MANAGEMENT of | for | by PROJECTS

(Human Endeavour for Growth)

An Insight into

By

JANAK V. SHELAT
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Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him"

Question: Which of these are projects?

(1) A project team is responsible for replacing PCs over 4 years old with the latest hardware and software. When these become 4 years old, they too will also be replaced (2) A team is working to produce analysis and design documentation to SSADM standards for an application that is required desperately (3) You are asked to examine the processes of a warehouse, and implement a more streamlined approach that is cheaper to run and provides a better service (4) You are expected to improve programming standards this year

A project is a set of related tasks that are coordinated to achieve a specific objective in a given time limits. It is one shot, time limited, goal directed, major undertaking, requiring the commitment of varied skills and resources both human and nonhuman pooled together in a temporary organisation to achieve a specific purpose. Project is a temporary endeavor undertaken to create a unique product, service or result. It is a complex effort, usually less than three years in duration, made up of interrelated tasks performed by various organizations, with a well-defined objective, schedule and budget Key words Achieve a specific objective normally unique and "novel" Time limit often other constraints too Coordinated projects typically involve many people - a team this will be assumed from now on

PROJECT CHARACTERISTICS

It has objectives. It has life span. It is single entity. It is team work. It has life cycle. Every project is unique. It is synonymous to change. It pursues Successive principle. It is made to order. It is Unity in diversity. It has high level of sub contracting. It is Risk and uncertainty. It has missionary Zeal. It has long term effect. It is irreversible. It has substantial out lay. It has measurement problems. It has temporal spread. The cost benefit received is different at different point of time.

Basic Project Management Principles

One way to look at the project management discipline is to view it as consisting of these three basic principles: Assignment of project responsibilities to the key integrative roles. Application of integrative and predictive project planning and control systems to the project documents, procedures, information processing and communication systems, and their application. Integrated project team-working to identifying, integrating, and managing the team and the efforts of all contributors to the project.

Paretos Principle of Vital few, trivial many

(80::20)
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OBJECTIVES OF THE PROJECT MANAGEMENT

To assure that each project when initially conceived and authorized, the organizations achieve higher level strategic objectives and contains acceptable risks regarding the project's objectives: competitive, technical, cost and schedule. To plan, control and lead each project simultaneously with all other projects effectively and efficiently so that each will achieve its approved objectives: meeting the related strategic objective by producing the specified results on schedule and within budget.

Project vs. Process work

Projects
One-off task
Specific deliverables Time restrictions Many tasks Multi-function teams

Process work
Varies little day-to-day
Measured by quantity produced On-going work Tasks fit within functional boundaries Interfaces between
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LIFE CYCLE OF THE PROJECT

PROECT LIFE CYCLE Conceptualization Definition Planning & organization Implementation Clean - up
IMPEMENTATION PHASE

Planning & Organizing Clean - Up DEFINITION PHASE

CONCEPT PHASE

CLASSIFICATION OF PROJECTS

NATIONAL

INTERNATIONAL

NON INDUSTRIAL

INDUSTRIAL

NON CONVENTIONAL/ R & D

HIGH TECH

CONVENTIONAL TECH

LOW TECH

MEGA

MAJOR

MEDIUM

MINI

NORMAL GRASS ROOT EXPANSION MODIFICATION CRASH DISASTER

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OTHER CLASSIFICATION

New ventures Expansion Diversification Modernisation Technology Up gradation Replacement Renewal/ Reconstruction/ Revamping Addition/ Modification Maintenance Research and development Automation/ Computerisation Energy Conservation Quality Improvement Spare/ Reserve/ Standby facilities Infrastructure Projects.

Launching of Advertising Campaign New product introduction New market development Acquisition/ Take over Government projects Social Projects EOU Projects Joint Venture Projects Other Private participation projects 1. Build, own & Transfer (BOT) 2. Build, Own. Operate, & Transfer (BOOT) 3. Build, Own, Lease & Transfer (BOLT)

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The impact of projects on organisational structures

Projects require people with different skills to work together in a coordinated way Teams will cut across functional boundaries, giving rise to "matrix" organisations

Projects

1
A People B C D E / /

2
/ /

/ /
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Illustrates the relationships between the integrative roles.

