Assignment (project Management)

INDIAN INSTITUTE OF MODERN MANAGEMENT (IIMM)

Registration No. : IIMM/DH/1/2007/5516 Course

: PM & HRD

ASSIGNMENT :-Project Management

Answer 1. (a) Project The most obvious characteristic of a Project is that it has to achieve a particular purpose and this is normally indicated in the Project’s name: Mumbai-Pune Expressway Project, Reliance Petroleum Refinery Project, Bharati Telecom Project, The Hindustan Lever Compensation Survey Project, Nagarjuna Fertilizers Project, The Chinnaswamy Stadium Project, The National Sports Complex Project, The Hinduja Hospital Project, etc. This distinguishes it from routine activities which are part of an organization’s normal business, such as running a payroll, editing a daily news paper or producing another ten thousand tins of beans, or cars, or motors or bicycles. A Project is a job that is done one time. Cooking a meal is a project. A heart surgery is a project. A Project involves a single, definable purpose, end-time or result, usually specified in terms of cost, schedule and performance requirements. Every project is unique in that it requires doing something different than was done previously, Even in ‘routine’ projects such as home construction, variables such as terrain, access, zoning laws, labour market, public services and local utilities make each project different. A project is a one-time activity never to be exactly repeated again. Finally a project is the process of working to achieve a goal; during the process, a project passes through several distinct phases, called the project life cycle. The tasks, people organizations and other resources change as the project moves from one phase to the next. The organization structure and resource structure expenditure slowly build with each succeeding phase; peak; and then decline as the project nears completion. Moreover, no two projects are the same. A project to stage this year’s Filmfare Awards contest may look similar to last year’s, but its objectives will be different the circumstances will have changed and it will involve different people. The main characteristics of a Project are that: 1. 2. 3. 4. 5. 6. 7. 8.

It is an instrument of change. It has a clearly identifiable start and finish. It has a specific aim It results in something being delivered It is unique It is the responsibility of a single person or body It involves cost, resources and time It uses a wide variety of resources and skills.

Another way of looking at a Project is that: 1. 2. 3. 4. 5.

It has a start and a finish It has a time frame for completion It has a unique one timeness It has an involvement of several people on a ad-hoc basis. It has a limited set of resources. 1

6. It has a sequencing of activities and phases. Need for a Project A project could be undertaken for one of these needs:                           

To acquire balancing resources to correct imbalances in capacity To upgrade the technology To replace the used-up or worn out assets To expand projections of existing activities To diversify into allied and new lines Analysis & design of objectives and events Planning the work according to the objectives Assessing and controlling risk (or Risk Management) Estimating resources Allocation of resources Organizing the work Acquiring human and material resources Assigning tasks Directing activities Controlling project execution Tracking and reporting progress (Management information system) Analyzing the results based on the facts achieved Defining the products of the project Forecasting future trends in the project Quality Management Issues management Issue solving Defect prevention Identifying, managing & controlling changes Project closure (and project debrief) Communicating to stakeholders Increasing/ decreasing a company's workers

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Answer 1. (b) Project Management is the application of skills knowledge, tools & techniques to meet or exceed stakeholder requirements from a project. The tools are a means to an end. The desired end is a successful project that contributes to the business success of the organization as well. Project Management is too often thought in terms of discrete tools such as schedules and status reports with a concomitant lack of understanding of its value and corresponding lack of commitment to effective implementation. Project management focuses on a project. A project is an undertaking that has a beginning and an end and is carried out to meet established goals within cost, schedule, and quality objectives. Project Management brings together and optimizes the resources necessary to successfully complete facilities, tools, and equipment; information, systems, and techniques and money. A Typical Project life cycle All projects have the same basic underlying structure. Whatever be the project, it will develop over four distinct phases: 1. The Conceptual and Definition phase 2. The Planning Phase 3. The Implementation or Execution phase 4. The Completion and review Phase Project Management means Management of all four phases of a Project’s life cycle to meet the established goals of Time, Cost and Quality.

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Typical Activity levels during the Phases of a Project’s Life Planning the Project

Implementing the Plan

Completing the Project

Activity Level

Defining the project

Time

Keenly observe from the graph that the Time (that should be) taken in Conceptualizing / Defining the Project and in Planning the project is (and should be) high – This is important to understand - for it lays the foundation for the Implementation phase and the project will get completed smoothly. The primary reason why many projects have time and cost overruns resulting in poor quality, unfinished tasks and leave a feeling of being short changed disgusted, cheated, leading to litigation and unpleasantness is because they are ill conceived. The nature of these phases will, of course vary, depending on the type of project. So too will the time taken to go through, them, from minutes to years. Typically, a project will begin as the result of a report or feasibility study. (The work to undertake the feasibility study may well itself have been run as an individual project). The feasibility study will have defined the problem which is being addressed (e.g. ‘It takes too long to travel from Mumbai to Pune’) It may have investigated what the real requirements are (e.g. ‘we need to be able to travel from Mumbai to Pune in less than two hours’). It will have evaluated alternative solutions and recommended a course of action. We shall study the subject of project Feasibility and Project Appraisal in a forthcoming chapter. In an industrial manufacturing project, each phase is typified by the following activities: 1.

