Fundamentals Of Project Management _class Notes

Fundamentals of Project Management 1

Overview of Project 1.1 Concepts and Definition of Project 1.2 Characteristics of a Project 1.3 Project Environment 1.4 Types of Project 1.5 Projects Life Cycle and Project Phases 1.6 Project Organizations

2 Project Management 2.1 2.2

Concept and Definition of Management Concept of Project Management 2.3 The Project Manager, His Roles and Responsibilities

3

Project Management in Nepal 3.1 3.2 3.3 3.4

Historical Overview Project Planning in Nepal Why do Projects Fail in Nepal? Improving Project Management in Nepal

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1. Overview of Project 1.1 Concept and Definition of Project Projects are the specific schemes or action units designated for the investment of given resources and skills with an aim of attaining some predetermined objectives. A project starts from the scratch. It has a specific objective. It has a well-defined life span divided into a life cycle. It involves a set of activities within a schedule and budget. It integrates human and non human resources. According to Harold Kerzner: A project is any series of activities and tasks that: • have a specific objective to be completed within certain specifications • have defined start and end dates • have funding limits, and • consume resources. A project is one-time job that has defined starting and ending dates, a clearly specified objective, or scope of work to be performed, a pre-defined budget, and usually a temporary organization that is dismantled once the project is complete ( The project Manager’s desk Reference, James Lewis) A group of multiple interdependent activities that require people and resources is the Project. Projects generally originate from plans. They serve as the building blocks for development planning. A Plan, Programme and Project are different concepts yet complementary to one another.

PLAN A plan is an image, map or vision to represent the forms and/or features of desired situation(s). It is a process of setting future goals for country or organization and choosing the actions to achieve these goals. Plans may be Community Development Plan, District Development Plan or Regional Development Plan depending upon the area it serves and its magnitude. Similarly, depending upon different sectors (agriculture, education, Health and so on) there may be different sector-specific plans known as Sectoral Development Plan. And finally, we have the National Development Plan. In Plan document, we can find only the level or sector-specific Broad Decisions indicating what and how much is to be achieved with the investment of given resources. A plan itself is static. In other words, a plan representing only an imagination or vision will have no meaning unless it is put into operation to achieve its set objective/s. A Plan is a set of Programmes.

PROGRAMME A Programme is the extensive and consistent set of action units stating the needs of interrelated activities to achieve the plan’s objectives and goal. There could be several programmes within a plan or development plan.

PROJECT A project is a unique group of tasks designed to attain a specific objective within the constraints of time, cost and quality based on planning and control through the use of a variety of resources in a dynamic environment.

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Project Family Tree Development Plan

Agricultural Programme

Health Programme

Roads Programme

Other Programme

Wheat Project Potato Project Fertilizer Project Livestock Project Other Projects

Plan

Five-Year Plan

Programme

Health Programme

Project

Hospital Construction

Work Package

Electrification Package

Activity/ Task

Preparation of Drawing

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Project Terminology Goal: Goal is what exactly needs to be accomplished after completion of the project. Project Scope: Documented set of standards and criteria that the customer defines as successful completion. Objective: A combination of tasks that concern specific functional groups or structural areas. Tasks: A combination of activities that lead to the achievement of a definable result. Activity: A time consuming piece of work with a definite beginning and end. Duration: The elapsed time from the beginning to the end of an activity, task or objective.

1.2 Characteristics of Project Despite the different types and natures of projects we observe in different sectors and in different levels, all of those necessarily reflect a set of common characteristics. A project has the following characteristics: 1.Objective: Each and every project needs to be guided to achieve an objective or a set of objectives. It ceases to exist when the objective is achieved. 2.Life Span: A project has beginning and end. It cannot continue forever. 3.Constraints: A project has a schedule. It operates within the constraints of time, cost and quality. Every project requires certain investment of resources. 4.Unique: Every project is unique. No two projects are exactly similar. 5.System: All projects need to undergo a system of inputs-process - Outputs. 6.Life Cycle: Every project will have its own phase-based cycle. 7.Teamwork: A project has many participants. It requires teamwork under the leadership of the Project Manager. 8.Organization Structure: A project is a temporary organization. A project usually has its own budget and management. 9. Planning and Control System: A project requires information, planning and control system. The actual performance is compared with the planned targets. 10. Collection of Activities: A project is a collection of activities that are linked together to constitute a system.

Time

Environment Objectives Cost

Quality Model of a Project

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1.3

Project Environment

Environment consists of forces that influence the project’s ability to achieve its objective. Projects operate in a dynamic environment. Project environment can be classified into:

i

Internal Environment Internal environment is located within the project. It is Controllable by the project. It provides strengths and weaknesses to the project. The forces in the internal environment consists of: o Project Objective o Constraints o Structure o Resources

ii

Task Environment The task environment of a project is made up of stakeholders. They are either involved in the project or their interests are affected by the project. The elements of task environment are: o Customer o Contractor o Consultants o Suppliers o Government o Financiers o Competitors o Labour Unions

iii.

External Environment

It is located outside the project. It cannot be controlled by the project. The project can indirectly influence it. It provides opportunities and threats to the project. The forces in the external environment are: o Economic o Technological o Political-Legal o Socio-cultural (For detail Refer- Project Management in Nepal by Dr. Govinda Ram Agrawal page: 16-20)

1.4

Types of Project

Projects can be of many categories. Various ways of categorizing a project are as shown in the Table below.

Sponsorship

Nature

Orientation Speed

Funding Source

Technique Size

Customer Individual ProductNormal Indigenous Labor Mega Oriented Intensive Organization Staff Crash Foreign Major ProcessCapital Contractor Special Disaster -J/V Medium -Bilateral Intensive Government Complex Oriented Small -Multilateral INGO Donor (For detail Refer- Project Management in Nepal by Dr. Govinda Ram Agrawal page: 21-34) 5

1.5 Projects Life Cycle and Project Phases A project is time bound. It has beginning and end. The life of a project is divided into several phases to provide better management control and appropriate links to the ongoing operation of the performing organization. Each phase defines the work outcomes or deliverables of the project. The phases are arranged in a sequence. Collectively, the project phases are known as Project Life Cycle. Project life cycle generally defines: o What technical work should be done in each phase? o Who should be involved in each phase? Cost and staffing levels are low at the start, higher towards the end, and drop rapidly as the project draws to the Conclusion. The probability of successfully completing the project is Lowest, and hence risk and uncertainty are highest at the start of the project. The probability of successful completion generally gets progressively higher as the project continues. The ability of the stakeholders to influence the final characteristics of the project product and the final cost of the project is highest at the start and gets progressively lower as the project continues.

Risk/Amount Formulation

Planning

Implementation

Termination

Risk Amount of stake

Time

Project life cycle: The breakdown and terminology of project phases differ; depending upon whether we are discussing products or projects. The life cycle phases of a product are: o Research & Development o Market Introduction o Growth o Maturity o Deterioration o Death Today, there is no general agreement about the life cycle phases of a project. This is understandable because of the complex nature and diversity of projects.

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Project life cycle according to Cleland and King: o Conceptual   

Preliminary Evaluation of project idea Identification of needs Determination of initial technical, environmental and economic feasibility and practicability of the system.  Preliminary identification of human and non-human resources

o Definition  

Firm identification of resources required Preparation of the detailed plans required to support the system



Establishment of time, cost and performance parameters

o Production   

Standardization of efforts and completion of documents for operations Identification and management of the resources required facilitating the production process such as inventory, supplies, labor, funds etc. Project implementation

o Operational 

Use of the system results by the intended customer



Evaluation of the project and its integration into another organizations

o Divestment  

System phase down Reallocation of resources to other projects

 The Life cycle of a Construction Project: The various phases in the life cycle of a project are:  Formulation Phase  Planning Phase  Implementation

 I

Termination Phase

Formulation Phase The main tasks in the formulation phase are: • Project Identification and  Project Formulation

Project identification • • • •

A situation survey is done. The project idea is born. The project is conceptualized. The sources of project ideas are internal (Strategies, Plans, Programmes, R&D Dept., Quality Circle) or external (Customer needs, Donors, Experts, Politicians, Legal Provisions, Technological Development).

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Project Formulation • • • •

II

Defines the parameters of the identified project. Broad statement defining the objective and outputs Preliminary statement of schedule and resources required. Preparation of Project Proposal based on prefeasibility study and preliminary design.

Planning Phase

The basic tasks in the planning phase of the project are: • Feasibility study • Appraisal • Detailed design

Feasibility Study • •

Determines the implement ability of the projects. The areas for which analysis is done areo Technical analysis – Studies the feasibility of meeting technical specifications and examines the availability of alternative technical solutions. o Financial analysis –Studies the financial sustainability of the project in terms of capital requirements and capacity for meeting of financial obligations. o Management analysis – Studies the adequacy of management system to direct and control the project. o Marketing analysis- Studies project capacity, market demand and sales forecast. o Economic analysis – Studies net contribution of the project to the economy and to the society. Benefit/Cost analysis is done for this purpose. o Environmental analysis- Studies the impact of the project on the environment. Feasibility study should be based on accurate information.

Appraisal It is the Evaluation of the project’s ability to succeed. Appraisal is based on the findings of the feasibility analysis. It addresses - Ability of the project to achieve its objectives - Comparability of the project with other projects (in terms of investment, cost/benefits, job creation, profit etc.) The competent authorities appraise the project against a list of criteria (policy, technical, economic, financial, social, etc.) before giving approval and formally approve the project selected through appraisal. Approval involves finalization of funding proposals and agreements and allocation of resources to the project.

Detailed design •

It is concerned with - Preparation of blueprints of engineering design and specifications for construction, facilities, equipments etc. - Preparation of detail implementation plans and work schedules.  The design task establishes:  Operating plans and performance standards  Allocates responsibilities  Determines activities and resources  Sets down work schedules 8

III

Implementation Phase

The basic tasks in this phase are: - Implementation - Control

Implementation Implementation is concerned with mobilization. It involves• Setting up of project organization, • Allocation of tasks and responsibilities, • Getting together project team • Preparation of tender documents. • Other pre-construction activities like land acquisition and coordination with other infrastructure, • Tendering, Construction and/or installation of equipment  Project management, quality assurance, progress reporting and the participation of target groups and project affected groups.

Control It involves supervision and control of project performance to provide feedback. Monitoring of project performance is done. It is a means to improve implementation through the identification of problems and the possible corrective actions. Various techniques like CPM, PERT and other network analysis techniques are used for control purpose. The Control comprises the following activities: • Setting of standards • Measuring outputs • Verifying the output with pre set standards • Finding deviations, if any. • Correcting the process/output to the pre set standards if required.

IV

Termination Phase

The basic tasks in this phase are: • Project Evaluation • Project Handover

• Project Evaluation Evaluation measures the effects and impacts of the project. It can be carried out during the project implementation to improve implementation or can also be carried out after project completion to improve future project planning and management.

• Project Handover

Handover begins when the project work is finished. Resources are then reallocated to other projects.

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Other ways of breaking project phases in the Project Cycle

I.

• • • • • •

Concept and Feasibility Study Engineering and Design Procurement Construction Start Up and Implementation Operation and Utilization

F/P P/P I/P I/P I/P T/P

II. National and Local Level needs

Benefit Monitoring And Evaluation

Project Identification Project Preparation

Operation and Maintenance

Project Cycle

Project Implementation

Project Appraisal

Funding

Loan/Grant Negotiation and A 10

Donor Appraisal

1.6

Project Organizations

Concept of Organization: An Organization is a network of structure and relationship. Commonly, the focus of the structure is the specialization of the human elements of the group.

Characteristics of Organization:     

Goal-Oriented Collection of People Consists of Structure (division of labor) Consists of Technology Has Environment



Has Feedback

Project Organization When projects are initiated, two issues immediately arise. First, a decision must be made about how to tie the project to the parent firm. Second, a decision must be made about how to organize the project itself. Project Organization consists of:  Designing a Structure  Pulling together Project Team  Establishing Authority and Responsibility relationship  Establishing Project Office There are three major organizational forms commonly used to house the projects.

 Functional Organization  Pure Project Organization  Matrix Organization

1 Functional Organization  Organization structure is broken into different functional units.  The project tasks are performed through functional units.  A project tends to be assigned to the functional unit that has most interest in ensuring its success or that can be most helpful in implementing it.  Functional elements of the parent organization- Administrative home for a project.

General Manager

Production department Marketing department

Project A

Project B

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Finance Department

HR Department

Advantages: o There is maximum Flexibility in the use of staffs. o Individual experts can be utilized by many projects o Specialists in the division can be grouped to share knowledge and experience-Synergistic solutions to technical problems o Serves as a base of technological, procedural, administrative and overall policy continuity.  Functional division contains the normal path of advancement for individuals whose Expertise is in the functional area.

Disadvantages: o o o o o o

Lack of Client/Project focus. Focus on unique area of interest. Decision delay No individual is given full responsibility- lack of co-ordination Tendency to sub optimize the project Weak motivation for people Does not facilitate a holistic approach to the project (e.g. Jet air craft/ emergency room in a hospital can not be well designed unless designed as a totality.)

2 Pure Project Organization o The project is separated from the rest of the parent system. o A self- contained unit with its own technical staff/ administration. o The project manager has his own line organization with project authority and responsibility. o The project has its own resources and management. General Manager Project A Manager

Design

Construction

Administration

Production Department

Marketing Department

Advantages: o o o o o o o

The PM has full line authority over the project Project work force directly responsible to the PM Line of communication- shortened. Focus on project objective High motivation Unity of command Exists Flexible labor force

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Other Departments

Disadvantages: o o o o

Duplications of efforts/Inefficient use of resources Lack of job security Stock piling of equipments / Technical expertise Projectiles (A disease-that creates animosities between parent organization. staff and project staff)

3. Matrix Organization o A combination of pure project organization and functional Organization o It is a pure project organization overlaid on the functional divisions of the parent firm. o Project team is assigned from the functional departments. o The PM has overall responsibility

General Manager

Production department

Marketing department

Finance Department

HR Department

Project A Manager Advantages: o o o o o o o

The project is the point of emphasis/ special focus Availability of entire reservoir of technical talents in the FD Team identity Less anxiety about job Rapid response to client needs Consistency of policies/ practices/procedures of parent firm Holistic approach/Balance of resources

Disadvantages: o Power and Authority is balanced. Doubt exists who is in charge o Division of authority and responsibility is complex o Movement of resources from project to project- may foster political infighting among the several PMs. o Projectile is still a serious disease. o Violates the management principle of unity of command.

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2

Project Management

2.1 Concepts and Definition of Management All organizations carry out various activities to achieve their certain pre-determined goals. Management helps organizations to achieve goals. Management can be defined as follows: Management achieves goals by getting the jobs done efficiently and effectively through and with people by using the means of planning, organizing, staffing, directing and controlling in a dynamic Environment. Management is a know- how. Actually it is an art. It consists of skills, practical knowledge, creativity and result- orientation. Management is a science also because it has an organized knowledge of principles and techniques. Management is a profession also.

Characteristics of management • • • •

•

Management achieves goals Management gets the jobs done efficiently and effectively Management works through and with people Management is a process comprising planning, organizing, staffing, directing and controlling Management operates in an environment

Principles of management Principles are fundamental truths and are essence of management theory. Henry Fayol propounded 14 Principles of Management, which are universally applicable. These are: • •



• • • • • • • • • • 

Division of Work: Principles of specialization. An employee should be assigned only one type of work to increase output. Authority and Responsibility Authority Legitimate power, right to influence others and make decisions Responsibility Obligations to carry out assigned jobs. It cannot be delegated. Accountability Answerability for satisfactory performance Those who exercise authority must assume responsibility. Unity of command: One employee should have only one boss. Unity of direction: One head and one plan for a group of activities having the same objective. Span of management (Scalar chain of command): All employees should be linked with each other in superior- subordinate relationship. Subordination of individual interests to general interests Remuneration: Fair and equitable pay to employees. Discipline: Obedience and respect for agreement. Centralization: Highly centralized power structure; decentralization with centralized control. Order: A place for every thing and every thing in its proper place. Equity: Sense of kindliness and justice throughout all levels of scalar chain. Stability and tenure of personnel: The tenure should be stable. Initiative: Encourages subordinate’s initiative. Esprit de Crops: Union is strength; cohesiveness and team spirit. 14

Functions of Management Management is what managers do. Management has certain functions. Various writers have classified management functions differently. Some of them are as listed below.

i.

Henry Fayol (POCCC) • • • •

• ii.

Controlling

Luther Gullick (POSDCORB) • • • • • •

• iii.

Planning Organizing Commanding Coordinating

Planning Organizing Staffing Directing Coordinating Reporting Budgeting

Kast and Rosenzweig (GPAOIC)

• Goal Setting • Planning • Assembling resources • Organizing • Implementing • Controlling For our purpose, the functions of management are:

i.

Planning: • • • • •

Predetermining future Selection of goals Discovering alternatives Choosing the best alternative Choosing future course of actions • Estimating the cost and resources etc.

ii.

iii.

Organizing • • • • •

Defining activities and tasks Grouping the activities in departments Designing a structure Assigning activities to the position and people Establishment of responsibility and authority

Staffing • • • •

Manpower planning Preparation of an inventory of people available Job analysis to determine job description Recruiting, selecting, placing developing, promoting, remunerating and retiring 15

iv.

v.

Directing (Leading) •

Communicating, influencing and motivating people

•

Concerned with interpersonal aspect of management.

Controlling • • •

Establishing standards Measuring actual performance Finding and analyzing deviations

• Corrective actions. Managerial Skills:

Managers need wide variety of skills. These skills can be categorized into: • Technical Skills: Ability to perform a specialized task or function. • Human Skills: Ability to go along and motivate people. • Conceptual skills: Ability to think and analyze and to relate the organization to environmental forces.