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CONCEPTUALISATION

TECHNICAL

TECHNICAL SPECIFICATION
FINANCIAL CLOSURE

FORMULATION
EVALUATION

COMMERCIAL

FINANCIAL FEASI. REPORT ECONOMIC

INVESTMENT DECISION

CONTRACT FINALISATION IMPLEMETATION

MONITORING & CONTROL PROJECT COMPLETION

PROCESS OF PROJECT EXECUTION

ENVIRONMENTAL CLEARANCE ADMINISTRATIVE APPROVAL ENGAGE. OF CONSULTANT

PROJECT COMMISSIONING
PERFORM. GUARANTEE TEST
POST PROJECT EVAL. & REPORT
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DETAIL PROJECT REPORT

PROJECT MANAGEMENT PROCESS

Describes how the organization's project portfolios are related to the organization's growth strategies, Identifies the basic types or categories of projects that exist or are planned, Defines the project life cycle for each project category, Defines, for each project category, the corporate guidelines for project risk analysis and planning and control, with provision for appropriate adaptation for specific situations, Specifies the documents and related levels of approval authority for initiating and authorizing new projects and major changes to authorized projects, Identifies the key roles and defines their responsibilities and authority as related to project and functional management, and Specifies the procedures for escalating the inevitable conflicts (for scarce resources, priorities between projects and others) to the appropriate level for their prompt resolution.
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MULTI PROJECT MANAGEMENT

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The project portfolio management process

Consists of the following twelve basic steps:

Define the project portfolios required within the organization. Define the project categories within each portfolio based on uniform criteria for the entire organization. Identify and group all projects within categories and programs. Validate projects with the organization's strategic objectives. Prioritize projects within programs and portfolios. Develop the Project Portfolio Master Schedule. Establish and maintain the key resources data bank. Allocate available key resources to programs and projects. Compare financial needs with availability. Decide how to respond to shortfalls in money or other key resources and approve the list of funded projects. Plan, authorize and manage each program and project using the Project Management Process and supporting systems and tools. Periodically re-prioritize, re-allocate resources and re-schedule all programs and projects as required.
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DESIGN OF PROJECT INFORMATION SYSTEM

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PROJECT INFORMATION SYSTEM - procedures and software systems for preparation,

maintenance, preservation, transmittal and utilization of the documents that are used for creating, planning, evaluating and executing projects within a given organization.

Technical Information and Control System

Engineering Management Module Procurement Management Module Construction/Production Management Module Test Management Module Configuration Management Module

Project Information and Control System

Project/Work Breakdown Structure Module Planning and Scheduling Module Cost Management Module -- Cost Estimating -- Cost Estimating Support

Risk Information and Control System

Planning Assurance (Risk Assessment) Module Quality Assurance Module Reliability Module Maintainability Module Safety Assurance Module

-- Craft and Crew

-- Unit Material -- Unit Labor hours -- Source Document -- Cost Control -- Cost Projection Accounting Module Data Entry Module On-Line Query Module

Project Management Information and Control System

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PROJECT PLANNING AND CONTROL

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INTEGRATED PROJECT MANGAGEMENT

Define and control systematically the project's objectives and scope. Evaluate and proactively manage individual project risks together with the aggregate project portfolio risks. Define and control the specification, quality, configuration and quantity of intermediate and final products (or deliverables) of the project. Systematically define and control the work to be carried out using the project/work breakdown structure (P/WBS) approach. Estimate the labor, material and others costs associated with the project's deliverable products and related work elements, and each summary element in the P/WBS. Plan and control the sequence and timing of the project deliverables and related work elements using a top level project master schedule plus an appropriate hierarchy of schedules. Authorize and control the expenditure of funds and work hours required to execute the project. Provide the information regarding both a) actual progress and expenditures and b) forecasts in the future required by project managers, department managers, functional task leaders and work package leaders on a timely and reasonably accurate basis. Continually evaluate progress and predict and mitigate problems with quality, cost, schedule and risk using earned value project management methods. Report to management and customers on the current status and future outlook for project quality, cost and schedule completion, including post-completion reports.

