1.

Fundamentals of Project Management

What is Project?
According to IS-15883 (Part 1): 2009

A project is a non-recurring task having a definable beginning and end, with a definite mission and
has a set objectives and achievements.
According to PMI A guide to the project management body of knowledge (PMBOK guide)

A project is a temporary endeavor undertaken to create a unique product, service or result.

There are two key words in above definition.

(i) Temporary : every project has a definite beginning and a definite end.
(ii) Unique :- any project can never be exactly repeated again.

Types of Projects

Personal Project

Preparing for Gate/Engineering Service Exam

Writing a Report/Book.

Business/Organisational Project

Construction of Dam, bridge, Highway, building etc. Setup refinery.

Making a Music Album/Movie.

National Projects
Swatch Bharat Abhiyan
E-Governance/Digital India

Global Projects

Prevention of Global warming

Elimination of Polio

Based on Completion Time

Long duration projects (over 5 years)

Medium duration projects (3 to 5 years)

Short duration projects (1 to 3 years)

Special short-term projects (less than 1 year)

Based on Value of Project

Mega value projects (>1000 crores)
Large value projects (100-1000 crores)

Medium value projects (1-100 Crores)

 Small value projects (< 1 Crore)

Characteristics of Projects
1. Change
2. Fixed set of objectives
5. Temporary
6. Cross-functional/Teamwork
7. Unique
8. Life cycle
9. Made to order

8. Single entity
9. Multi-skilled staff
10. Subcontracting
11. Risk and uncertainty

Operations
Operations are ongoing execution of activities that produce same output or provide a repetitive
service.

Similarities between Operations and Projects.

Both are executed by individuals.

Both are subjected to constraints like resources, schedule, risk and etc.

Both are planned, executed and controlled.

Both are executed to meet strategic and organisational objectives.

Difference between operations and projects are:

Stakeholders
Stakeholder is a person, group of individuals or organisations, who is positively or
negatively impacted by the project and/or anyone who can exert influence over the
projects objectives and results.
Generally in any project stakeholders are as below.
(a) Project Manager
(b) Sponsor
(c) User/Customer
(d) Sellers or Business Partners
(e) Project Team
 (f) Departmental Managers
(g) Board of Directors
(h) Project Management Office

Project Constraints
Constraints are limiting factors or holding back elements that decide upon the boundaries of
project.
(i) Scope
(ii) Quality
(iii) Schedule
(iv) Budget
(v) Resources
(vi) Risk

What is Project Management?

According to PMBOK Project Management is application of knowledge, skill, tools and
techniques to project activities to meet project requirements.

Objectives of Project Management

(i) Scope (S)
(ii) Performance (P)
(iii) Time (T)
(iv) Cost = f (P, T, S).

Project Management Office

Project Management Office is a group or organizational body, which is assigned various
responsibilities related to the centralized and coordinated management of projects.
Types of Project Management Office
Project Management office could be of following nature
(a) Supportive Project Management Office :These kind of PMOs have low degree of
control on projects.
(b) Controlling Project Management :These kind of PMOs have moderate degree of control
on projects.
(c) Directive Project Management Office : These kind of PMOs have high degree of control
on project

Functions of Project Management

According to IS-Code following are the functions of Project Management.
Define work or scope of the project
Decide how the activities of project are to be executed.
Develop a suitable organisational structure.
Develop Implementation plan, procedure, standards and metrics.
 Involve all the participants and ensure all the project components (or elements) are inter-
related, integrated and Co-ordinated.
Finalize contracting plan and policy, prepare contract document and decide contractors
responsibility.
Prepare time schedules, cost (or budgets) and identify Milestones.
Develop monitoring and control, information and reporting system, and ensure their desired
operation.
Establish healthy communication and Co-ordination among projects.
Provide consultation, training and oversight about projects.

Creating organisational assets in terms of documentation and templates of Project

management policies, procedure and standards.
Program and PortfolioProgram
According to PMI, Program is a group of related projects managed in a Co-ordinated way to
obtain benefits and control, which is not available from managing them individually.
This means that a program will have multiple projects which are inter-related to each other.Benefits
of Program

Good communication and Co-ordination between projects. Reduce conflict between projects
Better resource utilization

Resource constraints are minimized

Organisation performance is improved

Portfolio

Portfolio is a group of related or non-related projects or programs.

Note that in program management only related projects were managed whereas in portfolio
related and non-related projects are managed.