Conceptual

Conceptual

Human

Conceptual

Human

Human Technical Technical Technical Top Managers

Middle Managers

Lower Managers

Top Managers have the overall responsibility for the survival, growth and welfare of the organizations. They should have more conceptual skills. Middle managers subordinate to top managers. They implement and control plans and strategies developed by top managers. They are responsible for the activities of lower level managers. It will be better to have all three skills equally for them. Lower managers subordinate to middle managers. Operating personnel report to them. They should possess more technical skills than other two skills.

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2.2 Concept of Project Management Project management is a system approach for efficient and effective achievement of project objectives through assignment of total responsibility and accountability to a single project manager from inception to completion and coordination across functional lines with proper utilization of planning and control tools According to Harold Kerzner: Project management is the planning, organizing, directing and controlling of company resources to complete specific goals and objectives. Project Management is an alternative to the traditional management models. It is planning, implementing and controlling of complex and unique projects to achieve results within constraints in a dynamic environment.

The main characteristics of Project Management • • • • • • •

Objectives-oriented Change-oriented Single responsibility center Multi-disciplined Requires functional coordination along functional lines. Requires integrated Planning and Control systems. Achieves results within the constraints of time, cost and quality.

Key Objectives of Project Management Any project must meet several objectives. Each objective is made up of many concerns, or constraints. Project management should have a document that has all of the details of each concern spelled out.

Objective Quality Requirements

Document Specifications

Deadlines

Project Schedule

Cost limits

Project Budget

High levels of Team Project Commitment Charter/Team Commitment

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Concerns/Constraints  Definition of end product  Form, fit and function  Must complete by ----- Must start by---------- Can’t start before ---------- We can only spend -------- Bring it under --------------Your minimum profit margin is ----- We understand the purpose  Each person’s role is clear  Mutual respect and trust  Self- motivated

2.3 The Project Manager, His Roles and Responsibilities The Project Manager The project manager serves as a single responsibility center to achieve project objective within the constraints of time cost and quality. His actions “make or break” the project. He occupies a focal position in project management. He assumes total responsibility and accountability for the project from inception to completion. A project manager must manage key project stakeholders-customers, contractors, consultants, suppliers, government, labor unions, competitors and financers.

What to Manage?

• Time • Cost • Quality

Time

Cost

Quality

Where the PM stands in project control? Client Organization

Project

Manager

Project Team

What a PM should know? • • • • •

What the priorities are? What authority he has? Opportunity and facilities to do the job. Feedback-to know how he is getting on. What extent of guidance and support from the superiors? • Recognition for good program.

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Skills Requirements of Project Manager 1.

2.

3.

• • • • • • • • • • • • •

4.

Technical skills: Understanding of the technology involved Evaluation of technical concepts and solutions Communication in technical terms Assessment of technical risks, trends and innovations

Managerial Skills Planning and control skills Organization skills Decision making skills Human Resource Management skills Leadership skills

Human Relations skills Communication skills Motivation skills Negotiation and bargaining skills Conflict management skills

Conceptual Skills They are ability to relate the project to environmental forces. The project manager should have vision, foresight, judgment and intuition.

5.

Team Building skills They are ability to integrate people from many disciplines and departments into an effective team.

Roles of Project Manager 1.Diplomat: • • • • •

Maintain better relationship between project and environment Ensure political support Tackle new threats, if any Have high level of sensitivity Good negotiating skill

2.Chief Executive: • • • • •

Responsible for all action of project personnel Make things happen by active intervention Make changes if necessary Coordinate the team Controlling and allocating resources

3. Leader • • • •

•

Authority and influence Define ethics, norms and values of the team Motivating capacity Drive- be a leader Team spirit- team work 19

Responsibilities of Project Manager Responsibility is the obligation to perform duties and carry out tasks. It flows from authority. It cannot be delegated. The specific responsibilities consists of: i. Defining and maintaining project integrity ii. Selecting the project team iii. Identifying and managing stakeholders iv. Planning the project implementation v. Project organization vi. Project implementation vii. Project control and progress tracking viii. Financial management ix. Change and conflict management

Few Important Tips for Project Managers: • • • • • •

Money makes things possible, people make things happen We are not looking for fire-fighting managers, we need managers to prevent fire If you want every thing, you may get nothing If you don’t know where you have to go, any road will lead you there. Those who have no place and work in the project should not be in the project. Being a construction manager, don’t be overly defensive, keep yourself cool, conceal your frustrations, when you slip off- say so.

The down side risk of Project Management • • • •

Severe down side risks When a PM begins to fall in love more with his jobs than with his family, the result is usually lack of friends, a poor home life and possibly divorce During the birth of the missile and space programs, companies estimated that the divorce rate among PMs and Project Engineers was probably twice the national average. The followings are the characteristics of the workaholic Project Manager: o o o o o

Every Friday he thinks that there are only two more working days until Monday At 5:00 PM he considers the working day only half over He has no time to rest or relax He always takes home work from the office He takes work with him on vacations.

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3. 3.1

Project Management in Nepal

Historical Overview

Nepal is one of the least developed countries of the world. More than 38% of people live below the poverty line. The project concept in Nepal began in 1950/51 with a grant assistance of US $ 100,000 by USA. The planned development in Nepal began with the implementation of the First Five Year plan in 1956 (1956-1961). Since then, Nepal has implemented Nine Development Plans. The current Tenth plan (2002-2007) is mid-way in implementation. The financing of Nepal’s development plans has been heavily project based. Project management model appeared in Nepal during 1970. The project organization structure adopted was “Development Committee”. It was an autonomous pure project organization structure for the management of a specific project. The matrix project organization structure was also used. • The first Engineering project in Nepal was an iron bridge over the Bagmati River in 1850. • The first hydroelectric project at Pharping was completed in 1911. • The Raxual-Amlekhgang railway line was constructed in 1927. • Manakamana Cable Car is the marvel of project management in Nepal. • Kali Gandaki “A”, Kulekhani, Marsyngdi Hydro-Power projects and International Conference Hall are the Mega projects in Nepal.

3.2

Project Planning in Nepal

Most central level development projects in Nepal are planned by the donors. Most local level projects, however, are planned within the country by various agencies of the ministries or local authorities. National Planning Commission, NPC is responsible for preparation of five-year development plan. Projects are the primary means of translating development plans into action. Central level projects should have approval of NPC. Enactment of Local Self Governance Act, 1999 (LSGA) and Local Self Governance Rules, 2000 (LSGR) has made local bodies responsible for local level planning. According to the new decentralization concept, local bodies (e.g. DDCs, VDCs and Municipalities) are totally responsible for planning and implementing local level projects. These bodies, constituted of the directly elected local representatives, prepare Periodic Plans for the development of their jurisdiction by comprehensively taking into consideration of the situation, need and potential of their jurisdiction and the aspiration of the local people. Planning is Participatory and Bottom-Up. On the basis of this Periodic Plan, they prepare Annual Plans for development investment. There are sets of government guidelines for helping the local authorities undertake such planning exercises. In addition to the Annual Plans and Periodic plan, the districts are also encouraged to prepare a vision plan of the concerned district in a participatory manner. This vision plan, generally termed as the Strategic Development Plan basically defines 20-year development goals in different sectors for the district and is essentially a Perspective Development Plan. In that sense, the Annual Plan is extracted from Periodic Plan, which in turn, is extracted from Strategic Development Plan.

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3.3 Why do Projects Fail in Nepal? Project implementation in Nepal has remained poor. Most development projects have failed to achieve the desired results. Time and cost overruns are common. There are various reasons behind the failure of the projects. Some of them are as listed below: • Unclear Policy and Objectives • Weak Institutional Capabilities • Lack of Users’ Participation. • Defective Project Design • Delays in Project approval • Consultants related Problems • Procurement Delays • Delays in Contract Award • Lack of Co-ordination • Delays in Budget Release • Lack of Counterpart Funds • Poor Monitoring and Evaluation • Corruption

3.4

Improving Project Management in Nepal

Problems of project implementation are profound in Nepal. Poor implementation has been the key reason for project failure. Thus for successfully managing construction projects in Nepal, project implementation needs urgent improvement. The actions needed for this purpose are: • Formulate proper policies and guidelines • Ensure good project design • Improve financial management • Strengthen institutional capabilities • Establish PMIS system • Prepare implementation plan • Streamline procedures • Strengthen Co-ordination, Monitoring and evaluation • Control corruption and politicization.

Thank You.

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PROJECT PLANNING TOOLS 1

Work Break Down Structure (WBS)

1.1

Concept:

To develop a project schedule, the successful Project Manager must break the project down into small work components. The concept is fairly intuitive. Most people understand that any job is easier to handle when broken into smaller pieces. A Work Break Down Structure is a “tree” showing the hierarchy of the required work to be performed to complete a project. It organizes, defines and displays the work to be accomplished. In planning a project, the project manager must structure the work into small elements that are: • Manageable, in that specific authority and responsibility can be assigned. • Independent, or with minimum interfacing with and dependence on other ongoing elements. • Integratable so that the total package can be seen. • Measurable in terms of progress. The WBS is the single most important element because it provides a common framework from which: • The total program can be described as a summation of subdivided elements. • Planning can be performed. • Costs and budgets can be established. • Time, cost and performance can be tracked. • Objectives can be linked to company resources in a logical manner. • Schedules and status-reporting procedures can be established. • Network construction and control planning can be initiated. • The responsibility assignments for each element can be established. The work breakdown structure acts as a vehicle for breaking the work down into smaller elements, thus providing a greater probability that every major and minor activity will be accounted for.

1. 2 Hierarchy of Work: A job must be broken down into objectives, then into tasks, and finally into activities. Using this hierarchy of work simplifies the process of breaking down the project into its smallest components, called activities, and ensures that any of the components is not missed out. Objective: An objective is a combination of tasks that concern specific functional groups, major contractors, major subassemblies or some other logical division of the total project like major parts, skills or major resources etc.

Tasks: A task represents one of several major deliverables towards an objective. It is a combination of activities that lead to the achievement of a definable result. Activities: An activity is a time consuming piece of work with a definite beginning and end. Activities are the basic building blocks of a project, the individual actions that will be performed one at a time. To develop Work Break Down Structure: • Develop the project goal. • Define the objectives- the preliminary plan. • Have teams refine the objectives. • Have teams break down the objectives into tasks. • Have doers break down the tasks into activities. Chart-1 shows a typical example of WBS with break down of the project into objectives, tasks and activities. There is a variety of WBSs. Alternatively a WBS can be developed as composed of three components: • Work Items • Levels & • Work Packages Work Item: A work item is a manageable element at each level. Level: The level refers to the management scope, which divides a project into clearly defined elements. For example, level 0 is for end product of a project. Level 1 is for manageable elements of the project manager. Level 2 is for manageable elements of superintendent. Level 3 is for manageable elements of project engineer. Level 4 is for manageable elements of fore men. Work Packages: The units of WBS at the lowest developed level. The work package is to be performed by a single organization unit (crew), sub-contractors etc. and is the base for project element, short interval planning, and collection of expenditures. Chart-2 shows a typical example of WBS with break down of the project into work items, levels and work packages.

2

Precedence Relationships:

It is the relationship between activities based on where they occur in relation to each other. In other words, it is the sequencing of activities. There are four main logical categories that will influence the sequencing of activities. • Technical Requirements o Write before editing o Test before repairing o Frame before pouring concrete • Safety and efficiency considerations o Check preflight checklist o Disconnect power before making repairs • Policy or preference decisions o A developer may insist that landscaping of the entrance must precede the opening of sales office. Though there is no technical reasons or may even be less efficient to do so. o Vendor certification prior to contract o Preference to minority contractors • Availability of limited resources o One may not be able to commit major expenditures until revenue is realized or credit is obtained o One may not be able to hire outside experts in some fields, and have to do with in house teams.

3. Planning Tools The Planning phase of any venture involves a listing of tasks or jobs that must be performed to bring about the venture’s completion. Gross requirement for material, equipment and manpower are also determined in this phase, and estimate of costs and duration for the various jobs are made.

PLANNING

ESTIMATING

COST

DIRECT Materials Equipments Manpower

RESOURCES

INDIRECT Overheads Profits

CONSTRUCTION

SCHEDULING

Material Equipment Manpower

TASKS

COST

Activity start & finish dates

Cost Profile

Project start & finish dates Sequence of operations

RESOURCES Resource Aggregation Resource Levelling Limited Resource Allocation

SITE LAYOUT

TECHNOLOGY

Materials Equipment Manpower

Methods Organization

Scheduling on the other hand, is laying out of the actual jobs of the project in the time order in which they have to be performed. Manpower and material requirements needed at each stage of construction are calculated, along with the expected completion time of each of the jobs. Control generally regarded as “ the underlying managerial function”, begins with reviewing the difference between the schedule and actual performance once the project has begun. The analysis and correction of this difference forms the basic aspect of control. There are a number of planning, scheduling and controlling tools in use. Basically these tools are of two types- the bar chart and flow chart. The use of any particular type depends upon the situation and complexity. A separate description on each of these tools is given in following paragraphs.

3.1 Bar Chart (Gantt Chart) A graphical representation of project activities shown in a time scaled bar line with no links shown between activities. A bar chart is a scheduling technique in which activity duration is drawn to scale on a time base. A bar chart is also called a Gantt chart since it was developed by Henry Gantt. It is one of the most popular and widely used techniques for planning and scheduling activities because the graphical representation of a bar chart makes it easy to read and understand.

How to draw Bar Chart? • • • •

Listing of work activities Estimation of work duration Identifying start and completion date in calendar format Drawing each activity as a horizontal bar in chronological order according to its start date.

Advantages: • • • • • •

Easy to understand The status of the project can be assessed in a short time Easy to develop and implement No training is required Appropriate for small projects Starting point for planning

Shortcomings:

• The length of the bar indicates rough time estimate. • Difficulties in seeing immediately and exactly overall project duration if changes occur in any particular activity. • Not detail but gross planning

• It does not show specifically which activities to control and expedite and how much. • It does not depict the dependencies of activities upon each other. • Updating means to redraw the entire chart again and again.

Types of Bar Charts: Bar charts differ in the way they show planned progress on the horizontal scale, in the way they report progress and in numerous details of diagrammatic style. Three of the more common types of bar charts are discussed in some detail below. Type I: Linear Time-scaled for Planning; Linear Progress-scaled for Reporting Jan

Feb

March

April

May

Type I: Plan Bar Reporting date Jan

Feb

March

April

May

Type I: Reporting Bar • Assumes that progress on an activity is a direct linear function of elapsed time. Therefore, in planning, no attempt is made to show the physical percentage completion at any point on the bar representing an activity. • In order to report progress, a parallel bar is sometimes placed immediately below the plan bar and is initially open also. Then as the job progresses, it is shaded in direct proportion to physical work (not necessarily elapsed time) completed on the activity. • In above example, 5 months were originally scheduled for the activity and that 60% of time has elapsed by the reporting period.. However, the shaded bar reports that only 50% of the physical work in the activity has been completed. It may seem that the activity is lagging behind by 10% or by 15 days. But it may not be true. It depends upon the volume of work and resources scheduled during different months. If resources scheduled are higher towards first half, it may be lagging behind the target and if the resources scheduled are higher towards later half, it may be on or ahead of scheduled target.

Type II: Time-scaled for Planning; Time-scaled for Reporting Jan 0

Feb 10

March 30

April 50

May 80

100

Type II: Plan Bar Reporting date Jan 0

Feb 10

March 30

April 50

May 80

100

55 0

8

28

55

Type II: Reporting Jan

Feb

March

0

10

30

0

8

28

April 50

55

May 80

75

Jun 100

90

96

• Type II differs from Type I in the sense that planned cumulative progress percentages (in terms of physical work, man hours expended etc.) are written at the end of each basic time interval (generally at the top). This progress need not be uniformly linear. In above example, 50% of the work is planned to be performed in last 2 months (40% time interval). • As the activity gets underway, work completed is reported by a parallel shaded bar below the planned one. It is shaded to show the actual time worked on the activity up to the current date or to completion, whichever is earlier. Figures giving the actual percentage cumulative progress are written on the opposite side of the bar.

Type III: Time-scaled for Planning; Variable Progress-scaled for Reporting • In this type of bar chart, work completed is reported by shading in alternating areas in the lower and upper portions of the bar, one for each basic time interval worked.. The segments are shaded in proportion to the physical work actually performed during the basic time interval compared with the scale for the basic time interval in the range being shaded. It is important to recognize that the scale of progress generally changes during each basic time interval considered unless progress is indeed a direct linear function of time. Jan 0

0

Feb 10

Mar 30

8

50

28

55

April

May

80

100

75

The End

90

June

July

96

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CPM/PERT Networks CPM/PERT Networks are flow charts and are sometimes called network diagrams. Critical Path Method (CPM) is a graphical network- based scheduling technique that evolved in late 60’s. US Government agencies insisted on their use by contractors on major government projects. Basic concepts of CPM such as activities, events and predecessors have become a regular part of the language of Project Managers. CPM enables planners and managers to thoroughly analyze the timing and sequential logic of all operations required to complete a project. In the 1950s, the US Navy developed the project management tool known as PERT (Project Evaluation and Review Technique). In the same decade (in 1956) CPM (Critical Path Method) was developed jointly by Engineers at DUPont and Remington Rand. Since the mechanics of the two approaches are so similar, they are now commonly referred to as CPM/PERT. The most obvious difference between the two is that PERT recognizes uncertainty in activity duration by the use of optimistic, pessimistic and most likely durations, whereas CPM makes only one time estimate for an activity- the most likely duration. In PERT, three duration estimates for each activity is developed. These are: • The most Optimistic duration: duration of an activity if all went right, without any problem. • The most pessimistic duration: duration of an activity if everything went wrong. • The most likely duration: duration of an activity based on experience of what usually happens- something went wrong and some thing right. A probability is attached to each estimate, and the final duration is derived from a stochastic formula: Final Duration= D0P0 + Dp Pp + Dc Pc Where, D0 is the most optimistic duration P0 is the probability of D0 Dp is the most pessimistic duration Pp is the probability of Dp Dc is the most likely duration Pc is the probability of Dc CPM is most often used in commercial projects. It differs from PERT only in the duration estimating technique. As CPM requires only one duration estimate; it sure do save a lot of time and effort. In practice, however, both PERT and CPM are used synonymously. 1

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PERT is used more in research and development projects and CPM is used more in projects such as construction, where there has been some experience in handling similar endeavors. Project characteristics that are essential for analysis by CPM are: • The project consists of a well-defined collection of jobs, or activities which when completed mark the end of the project. • The jobs are ordered, that is they must be performed in technological sequence. PERT/CPM charts can be drawn in one of two ways: • Activity on Node (AON Diagram): Each activity is represented by a node/box. Example: Activity A precedes activities B and C. E cannot start until both B and C are finished. B precedes D. D and E must finish before F can start. G must wait for F to finish. B

D

A

F C

G

E

• Activity on Arrow (AOA Diagram): Each activity is represented by an arrow Example: In the above example, the AOA diagram will be as shown below. A

B

D

C

F

G

E

Sometimes dummy activity (which requires neither time nor resources) is introduced. It is required to properly show the logic of an arrow network to provide unique labeling. The nature of the relationships conveyed by the dummy activities is not readily clear. For example, the dotted arrow on the far left representing finish to start between A and C could also mean start to start between B and C, which is not true in this case. For these and other reasons, the AON technique is generally used and for our purpose also we will describe PERT/CPM networks in AON only in this chapter.