The conceptual phase – Includes identifying needs, establishing feasibility, searching for alternatives, preparing proposals, developing basic budgets and schedules, and naming the starting project team.

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2.

The planning phase – involves creating schedules; conducting studies and analyses, designing systems; building and testing prototypes, analyzing results, and obtaining approval for production.

3.

The implementation / execution phase – encompasses procuring and implementing systems, verifying performance and modifying systems as required.

4.

The completion phase – includes training operational personnel, transferring Materials, transferring responsibility, releasing resources and reassigning project team members.

Answer 2. (a) Project Goals Every project has three overriding goals; to accomplish work for a client or end user in accordance with budget, schedule and performance requirements. The budget is the specified or allowable cost for the project; it is the target cost of the work to be done. The schedule includes time period over which the work will be done and the target date for when it will be completed. The performance requirements specify what is to be done to reach the end item or final result. They include required features of the final product or service, technological specifications and quality and quantity measures, whatever is important to the client or end user. Project Management is the discipline of planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives. A project is a finite endeavour— having specific start and completion dates—undertaken to create a unique product or service which brings about beneficial change or added value. This finite characteristic of projects stands in sharp contrast to processes, or operations, which are permanent or semi-permanent functional work to repetitively produce the same product or service. In practice, the management of these two systems is often found to be quite different, and as such requires the development of distinct technical skills and the adoption of separate management philosophy, which is the subject of this article. The primary challenge of project management is to achieve all of the project goals and objectives while adhering to classic project constraints—usually scope, quality, time and budget. The secondary—and more ambitious—challenge is to optimize the allocation and integration of inputs necessary to meet predefined objectives. A project is a carefully defined set of activities that use resources (money, people, materials, energy, space, provisions, communication, motivation, etc.) to achieve the project goals and objectives.

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Unfortunately, technological complexity, changing markets and uncontrollable environmental forces complicate what can be considered as “certain’. The three goals are interrelated and must be addressed simultaneously; exclusive emphasis on anyone goal is likely to detract from the others. In trying to meet time schedules and performance requirements, costs may be forced to increase; conversely, in trying to contain costs, work quality may erode, schedules may slip, and performance may degrade.

In the course of this treatise, we find the usage of certain ‘industrial” phrases such as engineering’, ‘Procurement’, ‘construction’, ‘commissioning’, ‘Handling Over’. These can be translated for use in non industrial projects too:

The Conceptual Phase (Proposal Engineering / design)



The Planning Phase (Detailed Engineering / Design)



The Implementation / Execution Phase (Procurement, Construction)



The Termination Phase (Commissioning, Handing Over).

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Answer 2. (b) Here are the rules of project management. Project management skills are essential for project managers, and any other managers who manage complex activities and tasks, because complex tasks are projects. Project management skills are essential for any complex task, where different outcomes are possible, requiring planning and assessing options, and organizing activities and resources to deliver a result. Projects come in all shapes and sizes, from the small and straight-forward to extremely large and highly complex. Project management can be concerned with anything: people, products, services, materials, production, IT and communications, plant and equipment, storage, distribution, logistics, buildings and premises, staffing and management, finance, administration, acquisition, divestment, purchasing, sales, selling, marketing, human resources, training, culture, customer service and relations, quality, health and safety, legal, technical and scientific, new product development, new business development; and in any combination. Ten Rules for Managing Projects 1. Set a clear project goal (Goals for the Project). Often called the project 'terms of reference', the project specification should be an accurate description of what the project aims to achieve, and the criteria and flexibilities involved, its parameters, scope, range, outputs, sources, participants, budgets and timescales (beware - see note below about planning timescales). Usually the project manager must consult with others and then agree the project specification with superiors, or with relevant authorities. The specification may involve several drafts before it is agreed. A project specification is essential in that it creates a measurable accountability for anyone wishing at any time to assess how the project is going, or its success on completion. Project terms of reference also provide an essential discipline and framework to keep the project on track, and concerned with the original agreed aims and parameters. A properly formulated and agreed project specification also protects the project manager from being held to account for issues that are outside the original scope of the project or beyond the project manager's control. 2. Determine the project Objectives (Objectives for the project). Plan the various stages and activities of the project. A useful tip is to work backwards from the end aim, identifying all the things that need to be put in place and done, in reverse order. First, brainstorming (simply noting ideas and points at random), will help to gather most of the points and issues. For complex projects, or when you lack experience of the issues, involve others in the brainstorming process. Thereafter it's a question of putting the issues in the right order, and establishing relationships and links between each issue. Complex projects will have a number of activities running in parallel. Some parts of the project will need other parts of the project to be completed before they can begin or progress. Some projects will require a feasibility stage before the completion of a detailed plan. 3. Establish, Checkpoints, Activities, Relationships, and Time estimates (Checkpoints to monitor 4. Draw a picture of the project Schedule (Activities to be completed). 5. Direct people individually and as a Project Team (Relationship among the activities). This serves two purposes: it informs people what's happening, and it obtains essential support, agreement and commitment. If your project is complex and involves a team, then you should involve the 7