Benefits of Portfolio

Better allocation and utilization of resources between projects and programs. Extending
constant support to projects or programs.

Reduction in conflicts or better communication between projects or programs. Improvised Co-

ordination among projects or programs.

Project Manager
A project manager is an individual with authority, accountability and responsibility for managing a
project to achieve specific objectives.
Characteristics of Good Project Manager
1. Good technical skills
2. Leadership skills
3. Resource management
4. Human Resource Management
5. Communication skill
6. Negotiation and Influencing skill
7. Conflict Management skill
8. Marketing, Contracting, customer relationship skill
9. Budgeting & Costing skill
10. Scheduling and time management skill
11. Team building
12. Motivation skills
13. Decision making skills
14. Political and Cultural awareness
15. Trust building.

Organisational Structure
Organisational structure is the hierarchy of people and its function.
An organizational structure defines how activities such as task allocation, coordination and
supervision are directed towards the achievement of Organisational aim.
It enables the co-ordination and implementation of project activities by creating an environment
which felicitates interactions among the team members with a minimum amount of conflict and
friction.

Basic characteristic of an Organizational structure should be innovative approached to

overcome difficulties.

Sound and Experience based judgment.

Prompt management of changes and changing Situations.
Good monitoring and control of preferred and performance.

Types of Organisational Structural

1. Functional Organisational Structure

In this type of Organisational structure an organisation is divided into a specialised functional
departments, undertaking corresponding specialised task of each project.
A department may have more than one projects at a time.
Any project is not identified by one special person or department.
In this kind of system functional manager has all the authority i.e. budget allocation, resource
allocation, decision making etc.

Generally position of project manager does not exist, whereas if there is a project manager their
role will be limited and requires approvals from functional managers.
Sometimes Project manager may have title of Project Co-Coordinator

Advantages
Employers are very skilled and efficient because they are experienced in same work.
 There is no duplication of work as roles and responsibility of each employee is fixed.
Clear cut hierarchy i.e. each employee reports to his functional manager, which results in better
communication and co-operation.

Disadvantages
Employees might feel bored due to the monotonous, repeated type of work and may become
lazy.
Cost of high skilled employee is higher.
Departments develop a self-centered mentality i.e. functional manager only pays attention to
his department and dont care about other departments.
Each department will start behaving like a small company with its own culture and management
style.
Project manager has little or no authority.
Carrier path is not clearly defined for project manager, sometime they may be on part time pay
roles.
II. Projectised Organisation
In projectised organization structure, project manager has full authority to assign persons
assigned to the project.
Here either there will be no functional manager, or if exists, he will have very limited role and
authority.
Projectised organisation are only interested in project work which they get from external clients.
Generally they have some small departments such as Admin, Accounting, and Human
Resource to support the project Management activities.

Advantages
As all the team members directly report to only one project manager, there is a clear line of
authority. This reduces conflict and enables decision making faster and flexible.
Team members become versatile and flexible due to experience in different Kinds of project.
Single reporting system creates a strong and effective communication within the project team.

Disadvantages
As project manager has full authority and power over his team, he can become arrogant and
dominating.
If any organisation has multiple projects, then there can be poor communications among them,
which can result in duplication of resources.
Employees are less loyal to the organization because there is a sense of insecurity among
them i.e. once the project is complete; they feel that they may lose their jobs.

III. Matrix Organisation

Matrix organisation structure is a combination of the functional organisation structure and
projectised organisation structure.
In matrix organisation, a project manager is identified and project team consists of various staff
 drawn from functional departments.
Project manager contracts with the functional managers for completion of specific task and co-
ordinates project efforts across the functional units.
Functional managers assign work to employees and co-ordinate work with in their areas.

Advantages
Highly skilled resources can be shared between functional units and departments.
Matrix structure is more dynamic than functional structure because it allows employees to
communicate more readily across their functional departments.
It creates a good working and co-operative environment which helps in integrating the
organisation.
Employees can learn and widen their skills and knowledge by participating in different kind of
projects.
As there is a sense of job security, employees tend to be loyal to the organisation and perform
well, and therefore efficiency increases.

Disadvantages

Employees have to report to two bosses, which may create confusion and conflict.

A conflict might arise between the project manager and the functional manager for the share of
authority and power.
If priorities are not clearly defined, employees may have confusion between their role and
responsibility, especially when they are assigned a task which is different from what they were
doing.
For a rare resource their might be a competition to use it, which may cause chaos within the
work place and may affect the operation.