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The Critical Path So far the only logic element in CPM networks has been discussed. The second main element is time. In general, these schedule calculations involve the following steps: i. Estimating Durations Once all activities in a project have been defined and organized into a logical CPM network, their durations must be estimated. An activity’s duration is the expected amount of time that will be required to complete the activity from start to finish. ii.

Forward Pass:

The calculation procedure called the forward pass establishes the earliest start and finish times for each activity in the network. The following nomenclature and relationship is used in the discussion of the forward pass: Early Start (ES): The early start of a job in a project is the earliest possible time that the job can begin. Early Finish (EF): The early finish of a job is its early start time plus the time needed to complete the job. The “Forward Pass” yields an ES and EF for each activity, and the earliest finish date, T for the project. S= Start time of project (usually =0) ES (a)= S for all beginning jobs, or ES (a)= Max {EF (all predecessors of a)} EF (a)= ES (a) + t (a) T= Max {EF (all jobs)}= Earliest finish time for project The set of rules that defines the procedure for the forward pass calculations is called an algorithm. iii.

Backward Pass:

The calculation procedure called the backward pass establishes the latest allowable start and finish times for each activity that will still permit the overall project to be completed without delaying beyond the scheduled completion date. The following nomenclature and relationship is used in the discussion of the backward pass: Late Start (LS): It is the latest time the job can begin without pushing the finish date of the project further into the future. Late Finish (EF): The late finish of a job is its late start time plus its duration. The “Backward Pass” yields LS and LF for each activity, and the finish times for all jobs. 3

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LF (a)= T for all ending jobs, or LF (a)= Min {LS (all successors of a)} LS (a)= LF (a)-t (a) iv.

Total Float/Slack

The total float or total slack for an activity is the maximum amount of time that the activity can be delayed without extending the complete time of the overall project. However, such a delay might postpone the early start of one or more of its following activities. Total slack of a job activity is the difference between its late start and early start times (or equivalently, as the difference between its late finish and early finish times). TS= LS- ES or LF-EF v.

Free Float/Slack

Free float is the maximum amount of time an activity can be delayed without delaying the early start of any of its followers. For calculation purpose, the free slack of a job is the difference between its early finish time and the earliest of the early start times of all its immediate successors. Free slack, of course, can never exceed total slack; moreover, all jobs that have total slack do not necessarily have free slack. In general, a job has free slack if it has more total slack than one of its immediate successors. FS (a)= Min {ES (immediate successors of a)} –EF (a) vi.

Critical Path

A critical path is a continuous chain of activities from the beginning to the end of a network with the minimum float value. In the case where the target project completion time is set equal to the early project completion time, a critical path will have Zero Float. In other words the longest path through the network is called the critical path.

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Example: Draw AON diagram indicating ES, EF, LS, LF and earliest finish time of the project having the activities, durations and precedence relationship as shown in the table below. Activity Duration Predecessors A 6 B 3 A C 4 A D 9 A E 12 F 8 G 3 B, D H 6 C, D I 4 C J 4 E K 3 E L 1 E M 6 G, H N 7 H O 4 N, I, J P 2 K, L

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Construction of Arrow Networks Example

Activity

Duration

Predecessors

Followers

A B C D E F G H K L M

3 2 1 4 4 3 5 3 3 1 2

A A C B, E B, E B, F D, G, H G, H

D, E G, H, K F L G, H K L, M L, M -

Equivalent Precedence Network

D

L

A E

G

Start End B

H

C

K

F

1

M

MR Gelal FPM, Class Note VI

AON Diagram

D

L

A G

E Start

B

H

M

Start S=0

End Finish Time T= 14

C

F

K

2

MR Gelal FPM, Class Note VI

AOA Diagram 9

2 7

1

3

8

5

4

6

3

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Forward Pass D (x) = Estimated duration for activity x ES (x)= Earliest start (expected) time for activity x EF (x)= Earliest finish (expected) time for activity x S= Project start time ES (Initial Activities) =S ES (x) = Maximum (EF (all predecessors of x)) EF (x) = ES (x)+ D (x)

Backward Pass D (x)= Estimated duration for activity x LS (x) = Latest allowable start time for activity x LF (x) = Latest allowable finish time for activity x T = Target project completion time LF (End Activities) =T LF (x)= Minimum (LS (all followers of x)) LS (x) = LF (x)- D (x)

Total Float The Total Float for an activity is the maximum amount of time that the activity can be delayed without extending the completion time of the overall project. However, such a delay might postpone the early start of one or more of its following activities.

Total Float for Activity x, TF (x) = LS (x)- ES (x) = LF (x)- EF (x)

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Free Float Free Float is the maximum amount of time an activity can be delayed without delaying the early start of any of its followers.

Free Float for Activity x, FF (x) = Minimum (ES (all immediate followers of x))-EF (x) All activities on the critical path have zero float- Total or Free. Free float for any activity is always less than or equal to the total float.

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MR Gelal FPM, Class Note VI

THE S-CURVE S-Curve is one of the popular planning tools. S-Curve graphically plots some measure of cumulative progress on the vertical axis against time on the horizontal axis. Progress can be measured in terms of money expended, quantity surveys of work in place, man-hours expended, or any other measure which makes sense. Any of these can be expressed either in terms of actual units (Rupees, Cubic meter, etc.) or as a percentage of the estimated total quantity to be measured.

Why does it look Like S? On most projects, expenditures of resources per unit time tend to start slowly, build up to a peak, and then taper off near the end. This causes the slope of the cumulative curve to start low, increase during the middle, and then flatten near the top. After signing a construction contract, the contractor has to prepare himself for the work. Also minor works are started which takes time to gain momentum. After the period of slow start, when the contractor mobilizes him fully, the rate of progress accelerates remarkably and for quite sufficient duration, the rate of progress is constant. Finally, a falling off of this rate of progress is marked when the project is towards completion. Contractor reduces his manpower substantially and activities are limited to finishing, testing and commissioning. By this, for any project, if we draw on a graph, we find a figure having S- shape.

Cumulative Cost

S- Curve

Time

Traditionally, the curve was being used to plan the budget and cash flow only. It was drawn for cumulative schedule of cost on vertical scale and time duration on horizontal scale. But now, we have started using it not only to plan overall cost of the project, but also to plan man-hours, physical percentage completion, individual items of work and so on. In that case

6

MR Gelal FPM, Class Note VI the vertical scale represents man- hours, physical percentage of work completed etc. and horizontal scale always represents the time.

Example: An airport construction project has to move 10,000 cubic meter of earth within 10 days. The daily excavation quantities are as shown in figure 1 below. Summing all the daily excavation quantities through any particular day gives the cumulative quantity by that day. For example, by the end of day 5, the cumulative quantity is the sum of excavation on days 1, 2, 3, 4 and 5. That is = 200 + 600 + 1000 + 1400 + 1800 = 5000 The shape of S- Curve can be seen by connecting the points at the end of each days cumulative production as shown in figure 2.

Figure 1

Figure 2

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MR Gelal FPM, Class Note VI

LINE OF BALANCE Line of Balance is a graphic technique used for project planning and control to depict timequantity relationships. They apply best to linear and repetitive operations such as tunnels, pipelines, highways and building projects. The vertical axis typically plots cumulative progress or percentage completed for different systems of a project, such as the structural, electrical, mechanical and other trade sub contractors on a high-rise building. The horizontal axis plots time. An example may be, clearing, excavation, stringing, welding, pipe laying, and backfill operations on a pipeline. As long as the slopes are either equal or decreasing as one moves to the right, the project should proceed satisfactorily. However, if early scheduling shows one operation proceeding too rapidly, with a high slope compared with those preceding it, the time and location of the first conflicts become rapidly apparent. To illustrate this, figure 3 shows the eighth operation starting to conflict with the seventh, when each is about 70% complete. 100%

Time

8

MR Gelal FPM, Class Note VI

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MR Gelal FPM

Linked Bar Chart Linked bar chart is a modified version of Gantt bar chart. It was developed to overcome some of the inherent limitations of bar chart. It shows the links between an activity and the preceding or succeeding activities. The linked bar chart has advantage of exhibiting the effect of delay on succeeding activities and also it can provide some information of the extra time available (if there is) with an activity for its completion. The extra time available for an activity for its completion is called float. Similarly, the activities, which do not have extra time for completion, are called critical activities. It is to be noted that linking bars are very complicated, difficult and sometimes impossible to show graphically. An example of linked bar chart is presented below. Example:

Activity

Duration

Predecessors

Followers

A B C D E F G H

4 3 2 2 7 3 8 8

A A B B C D E, F

B D F G H H -

Corresponding AON and CPM Network

D

G

B E Start

End

A

C

F

Corresponding Linked bar Chart is as given in figure 1 below.

1

H

MR Gelal FPM

Milestone Chart A Milestone Chart is an improved version of a bar chart in which some of the limitations of bar chart are eliminated. As Henry Gantt invented it, it is called Gantt Milestone Chart. Combined activity bar charts can be converted to milestone bar charts by placing small triangles at strategic locations in the bars to indicate completion of certain milestones within each activity or group of activities as shown in figure below. A milestone implies some specific stage or point where major activity either begins or ends, or cost data become critical. Figure (a) shows a bar chart of a project, which involves four tasks or activities or jobs viz. Task I, Task J, task K and Task L and figure (b) shows the corresponding Milestone Chart. It may be seen that in a milestone chart the long time activities or jobs or tasks are identified in terms of specific events or milestones which are plotted against the time scaled indicating their accomplishments by specified times. Each bar in a milestone chart again represents an activity or job or task and all the bars taken together represent the entire project. A milestone chart shows relationship between the milestones within the same activity or job or task. It may be seen from fig. (b) that Milestone 2 can not be started until milestone 1 has been accomplished. Thus as compared to bar chart better control can be achieved with the help of a milestone chart, but it still possesses the same deficiency that it does not depict the interdependencies between the various tasks or the relationship between the milestones of different tasks.

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MR Gelal FPM

Earned Value Analysis Any deviation in schedule, performance or cost from the plan or from the set standard to the actual accomplishment is called variance. In the past the conventional method of control analysis was variance analysis. This measures the difference between two factors by subtracting one from the other to give a positive or negative variance. It can be used to show differences between actual progresses and planned, and the resources used against estimate or budget. For example, the followings are common variances in the control of projects: • Scheduled start vs. Actual start • Scheduled finish vs. actual finish • Scheduled time for an activity vs. actual time • Scheduled date of milestone vs. the actual date when the milestone was reached • Budgeted cost vs. Actual cost • Measured value vs. Actual cost • Budgeted man-hours vs. Actual man-hours • Budgeted unit cost vs. Actual unit cost Although still used extensively today, variance analysis must be supplemented by other methods, as it is an inadequate, often misleading, and sometimes meaningless, guide to progress and performance. For example, consider a simple case where out of total project cost of NRs. 25,00,000, the budgeted expenditures to date on a project is NRS. 850,000 and actual expenditure is NRs. 900,000, giving a variance of NRs. 50,000. All this tells us is that expenditure is ahead of budget. It does not give us any of the following information: • Whether we are on, above or below the expected cost performance. • What will be the likely final cost of the project • Whether we are on, behind or ahead of schedule • What will be the likely completion time of the project Thus variance analysis, when used on its own is an ineffective way of analyzing and reporting project progress and performance.

Performance analysis based on Earned Value The modern methodology used in analyzing project progress and performance uses ‘Performance Measurement’ based on ‘Earned Value’ concepts, which integrates cost and schedule on a structured and personalized basis. There are actually three elements of data required to analyze performance, from which more information can be extracted than from than two-element variance analysis. These elements are: • Budgeted Cost of Work schedule (BCWS) = NRs. 850,000 • Actual Cost of Work Performed (ACWP) = NRs. 900,000 • Budgeted Value of the Work Actually Completed, i.e. Earned Value (EV) =NRS.750, 000 In addition the completion time of the project is 50 weeks (say).

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Cost variance CV Cost Variance CV, is the difference of Budgeted Value of Work performed (Earned Value) and Actual Cost of Work Performed. It can be expressed as:

CV= EV-ACWP Negative value of CV indicates Cost Overrun. In the above example, CV is, = NRs. 750, 000- NRs. 900, 000 = NRs. (-) 150, 000 The project is NRs. 150, 000 over budget!

Cost Performance Cost Performance can be obtained by dividing Earned Value EV by Actual cost of Work Performed ACWP. It can be expressed as:

Cost Performance = EV/ACWP In the above Example, Cost Performance = NRs. 750,000/NRs. 900,000 = 0.8333 The project is obtaining 83.33 Paisa of Earned Value for every Rupee expended, that is cost performance is 83.33% of that planned. Final Cost Forecasting= NRs. 25,00,000/ 0.83333 = NRs. 30,00,000 The project will be NRs. 500,000 over budget, if there is no change in performance.

Schedule Variance SV Schedule Variance SV (In cost terms), is the difference of Budgeted Value of Work performed (Earned Value) and Budgeted Cost of Work Schedule (BCWS). It can be expressed as:

SV= EV-BCWS Negative Value of SV indicates time overrun. In the above example, SV is, SV (In cost terms)= NRs. 750,000- NRs. 850, 000 SV (In cost terms)= NRs. (-) 100, 000 The Project is equivalent of NRs. 100,000 behind schedule.

Schedule Performance Schedule Performance can be obtained by dividing Earned Value EV by Budgeted Cost of Work Schedule BCWS. It can be expressed as:

Schedule Performance= EV/BCWS In the above Example, Schedule Performance = NRs. 750,000/NRs. 850,000 = 0. 8823 Schedule Performance is only 88.23 % of that planned. Final Completion Time Forecasting= 50 weeks/ 0.8823 = 56.67 Weeks The project will be 6.67 weeks late, if there is no change in performance.

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Resource Allocation and Leveling Resource Any consumable, except time, required to accomplish an activity, such as labor, materials, equipment, machinery, tools and shop space are the resources for the project. Resource requirements are estimated at the activity level based on project/activity documentation and achieved productivity or production rated under the stated environmental and managerial conditions. More than one resource needed is to be estimated. These resources may be constant over an activity’s duration or may be variable in intensity. Having estimated the resources needed for the activities considered, and based on the CPM diagram already developed, the project team will develop a schedule with no resource constraints. Project resources all have certain characteristics that differentiate them in specific categories for further analysis. 1. Stock ability 2. Required/ Availability resource intensity • Constant Intensity (Uniform Requirement) • Non uniform Intensity (Non uniform requirement) 3. Resource Complexity.

Resource Aggregation Resource aggregation is a method of calculating needed resources at the project or multi project level for each time unit to enable implementation of the plan. During this process, no limitation on available resources is considered. Most CPM –oriented software on the market is capable of performing aggregation or finding daily (time unit) project requirements for all resources estimated as needed to implement the plan.

Resource Aggregation Process The step-by-step procedure for obtaining resources histograms for a given project with or without computer usage are as listed below. 1. A project CPM network using the arrow or precedence technique is developed. 2. The required resources/activity are limited; sometimes more than one resources / activity is specified. 3. The CPM network is computed considering Early and Late start schedule. 4. A bar chart in ascending order of early or late activity start is developed. 5. For each specified resource for each project time unit, the total daily-required resource is calculated. 6. For each resource, based on requirements per project time unit, histograms are developed. (for both ES and LS schedule). 7. For each resource analyzed, cumulative curves for early start and late start schedules are developed on the same plot.

Resource Allocation Resource allocation is the distribution of available resources to different activities on different dates and in different quantities is. It is usual in planning a project; a planner has to consider not only the activity precedence relationships but also the availability of the resources. While allocating resources, the planner tries to distribute (allocate) the resources from non-critical activities to critical activities so that important activities (having no floats) can be continued without affecting the project completion date. 1

MR Gelal FPM

Resource Allocation Process Many of the constraints hedging in a plan will have origins in the limitation of total resources or in the proportion of total resources that can be committed to a project. Resource allocation procedures or programs allocate available resources to project activities in an attempt to obtain the shortest project schedule (completion date) consistent with fixed resource limits. For project managers, one of the most challenging tasks is allocating resources that are available only in a fixed amount for a given period. The first step of the process is to identify project required resources with limited availability and the periods of availability. • Available resources with constant intensity for long period of time or project duration (e.g., a tower crane for lifting materials for a multistory building). • Available resources for shorter or cyclic periods o Stock able resources (if not used today, can be used in future) o Non-stock able resources (if not used when allocated, incur extra costs in future) To reach the best use of resources, the utilization factor of the allocated resources is desired. The additional cost directly associated with utilization of allocated resources fall in one of the following categories: • Cost of hiring or requiring additional resources • Cost of idle labor or equipment • Cost of delay to other activities not having enough resources to schedule the work. The quality of allocation decision can be measured through a resource utilization factor. A utilization factor of 1 for the project is considered best. A simple procedure is presented for understanding the allocation procedures that lead to a more realistic schedule. • The resource availability limits are known for the entire project duration. • Starting with the first day of the project, consider all activities that can be scheduled and select the one with the highest priority. The most common priority criterion is the earliest start and minimum total float. • If an activity meets the allocation criterion and there are available resources in the pool, schedule and assume that the activity will not be interrupted until completion. A more complex procedure considers the possibility of interrupting an activity after its start and rescheduling the remaining position at a later date.