team in the planning process to maximise buy-in, ownership, and thereby accountability. Your project will also benefit from input and consultation from relevant people at an early stage. 6. Reinforce the commitment and excitement of the project team (Time estimates for the activities). Your plan will have identified those responsible for each activity. Activities need to be very clearly described, including all relevant parameters, timescales, costs, and deliverables. Use the SMART acronym to help you delegate tasks properly. See the delegation tips and processes. When delegated tasks fail this is typically because they have not been explained clearly, agreed with the other person, or supported and checked while in progress. So publish the full plan to all in the team, but don't issue all the tasks unless the recipients are capable of their own forward-planning. Long-term complex projects need to be planned in more detail and great care must be taken in delegating and supporting them. Don't delegate anything unless it passes the SMART test. 7. Keep everyone connected with the project Informed. 8. Build agreements that Vitalize team members. Check the progress of activities against the plan. Review performance regularly and at the stipulated review points, and confirm the validity and relevance of the remainder of the plan. Adjust the plan if necessary in light of performance, changing circumstances, and new information, but remain on track and within the original terms of reference. Be sure to use transparent, pre-agreed measurements when judging performance. (Which shows how essential it is to have these measures in place and clearly agreed before the task begins?) Identify, agree and delegate new actions as appropriate. Inform team members and those in authority about developments, clearly, concisely and in writing. Plan team review meetings. Stick to the monitoring systems you established. Probe the apparent situations to get at the real facts and figures. Analyse causes and learn from mistakes. Identify reliable advisors and experts in the team and use them. Keep talking to people, and make yourself available to all. 9. Empower yourself and others on the project team. Manage the team and activities by meeting, communicating, supporting, and helping with decisions (but not making them for people who can make them for themselves). 'Praise loudly; blame softly.' (Catherine the Great). One of the big challenges for a project manager is deciding how much freedom to give for each delegated activity. Tight parameters and lots of checking are necessary for inexperienced people who like clear instructions, but this approach is the kiss of death to experienced, entrepreneurial and creative people. They need a wider brief, more freedom, and less checking. Manage these people by the results they get - not how they get them. Look out for differences in personality and working styles in your team. They can get in the way of understanding and cooperation. Your role here is to enable and translate. Face to face meetings, when you can bring team members together, are generally the best way to avoid issues and relationships becoming personalised and emotional. Communicate progress and successes regularly to everyone. Give the people in your team the plaudits, particularly when someone high up expresses satisfaction - never, never accept plaudits yourself. Conversely - you must take the blame for anything that goes wrong - never dump on anyone in your team (as project manager any problem is always ultimately down to you anyway). 10. Encourage Risk taking and creativity. At the end of your successful project hold a review with the team. Ensure you understand what happened and why. Reflect on any failures and mistakes positively, objectively, and without allocating personal blame. Reflect on successes gratefully and realistically. Write a review report, and make observations and recommendations about follow up issues and priorities - there will be plenty. These are the Go-Carts for Successful Project Management.

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Answer 3. (a) It is very important to remember that Project management is carried out as a Partnership one Partner who awards the project, the other Partner who executes the Project on behalf of the first partner. We shall therefore take a good look at what the Conceptual and Planning Phases are all about. The Conceptual phase consists of four main parts. 

Project Feasibility



Proposal preparation



Risk Management



Cost Estimation Conceptual Phase determine existing needs or potential deficiencies of existing systems, Establish system concepts which provide initial strategic guidance to overcome existing or potential deficiencies. It determines initial technical, environmental and economic feasibility and practicability of the system. 1.

Project Feasibility

Definition: Establishing the Project – Scope, Time, Cost and Performance Goals. A project needs to be fully defined in order to provide terms of reference for the management of the project. The Project Manager may not have been a party in conceiving the project; it would, therefore, be necessary for him to ensure that the terms of reference for the management of the project are unambiguously defined and valid. This is of vital importance in Project management. A project can be considered to have been fully established when the following conditions are fulfilled: I. The technical configuration of the project has been fully defined II. The performance requirement for the various technical systems, sub-systems and the key equipments has been specified. III. Cost estimate for the project if frozen. IV. Techno – economic viability of the project has been examined, appraised and approved. V. An overall schedule for implementation of the project has been drawn up. VI. Financial arrangements have been made to implement the project. VII. A project manager has been appointed for implementation of the project. VIII. Pre-project activities have been completed and a zero date fixed. Except for items VI, VII and VIII all the other items are covered in what is known as the feasibility report. This report is prepared during the definition phase of a project. The project manager, therefore, may be required only to update and validate the feasibility report before proceeding with the project.

