputs to give you a wider perspective of: - the real project needs and requirements - what is realistically available in the time scale demanded. III. Project brief – one page document with the following sub headings:  Project title – relevant title for identification (project number)  Project overall objective – describes project’s desired results in 25 –30 words  Project leader and sponsor to be identified  Project proposed start date: date when the real work starts after definition is approved and planning begins  Project required and date: and project is handled over to customer 67
  • 68.
     Project deliverables;tangibles outputs from the project which must be impabale of being measured through its lifecycle, apply SMART test to ensure that each deliverable is specific, measurable achievable, realistic and time bound  Project benefit  Lists benefits and quantity them in financial terms-cost savings, increased turnover, contribution or profitability in a specific time scale.  Project strategy –explore alternative, carry out feasibility study, set up site team, involve customers in the team  Project skills required: identify and highlight special experience and technical skills you expect to need, external skills, expertise from outside the organization.  Relationships with other active projects –any project interfaces with other projects in terms of inputs, outputs critical interface dates to be determined.  Project cost – if known or budget exists from earlier studies or feasibility with them state cost, if not give estimate cost o rleave blank.  Risk management – risk log and management forms attached Project brief is a document that summarizes all relevant facts about the project and is a source of definitive information: 68
  • 69.
    Contents:  Projects origins–a need or opportunity statement  Project …….. – why is it necessary now?  Benefits of project –to customer and your organisation  Project budget if known at this stage  Current timescale and dead lines –subject always to detailed planning later Iv Scope of work statement (SOW) - it is a narrative description of the project objectives in more detail, giving more information about each deliverable and benefit identified. SOW must identify boundary limits of project clearly stating what is not going to be done as part of the project. It records all constraints made earlier and any assumptions made in each of the meetings, SOW is where the applicable specification list is recorded: - internal product specifications - external product specifications - mandatory standards imposed by legislation - process specification - customer specifications - standard operating procedures - purchasing procedures 69
  • 70.
    - quality standards -testing specifications and procedures - sub contract terms and conditions imposed on third parties Its purpose: - to make sure that everyone knows from the offset which standards and specifications apply to your project - it identifies where actual document scan be found for reference - it identifies what exceptions, if any, apply to any specification for your project - if necessary record for reference purposes any other relevant documents that have been issued previously relating to project e.g. CBA fundability reports, studies carried out by consultants, project evaluation reports from previous projects v Risk Management - a risk is any event that could prevent the project from realizing expectations of the stakeholders as stated in the agreed project briefs or a agreed definition. A risk that becomes a reality is treated as an issue - there are risks to all projects and risk management is the process o identifying and containing them to ensure your project’s success. It is necessary to anticipate what might go wrong. Two types of risks 70
  • 71.
    o project risks– associated with technical aspects of the work of the work to achieve the required customers o process risks – associated with project process, procedures, tools and techniques employed, the controls put in place, communication, stakeholders and team performances o can be due to external / internal factors Project manager is made an obligation with the team to,  identify and evaluate potential risks  obtain agreement for action plans to contain risks  take actions and monitor results  promptly resolve any issues arising from risks that happen Risk management is a continuous process throughout the life cycle of the project. Identify the triggers or signals that suggest a risk likely to happen, and you must maintain awareness of risk in the minds of all your project team;  should be started at definition phase.  Is essential to establishing project brief  Compile a complete list of a project risk log  Review the list at regular intervals as the project moves forward. Approval of project definition Requires following documents to be presented 71
  • 72.