Resource Leveling Resource Leveling is the method of scheduling activities within their available float so as to minimize fluctuations in day- to- day resource requirements. By resource leveling, we try to optimize the use of resources required to complete a project. Resource leveling helps in obtaining uniformity (so far as possible) in resource requirement throughout the life of a project. The benefit of resource leveling is to ease resource management so that cost involved in managing resources can be minimized.

Resource Leveling Process: i. ii. iii. iv.

Identification of what type of resources on what dates and on what quantity. Preparation of Resource Histogram of the resources required for each activity in a time series. Shifting of activities having floats for resource allocation/leveling. Sometimes, resource allocation/leveling may require extension of total project duration also. 2

MR Gelal FPM,

Limited Resource Scheduling The completion of a construction project at maximum efficiency of time and cost requires the judicious scheduling and allocation of available resources. Men power, equipment and materials are important project resources that require close attention. The supply and availability of resources is seldom be taken for granted due to seasonal shortage, labor disputes, equipment breakdowns, competing demands, delayed deliveries and many other uncertainties. Nevertheless, if time schedules and cost budgets are to be met, the work must be supplied with the necessary men, equipment and materials when and as they are needed on the job site. The project manager has to identify and schedule the future job needs so that the most efficient employment is made of the resources available. He must establish what resources will be needed, when they must be on site and the quantities required. He should have detailed compilation of resource requirements. If it appears that there will be adequate numbers of resources available to satisfy these projected requirements, the work presumably goes according to established schedule and no adjustment of the job completion date is required. If the resources requirement discloses that demand will exceed the supply, remedial measures to combat inadequate resource supply is to be made. If there are conflicts among project activities for the same resource items, rescheduling the non- critical activities will often solve the problem. Most project managers are faced with • The problem of relatively fixed manpower availabilities, a certain number of machines or other pieces of equipments, and – considering money as a resource- a limited budget. • Jobs that occur on parallel paths through the network may compete for the same resources, and even though precedence constraints would not prevent their being scheduled simultaneously, a limited supply of resources might force them to be scheduled sequentially.

Example: Consider the small project plotted as a schedule graph with a horizontal time scale. The horizontal length of each activity arrow represents its duration and the number above the arrow represents its manpower resource requirement. Assume that there are only 10 men available on any day. In modified schedule, the completion time has increased from 6 to 7 days. The resource limit has resulted in a delayed completion date. (See graph in next page)

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MR Gelal FPM,

The complexity of Project Scheduling with Limited Resources Problems of resource scheduling vary in kind and in severity, depending upon the nature of the project and its organizational setting. • In some cases there may be just one key resource- perhaps a large crane- that is bottleneck in scheduling a project. • Activities must be scheduled so that no two of them requiring the same facility occur at the same time. • Or perhaps there is relatively small number of resources, whose limited availability must be jointly considered in scheduling. • At other extreme are projects requiring many resources, most of which are available in fixed, limited amounts. • The problem of scheduling activities so that none of the resource availabilities are exceeded and none of the precedence relations are violated is a exceedingly difficult task for project of even modest size. This is especially true if one tries, simultaneously, to minimize project duration or meet some other reasonable scheduling criteria. Resource leveling program attempts to reduce peak resource requirements and smoothen out period-to-period assignments, within a constraint on project duration.

Resource Leveling of Project Schedules • • • •

2

In most project situations resources can be acquired or released in practically any desired amounts if one is willing to pay expenses involved in changing resource levels, such as the costs of hiring, training, unemployment insurance, and so on. It is usually prudent, however, to maintain relatively stable employment levels and to utilize resources at a more constant rate. The activity slack is a measure of flexibility in the assignment of activity start times. The scheduler may use activity slack as a means of smoothing peak resource requirements. One has to start by calculating an early start schedule for the project and then plotting a resource loading chart for the schedule. (See Example 2 in next page)

MR Gelal FPM,

Resource Requirement/ Availability and Economics of Project Completion Date 1. The projects required resources can be satisfied at normal prices. The recommendation is to adopt the early start schedule and target the project early completion date.

2. If the project requirements cannot be satisfied at the normal price level. Maintain the project completion date, reschedule the activities, and target the project contractual due date (Project late finish date)

3. If the early schedule resource requirements can be satisfied using the resource Premium -price level (if economical). The planner may choose this solution, targeting early completion. 4. If project resource requirements can not be satisfied at the premium- price level

by implementing an activity early start schedule but it will be possible to complete the project by contractual due date. There is no alternative.

3

MR Gelal FPM, Class Notes 10

Project Monitoring and Control 1.Concept Monitoring and evaluation (M & E ) are of critical importance for achieving the objective of the project and are among the most challenging tasks faced by the Project Managers. They are tools for effective project management. Monitoring and Evaluation are related but distinct activities.

Monitoring: Monitoring refers to timely gathering of information to review project implementation. It is usually an ongoing activity throughout the life of the project. It is management review of project implementation to ensure that project inputs, schedules, outputs and other actions are proceeding according to the plan. It is done during the project implementation phase. Some definitions: • Meredith and Mentel Monitoring is collecting, recording and reporting information concerning any and all aspects of project performance that the project manager or others in the Organization wish to know. • David I. Cleland Monitoring means to keep track of and to check systematically all project activities. Monitoring is a feedback mechanism.

Evaluation: Evaluation is an objective and systematic process for determining relevance, efficiency, effectiveness and impact of project in the light of its objective. Evaluation can be on- going, terminal or ex-post. Evaluation is used to improve project implementation or to improve future project planning and decision-making.

2 Project Monitoring and Evaluation in Nepal The UNDP/World Bank developed the existing project monitoring and evaluation system in Nepal in 1993. It is common to all sectors. It consists: • A system of weighting. • Indicators for financial and physical performance. • The monthly and trimester performance reports related to financial and physical performance of projects from Line Ministries serve as the heart of monitoring system. • Projects are divided into: o Priority Projects o Other Projects  The Central Monitoring and Evaluation Division of NPC monitors priority Projects. Monthly and Trimester reports, supplemented by ad-hoc field observations of projects by NPC staff, serve as the source of information for monitoring. Problems of project implementation are identified.  Sector- wide problems are discussed in National Action Development Committee (NDAC) chaired by the Prime Minister on a trimester basis.  The non- priority projects are reviewed by the respective line ministries in the Ministry Action Development Committee (MDAC) 1

MR Gelal FPM, Class Notes 10

3. Logical Framework for M&E A logical framework is generally used for monitoring and evaluation. It evaluates cause and effect relationships and assumptions and risks of the project. The logical framework evaluates three sequential relationships:

Inputs to Outputs Outputs resulting from inputs. For example, construction of Cold Storage facility for Apple Promotion Project.

 Outputs to Effects Effects resulting from project outputs. For example, ability of storing apple for a long time with out damage is an effect of cold storage facility.

 Effects to Impacts Impacts resulting from project effects. For example, higher income to farmers due to higher price of apple in the market during off-season is the impact of apple storage. The assumptions and risks are evaluated as to their validity. They cannot be controlled by the project. Performance Benchmarks serve as the standards for monitoring and evaluation purposes. A logical framework matrix for each project is prepared for planning, monitoring and evaluation purposes as shown in the box below. Narrative Summary

Objectively Verifiable Indicators Per Capita Income Objective (Increased by 2010 will be economic growth NRs. 25000 through economic (PCI now is NRs. reform) 11000)

Effect/Purpose (Increased Production and productivity through modernization and professionalism in agriculture and livestock) Outputs (Area irrigated by X Irrigation Project) Activities

Means of Verification

Nepal Human If assistance from Development donors continues Report published after If the present 2010 situation of Sample Surveying insurgency improves. Reports of CBS

Rice Production Reports of DADO by 2010 shall be Records of DIC 50,000 MT (Present Production 36,000MT)

3000 Hectors

Assumptions and Risks

If the present Agriculture/Irrigation/Subsidies Policies of HMG/N and the norms and programs continues If assistance from donors continues

Project completion If assistance from report of DOI continues

Inputs

2

donors

MR Gelal FPM, Class Notes 10

Key Concepts in Logical Framework o Objective: Desired outcome of the project o Purpose: Effect or impact of the project. o Outputs: Deliverables of the project o Activities: Tasks that must be undertaken to accomplish outputs. o Objectively Verifiable Indicators (OVIs): Targets in terms of quantity, quality and time (QQT) to measure actual performance. o Means of Verification (MOV): Sources of information that provide the basis for monitoring and evaluation of the project. o Assumptions and Risks: External factors beyond the control of the project.

4. Concept of Control: Control, generally regarded as “ the underlying managerial function” begins with reviewing the difference between the schedule and actual performance once the project has begun. The analysis and correction of this difference forms the basic aspect of control. It ensures that the right things are done in the right manner and at the right time. Control is measuring, evaluating and correcting actual performance to achieve planned targets. Some definitions:

Koontz and Weihrich Controlling is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished.

Ivancevich, Donnelly, Wilson: Controlling consists of actions and decisions managers undertake to ensure that actual results are consistent with desired results. Control is interrelated with planning. Planning provides standards for control. Control measures actual performance and compares it with standards to identify deviations. Deviations are analyzed to take corrective actions. Control is a continuous process. To be effective, it should give attention to critical control points or benchmarks where deviations adversely affect the attainment of targets.

Types of Control: I.

Pre- Control (Feed-Forward Control): It is inputs- based. It is initiated before the start of the activity. It anticipates problems in advance and takes preventive corrective actions. Example: Specification for Quality Control, Acquisition of right human resources.

II.

Concurrent Control (Yes/No Control): It is transformation- based. It is initiated during the implementation of the activity. It ensures that operations are being conducted according to plans. Problems are corrected as they arise. Example: Quality control from process to process. 3

MR Gelal FPM, Class Notes 10

III.

Post Control (Feedback Control): It is output-based. It is initiated after the completion of the activity. It is based on feedback of performance results. Example: Financial analysis.

5 Project Monitoring and Control cycle Control is a cyclic process. Figure below shows project monitoring and control cycle.

Planning / Replanning (Setting standard)

Corrective Actions Goals

Measuring Actual Performance

Finding and Analyzing Deviations

i.

Setting standards (What should be done?) • • • • •

Planning sets standards for performance Starting point of control Targets of performance Standards can be in terms of quality, quantity, costs, income and time. Standards should be clearly understandable and reasonable.

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MR Gelal FPM, Class Notes 10

ii.

Measuring Performance (What actually was done?)

• • •

iii.

Finding Deviations (Extent and Causes of Difference)

• • • • •

iv.

6.

Measurement of actual performance within a given period Continuous on going process to get feedback Internal reports relating to quantity, quality, costs, income, time etc., provide information about actual performance.

Comparison of actual performance with standards Performance can be equal to, be higher, or be, lower than standards The magnitude of deviation is identified The causes and incidence of deviation are analyzed The responsibility for deviation is located

Corrective Actions (Future Standards)

• •

Corrective actions are taken The actions can beo Do nothing, if deviations are within the allowable tolerance o Corrective actions (More training, better raw materials, design improvements, greater motivations etc.) o Change standards (Standards are revised to make them appropriate and realistic)

Prerequisites of Control system The prerequisites of control system are: • • •

Planning: Control is not possible with out planning. Information System: Control is based on feedback of performance information. Organization Structure: Control requires a structure with people and clearly defined

authority-responsibility relationship to collect performance information and analyzing. • Flexibility: Should be flexible and capable of adjusting to environmental changes. • Participation: Control should be based on participatory approach. • Timeliness: The reporting and feedback for control should have timeliness. There is no point in “ bringing a doctor after death”.

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MR Gelal FPM, Class Note 11

Project Monitoring and Control 1.

SCHEDULE CONTROL

Time is one resource that we manage and control; it is non-renewable. Schedules are a graphical representation of time management on a project. Control of project progress is an on-going activity. Progress must be marked on the plan for every one to see; it should be reported from site and must be supplemented by the report on expediting procurement activities so that reliable updated reports can be prepared at regular intervals. During the process of implementing the plan according to the schedule, we may come across one or more of the following possibilities: • that some or all activities are progressing according to schedule; • that some or all activities are ahead of schedule; and • that some or all activities are behind schedule. If all activities are progressing according to the schedule, there is no need for updating the network but this is seldom the case. Therefore, based on the progress of the work and the revised durations of unfinished activities due to delays, the schedule has to be redrawn.

1.1

Marking Project Progress Information

Progress information can be displayed on a project network or bar chart as shown in figure 1 below. A thick line can be used above an activity line to show extent to which the activity has been completed. Since the bars are drawn to scale, the length can shoe the status of activities on a certain day. Notice in figure 1 above that activities 1-3, 3-4 and 2-4 are behind schedule. Activity 6-7, on the other hand, is 50% complete and two days ahead of schedule. On the day of update, a vertical line is drawn through the bar chart to indicate how far the project should have progressed. The use of such control information in a format that enables easy visualization of the activity status enables all members of the project team to predict future events more accurately, weather favorably or unfavorably.

1.2

Updating

When the progress report has been received from the site, it is necessary to compare it with the original schedule. Although the duration of each activity can be compared with its planned duration, this does not give an accurate picture of actual performance. For a clear understanding of what a delay on an activity means to the complete project plan, it is necessary to perform an update. In effect this involves entering the progress information into the network plan and analyzing the network with this added information. Updating is carried out to accommodate configuration changes, to assign a new target date instead of a previously planned target date, and to reflect remedial actions designed to correct deviations in order to predict their effect.

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MR Gelal FPM, Class Note 11 Updating CPM Network: Process The CPM networks previously developed in planning can be used to aid planners and managers in decision making during controlling process. When the project is partially completed and is at an intermediate stage, it may be possible that: • the time durations originally assigned for some activities were erroneous and • the planner may himself feel it desirable as a result of experience or he may be enriched with additional information, or compelled by some changes in original schedule due to various reasons, to reconsider and re-estimate duration times of activities not yet being performed. Now, new information and considerations can be placed on the original network and fresh calculations are made for controlling the project. The process of replanning and rescheduling based on the results which serve as a guidance for decision by performing calculations made by taking into consideration the new knowledge and latest information at an intermediate stage of the project thus modifying the original network, is known as the process of Updating.

Data Required for Updating The following information is necessary to update the plan at an intermediate stage of execution of a project: • Original network • Original network calculation chart • Stage at which updating is being done • Execution position of the project at that stage and • New information and knowledge, that affects the duration time of the activities to be performed.

Steps in Updating Process: 1. DESCRIBE: updating point as per the original plan 2. RECORD: what has happened actually till that point 3. SUMMARIZE: the knowledge attained in the tabulated form 4. PLACE: the information contained in the updating table on to the original network. Assigning the time of update as the earliest occurrence time for the tail event of the project Allocating a zero time duration for all activities which have been completed Entering the remaining estimated durations of those activities which are in progress; and Entering the estimated durations based on new knowledge of activities which are still to be Commenced. 5. PERFORM: calculations of earliest occurrence time and latest occurrence time and mark these on the network known as updated network. The updating cycle is as shown in figure 2 below.

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MR Gelal FPM, Class Note 11

Re-plan / Reschedule Project Network

Compare Progress to Schedule: Is it Satisfactory?

Issue Directions

Report Progress

Record and Assess Progress

Execute the Project

Project Completed Figure 2: Updating Cycle

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MR Gelal FPM, Class Note 11

Illustrative Example: The network of a project shown below is to be updated at the end of 12 days. The following conditions exist at the time of updating. • Activity 1-4 was completed as originally planned. • Activity 1-3 was executed more rapidly than originally scheduled, and it took 8 days for its completion. • Activity 3-4 commenced following the completion of activity 1-3 and was finished at the end of 11th day. • Activity 4-5 was commenced following the completion of activity 13 (i.e., at the end of 11th day), and still requires 6 more days for its completion. • Completion of activity 1-2 was delayed drastically, and it still requires 10 more days for its completion. • Activity 2-7 will commence following the completion of activity 1-2 and will require 9 days for its completion instead of 6 days originally estimated. • The time required to perform activity 5-8 has been revised based on the experience on the project gained to this point. It now requires 10 days in the place of 6 days originally planned. • No other activities have been started, and the original time estimates for these activities still appear to be accurate. Update the network, and determine the revised critical path. TE =8 TE =23 2 7 TL =24 TL=18 TE =20 TE =13 TL =13 TL =20 TE =29 1

4

5

TE =0 TL =0

TL=29

3 TE =10 TL= 10 4

6

TE =24 TL =24

8

MR Gelal FPM, Class Note 11

Solution: Figure above shows the original network, with TE and TL marked. The critical path, shown by dark lines is along activities 1-3, 3-4, 4-5 and 6-8.Table below gives the details of execution of the various activities at the end of 12 days. The updated network can now be drawn on the basis of data of columns (1), (2), (4) and (5) of the above table. For those activities, which have already been completed, completion time t is taken to be zero, since they require zero time after the 12th day. Also the earliest event time (TE) and latest occurrence time (TL) of each event is computed with reference to the original date of the project. This can be best achieved by taking TE for event 1 as equal to 12.