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The Project Manager is ultimately responsible for the completion of the project as per the technoeconomic stipulations made in the feasibility report. If the feasibility report stipulations are not adhered to, the success of the project will be in jeopardy. Ideally, what is stipulated in the feasibility report should not require to be changed, except the project cost estimate which needs to be updated in case there is a shift in the zero date of the project. But in reality, not only project cost estimate may undergo change because of, the delayed zero date, or the promoter’s requirement itself may change, thus, changing the entire complexion of the project. It is, therefore, necessary to discuss these various issues covered in a feasibility report so that the necessary steps can be taken for the finalization of the terms of reference for management of the project. 2.

Proposal Preparation

Project Management is a partnership between the Originator of the project idea, usually the EndUser / client and the project Builder. Depending upon the knowledge Base that is available with the End User, the extent of “Project Building” from the Conceptual phase to the Completion phase will vary. Some Organizations have almost complete In House Project Building facilities at the other end of the Spectrum, the organizations may opt to completely outsource the project building activities. There would be at least some involvement of an external agency; it could even be as simple as a supplier providing tables and chairs for an End- User! A project, by definition, sets out to make some changes to the environment, usually over a short time period. Hence it ill behoves project management to ignore the environment; it is necessary to develop an understanding of it. From understanding can develop respect and appreciation, and mutual understanding can lead to constructive working relationships. In a general sense, the environment consists of people inside as well as outside the project: individuals and groups with their own opinions and motivations, and, in this context, the impact of the environment on a project is even more profound. The five elements, contained in project environment are: 

The End User / Client or Sponsor could be within the organisation or outside; could be you! Your personal project



The project



The internal departments



The external contractors and suppliers



The sub-contractors

All five elements are largely, but not entirely, contained in the immediate environment. Proposal Preparation is an intrinsic part of establishing Project Feasibility. It is the process of investigating a problem and developing a solution in sufficient detail to determine if it is economically viable and worthy of development.

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Answer 3. (b) Cost estimates budgets, WBSs, and schedules are interrelated concepts. Ideally, estimates for project costs are based upon elements of the WBS and are prepared at the work package level. When the cost of a work package cannot be estimated because it is too complex, the work package is broken down further until it can. When the cost cannot be estimated because of uncertainties about the work, the estimate is initially based upon opinions and judgement, and is then refined as information becomes available. Project schedules dictate rates of expenditures and cash flows, but the converse is also true: limited resources and working capital dictate the scheduling of activities. Cost estimation is the determination of quantity and the predicting, or forecasting, within a defined scope of the costs required to construct and equip a facility, to manufacture goods, or to furnish a service. Included in these costs are assessments and an evaluation of risks and uncertainties. Hence, costestimates2 are determined utilizing experience and calculating and forecasting the future cost of resources, methods, and management within a scheduled time frame. Cost estimates provide input to original baselines and changes to baselines, against which cost comparisons are made throughout the life of a project. The estimate may be in the form of proposals submitted by contractors / Government agencies, a response to a program opportunity notice, or an official DOE estimate. Cost estimates and cost estimation provide a basis for feasibility studies, business planning, budget preparation, and cost and schedule control. Unique characteristics of a cost estimate include: Representation of a specific Scope of Work (SOW) Representation of a specific schedule

Specific basis of the estimate, and representation of the best available information at a point in time Formation based around a Work Breakdown Structure (WBS), to be consistent with the Scope of Work, the schedule, and any other pertinent aspects of a project Specific definitions of cost / price, which usually include direct costs (material, labour, equipment, subcontract, and any other impacting cost components), indirect costs, overhead costs, profit / fee, contingency, and escalation. These costs may be represented in a Detailed or Summary form. It is necessary in projects to put practical constraints on costs so that realist’s budgets can be established. Failing to do so results in projects that are prematurely terminated for lack of funds, or are completed but at exorbitant expense. Both occurrences are relatively commonplace. Cost estimating, budgeting, and cost control sometimes are thought to be the exclusive concerns of project planners and accountants, but in projects they should be a concern to everyone. Project participants who have the best understanding of the work the engineers, scientists, systems specialists, architects, or others who are the closest to cost sources should be involved in the estimating and budgeting process (it is common, however, for these same people to be disdainful of budgets or ignorant of why they are necessary and how they work). Also, project managers must be involved. They do not have to be financial wizards, but they should have an accountant’s skill for organizing and using cost figures. The Importance of Cost Estimation The initial cost estimate can seal a project’s financial fate. When project costs are overestimated (unrealistically high), chances are good that the contract will be lost to a lower bidding competitor. Just as harmful is when the cost is underestimated. A Rs. 50,000 bid might win the contract, but obviously the project will lose money if it ends up costing Rs. 80,000. Underestimates are often accidental, the result of 11