Project Life Cycle

Project manager or organizations can divide projects into phases to provide better management
control over the projects.

It also helps in identifying deviations and thus helps in decision making with regard to continuation
or termination of the project.

Collectively these phases are called as Project Life Cycle.

Generally, there are four stages or phases of project life cycle which are
(i) Project initiation (Concept) Phase
(ii) Project Planning Phase
(iii) Project Execution (Implementation) Phase
(iv) Closing Phase
Phase to Phase Relationship
1. Sequential Relationship
In sequential relationship next phase can start if and only if previous phase is complete.
Traditionally construction projects generally use sequential relationship.
Step by step nature of this approach reduces uncertainty but also eliminates options for
shortening the schedule.
II. Overlapping Relationship
In overlapping phase relationship next phase can begin before the completion of previous
phase.
This technique allows schedule compression called fast tracking.
This technique can lead to increase in risk and may result in rework if a subsequent phase
progress before accurate information is available from previous phase.

Types of Projects Life Cycles

Predictive Life Cycle

This life cycle is also known as plan driven life cycle or Water fall life cycle.
In a predictive life cycle, the three major constraints of the project i.e. scope, time and cost,
are defined in complete details early in the project life cycle as practically.

Then project is split up into phases which can be either sequential or overlapping.
Requirements are defined early and not expected to change.

Iterative and Incremental life Cycle

This life cycle is also known as Incremental life cycle and Rolling wave planning (also
known as progressive elaboration).
In Iterative life cycle, the project is split up into phases (or iterations) which can be either
sequential or overlapping, same as predictive life cycle.
In Iterative life cycle, scope is not defined ahead of time at a detailed level, but only for the first
iteration or phase of the project. Once a phase is completed, the detailed scope for next phase
is worked out, and so on.
End result is delivered at the end of each phase or iteration.
This life cycle is used for projects where change in the scope is need to be managed.

Adaptive life Cycle

This life cycle is also known as Change-Driven life cycle or Agile life cycle.
In Adaptive life cycle is also, sequential or overlapping, same as predictive.
At the end of each iteration, work for the product is reviewed by the customer, and feedback from
the customer is used to define the detailed scope for next iteration
This life cycle is used for projects where rapid changes are expected and it is not possible to define
scope in the start.
Adaptive life cycle is generally used in IT industry.
 2. Project Management and Knowledge Areas
Project Management is accomplished by the appropriate application and integration of 47
processes.
Each process needs three essential elements i.e. Input, Output, Tools and Techniques.
Inputs are essential ingredients for start of any particular process.
Outputs are outcome or result of any process.
Tools and Techniques are methodology and actions required for the transformation of
input of any process into Output.
These processes are organized of classified into 5 process groups and 10 knowledge
areas.

What is Process Groups?

A process is a way of doing something.
All related processes are grouped in to one process group.
For example, all the processes required to define a new project or a project phase are
grouped into Initiating Process Group. Similarly all planning related processes are grouped
into Planning Process Group, and so on.
Hence 47 project management processes are grouped into five categories

(1) Initiating Process Group

Aim of Initiating process group is to answer the questions what is this project trying to
achieve and why?
Project sponsor to create a project charter, which defines what, is to be done to meet the
requirements of project customers.
The charter should be used to authorize work on the project; define the authority,
responsibility, and account ability of the project team; and establish scope boundaries for
the job.
(2) Planning Processes Group
Aim of Planning process group is to develop an understanding of how the project will be
executed and a plan for acquiring the resources needed to execute it.
(3) Executing Processes Group
Aim of Executing process group is to complete the work defined in the project plan to
accomplish the projects requirements.
There are two aspects to the process of project execution.
1. To execute the work that must be done to create Service, Product or Result
2. To execute the project plan.
(4) Monitoring and Controlling Processes Group
Aim of Monitoring and controlling process group is to track, review and regulate the
progress and performance of the project.
! Project Monitoring is collecting, recording, and reporting information concerning project performance
that project manager and others wish to know.
! Project control is the process that uses data collected during project monitoring and to bring actual
performance to planned performance.
(5) Closing Processes Group
Aim of closing process group is to finalize all activities across all process groups to
formally close the project or phase.
A final lessons-learned review should be done before the project is considered complete.
Five process groups are based on Shewhart-Deming Plan-Do-Check-Act cycle.

t
Ac

Pl
an
Ch
ec

Do
k

What is Knowledge Areas?