Table: Review after 12 days Activity

(1) 1-2 1-3 1-4 2-7 3-4 4-5 5-6 5-7 5-8 6-8 7-8

Whether completed or not Yes/No If yes, time taken (days)

(2) No Yes Yes No Yes No No No No No No

(3) 8 5 3 -

Additional Completion time required time required for activities for activities in progress yet to begin (days) (4) (5) 10

9 6 4 3 10 5 5

After having determined the updated TE for each event, corresponding TL can be computed by the backward pass. The updated network is shown in figure below. The critical path of the updated network has now changed; it is along activities 1-2, 2-7, 7-8, shown by dark lines. According to the updated network, the project will take a total time of 36 days, instead of 29 days originally planned. On the day of updating, the remaining duration of the project is = 36-13 =24 days.

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MR Gelal FPM, Class Note 11

Updated Network:

TE =22 TL =22

TE =31 TL =31

2

1

7

TE =12

4

TL =20

5

TE =18

TE =36

TL =26

TL =36

TE =12 TL =12

3

TE =12 TL =20

6

6

TE =22 TL =31

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MR Gelal FPM, Class Note 12

COST CONTROL Every project has its own way of controlling cost with a wide variety of record keeping, terminology and approaches. Project cost control systems should be designed to highlight potential problem areas. If you anticipate that some functions or contractors may have cost overruns, then track cost by function or contractor. Conversely, if you anticipate certain tasks or objectives to be the source of cost problems, then design the system to track cost by task. Other possibilities include tracking cost by resource type, by work category, and by activity. All costs must be managed and most costs can be controlled. An important question is which costs are controllable and by whom? Some costs are not directly controllable and yet a project manager must manage within a given environment, such as the state of the general and local economy. There are three cost categories:

a. Direct Cost Direct costs are those that can be related to the production, such as the cost of labor and material inputs that remain as part of the permanent facility. Direct costs include the following: • Labor wages • Overtime premium • Materials • Sub contractors • Freight • Sales tax

b. Indirect Cost Indirect costs include labor, material, and expenses that are incurred but cannot be readily apportioned to a particular part of the project. They are usually applied as a percentage of direct costs, and include items such as • General supervision, • Daily subsistence allowances, • Temporary roads and facilities, • Snow removal, • Licenses and permits • Insurance and • First aid facilities etc.

c. General Overhead Cost These are home office costs that are charged to a project on a predetermined basis. General overhead costs include: • Costs for executive management • Home office facilities • Other costs required to carry out the normal courses of company business. Field personnel can measure the costs incurred on a project best. The starting point for data collection is at the grass roots level through the use of time cards, invoices for materials, material requisition forms, and equipment utilization sheets.

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MR Gelal FPM, Class Note 12

1.

Labor Cost

On all projects it is necessary to obtain the number of hours spent on each part of the job by each employee. The man-hour distribution sheet is usually prepared by the foreman, except for costing, which is done by the office. The information on this sheet is summarized from the daily time check report in which the foreman records each worker’s time against the work items on which the individual works. The activity code column on the daily time sheet, as shown in figure 1 below and the man-hour distribution sheet have this function. Daily time sheets and man-hour distribution records are totaled weekly, as well as the costs for each activity and each work item. Full use of man- hour information cannot be made without knowing the interim quantity of work. It is of little value to know the man- hours expended on an incomplete work item if the quantities of work done are not known. The quantity report, as shown in figure 2, is used to measure the work done on different work items in the preceding period. It provides space for noting the budgeted and actual quantities of work done. The forecast quantity is normally estimated, taking into account any changes. A labor report as shown in figure 3 enables management to keep track of man-hours worked. Such reports generally give a comparison of work item in terms of estimated hours for each activity with the actual hours to date and indicate any overrun or under run. Total estimated and actual man- hours within each work item are listed. The difference between the forecast to complete and the original estimate is computed and listed as the projected overrun and under run, depending on whether the balance is positive or negative.

DAILY TIME SHEET AND WORKER – HOUR DISTRIBUTION Report No: Page No:

Date: Job No:

Occupatio n

Labor Carpenter Iron worker Mason

Employee

Activity Code

Name

No

X Y Z

32 75 80

15-32 16-48 20-43

P

96

25-50

Perf. Agncy

Work Item Hours

OT

BA03100 R O 4 3 2

h

r

2 5

18 23

Figure 1: Example of daily time sheet

2

Reg ular BA03200 h r R O 5 2 9 12 4 3 7 15

Amount

144 220

00 00

MR Gelal FPM, Class Note 12 CHARGE NO

AS OF DATE

SHEET

WORK ITEM BA 03 200 WORK UNIT m3 ACTIVITY 15-32

WORK ITEM BA 03 300 WORK UNIT m3

BUDGET ACTUAL LATEST REVISED 750 400 800

BUDGET ACTUAL LATEST REVISED 200 125 220

Figure 2: Foreman’s Quantity Report

CONTRACT RESPONSIBLE CONTRACT NO DESCRIPTION ORGANIZATION XXXX YYYYY NNN WORK IDENTIFICATION CURRENT PERION WORKER-HOURS RESOURCE AGENCY

Crew Supervisor XX

WORK ITEM

A

E

( OVR) UNDR

Structural Metal frame

205 200

(5)

REPORT DATES FROM-------------TO------------TOTAL WORKER-HOURS

A/TO DATE

875

Str. Steel work Welders Crane Oprt. Light Equip. Oprt.

Figure 3: Example of worker- Hour Summary Report

3

E

F/COMP.

2000

2500

PROJECTED (OVR) UNDR

(500)

MR Gelal FPM, Class Note 12

2.

Material Cost

Material cost feedback is generated mainly through a purchase requisition control procedure. All materials used on a project are requisitioned by the home office (Project Manager) or the field office (Construction superintendent). A good definitive estimate and a bill of materials provide excellent control documents by which the material cost can be kept in check on a project. For control to be exercised at the appropriate time, it is essential that a record of purchases be maintained by the organization. If the quantity and cost of materials for a particular work item do not match its estimate, the cost engineer must determine the reasons for the discrepancy and report to the Project Manager. The materials received on the site must be recorded on a material receiving report or in a similar manner. The materials receiving report is useful for inventory control and for keeping track of the status of purchase orders received at the site. Materials are charged to work items by means of the costing code, and every order, invoice, and delivery ticket should bear both a job name and number and a costing code for the work item. For the materials, that can not be charged to a particular work item ( for example, ready mixed concrete which are used in many items and sometimes as indirect cost items also), an inventory of materials on site is taken at the end of week. After deducting these quantities from the materials received, the materials used can be determined. These are distributed over the volume of work performed in each work item, as shown in figure 4. Such materials are costed at the average purchase price for the period. To check on the use of a certain material on a project, it is useful to generate a material consumption report separated by work items using a format similar to the man-hours report.

WORK ITEM BA 03 200

PERFORMING AGENCY MATERIALS XXX Concrete

UNITS m3

Figure 4: Material Register

4

QUANTITY USED 600

RATE 1000

AMOUNT 600000

MR Gelal FPM, Class Note 12

3.

Equipment Cost

Equipment cost must also be charged to work items just like man- hours and materials cost. To do this, a record of number of hours per work item and the hourly rate for each piece of equipment is required. The number of days that equipment is assigned to a project can be derived from checking- in and checking- out procedures. Hours of operation can be accumulated from equipment time cards, as shown in figure 5. Idle time should be distributed to items of work or captured in a separate idle time account. When use of equipment is not heavy on a project, the equipment costs can be applied to all work items as well as to all activities as an indirect cost. In such cases, operators and operation costs are charged directly to work items, along with the manpower costs. PERFORMING WORK MON. TUE. WED.---- TOTAL AGENCY ACTIVITY ITEM (hrs) (hrs) (hrs) (hrs) RATE XXX 4-5 AA02200 4 3 5 12 100

AMOUNT 1200

Total:

Figure5: Weekly Equipment Record

Control of Spending Even though the project manager is responsible for the total project budget, this budget is made up of a collection of items, assigned to various team members to spend. These team members do not have visibility of the total budget and are usually spending in isolation. In addition, the timing and the amount actually spent on a budgeted item will vary from the budget, causing item variances. The sum total of these variances needs to cancel out or be within the budgeted tolerances. This never happens by itself. In order to exercise effective control on spending, you need insight into the behavior of spending. Most items are spent over a period of time. Each time another expenditure towards this item is needed, turning an increasing portion of the Budgeted Cost into Contracted Cost. This portion is called Cumulative cost- to- date. What is left is called item balance.

Item Balance = Budgeted Cost- Cumulative Cost to- date. The objective of a project manager is to have a zero or positive item balance when this item is complete. An easy way to keep track is to keep a running balance per item, except that you don’t know at which point the big variances may hit. As you get deeper into the implementation of an item, you get better visibility of its true cost requirements, i.e., how much more will it take to complete this item, which is known as Projected Cost to Complete. Projected Total Cost= Cumulative Cost- to- date + Projected Cost to Complete.

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MR Gelal FPM, Class Note 12 By comparing this projected total cost with the budgeted cost, we can anticipate the ultimate variance for this item, known as Projected Variance. Projected Variance= Budgeted Cost- Projected Total Cost Keeping this projected variance at zero or positive becomes the responsibility of the item “Owner”.

Example: Given the following data for an important project item, calculate (a) the item balance, (b) the projected total cost, and (c) the projected variance. Cumulative Cost- to- date = Rs. 5,40,000.00 Budgeted Cost= Rs. 7,50,000.00 Projected Cost to Complete= Rs. 2,50,000.000 Solution: (a) Item Balance = Budgeted Cost- Cumulative Cost- to- date = Rs. 7,50,000- Rs 5,40,000 = Rs. 2,10,000.00 (b) Projected total cost= Cumulative Cost- to- date + Projected Cost to complete = Rs. 5,40,000 + Rs. 2,50,000 = Rs. 7,90,000.00 (c ) Projected Variance= Budgeted Cost- Projected total Cost = Rs. 7,50,000- Rs. 7, 90,000 = Rs. (40,000) It is obvious that this item will overrun the budget if action is not taken to get it back in budget.

The End

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MR Gelal FPM, Class Note 13

Quality Control 1.

What is Quality?

According to Advanced Learner Dictionary, Quality is degree of goodness. Similarly Crossby defines Quality as conformance to requirements. According to Juran, Quality is fitness for purpose. Others define Quality as: • Zero defects • Consistent conformance to expectation • Doing things right the first time • Quality is the totality of characteristics of an entity that bears on its ability to satisfy stated and implied needs.

Facts Regarding Quality •

• • • • •

Quality is not grade (Grade is an indicator of category or rank related to features that cover different sets of needs for products or services intended for the same functional use. Level is a general indication of the extent of departure from the ideal. A high-grade article can be of inadequate quality as far as satisfying needs and vice- versa. E.g. a luxurious hotel with poor service or a small guest- house with excellent service.) Quality costs more, but lack of quality costs even more Quality is a means of achieving project success. It is not the goal in itself. Process quality is more than product quality Quality standards do not demand the best quality; they establish the minimum requirements to be achieved. Quality does not happen by accident, it has to be properly planned and implemented

Summary of Quality Guru’s • • • • • • •

Management, Commitment and Involvement is a MUST. Break interdepartmental barriers and encourage teamwork. Philosophy of “Do it right the first time”. Prevention is better than rectification. Quality must be customer focused. Set goal which is SMART (Specific, Measurable, Attainable, Relevant and Track able). Drive out fear so that workers work efficiently.

Be Careful: • • •

2.

Sub-standard materials Malpractices in Construction Shoddy workmanship

Quality Management

Quality management includes Quality Assurance (QA) and Quality Control (QC) as well as other concepts of quality planning, quality policy and quality improvement. Total Quality Management (TQM) develops these concepts as a long-term global management strategy and the participation of all members of the organization for the benefit of the organization itself, its members, its customers and society as a whole.

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MR Gelal FPM, Class Note 13

QUALITY MANAGEMENT

QUALITY CONTROL What to do? How to do?

QUALITY ASSURANCE

 Detection  Prevention  Improvement  Output Verified  Work Procedures  Work Processes • Adequate • Authorized • Implemented

Method?



Inspections

• Sample or 100% Who does?

TOTAL QUALITY

 Inspectors

 Audit

 Samples

 QA

Organization

Improvement

 Quality Circles

All work Processes  All

Employees

Client Suppliers

Quality System The provision made by management to ensure that quality is protected and promoted throughout all an organization’s activities is referred to as the ‘Quality system’ or ‘Quality Management system’

Quality control Quality Control is the operational techniques and activities that are used to fulfill requirements for quality. Quality Inspection is done first for quality control. Activities such as measuring, examining, testing, gauging one or more characteristics of a product or service and comparing these with specified requirements to determine conformity is quality inspection. Inspection is concerned with sentencing the product as good or bad, by comparison with the standard. On the other hand, quality control is concerned with feedback of the comparative 2

MR Gelal FPM, Class Note 13 information in order to regulate the process. In quality control, the limits are set so that the process can be adjusted before product from the process reaches the limit where it has to be rejected.

Quality Assurance All those planned and systematic actions necessary to provide adequate confidence that a product or service will satisfy given requirements or quality both within the organization and externally to customers and authorities. Quality assurance: • is a systematic way of ensuring those organized activities happen in a way that they are planned. • is concerned with anticipating problems and with creating the attitudes and control that prevent problems from arising. • firstly, aims to impart confidence to the client assuring that his needs will be consistently met (external quality assurance). Secondly, it aims to achieve quality through systematic and planned actions avoiding “ fire-fighting or crisis management” (internal quality). Elements of Quality assurance system • Assessment of the project’s requirements • Development of technical specifications and acceptance criteria • Choice of quality materials and design • Choice of construction method; Equipment/ Plant • Field supervision and quality control • Assessment of quality of completed project • Periodic Inspection and Maintenance measures Preparation of Quality Assurance Plan • Clearly defining the objectives • Enumerating the activities involved • Incorporating the requirements of quality in each activity and providing far a fail- proof safeguard, if any, and • Laying down the surveillance plan, checks and penalties for each apprehended lapse and omission

Total Quality Management Total quality Management is a new concept of quality management and is that aspect of the overall management function that determines and implements the quality policy. The essential elements of TQM are: • Quality Planning • Quality Control • Quality audit • Quality surveillance • Quality Assurance • Quality Circles

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MR Gelal FPM, Class Note 13

TQ (Improvement)

QA (Prevention)

QC (Detection)

Total Quality Management Quality Plan A Quality Plan (QP) is a document setting out the specific quality practices, resources, and sequences of activities relevant to a particular product, service, contract or project. It should define: • The quality objectives to be attained • The specific allocation of responsibilities/authority during the different phases of the project • The specific procedures, methods and work instructions to be applied • Suitable testing, inspection and audit programs at appropriate stages • A method of modification for the quality plan as the project proceeds. • Other measures necessary to meet the objectives

3. Quality Management Tools (a) Brain Storming Brainstorming is an idea- generating process. Alternatives are generated spontaneously through group creativity. Freewheeling including unrealistic or fantastic alternatives is encouraged. Criticism is ruled out. The generated alternatives are screened to identify appropriate alternatives. BS is used to: • Generate list of problems • Identify possible causes of problems • Identify possible solutions • Analysis, Evaluation and Investigation • Develop action plans 4

MR Gelal FPM, Class Note 13

(b) Cause and Effect Analysis Cause and effect analysis is very useful for investigating root causes of problems. A solution applied after finding root causes of problem will have chance of lasting success in eradicating the problem. C/E analysis • is a form of structured brainstorming • breaks complex problems down • sorts and records ideas • gives focus to generate more ideas • considers all areas • points to root cause

Effect

Cause

Sub-Causes

5

MR Gelal FPM, Class Note 13

(c) Process Flow Chart A process is anything, which converts an input into an output by doing work. Flow chart provides substantial help to picture a process where overlaps, duplication and iterative loops are easily identified.

Concreting Work

Cement

Sand

Aggregate

Batching to Proper Ratio

Dry Mixing Addition of Water

Mixing

Slump Test Placing

Compaction/Finishing

6

Water

MR Gelal FPM, Class Note 13

(d) Check List Check list is the collection of different activities accompanied with required quality standards in each activity expressed in a sequential order so that each item is checked with the stipulated performance standard.

4. Quality circle Quality circle is a small group of employees in the same work area or doing a similar type of work who voluntarily meet regularly for about an hour every week to identify, analyze and resolve work related problems, leading to improvement in their total performance and enrichment of their work life. QC is a technique of participative management for continuously improving quality, quantity, efficiency and safety. QC is a work group of employees, who meet regularly to discuss their quality problems, investigate causes, recommend solutions and take corrective actions.

5.

Quality Costs

Quality cost can be divided into two parts:

1. Quality Management Cost Prevention cost Cost involved in activities to ensure right first time performance, e.g., costs of: • quality planning • new products review • process planning • process control • quality audits • supplier quality evaluation • training Appraisal Cost Cost involved in activities that check whether right first time is achieved, e.g., costs of: • incoming inspection and test • final inspection and test • product quality audits • maintaining accuracy of test equipments • evaluation of stocks etc.