being overly optimistic; however, they are sometimes intentional as a result of trying too hard to beat the competition. A very low bid signifies more than the desire to get a contract. It may imply that the contractor cut corners, left things out, or was just sloppy. The consequences for both client and contractor can be catastrophic, from operating at a loss to going bankrupt. Cost estimates are used to develop budgets and become the baseline against which project performance is evaluated. The rate of actual cost expenditure compared to the estimated rate of expenditure (as indicated on the budget) is an important measure of project work performance; thus throughout the project actual costs are continuously compared with estimated, budgeted costs. Without good estimates it is impossible to evaluate work efficiency or to determine how much the finished project will cost. Cost estimation Is defined as developing an approximation (estimate) of the costs of the resources needed to complete project activities. Cost budgeting Is defined as allocating the overall cost estimate to individual work activities. Cost control Is defined as controlling changes to the project cost budget. Efficient cost estimating of the cost of a project is vital, both to the client and the contractor. Reasonably accurate estimates are essential to the initial decision on whether to proceed with a project or not, that is, the “go/no-go” decision. If project costs are widely underestimated at this stage, companies can be locked in to uneconomic investments, with low or negative profitability, undertake the wrong project, or run out of funds. They are also required by the client company for the knowledgeable comparison of bids, where contractors are involved, with very low bids being as much a cause for concern as very high bids. A very low bid may imply a contractor anxious to gain the contract and accepting no profit on his bid; it may also imply that some factor has been missed out on a bid, or that corners are going to be cut; or it may simply be errors in the contractor’s estimate. If the contractor underestimates the cost to him of carrying out a project at the bidding stage on fixed price contracts, the consequences can be catastrophic for him. At the very least he can be landed with a loss-making contract, and at the extreme he can go bankrupt, which in turn can cause the client considerable trouble and expense. Decisions on tendering policy, that is, whether to bid a low price or the estimated cost plus a reasonable profit margin, should be taken on as accurate an estimate as is possible. Thus the initial cost estimates both for client and contractor, must be as accurate as the information available permits, and must include allowances for any particular areas of uncertainty.

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Answer 5. (a) Planning is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired future on some scale. As such, it is a fundamental property of intelligent behaviour. This thought process is essential to the creation and refinement of a plan, or integration of it with other plans, that is, it combines forecasting of developments with the preparation of scenarios of how to react to them. The term is also used to describe the formal procedures used in such an endeavour, such as the creation of documents, diagrams, or meetings to discuss the important issues to be addressed, the objectives to be met, and the strategy to be followed. Beyond this, planning has a different meaning depending on the political or economic context in which it is used. Planning the three project parameters Having ensured to a great degree of confidence in the conceptual phase that the project is feasible we shall now proceed to turn the concepts into reality. Hence you will appreciate that the Planning Phase is the beginning of Project Execution. This term “Project Execution” includes Planning, Monitoring & Control. The monitoring and Control Activities will be taken up in the Implementation Phase of the Project. All too often when people think of project planning, they perceive the use of only techniques and concepts such as PERT and CPM. These techniques are important to use in the development of a project schedule: However Project planning includes a wider scope of activity. Project planning also deals with the organizational design to support the project as well as the information system and control system which are used to mode, evaluate and reallocate resources as will be required during the execution of the project. The basis for planning is the clarity in the Scope, Time, Cost and quality, Goals/Parameters which have been established in the conceptual phase. Project planning begins with the end result the three goals and work backward to ensure that the goals are achieved. Advantages of planning in a project 1. You will have a more realistic plan one that gives a more accurate picture of what will happen as the project progresses. 2. You will be better able to anticipate what needs to happen next. 3. You will know where to concentrate your attention to be sure that the project stays on schedule and within budget. 4. You will be able to anticipate bottlenecks and other co-ordination problems before they occur, so that you can take action to correct a delay before it becomes severe. 5. You will have a valuable tool to enhance co-ordination and communication among the project team members. 6. You will have a tool to build commitment because it publicly identifies responsibilities and deadlines and creates an awareness of interdependencies. 7. You will have a tool that leads to completion of projects on time, within budget and according to quality standards. 8. A plan can play a vital role in helping to avoid mistakes or recognize hidden opportunities. Preparing a satisfactory plan of the organization is essential. The planning process enables 13