     Project organizationchart p56 T&Young  Project stakeholder list  Scope of work statement  Project risk management forms  Project brief. 5. PROJECT LAUNCHING After project definition, plan and schedule have been approved you are ready to launch the project work. i) ask key stage owners(people assigned with project work and own the work) to record their task lists -using WBS -use schedule start and end dates -note name of person responsible for carrying out the tasks. -prepare Gannt chart. ii) establish milestone scheduling –milestone should be considered as a flag or some signal at some clearly defined point in the project. There are selected key events that 72
  • 73.
    are of majorimportance towards achieving objectives. Milestone are excellent tools for reporting project status in summary form to management. It summarizes the status of major events. e.g.  completion of key task  completion of one of the project deliverables  stage generation of benefits  completion of third party activity  financial audit point  project audit point  quality audit  significant decision point. Record list of milestone on a schedule and on Gantt chart. 5.1.3 IDENTIFYING CRITICAL SUCCESS FACTORS OF PROJECT Use process type CSF which include: - tools, techniques, processes and procedures you use to define, plan, execute and complete project on time, to the budget - these must be acceptable to the key stakeholders i.e. customer and project sponsor 73
  • 74.
    Examples: - defining projectobjectives, deliverables, benefits - ensuring sponsor is appointed and sustains support and commitment to project - appropriate team is formed and right skill are utilized - scheduled plans exist, up to date - WBS is maintained - Control procedures are understood - Project risks regularly reviewed - Reporting and communication procedures are established –plan a meeting schedule (1 to 1)meetings for your project. 5.1.4. Launch Meeting: as a milestone in the project - get together all important people involved in a project  project sponsor  the customer  other stakeholders(key) –line managers  project team Consider preparing a document package for distribution containing:  project organization chart  project stakeholderlist  key stage Gantt chart  key stage responsibility chart 74
  • 75.
     project brief any other relevant information CHAPTER 6: PROJECT WORTH INVESTMENT DECISIONS Decision to invest is based on 3 major factors. (a) Investor’s beliefs in the future – such beliefs would be based on forecasts of internal factors including: costs, revenues, inflation, interest rates, taxation etc. (b) Alternatives available in which to invent – appraisal techniques are used to assess competing investments. (c) Investor’s attitude to risk – analysis of project uncertainity, risk are critical given the size of investment. Appraisal techniques Payback is the period usually expressed in yeas which it takes for the project’s net cash inflows to recoup the original investment. e.g Calculate payback for the following projects: 75
  • 76.
    Project 1 ProjectII Year Cash flow Cash flow 0 -1500 -1500 1 +600 +400 2 +500 -500 3 +400 +600 4 -1500 5 +300 6 +500 7 +400 8 +300 9 +300 10 +300 Advantages a) Simple to calculate + understand b) Uses project cash flows rather than accounting profits + hence is more objectively based. c) Favours quick return projects which may produce faster growth for waand enhance liquidity d) Choosing projects which payback quickest with tend to minimize those risks saving the way which are related to time. 76
  • 77.
    Disadvantages a) Payback doesnot measure overall project worth because it does not consider cash flows after the payback period e.g project III is ranked after project I + II even though it produces cashflows over a 6 year period. b) Payback provides only a crude measure of project cashflows. eg project I + II are reached equally even though there are clear differences in timing of cash flows. In spite of above it is undoubtedly the most popular appraisal criteria in practice. Discounted cashflow (DCF) Use of Def overcomes some of the disadvantages of the traditional technique of payback. Two common features to DCF methods: a) Use of cash flows not accounting profit. This is preferred because:- - Cash flows are more objective and in the end are what actually count. Profits cannot be spent cash is the life blood of the company. - Accounting conventions regarding revenue/capital expenditure classifications, depreciation calculations, stock valuations become largely redundant. 77
  • 78.