Knowledge areas are designed to group processes which have common knowledge
characteristics.
Knowledge areas describe specific skills and experience needed by the Project manager to
achieve project goals.
According to PMBOK there are Ten knowledge areas in the field of project management.
(1) Project Integration Management
Project integration management ensures every activity must be coordinated or integrated
with every other one in order to achieve the desired project outcomes.
(2)Project Scope Management
Project scope management includes authorizing the job, developing a scope statement
that will define the boundaries of the project, subdividing the work into manageable
components with deliverables, verifying that the amount of work planned has been
achieved, and specifying scope change control procedures.
(3)Project Time Management
Project time management specifically refers to developing a schedule that can be met,
then controlling work to ensure that this happens.
(4) Project Cost Management
Project cost management involves estimating the cost of resources, including people,
equipment, materials, and such things as travel and other support details.
(5) Project Quality Management
Project quality management includes both quality assurance and quality.
(6) Project Human Resource Management
Project human resources management, often overlooked in projects, involves identifying
the people needed to do the job; defining their roles, responsibilities, and reporting
relationships; acquiring those people; and then managing them as the project is executed.
(7) Project Communications Management
Project communications management involves planning, executing, and controlling the
acquisition and dissemination of all information relevant to the needs of all project
stakeholders.
This information might include project status, accomplishments, and events that may
affect other stake holders or projects.
(8)Project Risk Management
Project risk management is the systematic process of identifying, quantifying, analyzing,
and responding to project risk.
(9) Project Procurement Management
Project procurement management involves deciding what must be procured, issuing
requests for bids or quotations, selecting vendors, administering contracts, and closing
them when the job is finished.
(10) Project Stakeholders Management
This knowledge area involve processes related with identification, planning for
management of stakeholders expectations.
 3. Project Initiation

Prima facie Analysis or Prefeasibility Analysis

a. Performance of existing industries
b. Price trend
c. Price difference between international and domestic prices
d. Government policies
e. Location aspects
f. Financial position

Technical Feasibility
Factors Considered in Technical Analysis
a. Selection of Locations
b. Government incentive considerations
c. Technology selection and sourcing
d. Capacity planning
e. Raw material planning
f. Utility (water, power, waste, etc)planning

(a) Factors Affecting Selection of Locations

i. Size, Suitability and Cost of the Land
 ii. Suppliers
iii. Market proximity
iv. Infrastructure
v. Labour Availability

vi. Political and Social Environment

vii. Government Support
viii. Environmental regulation

(b) Government Incentives:- SEZ, EOU(Export Oriented Units),EPU (Export Processing Units).

(c) Technology Selection

! The technology that is selected should be appropriate technology.
! An improper selection of technology can be futile for a project.
! Appropriate technology can be defined as the technology which is best suited for the conditions of its
operations (time and location).
! A technology which is appropriate today may become inappropriate in future. So, time is one big
factor which can make a technology inappropriate.
Factors to be considered while selecting a technology are:
i. Environmental
ii. Ethical and cultural
iii. Social
iv. Economical
v. Capacity Planning and Cost Capacity Relationship

Market Feasibility

(a) Qualitative Techniques

1. Jury Opinion
! Jury opinion is a method of combining views of several executives regarding a forecast.
! The general practice is to bring together top executives from various fields of management, which is
finance, human resources, marketing, purchasing and production.
! They provide information experiences and opinions to project planning.
! Jury opinion is simple and commonly used as it is less time-consuming.

2. Delphi Technique

Delphi method is a group process and aims at achieving a consensus of the members
! Herein experts in the field of marketing research and demand forecasting are engaged in
analyzing economic conditionscarrying out sample surveys of market conducting opinion polls
! Demand forecast is worked out in following steps:
1. Coordinator sends out a set of questions in writing to all the experts co-opted on the panel who
are requested to write back a brief prediction.
2. Written predictions of experts are collated, edited and summarized
3. Based on the summary, Coordinator designs a new set of questions and gives them to the same
experts who answer back again in writing.
4. Coordinator repeats the process of collating, editing and summarizing the responses.
 5. Steps 3 and 4 are repeated by the Coordinator to experts with diverse backgrounds until
consensus is reached.
! Direct interaction among experts is avoided and their identity is also not disclosed.
! Procedure also avoids inter-personnel conflicts nor are strong-willed experts able to dominate the
group.
! This method is also used for technology forecasting
(b) Quantitative Techniques

1. Moving Average Method

Simple moving average method uses simple mean of last few time intervals to forecast future demand.
The number of time intervals generally varies from three to five.