management to understand more clearly what they want to achieve, and how and when they can do it. 9. A well-prepared business plan demonstrates that the managers know the business and that they have thought through its development in terms of products, management, finances, and most importantly, markets and competition. 10. Planning helps in forecasting the future, makes the future visible to some extent, it bridges between where we are and where we want to go. Planning is looking ahead. Planning Steps Establish the project objective. Choose a basic strategy for achieving the objective. Break the project down into subunits or steps. Determine the performance standards for each subunit. Determine how much time is required to complete each subunit. Determine the proper sequence for completing the subunits and aggregate this information into a schedule for the total project. Design the cost of each subunit and aggregate costs into the project budget. Design the necessary staff organization, including the number and kind of positions, and the duties and responsibilities of each. Determine what training, if any, is required for project team members. Develop the necessary policies and procedures.

Identify all the main issues, which need to be addressed. Review past performance. Decide budgetary requirement Focus on matters of strategic importance. What are requirements and how will it be met. What will be the likely length of the plan and its structure? Identify Shortcomings in the concept and gaps. Strategies for implementation. Review periodically.

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Answer 5. (b) PERT PERT (Program Evaluation and Review Technique) was originally developed for use by the U.S. Navy Special Projects Office in planning and controlling the development of the Polaris submarine weapon system to the point of operational effectiveness. This single project was the largest engineering undertaking ever made and it was given the highest national priority since the new weapon system was to be a major element of United States defence. The project was executed by a few thousand otherwise independent organizations, of whom a few hundred were regarded as prime contractors, all under the ultimate control of the Special Projects Office. The need in planning and control for this project was not only for an effective analytical discipline but also to take account of the time uncertainty which characterized much of the research and development work, and to provide a common language of rapid communication between the many organizations who work had to be co-ordinated. In the event, the original estimate for project duration was five years and it was achieved in three, much of the credit for this achievement being given to PERT. Since 1958, when PERT was first used in the Polaris project, it has come to be used on a large number of other projects. Its use is now obligatory on all major U.S. defence contracts and the system is in common use by profit – making industry in the planning and control of complex projects of many kinds. PERT is rapidly coming to be used in many countries of the world. The PERT view of activity Duration Uncertainty In PERT activities are identified and their parallel and sequential relationships are expressed in the project network as already described in previous chapters. The difference between what has already been described and PERT lies in the way activity durations are derived and used. Instead of using single estimates of duration for each S activity, we may, if we wish, use three, and we then determine” the statistical probability of meeting desired even dates. The purpose of this procedure is to take analytical account of the real difficulty some activity managers will always have in making estimates of duration. For example, in much research and development it is just not possible, sometimes, to give close estimates. The theoretical background to the three time estimates is a follows: Supposing an individual activity were repeated under identical circumstances a hundred times (something which is most unlikely ever to happen) and we were to plot a graph of the statistical distribution of the achieved times, it would have the general figure 1.The resultant curve has two extremes, corresponding to the shortest and the longest achieved durations, and a highest point somewhere between them. If we now transfer this picture to the estimation of durations for future activities, and if we assume that the curve has a standard form, we have only to define these three points, the extremes and the high point, and we will have a statistical view of the uncertainties involved. In PERT we assume a Beta distribution and we call the one shortest duration out 6f the hundred the Optimistic time, the one longest the Pessimistic, and the time corresponding to the high point the most likely. In Figure 2 we see this image of the future and note that the curve is not necessarily symmetrical. There are two characteristics of the Beta distribution which are of direct use to us in PERT. Firstly, the expected time for the activity coincides with a vertical line which divides the area under the curve into equal parts and approximates to:Expected Time = O + 4M + P 6 Where

O = optimistic time M = most likely time P = pessimistic time

There is a 50% chance that the activity will be completed in a shorter time than the expected time and a 50% chance that it will be longer. Clearly the expected time will only be the same as the most likely 15

time when the curve is symmetrical. When this is not so, the expected time will in fact lay one-third of the way from the most likely time to the mid-point between the optimistic and pessimistic times. Secondly, the range of time uncertainty is measured by the variance which approximates to Variance

=

P-O 6

Note that the range of uncertainty takes no account of the most likely time and is a function of the time separation between the optimistic and pessimistic times. The activity expected time as defined above is used in exactly the same way as the single activity duration described in the section “Simple Critical Path Theory” to calculate activity and event schedules.

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Answer 7. A project manager is the person who has the overall responsibility for the successful planning and execution of a project. This title is used in the construction industry, architecture, information technology and many different occupations that are based on production of a product or service. The project manager must possess a combination of skills including an ability to ask penetrating questions, detect unstated assumptions and resolve interpersonal conflicts as well as more systematic management skills. Key amongst his/her duties is the recognition that risk directly impacts the likelihood of success and that this risk must be both formally and informally measured throughout the lifetime of the project. Risk arises primarily from uncertainty and the successful project manager is the one who focuses upon this as the main concern. Most of the issues that impact a project arise in one way or another from 17

risk. A good project manager can reduce risk significantly, often by adhering to a policy of open communication, ensuring that every significant participant has an opportunity to express opinions and concerns.