    - The wholelife of the project is to be considered therefore it becomes unnecessary and misleading to consider accounting profits which are related to periods (period oriented- monthly, quarterly, annually) - Timing or expected timing of cash flows is more easily ascertained. Typical cash flow items include; 1. project revenues 2. cost grants 3. resale or scrap value of assets 4. tax receipts capital injection (contribution) 5. any other cash inflows caused by accepting the project. Cash outflows - initial investment in acquiring the assets - project costs (labour, materials etc) - working capital investment - tax payments - any other cash outflows caused by accepting project. 78
  • 79.
    b) Time valueof money (money received now is worth more than money received in use of money) It is preferable to receive a given sum of money earlier rather than later because the sum received earlier can be put to use by earning interest or some productive investment within the business. Assumptions in basic DCF Appraisal a) uncertainty does not exist b) inflation does not exist c) appropriate discount ate to use is known d) a perfect capital market existsi.e. unlimited funds can be raised at the market rate of interest. NPV method It calculates the present values of expected cash inflows and outflows (i.e the process of discounting) and finds out whether in total the present value of cashinflows is greater than the present value of cash out flows. NPV = ∑ C (1 + r) Where C = net cash flow ∑ = Summation of r = discount rate 79
  • 80.
    e.g An investmentis being considered for which the net flows have been estainated as follows. Period cashflow PVF Discounted PV Yr 0 Yr 1 Yr2 Yr3 Yr4 -9500 +3000 +4700 +4500 +3200 What is the NPV if the discount rate is 20%. Is the project acceptable? NPV = -9500 + (0,833 x 3000) + (0,094 x 4700) + (0,579 x 14800) + (0,482 x 3200) = $582 Use tables To verify use calculator I 1 + r Investment acceptable because it has positive NPV at the firm’s cost of capital. Interpretation: the NPV means potential increase in consumption made possible by the project valued in present day terms. Internal Rate of return (IRR) Alternative names: - DCF yield - Marginal efficiency of capital - Trial and error method 80
  • 81.
    - Discounted yield -Actual rate of return Definition - It is the discount rate which gives zero NPV. - It can be found by either i) drawing a graph known as a present value profile or ii) calculations involving lines interpolation. Present value profile - Is a graph of the project NPV’s at various discount rates - Plot two points one at a rate which gives positive NPV and one at a rate which gives a negative NPV e.g 20% gives + $ 582 NPV; and a higher rate is tried to see if a negative NPV is obtained e.g 25% discount rate gives –322 NP Plot these points and draw a line between them to see where it crosses the horizontal axis which gives then IRR 81
  • 82.
    PRESENT VALUE PROFILE 700- 600 - + VE 500 - NPV @ 20% = $ 582 400 - 300 – 200 - 100 - IRR i.e the discount rate which gives NPV 0 - zero NPV $ 100 - 5 10 15 20 25 30 35 40 - VE 200 - 300 - NPV @ 25% = $ -322 400 - 500 - Note a) at least out discount rate must be chosen which gives a negative NPV so that the present values line crosses the horizontal axis. 82
  • 83.
    b) The presentvalue line crosses the axis at approximately 23% which is close enough estimate for most practical purposes. Finding the IRR by linear interpolation IRR C = 20% + 5% 582 904 (a) (b) (d) Where a) is a discount rate which gives a positive NPV i.e 20% = $582 b) Is the difference between (a) and the rate which gives a negative NPV 25% - 20% = 5% c) Is the positive NPV at discount rate chosen in a) i.e $ 582 d) Is the total range of NPV at rates chosen i.e +582 to –322 = 904 Decision rule using IRR: Where calculated IRR is greater than company’s cost of capital then project is acceptable. NPV and IRR compared: a) Accept/reject decisions -where projects can be considered independently of each other and where the cashflows are conventional, then NPV and IRR give the same accept/reject decision. Accept project Reject project 83
  • 84.
    NPV positive NPVnegative NPV IRR IRR above cost of capital IRR below cost of capital b) absolute and relative measures NPV is an absolute measure of the return on a project whereas IRR is a relative measure relating the size and timing of the cashflows to the initial investment. Thus, the NPV reflects the scale of a project whereas the IRR does not. e.g. Assume a project has the following cashflows: year 0 year 5 project x -$20 000 + $40 241 NPV @ 10% = $4990 IRR = 15% Therefore, project is acceptable by both methods-assuming 10% is the cost of capital. Now assume that the project is scaled by a factor of 10: Year 0 year 5 Project 10x = 200 000 +402 410 NPV = 49 900 IRR = 15% NPV clearly distinguishes between project x and project 10x whereas IRR remains unchanged at 15%. c) Mutually Exclusive projects 84
  • 85.