Example
Calculate the forecast (using simple moving average method) for 2010 if demand were 32,36,
40,35,32,35 and 45, respectively, in each corresponding year from 2003 to 2009.
Table
Year Demand 4-year moving average forecast
2006 32
2007 36
2008 40
2009 35
2010 32 35.75
2011 35 35.75
2012 45 35.50
Sol. The forecast for 2013 is the arithmetic mean of demand of last four years, viz. 2009 to 2012.
Forecast for 2013 is 36.75

2. Weighted Moving Average Method

A weighted average has multiplying factors as different weights to different data points.
But in technical analysis, a weighted moving average (WMA) has the specific meaning of weights
which decrease arithmetically.
Example
Compute the forecast for 2013 using weights in the proportions of 1 : 2 : 3: 4.
Solution
Year Demand Weight Weight x Demand
2006 32
2007 36
2008 40
2009 35 1 35
2010 32 2 64
2011 35 3 105
2012 45 4 180
10 384
Forecast for 2013 = (W D) / W = 384/10 = 38.4

3. Regression (Time Series)

Regression methods involve determining the trend of consumption based on past consumption and
project future consumption by extrapolating this trend.
Linear relationship D = a + bT where D = Demand, T = year, a & b = constants

Example : Determine the forecast for 2010 and 2013 using least square method for the data given below:
Year 2005 2006 2007 2008 2009
Demand 35 42 45 51 56
Solution :
Least square method
Table
Year Demand(D) Year (T) T2 TD
2005 35 -2 4 -70
2006 42 -1 1 -42
2007 45 0 0 0
2008 51 1 1 51
2009 56 2 4 112
Total 229 10 51

Equation of line is D = a + bT
D/N
a = !
DT/T 2
b = !
a = 45.8 ; b = 5.1
! Forecast for 2010 is 61.1 (using T = 3). = D = 45.8 + 3 5.1 = 61.1
! Similarly, forecast for 2013 is 76.4 (using T = 6). D = 45.8 + 6 5.1 = 76.4
! In the above example, the middle year is assigned a value of 0;
! If the number of data available is even, the two middle terms can be assigned value of -1 and +1,
respectively, with a common difference of 2.

Financial Feasibility
! Importance and Steps of Financial Feasibility
! Financial feasibility is the process of identifying the overall investment outlay, determining expected
rate of returns and evaluating project financially.
! Financial feasibility is crucial for any organization as:
! It influences the firms growth in long term
! It affects risk of the firm into consideration
! It involves huge quantum of funds generally

Steps in Financial Feasibility

Estimation of Estimation of Estimation of

Application of
cost project project cash expected rate of
decision rule
flows return
!

Techniques for Financial Feasibility

1. Non Discounting Budgeting Technique

Non-discounting techniques are those techniques which do not consider time value of money.

(a) Payback period

! Payback period is the easiest method to assess financial feasibility.
! Payback period is the length of time it taken by the company to recoup (or payback) the initial cost of
producing the product, service or result of the project

Example: Mr. Sharma is investing Rs. 300 Lacs in a project and he is projecting cash flow of Rs. 50 lacs
every year, calculate the payback period for the project.
Solution :
Payback Period (PB) = 300/50 = 6 years.
Payback period can also be thought of as time at which break-even takes place

(b) Average Rate of Return

This is an accounting method.
There is no agreement on the definition and a number of alternative methods of calculating it are
available.
Average rate of return = Average Profit after tax/Average Book value of investment
Average profit after tax = Total profit/Life
Average book value of investment = Total book value of investment/Life

2. Discounting Budgeting Technique

Discounting techniques take time value of money into account.

(a) Net Present Value

Net Present Value = Present Value of future cash flows Initial Cost
n
Present Value = Future Value/(1 + i)
where i = Interest rate per interest period
n = No. of interest periods.
Larger the value of PV or NPV, more lucrative is the project.