Roles and Responsibilities Process Responsibilities Once the project starts, the project manager must successfully manage and control the work, including: Identifying, tracking managing and resolving project issues Proactively disseminating project information to all stakeholders Identifying, managing and mitigating project risk Ensuring that the solution is of acceptable quality Proactively managing scope to ensure that only what was agreed to is delivered, unless changes are approved through scope management Defining and collecting metrics to give a sense for how the project is progressing and whether the deliverables produced are acceptable Managing the overall schedule to ensure work is assigned and completed on time and within budget Again, this does not mean that the project manager physically does all of this, but they must make sure it happens. If the project has problems, or scope creep, or faces risks, or is not setting expectations correctly, then the project manager is the person held accountable. To manage the project management processes, a person should be well organized, have great follow-up skills, be process oriented, be able to multi-task, have a logical thought process, be able to determine root causes, have good analytical ability, be a good estimator and budget manager, and have good self-discipline. People Responsibilities In addition to process skills, a project manager must have good people management skills. This includes: •

Having the discipline and general management skills to make sure that people follow the standard processes and procedures

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Establishing leadership skills to get the team to willingly follow your direction. Leadership is about communicating a vision and getting the team to accept it and strive to get there with you.

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Setting reasonable, challenging and clear expectations for people, and holding them accountable for meeting the expectations. This includes providing good performance feedback to team members

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Team building skills so that the people work together well, and feel motivated to work hard for the sake of the project and their other team members. The larger your team and the longer the project, the more important it is to have good team-building skills.

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Proactive verbal and written communicator skills, including good, active listening skills.

Again, you are responsible for the success of the project. If the team has poor morale and is missing deadlines, you need to try to resolve it. If team members don't understand exactly what they need to do and when it is due, then you are responsible. Multiple Roles 18

Depending on the size and complexity of the project, the project manager may take on other responsibilities in addition to managing the work. For instance, the project manager may assist with gathering business requirements. Or they may help design a database management system or they may write some of the project documentation. Project management is a particular role that a person fills, even if the person who is the project manager is working in other roles as well. For instance, a project manager might manage the project for 45% of their time, perform business analysis for 25%, work on design for 15% and write documentation for 15%. This does not mean that one of the responsibilities of a project manager role is to spend 15% of their time on design. Instead, it just means that the project is not large enough to need a full-time project manager. The project manager spends the rest of their time in other project roles such as Business Analyst, Designer and Technical Writer. Depending on the size of your projects and the way your company is organized, a project manager’ time may be allocated one of three ways. They may have a full time role on a large project. They may have project management responsibilities for multiple projects, each of which is less than full time, but the combination of which adds up to a full-time role. They may fill multiple roles, each of which requires a certain level of skill and responsibility. On one project, for instance, they may be both a project manager and an analyst. Task of teams and individual manager in each phase of a project in an organisation

PHASE CONCEPTUAL

TEAM •

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PLANNING

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IMPLEMENTATION

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COMPLETION/ HANDOVER

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REVIEW

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INDIVIDUAL

Name the project this will give the team a point of reference as it forms. Negotiate a “team building” budget.

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Hold preliminary team meetings to establish roles and ground rules. Produce project “organisation chart”. Set up a group diary and e-mail address group. Agree dates for review meetings. Communicate progress to all team members. Maintain the profile of the project via minutes, articles and briefings. Resolve disputes if they arise. Integrate new team members. Arrange regular social events.

• • •

Involve the team in handover. Represent team in success or failure. Pass on feedback and rewards to team.

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Combine the post-project review with a social event to say thank-

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•

•

• • • • • •

• •

Identify the people you would like to take part, take preliminary soundings on availability and interest. Assemble the “planning team”. Select individuals. Delegate tasks. Identify skills shortfalls and agree personal development goals. Open a “personal” file on each team member. Monitor initial delegation. Delegate further tasks. Bring in new people as required. Coach individuals. Hold individual review meetings. Maintain an appropriate level of individual social contact. Debrief individual performances. Agree any feedback that will be passed to manager. Reward success. Thank individuals. Write reports on individuals noting any skills.

you all participant.

Answer 8. (a) Risk Management An evaluation of potential risks at an early stage can show whether or not a proposal is worth pursuing. It is not possible to envisage every possible action or turn that the project might take, but some evaluation of the top 20 percent of risks (that are likely to cause 80 percent of the delays or over run) is going to be beneficial. When a significant risk is encountered, it is normal for some form of Contingency Plan to be put in place for that eventuality. The need for such a plan should be highlighted in the project proposal to enable conscious decision making to go ahead with the project. For example, is the technology considered for the project a proven one? Is it an R & D Project?