    This where onlyone of several alternative projects can be chosen. Projects are ranked in order of attractiveness and choice is made on the most profitable. In such circumstances NPV and IRR may give conflicting rankings. A property company wishes to develop a site it owns. Three sizes of property are considered and costs and revenues are as follows: Year 0 year 1 to perpetuity Expenditure rentals per annum $million $million small development 2 0,6 medium development 4 1 large development 6 1,35 The cost of capital is 10 % and it is required to rank the projects by NPV and IRR and to select the most profitable. The projects are mutually exclusive because the building of one size of development excludes the others. Perpetuity = is a constant stream of cashflows without end e.g. bonds give cashflow stream (yearly interest) PV = C + C + C 1 +r ( 1 + r) ( 1 + r) = C r NB ranking is preferred i.e. large development because it leads to the greatest increase in wealth for the company. Non-conventional cash-flows (the multiple rate problem) 85
  • 86.
    Non-conventional cashflows –wherecashflows vary; opposite of conventional cashflows i.e. an initial cashflow followed by a series of inflows. e.g. year 0 year 2 year 3 project x -2 000 +4 700 -2 750 project y +2 000 - 4 000 +4 000 Project x has 2 outflows and is thus no-conventional. Project y has an outflow in a year’s time instead of initially and is thus non- conventional. When a project has non-conventional cash-flows it may have: i. One IRR ii. Multiple IRRs iii. No IRR Multiple rates: Project x =two IRRs at 10% and 25% Project y =No IRR NPV Method gives clear, unambiguous results whatever the cash-flow pattern Project x has positive NPVs at discount rates between 10% and 25% and negative NPVs at lower and higher rates. Project y has a positive NPV at any discount rate. NPV @ 0% = -50 NPV @ 10% = 0 86
  • 87.
    NPV @ 15%= +10 NPV @ 25% = 0 NPV @ 30% = -14 Annuity: This is a level of stream of regular payments that lasts for a fixed number of periods. PV annuity = C + C + C……..+ C 1+r 1+ r 1+r 1+r PV annuity = C Exercises: 1. Mr X has won a lottery paying $50 000 a year for twenty (20) years. He is to receive his first payment a year from now. If interest rate is 8%. What is the true value of lottery? 2. A firm can generate net cash flows of $500 000 in the first year and + $200 000 for each of the next five (5) years . Calculate the Present Value. 3. A firm is considering a project with a cash outlay of one million Zim.dollars now and a five (5) yearly cash inflows of $500 000. What is the NPV at 10%? 4. What is the Net Present Value and Internal Rate of Return of the following series at 10% Year 0 1 2 3 4 Cash-flows -2 000 +800 +600 +700 +500 87
  • 88.
    Draw a presentvalue profile of the above. Is the project acceptable at 10% cost of capital? 5. An entrepreneur is considering buying a freezit making machine Summary of NPV and IRR comparison: • NPV is technically superior to IRR and is simpler to calculate • Where cash-flow patterns are non-conventional there may be nil or several IRRs making the IRR impossible to apply • NPV is superior for ranking investments in order of attractiveness • With conventional cash-flow patterns both methods give the same accept or reject decision • Where discount rates are expected to differ over the life of the project such variations can be readily incorporated into NPV calculations but not in those for the IRR. • Notwithstanding the technical advantages of NPV over IRR is widely used in practice so that it is essential that students are aware of its inherent limitations. 7.1.0. EXECUTING THE PROJECT WORK PROJECT CONTROL – 3RD phase of project management cycle Consists of 1. – monitoring progress o f each project item 2. – assessing its effects on the total project 88
  • 89.