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Feasibility study:

A feasibility study may be carried out before a project commences Its purpose to establish an outline of what users require to ensure it is feasible to meet their needs

to record initial impressions of how to meet the requirements (options?) to give management a feel for costs and timescales of project to provide as much information as possible to project manager for to help management decide whether to proceed with the project Financial Feasibility Technical Feasibility Economic Feasibility Market Feasibility Social Feasibility

entirely in part

estimating purchasing and accommodation

TYPES OF FEASIBILITIES UNDERTAKEN PROJECT MANAGEMENT:

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Project Cost Estimates:

ORDER OF MAGNITUDE:(60% Variation)

(1)Investment per annual tonne capacity New Installed Capacity Cost R2= R1 xC2/C1 (2)Turn Over ratio and Capital ration: The ratio between annual sales and investment expressed in rupees is known as turn over ratio. Inverse of this is known as Capital Ratio. New Installed Cost R2 = C x V1 x P1 ( V1 projected volume, C capital ratio, P1 price per unit of sales volume) (3)Six tenth factor: If C be annual capacity and R be the investment cost logR2 = logR1 + 0.6 {logC1 - logC2} (4)Inflation Index : can be used with above methods Installed Cost (now) = Installed cost (past) x Cost Index (new) / Cost index (past) (5) Location Index: Ratio between the cost in two countries.

STUDY ESTIMATE: ( 30% Variation)

The estimates from preliminary cost of total equipments multiplied by Lang factor.

PRELIMINARY ESTIMATE: ( 20% Variation)

The estimate made after the freezing of technology package and deciding Zero dates and preliminary details based estimates.

DEFINITE COST ESTIMATES: (10% Variation) DETAIL ESTIMATE: ( 5 %Variation)

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EVALUATION OF THE PROJECT

ASSESSMENT OF VIABILITY OF PROJECT
(1)
(2) (3) (4) (5)

(6)
(7)

Pay Back Period method (PBP) Return on investment (ROI) Net present Value (NPV) Internal Rate of return (IRR) Benefit Cost Ratio (BCR) Urgency method Social profitability Analysis
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Planning
Project Summary Plan Project/Work Breakdown Structure (P/WBS) Task Responsibility Matrix Project Master Schedule

Authorizing
Master Contract Release Project Release Subcontracts and Purchase Orders

Controlling
Management Reserve Transaction Register Cost Expenditure Reports Updated planning and authorizing documents, comparing actuals with budgets and schedules - Project Master Schedule - Milestone Charts - Other Cost Performance Reports Schedule Variance Reports Earned Value and Cost Variance Reports

Reporting
Monthly Progress Reports - Narrative - Project Master Schedule - Cost Performance Reports - Risk Tracking Reports

Integrated Project Network Plan

Project Interface and Milestone Event List Project Budget Project Funding Plan Project Chart of Accounts Task Statements of Work Task Schedules Task Budgets Detailed Network Plans Task Work Orders ["Task: A short-term effort performed by one organization... ."[May be synonymous with "work package"; usually comprised of more detailed activities.]

Management Reviews of Critical Projects: - Major Project Identification Data - Summary Status Reports - Above Reports as required

Technical Perf. Measurement Reports Risk & Issue Tracking Reports Milestone Slip Charts Trend Analysis Charts Task Estimates to Complete (ETC) and Estimates at Completion (EAC)

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Technical Perf. Planned Value Profiles and Milestones

Table 4. Summary of documents for project planning, authorizing, controlling and reporting.

Action Item Lists from Project Review Meetings

Techniques of Project Management

1.Projectselectiontechniques: (a) Cost benefit analysis (b) Risk and Sensitivity analysis 2.Project execution planning techniques. (a) Work breakdown structure (WBS) (b) Project Execution Plan (PEP) (c) Project responsibility matrix (d) Project management manual. 3. Project scheduling and coordination techniques (a) Bar Chart (b) Life cycle Curve (c) Line of Balance (LOB) (d) Networking technique (PERT / CPM) 4. Project Monitoring and progressing technique (a) Progress measurement technique (PROMPT) (b) Performance monitoring technique (PERMIT) (c) Updating, reviewing and reporting technique (URT) 5. Project cost and productivity control techniques (a) Productivity Budgeting technique (b) Value engineering (VE) (c) Cost / WBS

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Approaches to ensuring completeness in estimating

The main problems are: over-optimism, especially if estimators are involved in justifying the project costs an expectation that estimates will be wrong, because we've always accepted it in the past forgetting major activities e.g.. installing software at many sites, data set up, user training Question: How can we ensure that all activities have been included?