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In the Planning Phase we shall examine a widely accepted quantitative technique of risk management called PERT. Risk analysis is an attempt to allow the brain to comprehend the effect of a number of variables on the outcome. Project Risk Management includes the processes concerned with identifying, analyzing and responding to project risk. It includes maximizing the results of positive events and minimizing the consequences of adverse events. The major processes are: 1. Risk Identification: - determining which risks are likely to affect the project and documenting the characteristics of each. 2. Risk Quantification: - evaluating risks and risk interactions to assess the range of possible project outcomes. 3. Risk Response Development: - defining enhancement steps for opportunities and responses to threats. 4. Risk Response Control: - responding to changes in risks over the course of the project. These four processes will be dealt with in greater detail under the Planning Phase and Implementation Phase. One form of assessment of risk is the Expected Value of an event. This is the possible outcome times (multiplied by) the probability of its occurrence eg. If a project has a 50% chance of yielding a profit of Rs. 50 lacs, the Expected Value is 0.5 * Rs.50 lacs = Rs.25 lacs. This provides the basic tool for evaluating different project proposals to assist the investment decision maker. Two projects require funding one has a potential return of Rs. 200 lacs, while the other a return of Rs. 150 lacs. The first has a 50% chance of yielding this, while the second has a 70% chance. The Expected Value Calculation yield Rs. 100 lacs for the first and Rs. 105 lacs for the second. On this basis, the second is more attractive.

Answer 8. (b) Gantt Chart A Gantt chart is a horizontal Bar Chart that graphically displays the time relationship of the steps in a project. It is named after Henry Gantt, the industrial engineer who introduced the procedure in the early 1900s. Each step of a project is represented by a line placed on the chart in the time period when it is to be undertaken. When completed, the Gantt chart shows the flow of activities in sequence as well as those that can be under way at the same time. To create a Gantt chart, list the steps required to complete a project and estimate the time required for each step. Then list the steps down the left side of the chart and time intervals along the bottom. Draw a line across the chart for each step, starting at the planned beginning date and ending on the completion date of that step.

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Some parallel steps can be carried out at the same time with one taking longer than the other; this allows some flexibility about when to start the shorter step, as long as the plan has it finished in time to flow into subsequent steps. This situation can be shown with a dotted line continuing on to the time when the step must be completed. When your Gantt chart is finished, you will be able to see the minimum total time for the project, the proper sequence of steps and which steps can be under way at the same time.

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Answer 8. (c) Internal Rate of Return (IRR) This is again a discounting method, but in this case instead of assuming a fixed discount rate, the discount rate is varied till the net present value becomes zero. The internal rate of return (IRR) is a capital budgeting metric used by firms to decide whether they should make investments. It is an indicator of the efficiency of an investment, as opposed to net present value (NPV), which indicates value or magnitude. The IRR is the annualized effective compounded return rate which can be earned on the invested capital, i.e., the yield on the investment. A project is a good investment proposition if its IRR is greater than the rate of return that could be earned by alternate investments (investing in other projects, buying bonds, even putting the money in a bank account). Thus, the IRR should be compared to any alternate costs of capital including an appropriate risk premium. Mathematically the IRR is defined as any discount rate that results in a net present value of zero of a series of cash flows. In general, if the IRR is greater than the project's cost of capital, or hurdle rate, the project will add value for the company. Method 23

To find the internal rate of return, find the value(s) of r that satisfies the following equation:

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Answer 8. (e) ‘S’ Curve At the Conceptual and Planning Phase, time is spent to carryout the activities you have seen necessary. Not much cost has been incurred except human / professional cost. Hence the curve is relatively flat along the X axis. In the Implementation Phase, the plan is put into action. Purchases are made, equipment and machinery are paid for and funds committed to the project are expended. The progress shoots up, in an exponential manner. Once equipment is purchased and installation is carried out, the project is given its finishing touches. Commissioning (Start up), polishing, etc. come under this category. Not much money is spent in this completion project but time is definitely spent. You will observe that the S Curve follows the Project Life Cycle graph. The S Curve Project Progress is directly proportional to cost spent on the project as on that date. The last 5% of a project progress and the first 5% of a project progress can take longer than the middle 90% if a project is badly planned. In any case the first 5% and last 5% of a project are not equal to 5% and 5% of the original project time estimate from start to finish. They could vary depending upon: a) b) c) d) e)

Complexity of Engineering detailing, Lead time for Procurement / Manufacturing Complexity of Installation Complexity of Commissioning. Mistakes and Rework and Delays due to poor planning at any stage of the project.

Construction project’s schedule and progress, as shown by a Gantt chart with S-curves super imposed.

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