2. Failure Cost Cost involved in the activities which result from not confirming to right first time and includes: • Internal Failure Cost (Scrap, Rework, Failure Analysis, Re- inspection, Scrap and rework from suppliers etc.} • External Failure Cost (Warranty charge, Returned material etc.) • Intangible Quality Cost (Loss of goodwill of the company) Quality costs more but lack of quality costs even more. 7

MR Gelal FPM, Class Note 13

Cost Per Unit Of Production

Economic Balance Total Cost

Prevention and Appraisal Cost Failure Cost

Quality Level

Cost of Quality The Fundamentals of Quality System ISO 9000 • •

International quality system standard The ISO 9000 series actually consists of Five Documents

1. ISO 9000: Principal Concepts and Applications (Definitions) 2. ISO 9001: Quality Systems- Model for Quality Assurance in Design/Dev./Prod./Installation/Servicing 3. ISO 9002: Quality Systems- Model for Quality Assurance in Production / Installation 4. ISO 9003: Quality Systems- Model for Quality Assurance in Final Inspection and Testing 5. ISO 9004: Quality Management and Quality System Elements Guidelines • ISO 9000- 9003 issue orders. Use the word “shall”. • ISO 9004 offers advice, using the word “should”. It is an advisory or guidance document. • Needed for international trade. • For selling the products of developing countries to the developed countries and to compete with International market, one has to be attached to ISO 9000 and produce its goods or services as per the attached standard. 8

MR Gelal FPM

PERT: Time Estimates 1

Uncertainties: Use of PERT

PERT stands for Programme Evaluation and Review Technique, which can be applied to any field having some uncertainties about time of completion of project activities. These uncertainties may be about the times required for developmental research, engineering designs, ultimate construction and may be for specific activities or sometimes about the configuration of end product itself. There is little past history on which to base network construction and time estimates. In such projects, management cannot be guided by past experience. They are referred to as once- through operations or projects such as launching a spacecraft. Two approaches may be used for assessment of duration for any activity in a project for its completion. The first approach is the deterministic approach in which we may assume that we know enough about each job or operation, so that a single estimate of their durations is sufficiently accurate to give reasonable results. This approach is followed by CPM users. The second approach is the non-deterministic approach or the probabilistic approach in which one may only be able to state limits within which it is virtually certain that the activity duration will lie. Between these limits we must guess what is the probability of executing the activity. PERT planners follow this approach.

2

Time Estimates

Time is the most essential and basic variable in PERT system of planning and control. PERT is mostly used for research and developmental projects, which are referred to as once- through. In these projects, there is uncertainty about the times required for the completion of various activities. Thus, to take the uncertainties into account, PERT planners make three kinds of time estimates: • The Optimistic Time Estimate: duration of an activity if all went right, without any problem. This time estimate is denoted by t0. • The Pessimistic Time Estimate: duration of an activity if everything went wrong. This time estimate is denoted by tp. • The Most Likely Time Estimate: duration of an activity based on experience of what usually happens- something went wrong and some thing right. This time estimate is denoted by tL.

Frequency Distribution These three time estimates, though look simple, are very difficult to prepare, unless some guidance is available. The planner should base the estimations on available information and past experience. For example, consider a certain activity ‘A’ under diverse conditions. The time required for the completion of this activity under each condition is known. Naturally, the time of completion will be short (optimistic time) if better than normal conditions exist. The number of cases when such conditions exist for completion of an activity A will be naturally small. Similarly, time of completion will be long (pessimistic time) if adverse conditions are there, and such cases will also be small in number. If a curve is now plotted between the ‘time’ of completion and the number of jobs completed in that time, a frequency distribution curve, such as the one shown in Fig. 1 below will be obtained. From the curve, it is clear that there are large numbers of cases of the activity that are completed in the most likely time. Such a curve is also called unimodal curve, since it has single hump.

1

MR Gelal FPM

No. Of Activities

Time Figure 1 The curve shown in figure 1 is symmetrical on either side of point Q; such a curve is known as the normal curve. It is not necessary that a frequency distribution curve may be normal; it may have skew due to which it is not symmetrical about the peak Q. Figure 2 below shows few frequency distribution curves.

Figure 2 (a)

Figure 2 (a)

Figure 2 (a)

Figure 2 (a)

2

MR Gelal FPM Figure 2 (a) • Frequency distribution curve having skew to the left • The difference between tL and to is 1 while difference between tP and tL is 3 days. Figure 2 (b) • Frequency distribution curve having skew to the right • The difference between tL and to is 3 while difference between tP and tL is 1 day. Figure 2 (c) • Frequency distribution curve symmetrical about the peak (Normal Curve) • Wider variation between tP and to (Greater Uncertainty) Figure 2 (d) • Frequency distribution curve symmetrical about the peak (Normal Curve) • Smaller variation between tP and to (More reliable time estimation) The method of preparing a frequency distribution curve will be explained with the help of an example.

Example 1 In a certain project, the times required for digging 54 trenches of fixed dimensions are recorded below. The trenches were excavated by different parties, each consisting of the same number of persons. Plot the frequency distribution curve.

8 10 12 6 9 11 10 13 15 12

11 9 8 10 14 16 12 16 15 10

14 12 7 9 13 10 8 11 17 13

9 11 13 10 14 9 12 15 14 9

3

10 9 11 10 7 13 11 8 12 11

8 10 9 11

MR Gelal FPM

Solution: Days Completion

6 7 8 9 10 11

of No. of trenches Days completed during Completion these days

1 2 5 8 9 8

12 13 14 15 16 17

4

of No. of trenches completed during these days

6 5 4 3 2 1

MR Gelal FPM

3

Mean, Variance and Standard Deviation

Mean Mean of distribution may be defined by the algebraic sum of time durations taken by various jobs divided by the number of the jobs.

tm = ∑ t / n

Deviation Deviation is the difference between the time under consideration and the mean time. This difference may be either positive or negative.

δ = t- tm

Variance

Variance is the mean of the squared deviations. It is expressed by σ2 . σ2 = ∑ (t- tm ) / n Variance is commonly used in statistics as measure of variability of the distribution. 2

Standard Deviation

It is simply the square root of the variance. Standard deviation is denoted by symbol σ .

σ =

∑ (t- tm )2 / n

In the above example, tm = ∑ t / n

= 597/ 54 = 11.06 ∑δ = 338. 834 2 Variance σ2 = ∑δ / n = 338. 834 / 54 = 6.275 Standard Deviation = √ 6.275 = 2.50 2

In the above example, we observed that the most likely time ( tL ) was 10 days, while the mean time tm is 11.06. The tallest peak of the distribution curve is called the mode, corresponding to the most likely time, tL . Both mean and mode do not coincide because the distribution curve is not symmetrical curve about its peak. In the case of a symmetrical curve ( i.e., normal distribution curve) the mean coincides with the mode.

5

MR Gelal FPM Time taken, t

Deviation δ = t - tm

δ2

8 10 12 6 9 11 10 13 15 12

-3.06 -1.06 0.94 -5.06 -2.06 -0.06 -1.06 1.94 3.94 0.94

9.364 1.124 0.884 25.604 4.244 0.004 1.124 3.764 15.524 0.884

11 9 8 10 14 16 12 16 15 10 14 12 7 9 13 10 8 11 17 13 9 11 13 10 14 9 12 15 14 9 10 9 11 10 7 13 11 8 12 11 8 10 9 11

-0.06 -2.06 -3.06 -1.06 2.94 4.94 0.94 4.94 3.94 -1.06 2.94 0.94 -4.06 -2.06 1.94 -1.06 -3.06 -0.06 5.94 1.94 -2.06 -0.06 1.94 -1.06 2.94 -2.06 0.94 3.94 2.94 -2.06 -1.06 -2.06 -0.06 -1.06 -4.06 1.94 -0.06 -3.06 0.94 -0.06 -3.06 -1.06 -2.06 -0.06

0.004 4.244 9.364 1.124 8.644 24.404 0.884 24.404 15.524 1.124 8.644 0.884 16.484 4.244 3.764 1.124 9.364 0.004 35.284 3.764 4.244 0.004 3.764 1.124 8.644 4.244 0.884 15.524 8.644 4.244 1.124 4.244 0.004 1.124 16.484 3.764 0.004 9.364 0.884 0.004 9.364 1.124 4.244 0.004

597

338.834 6

MR Gelal FPM

Probability Distribution Probability is connected with chance and Uncertainty. The probability measures are always between 0 and 1. If an event has probability of 1, it is certain to occur, while if the probability is 0, it will not occur. Closer the probability value is to 1, more certain is the occurrence of the event. y= f(x) Probability function

x No. of days

Probability number can always be assigned to the estimated time, if sufficient data is available. Generally, the available data (frequency distribution) is used to plot probability distribution. Probability distribution is the curve, with its height so standardized that the area under the curve is equal to unity. The height or the ordinate of the curve at any point x, is denoted by function f(x), usually called the probability density function. +∞ Thus

∫ -∞

f (x) dx = 1

Normal Probability Distribution The probability curve is not necessarily symmetrical about its apex. If the curve is symmetrical, then it is known to have normal or Gaussian distribution. The mean of the normal probability distribution is denoted by µ (i.e. x= µ ). It can be proved that: y= f(x)

x

7

MR Gelal FPM (a) Approximately 68% of the values of the normal distribution lie within + σ from the average, where σ is the standard deviation. This means that the shaded area of the curve between x= µ - σ to x= µ + σ is 68% of the total area. (b) Approximately 95% of all the values lie within + 2σ from the average. This means that the shaded area of the curve between x= µ - 2σ to x= µ +2σ is 95% of the total area. (c) Approximately 99.7% of all the values lie within + 3σ from the average. This means that the shaded area of the curve between x= µ - 3σ to x= µ +3σ is 99.7 % of the total area. The last property (c ) can be used to calculate the Standard Deviation directly if the minimum time t0 and maximum time tp are known. Let us say that the minimum time is 6 days and maximum time is 18 days for the completion of a job. If 99.7 % of all the values (I.e., possible completion times) are assumed to lie between 6 and 18 days then the distance between the extreme left value (6) and extreme right value (18) should be equal to + 3σ or 6σ in total. The standard deviation = (18-6)/6 = 2 days. Hence we conclude, in general, that standard deviation is given by σ = (tp – t0 ) / 6 or Variance δ2 = {(tp – t0 ) / 6}2 The above method of calculating standard deviation is approximate. A more exact method is by frequency distribution. However, in PERT problems, the emphasis is one- time, non-repetitive projects for which there are no history of the activity. Hence we must base computations for σ on the given time estimates of the estimator.

The Beta Distribution The beta distribution is a typical type of probability distribution, which fits well for PERT analysis. A beta distribution is the one, which is not symmetrical about its apex. Figure below shows two beta distributions, one having skew to the left (beta distribution for optimistic estimator) and the other having skew to the right (beta distribution for pessimistic estimator). Probability

Probability

Time Duration

Time Duration

It can be shown that for beta distribution, Standard Deviation σ = (tp – t0 ) / 6 or Variance δ2 = {(tp – t0 ) / 6}2 Greater the variance, greater will be the uncertainty. 8

MR Gelal FPM

4

Expected Time

The three time estimates t0 (optimistic time), tp (pessimistic time) and tL (most likely time) are identified on the beta distribution. The variance and standard deviation can be computed by using t0 and tp . However, one must combine the three time estimates into one single time – the average time taken for the completion of the activity or job. This average time or single workable time is commonly called the expected time and is denoted by tE . In computing the expected time, a weightage of 1 is given to the optimistic time and weightage of 4 to the most likely time and weightage of 1to the most pessimistic time. Thus, tE = (t0 +4 tL + tp) / 6

Example 2 Let us take the examples of estimated times of completion of three jobs A, B and C as under.

Jobs

t0

A 4 B 5 C 4 Find the Expected time of each job.

tL

tP

6 10 6

11 12 8

Solution The expected times for these jobs are (tE)A = (t0 +4 tL + tp) / 6 = (4+4*6+11)/ 6 = 6.5 days (tE)B = (t0 +4 tL + tp) / 6 = (5+4*10+12)/ 6 = 9.5 days (tE)C = (t0 +4 tL + tp) / 6 = (4+4*6+8)/ 6 = 6 days For job A The expected time, tE, falls to the right of the most likely time, though the curve has skew to the left. For job B The expected time, tE falls to the left of the most likely time, though the curve has skew to the right. One important point should be noted about the expected time, tE. The expected time tE represents the average value while the most likely time tL represents the mode of the β- distribution. Naturally, the vertical ordinate through tE will divide the probability curve into two equal areas. If the estimated time (to , tL and tP ) are such that the expected time tE computed with these comes out to be equal to tL the distribution curve will be symmetrical about the mode (tL), as in job C. Job A B C

Standard Deviation σA = (tP – tO ) /6 = (11-4)/6 =1.167 σB = (tP – tO ) /6 = (12-5)/6 =1.167 σC = (tP – tO ) /6 = (8-4)/6 =0.667

σA2 σB2 σA2

9

Variance = (1.167)2= 1.36 = (1.167)2= 1.36 = (0.667)2= 0.444

MR Gelal FPM Probability Function Probability Function

Time Duration

Time Duration

Job A

Job B

Probability Function

Time Duration Job C

Expected Time for Activities in Series When a number of activities are in series, the expected time for the path, along the activities, can be found by first finding the tE for each activity, and then taking their sum. Alternatively, to , tL and tP of the path can be calculated first by taking the sum of all to , tL and tP respectively and then tE can be computed.

4-6-8

5-7-11

11

Activity 11-12 12-13 13-14

12

to 4 5 4

4-10-12 13

tL 6 7 10

14

tP 8 11 12

tE 6 7.333 9.3333 Σ tE = 22.666

10

MR Gelal FPM Alternatively, Σ t0 Σ tL Σ t0 Σ tE

= 4+5+4 =13 = 6+7 +10 = 23 = 8+11+12 = 31 = (Σ t0 + 4 Σ tL +Σ tP ) / 6 = (13+4*23+31) / 6 = 22.67 The standard deviation for the last event (network ending event) in a series of activity, is given by,

σtE = √ σ12 +σ22+σ32+………..+σn2

Example 3 The network for a certain project is shown in figure below. Determine the expected time for each of the path. Which path is critical?

Solution:

2

1

7

3

6

4

Path

A

B

C

D

Activity 1_2 2_7 7_8 1_2 2_6 6_8 1_3 3_6 6_8 1_4 4_5 5_6 6_8

8

5

t 6 8 5 6 4 7 3 8 7 5 4 3 7

t 8 10 8 8 8 10 7 10 10 7 6 5 10

t 11 12 12 11 14 15 9 12 15 10 8 6 15 11

t 8.1667 10.00 8.1667 8.1667 8.3333 10.33 6.6667 10.00 10.33 7.1667 6.00 4.8333 10.33

t

26.34

26.83

27.00

28.33

Path

A

B

C

D

Activity 1_2 2_7 7_8 1_2 2_6 6_8 1_3 3_6 6_8 1_4 4_5 5_6 6_8

t 6 8 5 6 4 7 3 8 7 5 4 3 7

t 8 10 8 8 8 10 7 10 10 7 6 5 10

t 11 12 12 11 14 15 9 12 15 10 8 6 15

t 8.1667 10.00 8.1667 8.1667 8.3333 10.33 6.6667 10.00 10.33 7.1667 6.00 4.8333 10.33

t

26.34

26.83

27.00

28.33

FPM MR Gelal

HEALTH AND SAFETY Safety • • • • •

•

Oxford Advanced Learner’s Dictionary defines the term “safety” as ‘being safe; free from danger’. Safety hazards are those that pose imminent danger of causing injury or death to workers or damage to materials, equipment or structures. Theoretically, safety would mean the absence of danger at work, which is made possible by eliminating hazards that create the danger. A more practical definition used in an ILO document states “A thing is provisionally categorized as safe if its risks are deemed known and, in the light of that knowledge, judged to be acceptable.” However, it is not always easy to determine to what extent the accidents are the direct result of the working environment only. There may be lack of proper safety equipment at work sites. The design of the structure or of the equipment used may be faulty. The physical conditions at work sites, heat, light, humidity etc. may not be satisfactory. Long working hours may cause fatigue. Living conditions, social habits, experience, attitudes, motivation etc. are other possibilities. It is for these reasons that, very often, health, occupational safety, working conditions, working hours and welfare are bracketed together for evolving measures of accidents control as well of promoting safety. Safety may be defined as an act of being safe from the materials, substance and the process at construction site. Safety basically is concerned with no loss of life at the work place and minimizing injuries to the workmen and other common people. It is also concerned with the safety of works and with the damage of property and loss of time.

Accident • An event

that happens all of a sudden unexpectedly which may cause injury, death or damage to men/equipment/material and affects the life of individuals and his family as well as ultimately entire society.

Causes of Accidents 1. Hardware Causes Physical

• • • • • • • •

Improper equipments High speed of operation Unauthorized operation Machine related (Working space, Obstruction etc.) Tools related (Breakage etc.) Materials (Inflammable, explosives etc.) Uniform Working environment

1

FPM MR Gelal

Physiological • • • • •

Poor eye sight Poor health Old age Intoxication ( alcohol, drugs etc.) Physical disability

Psychological • • • •

Anxiety Worries Fear Over consciousness

2. Software Causes • • • •

Inadequate plan and program Lack of training Negligence Mistakes

Health Problems in Projects •

Health hazards in project include, among others, heat, radiation, noise, dust, shocks and vibrations, and toxic chemicals. • Perhaps the main hazard here, however, is human optimism. Since the effects are not immediately felt, we sayo “ I can work in this dust from rock drilling for a few more hours. A hot, steamy shower will clear it out! “ o “ I can go into the tunnel heading without earplugs. The pain stops when I come out!” o “ It sure is hot out, and I’m feeling dizzy and have a real headache coming on, but it’s only an hour until quitting time. There is no point in stopping this truck for a drink of water now!” o “ I’ve been working with asbestos for 20 years and I’m not sick. What’s this business about its causing cancer?” • Increasingly, it is being recognized that occupational diseases have indeed been a serious problem in construction. There are substantial direct costs for medical treatment and disability claims, and indirect costs through the premature loss of skilled workers. • It is virtually important that all organizations involved in construction stay up to date with developments in occupational health and implement methods proven to reduce health hazards. If humanitarian concerns are insufficient, the liability implications should be more than enough reason. Since Health and Safety are interdependent to each other, they will be dealt combinly in this chapter.

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FPM MR Gelal

Project and Safety Considerations • •

•

• •

Projects involve thousands of different types of materials, chemicals, equipments and machinery. Also the work involves working on difficult working conditions and situations. Project sites are often dangerous because they: o Are carried out at dangerous place or o The construction place are made dangerous o Use dangerous materials like blasting materials and other chemicals o Use dangerous methods like underwater drilling and blasting o Use heavy machines, which often become the cause of accident. From the record of other countries, the distribution of cause of accidents are as follows:  50% by fall of persons  15% by falling objects  15% by transport or mobile equipments  6% by other machines and  14% by others. Most important thing in dealing with the dangers from articles and substances and work process and arrangements associated with them is good quality safety training to the managers of construction industry. If managed properly, at least 90% of the accidents can be predicted and hence avoided in construction industry.