    3. – takingthe necessary action on the critical items to keep the project on the planned schedule. 7.1.1 Project control system and system design Control of a project environment involves three operating modes: • Measuring - determining progress through formal and informal reports • Evaluating - determining the cause of deviations from the plan and how to react • Correcting - taking actions to correct the situation System design Its purpose is to ensure that you and the team always have information to make an accurate assessment of: o What has happened and compare this with o What should have happened according to the plans. Controlling the project means managing the many problems that arise to maintain the project schedule. You do this on a day –to day basis through:  Monitoring the work – observing and checking what is happening  Identifying and resolving the problems that arise  Tracking the project – comparing with the plan and updating the records. Good control of any process is dependent on accurate data-keep project file up to date. This involves a regular check and up date of: 89
  • 90.
     Project organizationchart  Stakeholder list  Key stage responsibility chart  Project brief  Key stage Gantt charts  Key stage work plan charts  Project risk log Control system must be capable of providing information on:  Resource required –availability and its effective use  Equipment and machinery required and used  Materials used, ordered and required  Costs incurred to date and forward commitments  The results achieved – tasks completed  A valuation of the results- as expected Monitoring Progress Monitor: - The team (talkings to them, holding meetings) - The stakeholders (hold 1 to 1 meetings) - Performance (checking activity) Do this by MBWA, observe and have conversations. Do this by written reports which provide a historical record Tools to use: working with WBS 90
  • 91.
    Use of Ganttchart/bar charts Project status report Good monitoring and tracking (measuring) builds team confidence, anticipates problems and prepares future success. Taking corrective action: 1. rearrange work loads 2. put more effort into the job 3. put additional resources 4. more milestone date 5. lower scope /quality of results demanded. Go through problem solving process p158 - 161 Regular progress meetings  essential part of project control process  keep your meetings to the point  focus the team on what must be done next not history  come up with an action list  project control is dependant on good communication 7.1.4. Project status report a project status report is prepared on a regularly scheduled basis(usually monthly)and reflects programme content in a summary form. • Status of key project items • Assessment of key project items 91
  • 92.
    • Resolution of“troubled” areas • Difficulties anticipated in the work waiting to be done Status report documents p50-55 spinner - many include 3 documents - cover letter - executive highlights (listing, in a sentence or two) - project summary - bar chart - project status - milestone report 7.1.3. Cost Control Measures Developing cost estimates - Cost estimates for project activities are provided by experienced personnel - Sum total of project costs relate to cost estimates as standards - Usually cost associated with activities on the network are reliable costs. A completed bar chart timing schedule is a prerequisite to developing a project cost schedule. You can use the WBS and Gantt chart as the basis of collecting data. Steps to develop a cost schedule 1. complete bar chart time schedule and add the cost value of each activity to its corresponding bar. 2. calculate the cost per unit 92
  • 93.
    3. tabulate costschedule 7.15. Managing time Time is the most valuable resource that, if lost or misplaced is gone forever. There is need to convert this constraint to a manageable resource Barriers to effective time management. - encourages good time management for:  self  the team  stakeholders 8.0 People problems and role of project manager 8.1.1 Qualities of a project manager Role of a project manager is a complex role because of involvement in a changing environment. It is a temporary management role with specific responsibilities that are linked only to the project. Project manager has to balance the demands and needs of :  Customer  The project  The organization  The project team Primary Responsibilities of a project manager include:  Selecting the core team with project sponsor  Identifying and managing project stakeholders  Defining the project and securing stakeholder approval  Identifying and managing the risks 93
  • 94.