(b) Internal Rate of Return (IRR)

! Internal rate of return (IRR) is the rate at which the net present value of an investment becomes zero.
! In other words, IRR is the rate which equates the present value of the future cash flows of an
investment with the initial investment.
! NPV = PV of future cash flows Initial Investment = 0
1 2 3 n
NPV= [P /(1+IRR) + P /(1+IRR) + P /(1+IRR) + . . . +P /(1+IRR) ]- P =0
1 2 3 n 0
! Where, IRR is the internal rate of return;
P is the period one net cash inflow;
1
P is the period two net cash inflow,
2
P is the period three net cash inflow, and so on..
3
A project should only be accepted if its IRR is NOT less than the target internal rate of return (or the rate
at which money is taken from bank as loan for investment).

Social Cost Benefit Analysis

! SCBA can be defined as the systematic evaluation of a concerns social performance as
distinguished from its economic performance.
! The technique of SCBA was developed by a French Engineer named Jules Dupuit in 1844.
! He said, A project which may yield profit in monetary terms may not bring corresponding benefits to
the society.

Social Costs
If any activity leads to depletion of a certain resource, it is a social cost.

(i) Environmental damage

(ii) Ecological imbalance
(iii) Human services used
(iv) Material used
(v) Usage of public utility
(vi) Unemployment caused
(vii) Depletion of energy and global warming
(viii) Usage of foreign exchange
(ix) Subsidies

Social Benefits
It is not that projects are only causing cost to society; they are also providing benefits to society.
(i) Improve environment
(ii) Products and services provided
(iii) Employment creation
(iv) Taxes
(v) Indirect employmentEarning foreign exchange
(vi) Hospital and educational facility
(vii) Development of backward area
 4. Risk Analysis
! Risk is made up of two parts: the probability of something going wrong, and the negative
consequences if it does.
! Risk Analysis is a process that helps you identify and manage potential problems that could
undermine key business initiatives or projects.

Types of Risks
1. Operational risk
2. Market risk
3. Economic risk
4. Financial risk
5. Technological risk
6. Commercial risk
7. Quality risk
8. Legal or regulatory risk
9. International risk

Steps of Managing Risk

1. Identification of Risk
2. Determining causes of risk and
constraints involved
3. Quantifying the risk
(a) Sensitivity analysis
(b) Earned Monetary Value (EMV)
(c) Modeling and simulation
(d) Risk matrix analysis
4. Develop the Alternatives
(a) Mitigation
(b) Sharing
(c) Out sourcing
(d) Diversification
(e) Abandonment
(f) Retention
(g) Contingency funding
(h) Time buffers
5. Selection of best alternative
6. Creation of risk management Plan
7. Implementation of risk management Plan
8. Review of risk management Plan
 5. Project Planning
The purpose of the Project Planning process is to kickoff a new project and establishes an accurate plan
and schedule.

Project Planning Steps

1. Defining the scope
In the project scope definition, the elements within the scope and out of the scope are well defined in
order to clearly understand what will be the area under the project control.

2. Work Breakdown Structure (WBS)

The WBS is described as a hierarchical structure which is designed to logically sub-divide all the
work-elements of the project into a graphical presentation.
! Full scope of work for the project is placed at the top of the diagram, and then sub-divided smaller
elements of work at each lower level of the breakdown.
! At the lowest level of the WBS the elements of work is called a work package.
! A list of projects activities is developed from the work packages.
! Effective use of the WBS will outline the scope of the project and the responsibility for each work
package.

Benefits WBS are

1. WBS forces the team to create detailed steps
2. WBS lays the groundwork for schedule and budget
3. WBS creates accountability
4. WBS creation breeds commitment

3. Role Allocation by Synchronizing WBS and OBS

The WBS elements at various levels can be related to the contractors organizational breakdown structure
(OBS), which defines the different responsibility levels and their appropriate reporting needs

4. Project Scheduling
Steps in project scheduling
(a) Defining the Activities
(b) Sequencing the Activities
(c) Estimating the Resources Required
(d) Estimating the Time Required
(e) Developing the Schedule

Techniques for Project Scheduling

I. Bar charts/Gant chart
II. Milestones chart
III. Linked bar chart
IV. Network diagram
 (a) AOA network
(b) AON network
Estimate of time can be done by to approaches :
! Pert analysis Probebabilistic approach
! CPM analysis Deterministic approach

Comparison between Pert and CPM

Pert CPM
(1) Network diagram is event oriented. (1) Network diagram is activity oriented.
(2) It uses probabilistic approach and is suitable for (2) It uses Deterministic approach and is
research & development and non repetitive project. suitable for repetitive type of project.
(3) 3 time estimates are given for completion of an (3) Single time estimate is given for each
activity. activity.
(4) Follows distribution. (4) Follows Normal distribution.
(5) Cost of project is directly proportional time and (5) Cost model has to be developed
hence to minimize the project cost the project using which min. cost of the project is
completion time is minimized. found.
(6) Critical events are identified by using the concept of (6) Critical activities are identified by
slack. using concept of float.
(7) Critical path will be path joining the critical events. (7) Critical path will be the path joining all
the critical activities.