Need for Safety in Construction  

A disabling injury or fatal accident on the job site has negative impact on operations at many levels. Accidents cost money and affect workers morale. The factors that motivate safe practices at the job site are generally identified as follows:   

Humanitarian Concerns Economic Costs and Benefits Legal and Regulatory Considerations

Humanitarian Concerns  



On a purely humanitarian level, the purpose of improved occupational safety and health is to reduce the human pain and suffering, to workers’ families as well as to themselves, that result from accidents and work- induced illness. Even the strongest human beings are frail creatures when subjected to the forces of nature and the industrial hazards associated with the moving machinery, dust, explosives, heat, electricity, noise, potential for falling, and toxic substances that form the everyday environment of construction. The resulting injuries are often cruelly disfiguring and result in lifetime handicaps and disabilities.

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FPM MR Gelal

Economic Costs and Benefits • •

•

•

• •

• • •

•

When the indirect as well as the direct costs of accidents and illness are considered, costs associated with insurance premiums, claims settlements, and the like are only a small portion of the whole. Even at the project level, it is often estimated that the indirect and impact costs resulting from interrupted production, reduced morale, lower productivity and ripple effects on the schedule can be several times the direct costs associated with hospitalization, disability pay, spoiled materials, damaged equipment and reconstruction. The indirect impact costs must normally be absorbed directly by the project. Direct costs of each accident occurrence:  Delay to project  Uninsured damages  Lost production Indirect costs:  Investigation  Loss of skilled workers  Loss of equipments  Reduced morale Much the same analysis applies at the worker’s level. More typical settlements under workers’ compensation are limited mainly to workers’ medical expenses and a fraction of lost salaries. Further more, the indirect impact of the psychological and emotional disruption to the families is very real, but not easy to quantify. Where long-term or permanent disability results, there is an unknown lost potential for both earnings and future growth and development. Skilled workers area scarce and valuable resource; considerable time, money, and effort are invested in their training. A career interrupted at age 25 means that 40 additional years of skilled production have been lost. With today’s shortage, it is misjudgment to say there will be someone else to take the accident victim’s place. For these and other reasons, the more enlightened organizations in the engineering and construction industry- owners, constructors, designers and agencies alike- have recognized that effective programs to improve performance in safety and health are not expenses, but investments. Some have estimated that $ 1 invested in safety and health pays $ 4 to $8 in return.

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FPM MR Gelal

Legal and Regulatory Considerations 

      



Due to competitive nature of the construction industry cost cutting areas such as safety and health often seems attractive and even necessary for business survival. This not only runs counter to the productivity of long-term investments in safety described above, but this general attitude of expediency also accounts in large measure for the high rate of business failure in construction. Regardless of the origins, the consequences of the irresponsible safety and health performance of some individuals and firms have brought on laws and regulations as a leveler for all. Many Laws, Rules and Regulations have been formulated and are being enacted in several countries as a physical approach to achieving safety. These legislations require the owner, designers and contractors to meet certain requirements to protect the workers against health and accident hazards. A typical physical measure of this type is the requirement to install guardrails around all open floors of a multistory building during construction. Furthermore, physical measures are implemented to minimize injury in the event of an accident. An example of this is the requirement to wear a safety belt when working high steel and the installation of safety nets to protect a man who slips and falls. One typical legislation is: o Occupational Safety and Health Act, 1970 (US), more popularly known as OSHA. Under this act, all employers are required to provide “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” From above paragraphs, we believe without any doubt that the safety is needed for: o Minimizing rate of accidents in construction industry o Eliminating fatal accident at construction sites o Raising morale by which raising efficiency of the worker o Improving overall quality of the work and o Ultimately reducing construction costs.

What are the Unsafe Conditions?  

Unsafe conditions are those factors that are present due to defects in conditions, errors in design, faulty planning or omission of essential safety requirements for maintaining hazard free physical environment. Unsafe conditions may be grouped into: o Inadequate mechanical guarding o Defective condition of equipment, tools, floors, stairs etc. o Unsafe design and construction o Unsafe process, operation or arrangement e.g. unsafe piling, stocking, storage, overloading, over crowding etc. o Inadequate light and ventilation and o Unsafe dress e.g. loose clothing, no gloves, no aprons and shoes etc.

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FPM MR Gelal

What are the Unsafe Acts?  

Unsafe acts of the persons are those types of behavior at the work place that cause accident and leads to injuries or death. They include: o Working unsafely o Contravention of safety orders o Removing or altering safety devices o Operating at unsafe conditions o Use of unsafe or improper equipments etc.

Human elements in safety Safety policy

A clear and well-defined policy should be followed Discussion with trade union relating to safety policy Safety policy should be reviewed and updated in regular interval

Recruitment and Placing

• Preparation of a standard list of physical demands applicable to the entire task to be included in the selection procedure. • Square peg into a square hole and circular peg into a circular hole should be the guiding principle. • Preparation of job description and job specification including listing the requirement the holder of the job should have is the responsibility of personnel manager. Personnel Manager should seek expert advice of the safety in charge or safety expert.

Medical Examination

• Thorough medical examination is necessary for some specific jobs. • Care should be taken for patient of epilepsy, poor vision and poor hearing condition.

Alcoholism

• Alcoholism and drug abuse worsen the problem of control of injuries and therefore are matter of concern. • Alcoholism in job situation can be defined as “a disease in which an employee’s consumption of any alcoholic beverage definitely and repeatedly interferes with his job performance and/ or his health”. • Alcoholism is a complicated disease and not easy to cure as culture and values are associated with it.

Training

• Employee should be trained for the safety procedure and practice to be followed.

Safety Program for Construction • Safety planning • Safety Implementation • Safety Monitoring • Safety Control

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FPM MR Gelal

The Growth of safety Regulation/Legislation: Nepalese Scenario In Nepal, the government’s first response towards safety in projects might possibly be the enactment of the “Labor Act 2048”, which came into force on 15 May 1992. Before this, there was no special law regarding labor in construction industry. ‘Labor Act, 2048’ contains provisions on health and safety of the workers. As provided under chapter 5 of the act, management of an organization should ensure the following: a. • • • • • • • • • b.

Safety for Eye •

c.

•

d.

Eye shield or goggles should be provided to safeguard eyes from flying dust, object, welding and gas cutting light etc. Safety from Chemicals Personal safety arrangement has to be made for the workers who handle dangerous chemicals. Fire Safety

• • • e. f. g. h. i.

General Safety The working area should be cleaned, painted, cleared of waste and necessary insecticides spread on the area. Proper light and ventilation as well as appropriate temperature should be maintained. Arrangement should be made for the disposal of waste material. Working area should be free from dust, air, vapor and other material, which could adversely affect the health of the worker. Arrangements to be made for the control of noise and necessary equipment to be provided if workers have to work on loud noise area. Work area should not be congested. Every worker should get at least 15 Cum. Of working space within 4m. height from the ground. Adequate potable drinking water should be provided. Gents and ladies latrines to be provided at appropriate place. Medical checkup of the workers should be done at least once a year.

Modern safety equipment Provision of fire escape Provision of fire extinguisher at required places. Guarding the Machines Heavy load handling Pressure Plant Safety Order Information of the accidents 7

FPM MR Gelal

ILO STANDARDS AND GOVERNMENT RULES In 1966, Nepal became a member of ILO. Besides the general ILO Standards (ILS) like freedom of association, prohibition of forced labor etc, there are ILS on Occupational Safety and Health which are more specifically related to the construction workers. Some of the Conventions are: • • • • • • • • •

No 155 No 161 No 13 No 115 No 139 No 170 No 119 No 127 No 148

: Occupational safety and Health Convention, 1981 : Occupational Health Services Convention, 1985 : White Lead (Painting) Convention , 1921 : Radiation Protection Convention, 1974 : Occupational Cancer Convention, 1974 : Chemical Convention , 1990 : Guarding of Machinery Convention, 1963 : Maximum weight Convention, 1967 : Working Environment(Air pollution, Noise and Vibration)Convention, 1977

8

MR Gelal Class Notes 17 & 18

Risk and Uncertainty in Projects Managing Risks in Projects When our World was created, nobody remembered to include Certainty - PETER BERNSTEIN Every project is risky, meaning there is a chance things won’t turn out exactly as planned. Project outcomes are determined by many things, some that are unpredictable and over which project managers have little control. Risk level is associated with the certainty level about technical, schedule and cost outcomes. High certainty outcomes have low-risk; low- certainty outcomes have high risks. Certainty derives from knowledge and experience gained in prior projects, as well as from management’s ability to control project outcomes and respond to emerging problems. In general, risk is a function of uniqueness of a project and the experience of the project team.

Risk = f (uniqueness, experience of project team). When activities are routine or have been performed many times before, managers can anticipate the range of potential outcomes and manipulate aspects of the system design and project plan to achieve the outcomes desired. When the project is unique or team is inexperienced, the potential outcomes are more uncertain, making it difficult to know what could go wrong and how to avoid problems. Even in routine projects there is risks because outcomes may be influenced either by factors that are new and emerging, or those beyond anyone’s control. The notion of project risk involves two concepts: i. The likelihood that some problematical event will occur. ii. The impact of the event if it does occur. Risk is joint function of the two; that is,

Risk = f (likelihood, impact) A project will be ordinarily considered risky whenever at least one factor- either the likelihood or the impact- is large. For example, a project will be considered risky where the potential impact is human fatality or massive financial loss even when the likelihood of either is small. Though the risk cannot be eliminated from projects, it can be reduced. That is the purpose of risk management. There are three major aspects of risk management: • Risk Identification • Risk Assessment • Risk Response Planning

1

MR Gelal Class Notes 17 & 18

1

• • • •

• •

Risk Identification Before you can manage something, you must first know about it. Thus, risk management begins with identifying the risks and predicting their consequences. If a risk and its consequences are significant, ways must be found to avoid the risk or reduce it to an acceptable level. Acceptable risk depends on the risk tolerance of project stakeholders and managers. Experienced managers are more careful (and risk averse), where as less experienced stakeholders tend to be greater risk-takers (more risk tolerant) because they don’t know of the risks or are ignorant of the consequences. o Risk of failure: project might fall short of schedule, budget or technical goals. o Risk of opportunity: events leading to rewards, savings or benefits. One method to identify project risks is to proceed according to project chronology; that is risks associated with each phase of project life cycle that may ruin the project immediately or lead to a later failure are separately identified. High risks in projects typically stem from: o Using an unusual approach. o Attempting to further technology. o Training for new tasks or applying new skills. o Developing and testing of new equipment, systems or procedures.

Sources of Risk: • • •

Any factor with an uncertain probability of occurring, that can influence the outcome of a project, is considered a risk source or risk hazard. The most difficult part of risk identification is discovering things you don’t already know! Project risk can be classified as internal risks and external risks.

Internal Risks: •

Internal risks originate inside the project and project managers and stakeholders usually have a measure of control over these. Two main categories of internal risks are market risk and technical risk.

Market Risk •

Market risk is the risk of not fulfilling either market needs or the requirements of particular customers. The sources of market risk include:  Incompletely/ inadequately defined market or customer needs.  Failure to identify changing needs  Failure to identify newly introduced products by competitors.

Technical Risk • • •

Technical risk is the risk of not meeting time, cost or performance requirements due to technical problems with the end-item or project activities. These risks are high in projects involving activities that are unfamiliar or require new ways of integration and especially high in projects with untried technical applications. One approach to expressing technical risk is to rate the risk of the project end-item or primary process as being high, medium or low according to the following features.

2

MR Gelal Class Notes 17 & 18 o Maturity: An End-item or process that is pre-existing, installed and operational or based on experience and preexisting knowledge entails less risk than that in the early stage of development or new. o Complexity: An End-item or process with numerous interrelated steps or components is more risky than one with few steps and components having simple relationship. o Quality: An end- item or process that is known to be completely producible, reliable or testable is less risky than one that has not yet been produced or has low reliability or testability. o Concurrency or Dependency: In general risk increases the more that activities overlap one another. Sequential, dependent activities with no overlap are much less risky than those with much overlap.

External Risks: •

External risks include only risks that stem from sources outside the project. Project managers and stakeholders usually have little or no control over these. External risk hazards include changes in:  Market conditions  Competitors actions  Government regulations  Interest rates  Decisions made by senior management/ customers regarding project priorities, staffing or budgets  Customer needs and behavior  Weather (adverse)  Labor availability (strikes/walkouts)  Material/labor resources (shortages) etc.

Risk Identification Techniques 



Project risks are identified from analysis of the numerous documents reviewed or prepared during project conception and definition. These documents include:  Reports from past projects  Lists of user needs and requirements  WBSs  Cost estimates  Schedules  Models of end-items. The various techniques for pin pointing risks are: o Analogy Technique: looking at records, post completion summaries and project team members’ notes and recollections from previous similar projects. o Checklists: lists of factors that can affect the risk in a project o WBS Analysis: Every work package is scrutinized for potential problems with management, customers, suppliers, equipment and resource availability and technical hurdles. o Process Flow Charts: A flow chart illustrates the steps, procedures and flows between tasks and activities in a process.

3

MR Gelal Class Notes 17 & 18 o Cause- and- effect Diagram: Potential outcome or end-item (effect) due to potential causes (hazards) or risk hazards (cause) that might ensue (effect). o Brainstorming: share opinions and generate ideas about possible problems or hazards in the project.

2

Risk Assessment

Risks are commonplace, but it is only the notable ones that require attention. What is considered notable depends on three things:  Risk likelihood  Risk impact, and  Risk consequences

Risk Likelihood • • •

Risk likelihood is the probability that a hazard or risk factor will actually materialize. It can be expressed as a numerical value between 1.0 (certain to happen) and 0 (impossible) or as a qualitative rating such as high, medium or low. Table 1 below shows an example of qualitative ratings and the associated numerical percent values for each. The table is for illustration only. The association between qualitative ratings and particular values is subjective and depends on the experience of the project team and risk tolerance of stakeholders.

Table 1

Risk Likelihood: Qualitative Ratings for Quantitive Values

QUALITATIVE Low Medium High

NUMERICAL 0- 0.20 0.21- 0.50 0.51- 1.00

Table 2 is a checklist that gives numerical likelihood for five potential sources of failure in computer systems projects. Table 2: Sources of Failure and Likelihood. MS CS MH CH D Likelihood 0.1 (low) 0.3 (minor)

MH Existing Minor redesign

failure likelihood due to immaturity of software failure likelihood due to complexity of software failure likelihood due to immaturity of hardware failure likelihood due to complexity of hardware failure likelihood due to dependency on external factors MS Existing Minor redesign

CH Simple Design Minor complexity

0.5 (moderate) Major change feasible Maj.Change feas. Moderate complexity 0.7 (significant) Complex design 0.9 (high)

New but similar to exist.

SoA/ research done SoA/ never done

Signif.complex. Extreme complx.

4

CS Simple Design Minor complexity

D Independent Sch. Depnt.on ES

Moderate

Perf.depnt. on ES

Signif.complex

Sch.Depnt.on NS

Extreme complx.

Perf.depnt. on NS

MR Gelal Class Notes 17 & 18 When a project has multiple, independent risk sources, they can be combined and expressed as a single Composite likelihood factor, or CLF. For example, using the sources listed in Table 2 the CLF can be computed as a weighted average, CLF= W1 MH + W2 CH + W3 MS + W4 CS + W5 D Where W1, W2, W3, W4 and W5 each have values 0 through 1 and together total 1.

Example 1: The ROSEBUD project involves development of hardware and software with characteristics as follows: The hardware is existing and of minor complexity; the moderately complex software involves a minor redesign of current software; the performance of the overall system depends on how well it can be integrated into another, larger system. Calculate the CLF for the probable risk. Solution: From Table 2 above, we have; MH = 0.1, CH = 0.3, MS = 0.3, CS = 0.5 and D= 0.9. Assuming all sources are rated equally at 0.2, then, CLF = 0.2*0.1 + 0.2* 0.3 +0.2* 0.3 + 0.2*0.5+ 0.2* 0.9 = 0.31 Ans.

Risk Impact What would happen if a risk hazard materialized? The result would be called risk impact. A poorly marked highway intersection is a risk hazard; the risk posed is that of collision with the impact of injury or death. Risk impact in projects is specified in terms of time, cost and performance measures. For example, Risk hazard: insufficient numbers of skilled labor Risk impact: extending the schedule of the project Risk impact can be expressed as a qualitative rating such as high, medium or low. The rating is subjective and depends upon the opinion of managers about the importance of the risk. For example, a risk leading to a schedule delay of 1 month or less might be considered “ low impact”, whereas a delay of 3 months or more might be deemed “high impact”. Risk impact also can be expressed as a numerical measure between 0 and 1, where 0 is “not serious” and 1 is “catastrophic”. Again the rating is subjective and depends upon the opinion. Just as the likelihood for multiple risks can be combined, so can the impacts from multiple risk sources. If technical, cost and schedule impacts are TI, CI and SI, then Composite Impact Factor CIF, can be computed using a simple weighted average, CIF = W1 *TI + W2 * CI + W3 * SI Where W1, W2, and W3 are valued from 0 to 1 and together sum to 1. If CIF is 0, it means “no impact” whereas CIF equal to 1 means “ the most severe impact”.