     Allocating andsecuring resource commitments  Monitoring and tracking project progress  Solving the problems that interfere with progress  Controlling costs  Leading the project team  Informing stakeholders of progress status  Delivering the project deliverables and benefits  Managing the performance of everyone involved with the project 8.1.2. Managing project stakeholders Stakeholders are the people who have a specific and clearly definable interest in the project. They have influence in the management of the project as they provide some resources e.g. line managers. Other stakeholders include: (internal/external stakeholders) - Your customers - Your project sponsor - Customer’s user group - Finance department - Production - Marketing - Personnel e.t.c They need to be consulted and managed all stakeholders have a hidden agenda about what they expect from your project and you need to expose these expectations before you define the project. 94
  • 95.
    External stakeholders alsohave an interest in the project  Suppliers  Contractors  Consultants  Government or agencies etc 8.1.3 Projects and conflicts Hopes, desire and needs of people across the organization as well as outside players are often in compatible with each other resulting in conflict where change takes place, conflict is inevitable. Most common types of conflict: - resources - equipment and facilities - budgets and costs - technical opinions - priorities - procedures - responsibilities - personality clashes Some common causes for conflict 1 diverse expertise in project team 2 low level of authority given to project leader 3 lack of understanding of project objectives by project team 95
  • 96.
    4 unclear orshared responsibilities 5 unclear schedules and performance targets for team members 6 local interference from high level involvement 7 people do not like each other or do not get on together in their worst Conflict is good if it:- - brings problems and issues out into the open for discussion - brings the team together, screening loyalty - promotes creativity, generating new ideas and work practices - focuses people to give their work more detailed analysis Good conflict generates win-win relationship between individuals, promoting sharing of information and improved motivation. Bad conflict - creates stress, stiring up negative feelings - makes the working environment less pleasant - surely reduces effectiveness of communication processes - interferes with coordination of effort between groups and individuals - encourages an automatic approval to working Bad comfort generates a win-lose relationship between individuals. A team without conflict could be perceived as complaint and lethargic with little creativity. Projects and teamwork: 96
  • 97.
    Successful teams donot just happen, they have to be built through effective leadership and commitment.  Select your core team carefully  You want creative, enthusiastic people with a strong sense of responsibility and commitment  A successful team consists of a carefully designed mixture of right skills and personalities who can work together without dissension and conflict. Take positive actions to build the team  Regularly review the performance  Test team working  Encourage participation 9.0 USE OF COMPUTERS IN PROJECT What can software do? Most software programmes are in project work designed around some fundamental features that include:  Tabulating a list of tasks at different levels of the WBS  Inputting duration data  Calculating critical path and float date  Deriving the Gantt chart  Deriving the logic diagram or Pert chart  On putting a list of resources  Assignment of resources by responsibility or capacity  Inputting of cost data as resources cost rates and materials costs  Deriving a budget and cost curves 97
  • 98.
     Scheduling theproject based on input data  “what if” analysis of issues using a Gantt chart  reassignment of resources  identifying and correcting resource overloads  outputting a wide range of reports Software programmes can be used for: Graphics part - produces Gantt char t,logie diagram or Pert chart And graphics used for reporting Spread sheet part – is used for the forms, table, reports Database part - stores and manipulates the data provided for Calculations using the spread sheet section to Insert results into the tables, charts, diagrams Viewed on the screen. Selecting project software: Selection should not be based on price alone but includes are view of :  past track record of performance  ease of use  compatibility with other software in use  stand alone or networked and availability  platforms available  features for planning and scheduling  features for control and updating 98
  • 99.
     quality andeases of reporting  networking features-passwords , access restrictions etc  training available  helpline and back up available Using a software programme Steps:  open a new project file  insert project title, start date and project manager’s name  set up the master calendar giving public and organizational holidays  if possible design the specific formats for the tables you require  input the project organization – the core team on a resource listing  set up resource calendars – one for yourself and each team members to show their available capacity for the project, including holidays  input the list of key stages to a blank Gantt chart  assign responsibilities for the key stages –select by responsibility  input the durations for each key stage  input dependencies between the key stages  programme calculates the critical path, the key stage start and finish times and floats  Gantt chart produced, highlighting critical stages  Pert diagram produced  Table generated showing early and late start and finish times with total float  Total project time is now available 99
  • 100.