Two approaches to identifying tasks Product-based approach

Product Breakdown Structure Product Flow Diagram Product Descriptions Critical Path etc can be derived

Task-based approach WORK BEAK DOWN STRUCTURE

The Work Breakdown Structure is the traditional tool for devising lists of tasks The WBS can be conceived as a tree, with the project as the root node, major components of the project as the main branches, and tasks/subtasks branch off from these. A WBS may be a diagram or a text list. It is up to the project manager to ensure that all the tasks are included. TYPES OF WBS: AGENCY BASED, FUNCTION BASE, HARDWARE, SOFT WARE 27

PROJECT

DESIGN

PROCUREMENT

CONSTRUCTION

COMMISSIONING

CIVIL

MECHANICAL

ELECTRICAL

CONTRACTOR -1

CONTRACTOR -2

CONTRACTOR - 3

Site Levelling, Road, Drain

Water Supply & Distribution

Admn & Plant Bldg

Township

FUNCTION ORIENTED WORK BREAK DOWN STRUCTURE

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Example of a textual WBS

33.01 MOBILIZATION AND PREPARATORY WORK 33.01.01 MOBILIZATION OF CONSTRUCTION EQUIP. AND FACILITIES 33.01.02 MOBILIZATION OF PERSONNEL 33.01.03 PRECONSTRUCTION,SUBMITTALS/IMPLEMENTATION PLANS 33.01.03.01 Erosion Control Plan 33.01.03.04 Environmental Protection Plan (etc) 33.01.03.14 Construction Quality Control Plan 33.01.04 SETUP/CONSTRUCT TEMPORARY FACILITIES (etc) 33.01.05 CONSTRUCT TEMPORARY UTILITIES 33.02 MONITORING, SAMPLING, TESTING, AND ANALYSIS 33.02.03 AIR MONITORING AND SAMPLING (etc) 33.03 SITE WORK 33.03.04 ROADS/PARKING/CURBS/WALK 33.03.04.03 Aggregate Surfacing
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PROJECT PLAN DEVELOPMENT

BAR/ GANTT CHART

(a) Bar Chart (b) Life cycle Curve (c) Line of Balance (LOB) (d) Progress measurement Tech. (e) Performance measurement Tech

NETWORK TOOLS

ACTIVITY BASE

EVENT BASE

CRITICAL PATH ANALYSIS

PROGRAMME EVALUATION & REVIEW TECH.

GRAPHICAL EVALUATION & REVIEW

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PROJECT PERORMANCE REVIEW

CUMULATIVE PROGRSS CURVE: Cumulative Progress = W * X

SCHEDULE PERFORMANCE

OVER RUN OF THE PROJECT

ACTUAL PERFORMANCE

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CAUSES OF DELAY/ OVER RUN

EXTERNAL FACTOR / ACTORS

Global and macro level government policies influenced by macro factors Indian government policies. Import regulations. Panic taxations Resource constraints. Defence expenditure Political situation Inflation Non developmental expenditure. Budgetary deficits Economic stagnation Natural disaster, like earthquakes, floods. etc Labour unrest Law and order situation Social turmoil, like terrorist menace, communal vandalism, etc Un schedule mid term election Global recession, or unrest Interference from unexpected quarter. (INTERNAL FACTORS/ ACTORS IN NEXT SLIDE)
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INTERNAL FACTORS AND ACTORS:

In appropriate choice of site. Dispute with local agencies. Inadequacy of foreign collaboration agreement. Monopoly of technology. Technical incompetence. Lack of skilled workers. Inadequate project planning preparations or over ambitious project target dates.. Frequent changes in design and technology up gradation, change of scope because of government regulations. Alteration because of demand fluctuation. Resources constraints because of limitation of funds. Vendor delivery problems. Foreign exchange curbs. Labour unrest Low motivation of project team for want of job guarantee after project completion. Zero date not being specified. Lack of coordination / cohesion between team members. Late clearance of project schedule by different agencies. Price escalation because of change in exchange rates. Delay in obtaining import licences. Inadequate and improper liaison with Custom, Excise, Sales Tax, police, octroi, and other authorities. Poor monitoring and control. Unavoidable statutory controls. Not equipped with force majeur to operate in contingencies.
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THANK YOU
Any Question?

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