Estimation of Project Cost

An important part of project management is the project cost management.
! It covers the scopes of cost estimations and budgeting.
! Cost control ensures that the project stays within the financial borders which are defined in the
budgeting process.
! One can define Two main types of costs in total project cost as, direct costs and Indirect cost.
Total cost

Direct cost Indirect cost

Outage loss Overheads

Indirect Cost
! Indirect cost of a project are those expenses which can not be associated or assinged to any
individual activity of the project,
! Indirect cost include overhead charges, for example : establishment charges, insurance charges,
expenditure for maintenance of services during operations.
! Indirect cost also include loss in profit or liquidity damages or penalty for delay in project complication,
which is known as Outage Loss.

Direct Cost
Direct cost of a project are those expenses which are directly chargeable and can be identified by
activities eg. cost of material, machine, labour etc.

Crashing
The process of reduction of total project duration along the longest path (time wise) of the network i.e.
along the critical path to obtain the optimum project cost and optimum duration is called as crashing.

Resource Allocation
! A resource is a physical variable quantity such as material, labour, equipment, time or space, which
are required for carrying out a project.
! During planning stage, we generally assume that sufficient resources are allocated to perform the
various activities and complete the project.
! But in reality resources are always limited, and this limitation of resources can significantly affect the
start, performance and completion of activities on scheduled time.
! Therefore, various activities of project should be scheduled in such a way that the demand for various
resources is more or less uniform during the project duration.

This can be achieved by following two approaches.

1. Resource smoothing
2. Resource levelling

Resource smoothing
In resource smoothing the total project duration is not changed but the activities having floats are
rescheduled such that a uniform demand for the resources is achieved.

Resource Levelling
In resource levelling the activities are rescheduled such that maximum or peak demand of the
resource does not exceed the availability of resources.
 6. Project Monitoring & Control
Project Monitoring is collecting, recording, and reporting information concerning project performance that
project manager and others wish to know.
Project control is the process that uses data collected during project monitoring and to bring actual
performance to planned performance.
PLAN
Specifications
Project Schedule
Project budget
ACTION Resource plan
Correct Vendor contracts MONITOR
deviations Record status
from plan Report progress
COMPARE Report cost
RE-PLAN as
Actual status
necessary
against plan
-Schedule
-Cost
!

What Do We Monitor?
1. Scope
2. Time:
3. Cost
4. Quality/Technical Performance
5. Risk
6. Team

When do we monitor?
Ans: @ End of the project, Continuously & Regularly

Tools and Monitoring and Control

1. S-Curve
! S-curves are an important project management tool it allow the progress of a project to be tracked
visually over time, and form a historical record of what has happened to date.
! Analyses of S-curves allow project managers to quickly identify project growth, slippage, and
potential problems that could adversely impact the project if no remedial action is taken.
! Graphic display of cumulative costs, labor hours, or other quantities, plotted against time.
! The name derives from the S-like shape of the curve (flatter at the beginning and end, steeper in
the middle) produced on a project that starts slowly, accelerates, and then tails off.
 (a) Determining Growth using S Curve

!
Comparison of the Baseline and Target S-curves quickly reveals if the project has grown (Target S-curve
finishes above Baseline S-curve) or contracted (Target S-curve finishes below Baseline S-curve) in scope.

(b) Determining Slippage using S Curve

SLIPPAGE
Man House /Costs

Time Cut Off Date

LEGEND : BASELINE ACTUAL TARGET
!

! Slippage is defined as: The amount of time a task has been delayed from its original baseline
schedule.
! The slippage is the difference between the scheduled start or finish date for a task and the baseline
start or finish date.
! If the resources are fixed, then the duration of the project will increase (finish later) or decrease
(finish earlier), possibly leading to the need to submit an extension of time claim.
(c) Determining Progress using S Curve

Man House /Costs

Time Cut Off Date

LEGEND : BASELINE ACTUAL TARGET
!

Comparison of the Target S-curve and Actual S-curve reveals the progress of the project over time. In
most cases, the Actual S-curve will sit below the Target S-curve for the majority of the .