     Input costdata as resource lost rates and materials costs for key stages  Operating budget cumulative curve calculated Use “update mode” during implementation. 10.0 CLOSING, EVALUATING AND APPRAISING PROJECTS Closure of projects does not happen, it must be planned with care. The date may relate to when a decision is to be made concerning outside financing, when announcement of a project to the press is planned, when a thorough project review is scheduled on whatever. Milestone scheduling indicates seluted dates by which various phases of the entire project to be completed. • Milestones add detail to Gantt chart • Milestones serve as formal review points where costs, progress and the need for replanning on schedule modification can be reviewed. Gantt chart shows the relationship between milestones within the same task but not within different tasks. Establish with customer and user group the criteria they want to use to confirm completion. These must be measured by agreed methods to avoid conflict a) Acceptance process (handover) must be based on a checklist agreed with customer and user group. Acceptance process should identify customer representative with authority to assign the project completion report. 100
  • 101.
    b) Hold ateam meeting to review all tasks and present completion report for approval and sign – off c) Evaluate your project to learn what went well and what went wrong. PITFALLS IN PROJECT MANAGEMENT Possible flaws relate to the following: • Foundations of the project [PITFALLS IN TOR] a) Insufficient support for the project from the company or its executives. - project plans not aligned with business plans: project must fit into the overall plans for the company to avoid conflict between the direction in which the company’s management wants business to develop and the way in which project work contributes to that development. - Half hearted support chokes project through lack of necessary resources and decisions b) Undefined principles and policies of project work in terms of corporate and line management’s responsibility for the project; whose responsibility it is for committing resources; what the policies are for making resources available; what the tools and methods are to be used for management of the project and how coordination and cooperation are to be achieved? 101
  • 102.
    c) Poor projectdefinition - Goals for project are imprecise affecting adversely 4 phases to problem solving ie • Decision making • Decision taking • Implementation • Monitoring - Undefined limits of scope (use milestone plan and a clear responsibility chart. - Unbalanced levels of ambition. - Project manager has to balance technical aspects, the right people and system (physical products) using a milestone plan (PSO project mind set) (ii) Planning of Project • planning level is uniform: plan contains too much detail for some users and too little for others: use milestone plan at management level and activity plan at task level. • Planning tools are too unwieldy • Planning range is psychologically unsound 102
  • 103.
    • Planning methoddiscourages creativity and encourages bureaucratic – democratic process, free of jargon, tools and methods. • Planning of time and cost are over optimistic • Unrealistic, arbitrary plans. • Insufficient previous experience against which to judge the work content. • Planning of resources overestimates their competence and capacity. • Project calendar ignores lost time. • Plan omits activities: activity planning (iii) PITFALLS IN ORGANISING Alternative orgamisations for the project are not considered. - Distribution of responsibility is not defined - Principles of cooperation are unclear - Key resources are not committed - Communication is poor - Project manager is a technocrat, rather than a manager (iv) PITFALLS IN CONTROLLING 103
  • 104.
    - purposes ofcontrol is not understood (difference between monitoring and controlling) - plan and progress reports are not integrated - no well defined formalized communication between project managers and project members - project manager has responsibility but no formal authority (v) PITFALLS IN EXECUTION OF PROJECT WORK (PROFESSIONAL COMPETENCE OF PROJECT MANAGER) - complexity of coordinating a variety of resources is under estimated - changes to the plan or specification are uncontrolled - activities are not completed and documented before others begin - the targets of time , cost and quality are unbalanced 104
  • 105.
    DISCUSSION: Review a projectthat has failed. Examine the reasons for its failure. At what stage in the life cycle did this occur? What lessons can future project managers learn? 105