2. Earned Value Analysis

! Earned Value Management (EVM) is a project management technique that objectively tracks
physical accomplishment of work.
! EVM can be used to show the past and the current performance of a project and predict the future
performance of the project by the use of statistical techniques.
! EVM integrates the scope, schedule, and cost of a project.

Basic Terms
EVM consists of the following three basic elements:

(a) Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS)

Today
Cost
Actual Cost: What has
n ed
been actually spent to Plan
this point in time
Planned Value: What the
plan called for on the tasks
planned to be completed
by this date
al Earned Value: Value (cost)
ctu
A of what has been
ned accomplished to date,
Ear per the base plan

! Time
The sum of budgets for all work packages scheduled to be accomplished within a given time period.
(b) Earned Value (EV) or Budgeted Cost of Work Performed (BCWP)
The budgeted cost of work actually performed in a given period or the budgeted level of effort actually
expended.

(c) Actual Cost (AC) or Actual Cost of Work Performed (ACWP)

The amount of money (or effort) actually spent in completing work in a given period.

(d) Cost Variance (CV) = Earned Value (EV) Actual Cost (AC) = BCWP ACWP
Time
Cost
Planned

Over budget

al Behind Schedule
tu
Ac
n ed
E ar

! Time
Positive CV indicates the project is under-budget.
Negative CV indicates the project is over-budget.

(e) Schedule Variance (SV) = Earned Value (EV) Planned Value (PV) = BCWP BCWS

Cost
Schedule
al
c tu
A
CV
SV

d
rne
Ea
! Time

+ve SV indicates we are ahead of schedule.

ve SV indicates we are behind schedule
(f) Cost Performance Index (CPI)
! CPI = Earned Value (EV) / Actual Cost (AC) = BCWP / ACWP
! CPI=1, indicates actual cost =estimated cost & utilizing the resources is as planned.
! CPI>1, Indicates actual cost>estimated cost & utilizing the resources is better than planned.
! CPI<1, Indicates actual cost<estimated cost & utilizing the resources is worse than planned.
(g) Schedule Performance Index (SPI)
! SPI = Earned Value (EV) / Planned Value (PV)= Earned Value (EV) / Planned Value (PV)
! SPI >1 , project team is very efficient in utilizing the time allocated to the project.
! SPI <1 , project team is less efficient in utilizing the time allocated to the project.
(h) Budget at Completion
! Budget at Completion (BAC) is the total budget allocated to the project.
! BAC is generally plotted over time. For example, periods of reporting (Monthly, Weekly, etc.)
! BAC is used to compute the Estimate at Completion (EAC)
(i) Estimate at Completion (EAC)
EAC = Actuals to date + new estimate for all remaining work.
(j) Estimate to Complete (ETC)
ETC= Estimate At Completion (EAC)- Actual Cost (AC).
This is the estimated additional cost to complete the project from any given time.
(k) Variance at Completion (VAC)
VAC=Budget At Completion (BAC)- Estimate At Completion EAC
This is the money value by which the project will be over or under budget.
 7. Project Closing
Project closing is the last phase of a project, when the project outputs are handed over to the
stakeholders, contractual agreements properly taken care of, and project records elicited and stored for
future reference.

Types of Project Closing

1. Termination by integration and termination by addition Successful cases: Project outputs
integrated and/or used as input for another project/production
2. Termination by starvation: Project ends because resources run out.
3. Termination by extinction: Termination by management because the project failed (objectives not
met, superseded, not profitable).

Reasons for Pre-Completion Termination of any Project

1. Low chance of technical or marketing success as per reanalysis
2 Low profitability or returns as per expectation
3. Delay in schedule of implementation
4. Change in market conditions or increased competition
5. Changes in economic Conditions
6. Top management plans for some better investment opportunity

Steps of Project Closing Process

1. Getting client acceptance
2. Installing Project Deliverables
3. Archiving old Deliverables
4. Documenting the Project
5. Performing a Financial Closure
6. Performing Project Completion Audit
7. Releasing Staff

Project Completion Audit

! Audit is generally defined as an unbiased examination and evaluation of the process, documents or
statements of an organization.
! It can be done internally (by employees of the organization) or externally (by an outside firm).
! Project Completion Audit (PCA) is defined as evaluation of actual profile of a project completed to
what was desired and planned.

Different Types of PCA

1. Financial audit
2. Technical audit
3. Schedule audit
4. Social audit