5

MR Gelal Class Notes 17 & 18 Table 3: Impact Values for Different Technical, Cost and Time Situations. Impact Value Technical Impact (TI) Cost Impact (CI) Schedule Impact (SI) 0.1 (low) Minimal Within budget Negligible 0.3 (minor) Small reduction in Cost increase 1- 10% Minor slip <1month performance 0.5 (moderate) Moderate reduction in Cost increase 10- 25% Moderate slip performance (1-3 month) 0.7 (significant) Significant reduction in Cost increase 25- 50% Significant slip performance > 3 month 0.9 (high) Technical goals might not Cost increase in Large slip be achievable excess of 50% (unacceptable) Above equation assumes that risk impacts are independent. If they are not, then they must be treated jointly as, for example, the impact of both a 20% increase in cost and a 3- month schedule slip.

Risk Consequences The risk is a function of risk likelihood and risk impact. This notion is referred to as the risk consequence. Risk consequence can be expressed in two ways. First, it can be expressed as a simple numerical rating with a value ranging between 0 and 1. In that case, the risk consequence rating, RCR, is RCR= CLF+CIF- (CLF)* (CIF) Small value represents unimportant risk that might be ignored; large values represent important risk worth attending to. The consequence rating value is interpreted subjectively. In general, • Value over 0.7: high risk project • Value under 0.2: low risk project • Value of 0.48: moderate level risk Another way to express risk consequence is an Expected value. The risk consequence expected value is computed as Risk Consequence= (Impact)* (Likelihood) The risk consequence on project duration is called the Risk Time, RT. RT= (Corrective time)* (Likelihood) The risk consequence on project cost is called the Risk Cost, RC. RC= (Corrective cost)* (Likelihood)

Example 2 Suppose the baseline time estimate (BTE) for project completion is 26 weeks and the baseline cost estimate (BCE) is NRs. 500,000. Assume that the risk likelihood for the project as a whole is 0.3, and, should the risk materialize, it would delay the project by 5 weeks and increase the cost by NRs. 80,000. Calculate the expected project completion time ET and expected project completion cost Ec, considering risk into account.

6

MR Gelal Class Notes 17 & 18 Solution: As the probability of the risk materializing is 0.3, the probability of not materializing is 0.7. If the risk does not materialize, no corrective measures will be necessary, so the corrective time and cost will be nil. Hence RT= 5*0.3 + 0* 0.7 = 1.5 Weeks RC= 80,000* 0.3 +0* 0.7 = NRs. 24,000 These figures RT and RC would be included as reserve or buffer amounts in the project schedule and budget to account for risk. RT and RC are the schedule reserve and project contingency (budget reserve) respectively. Thus, Expected Project Completion Time, ET = BTE+ RT = 26 + 1.5 = 27.5 Weeks Expected Project Completion Cost, EC = BCE+ RC = 500,000 + 24,000 = NRs. 524,000 When the corrective time and cost cannot be estimated, then ET and EC are computed as ET= BTE (1+likelihood) = 26* 1.3 = 33.8 Weeks EC= BCE (1+likelihood) = NRs. 500,000* 1.3 = NRs. 650,000

7

MR Gelal Class Notes 17 & 18

3

Risk Response Planning

Risk response planning addresses the matter of how to deal with risk. The response to, or the allocation of, risk can take any of four forms:

Risk Response

Risk Transfer

Risk Reduction

Risk Avoidance

Risk Acceptance

Risk Transfer Transferring risk does not reduce the criticality of the source of risk; it just removes it to another party. The commonest form of risk transfer is by means of insurance, which changes an uncertain exposure to a certain cost. Risk can be transferred partly or fully from the customer to the contractor, or vice versa, using contractual incentives, warranties, or penalties attached to project performance, cost or schedule measures. The contractor and customer may decide to split the risk through a contractual agreement in which each manages the risks they can handle the best. Of course it is impossible to entirely transfer the risk to one party or another. Even with a fixed price contract, where the contractor takes all the risk, the customer still incurs damages or hardship should the project exceed the target schedule or the contractor declares bankruptcy. Transfer of one kind of risk often means inheriting another kind of risk.

Risk Reduction One of the ways of reducing the risk exposure is to share risks with other parties. For instance, the international banks syndicated loans to third world governments or the stock market investor spreads his risks over many securities. The general contractor will attempt to reduce his risk exposure to pay liquidated damages for late completion by imposing liquidated damages clauses in domestic sub contractor agreements. Among the many ways to reduce risk associated with technical performance are to: • Employ the best technical team. • Base decisions on models and simulations of key technical parameters. • Use mature, computer aided system-engineering tools. • Provide the technical team with adequate incentives for success. • Hire outside specialists for critical review and assessment of work. • Perform extensive tests and evaluations. • Minimize system complexity (By decoupling activities and subsystems, that is, making them independent of one another, the failure of any one activity or subsystem is contained and will not spread to others).

8

•

MR Gelal Class Notes 17 & 18 Use design margins (A design margin is quantified value that serves as a safety buffer to be held in reserve and allocated by management. By aiming for the target value, any design error can miss by as much as the design margin amount and still satisfy the requirement).

Risk Avoidance Risk avoidance is synonymous with refusal to accept risks. The refusal to contract is a simple example to risk avoidance. However, it is more relevant to consider the specific risks, which can be avoided. The basic rational of risk aversion is that it is more unpleasant to lose a given sum than pleasant to gain the same amount; for a loss may cause a reduction in the standard of living to which one has become accustomed. In an extreme case, a risky venture may be shunned because it puts basic necessities at risk. Also, avoiding risk can diminish the payoff opportunities. Research projects and innovative, new-product development projects are inherently risky, but they offer potential for huge benefits later on. Because the potential benefit of such a project is proportionate to the size of the risk, it is better to reduce risk to an acceptable level rather than completely avoid risk.

Risk Acceptance Not all impacts are severe or fatal, and if the cost of avoiding, reducing or transferring the risk exceeds the benefit, then “ do nothing” might be advisable. Of course, this response would not be chosen for risks where the impacts or consequences are potentially severe. Not all risk can be transferred, but even if they were capable of being transferred it may not prove to be economical to do so. The risk will then have to be retained. The gamble is between paying premium and the probability of the event occurring and the consequential loss that would result. The risk retention is based on the probability of a claim for damages and what the practice can afford to pay if the claim is successful.

Summarizing Risk Management • • • • • • • • • • • •

Project management is risk management. Risks have to be identified, classified and analyzed before any response is made. An identified risk is not a risk; it is management problem. Beware of using solely the intuitive approach or ‘gut fell’ to manage risk. Risk management needs to be continuous from the moment the project starts to the moment it ends. A poorly defined risk structure will breed more risk. Use both creative and negative brainstorming and don’t use the ostrich approach. Always have a contingency plan (risk reserve) to cope with the worst eventuality. Risk management system should not be complicated or burdensome; they need to be integrated into a firm’s daily operations. A risk officer should be appointed to take the responsibility of risk management. A communication channel is to be established within the project team to ensure that bad news quickly gets to the project manager. Ensure accurate and comprehensive project documentation for better risk planning in future. 9

MR Gelal FPM

THE S-CURVE S-Curve is one of the popular planning tools. S-Curve graphically plots some measure of cumulative progress on the vertical axis against time on the horizontal axis. Progress can be measured in terms of money expended, quantity surveys of work in place, man-hours expended, or any other measure which makes sense. Any of these can be expressed either in terms of actual units (Rupees, Cubic meter, etc.) or as a percentage of the estimated total quantity to be measured.

Why does it look Like S? On most projects, expenditures of resources per unit time tend to start slowly, build up to a peak, and then taper off near the end. This causes the slope of the cumulative curve to start low, increase during the middle, and then flatten near the top. After signing a construction contract, the contractor has to prepare himself for the work. Also minor works are started which takes time to gain momentum. After the period of slow start, when the contractor mobilizes him fully, the rate of progress accelerates remarkably and for quite sufficient duration, the rate of progress is constant. Finally, a falling off of this rate of progress is marked when the project is towards completion. Contractor reduces his manpower substantially and activities are limited to finishing, testing and commissioning. By this, for any project, if we draw on a graph, we find a figure having S- shape.

Cumulative Cost

S- Curve

Time

Traditionally, the curve was being used to plan the budget and cash flow only. It was drawn for cumulative schedule of cost on vertical scale and time duration on horizontal scale. But now, we have started using it not only to plan overall cost of the project, but also to plan man-hours, physical percentage completion, individual items of work and so on. In that case

1

MR Gelal FPM the vertical scale represents man- hours, physical percentage of work completed etc. and horizontal scale always represents the time.

Example: An airport construction project has to move 10,000 cubic meter of earth within 10 days. The daily excavation quantities are as shown in figure 1 below. Summing all the daily excavation quantities through any particular day gives the cumulative quantity by that day. For example, by the end of day 5, the cumulative quantity is the sum of excavation on days 1, 2, 3, 4 and 5. That is = 200 + 600 + 1000 + 1400 + 1800 = 5000 The shape of S- Curve can be seen by connecting the points at the end of each days cumulative production as shown in figure 2.

Figure 1

Figure 2

2

MR Gelal FPM

LINE OF BALANCE Line of Balance is a graphic technique used for project planning and control to depict timequantity relationships. They apply best to linear and repetitive operations such as tunnels, pipelines, highways and building projects. The vertical axis typically plots cumulative progress or percentage completed for different systems of a project, such as the structural, electrical, mechanical and other trade sub contractors on a high-rise building. The horizontal axis plots time. An example may be, clearing, excavation, stringing, welding, pipe laying, and backfill operations on a pipeline. As long as the slopes are either equal or decreasing as one moves to the right, the project should proceed satisfactorily. However, if early scheduling shows one operation proceeding too rapidly, with a high slope compared with those preceding it, the time and location of the first conflicts become rapidly apparent. To illustrate this, figure 3 shows the eighth operation starting to conflict with the seventh, when each is about 70% complete. 100%

Time

3

MR Gelal FPM

Linked Bar Chart Linked bar chart is a modified version of Gantt bar chart. It was developed to overcome some of the inherent limitations of bar chart. It shows the links between an activity and the preceding or succeeding activities. The linked bar chart has advantage of exhibiting the effect of delay on succeeding activities and also it can provide some information of the extra time available (if there is) with an activity for its completion. The extra time available for an activity for its completion is called float. Similarly, the activities, which do not have extra time for completion, are called critical activities. It is to be noted that linking bars are very complicated, difficult and sometimes impossible to show graphically. An example of linked bar chart is presented below. Example:

Activity

Duration

Predecessors

Followers

A B C D E F G H

4 3 2 2 7 3 8 8

A A B B C D E, F

B D F G H H -

Corresponding AON and CPM Network

D

G

B E Start

End

A

C

F

Corresponding Linked bar Chart is as given in figure 1 below.

4

H

MR Gelal FPM

Milestone Chart A Milestone Chart is an improved version of a bar chart in which some of the limitations of bar chart are eliminated. As Henry Gantt invented it, it is called Gantt Milestone Chart. Combined activity bar charts can be converted to milestone bar charts by placing small triangles at strategic locations in the bars to indicate completion of certain milestones within each activity or group of activities as shown in figure below. A milestone implies some specific stage or point where major activity either begins or ends, or cost data become critical. Figure (a) shows a bar chart of a project, which involves four tasks or activities or jobs viz. Task I, Task J, task K and Task L and figure (b) shows the corresponding Milestone Chart. It may be seen that in a milestone chart the long time activities or jobs or tasks are identified in terms of specific events or milestones which are plotted against the time scaled indicating their accomplishments by specified times. Each bar in a milestone chart again represents an activity or job or task and all the bars taken together represent the entire project. A milestone chart shows relationship between the milestones within the same activity or job or task. It may be seen from fig. (b) that Milestone 2 cannot be started until milestone 1 has been accomplished. Thus as compared to bar chart better control can be achieved with the help of a milestone chart, but it still possesses the same deficiency that it does not depict the interdependencies between the various tasks or the relationship between the milestones of different tasks.

5

MR Gelal FPM

Earned Value Analysis Any deviation in schedule, performance or cost from the plan or from the set standard to the actual accomplishment is called variance. In the past the conventional method of control analysis was variance analysis. This measures the difference between two factors by subtracting one from the other to give a positive or negative variance. It can be used to show differences between actual progresses and planned, and the resources used against estimate or budget. For example, the followings are common variances in the control of projects: • Scheduled start vs. Actual start • Scheduled finish vs. actual finish • Scheduled time for an activity vs. actual time • Scheduled date of milestone vs. the actual date when the milestone was reached • Budgeted cost vs. Actual cost • Measured value vs. Actual cost • Budgeted man-hours vs. Actual man-hours • Budgeted unit cost vs. Actual unit cost Although still used extensively today, variance analysis must be supplemented by other methods, as it is an inadequate, often misleading, and sometimes meaningless, guide to progress and performance. For example, consider a simple case where out of total project cost of NRs. 25,00,000, the budgeted expenditures to date on a project is NRS. 850,000 and actual expenditure is NRs. 900,000, giving a variance of NRs. 50,000. All this tells us is that expenditure is ahead of budget. It does not give us any of the following information: • Whether we are on, above or below the expected cost performance. • What will be the likely final cost of the project • Whether we are on, behind or ahead of schedule • What will be the likely completion time of the project Thus variance analysis, when used on its own is an ineffective way of analyzing and reporting project progress and performance.

Performance analysis based on Earned Value The modern methodology used in analyzing project progress and performance uses ‘Performance Measurement’ based on ‘Earned Value’ concepts, which integrates cost and schedule on a structured and personalized basis. There are actually three elements of data required to analyze performance, from which more information can be extracted than from than two-element variance analysis. These elements are: • Budgeted Cost of Work schedule (BCWS) = NRs. 850,000 • Actual Cost of Work Performed (ACWP) = NRs. 900,000 • Budgeted Value of the Work Actually Completed, i.e. Earned Value (EV) =NRS.750, 000 In addition the completion time of the project is 50 weeks (say).

6

MR Gelal FPM

Cost variance CV Cost Variance CV, is the difference of Budgeted Value of Work performed (Earned Value) and Actual Cost of Work Performed. It can be expressed as:

CV= EV-ACWP Negative value of CV indicates Cost Overrun. In the above example, CV is, = NRs. 750, 000- NRs. 900, 000 = NRs. (-) 150, 000 The project is NRs. 150, 000 over budget!

Cost Performance Cost Performance can be obtained by dividing Earned Value EV by Actual cost of Work Performed ACWP. It can be expressed as:

Cost Performance = EV/ACWP In the above Example, Cost Performance = NRs. 750,000/NRs. 900,000 = 0.8333 The project is obtaining 83.33 Paisa of Earned Value for every Rupee expended, that is cost performance is 83.33% of that planned. Final Cost Forecasting= NRs. 25,00,000/ 0.83333 = NRs. 30,00,000 The project will be NRs. 500,000 over budget, if there is no change in performance.

Schedule Variance SV Schedule Variance SV (In cost terms), is the difference of Budgeted Value of Work performed (Earned Value) and Budgeted Cost of Work Schedule (BCWS). It can be expressed as:

SV= EV-BCWS Negative Value of SV indicates time overrun. In the above example, SV is, SV (In cost terms)= NRs. 750,000- NRs. 850, 000 SV (In cost terms)= NRs. (-) 100, 000 The Project is equivalent of NRs. 100,000 behind schedule.

Schedule Performance Schedule Performance can be obtained by dividing Earned Value EV by Budgeted Cost of Work Schedule BCWS. It can be expressed as:

Schedule Performance= EV/BCWS In the above Example, Schedule Performance = NRs. 750,000/NRs. 850,000 = 0. 8823 Schedule Performance is only 88.23 % of that planned. Final Completion Time Forecasting= 50 weeks/ 0.8823 = 56.67 Weeks The project will be 6.67 weeks late, if there is no change in performance.

7

Project Management Information System

Project Management Information System

Example - Screen Layout

Main screen (Headquarters)

Site query (Headquarters)

Monthly business performance (Headquarters)

Real-time Site monitoring (Headquarters)

Main screen (Site)

Monthly work status input (Site)

Process photograph & slide show (Site)

Organization Chart (Site)

Document management (Site)

Drawing management (Site)

Weekly safety management status (Site)

Process photograph management (Site)

Project Management Information System

Contact us Homepage E-mail Tel Fax Address

http://www.hit.co.kr [email protected] +82-2-2129-4387 +82-2-2129-4072 Kukdong Bldg., 6th Floor, 60-1 Choongmuro-3Ga, Choong-Gu, Seoul, Korea 100-705

INFORMATION TECHNOLOGY

INFORMATION TECHNOLOGY

Project Management Information System

Project Management Information System

Flow Diagram

Conceptual Design

PMIS supports information sharing and cooperative work among various business entities (headquarter/field, customer/architect/supervisor/constructor/affiliates) and provides management information to managers during projects. The knowledge management system is supported by managing results after the completion.

The application of IT in the construction sector has shown considerable success in administrative processes such as financing and accounting; however, while construction is a field-oriented industry, the system implementation for collaboration among business entities to support engineers in site is still in its early stage. PMIS implement business management system to overcome shortcomings of headquarter-oriented ERP systems such as insufficiencies in field monitoring, reporting system between headquarters and site, difficulties of drawing transfer or recycling by establishing systematic process of reporting and communication, cooperating with sharing of related information and knowledge among field business entities.

Information for manager

The PMIS server resides at headquarter office while each site accesses the server to process the tasks of each site. The various outputs or reports are stored in the server, and these will be used for management information. Employees at each site can download the drawings from the server for immediate use, so that information sharing is available among headquarter/site/affiliate/customer.

ERP

ERP

ERP Information

HR/Payroll

ERP management information

▶ HR/Payroll ▶ Financial management ▶ Business management

Financial Statement

Management

▶ Work Report - Field information

▶ Construction Status Report - Work report - Safety/Quality management - Process management - Construction Drawing/Specification - Video conferencing, cctv - Test running

Site

- Business performance - Billing Information - Progress report

Material Management

Construstion Management

Strategy Site manager

Site report, Project management information such as Site status, problems, profit/loss

HR Cost

EKP

Integrated UI

Business expense/ Project information Customer

Administrators of Business division Project monitoring & control

- Document transfer - Managing information - Technique/Method - Defect/Repair

PMIS(Construction related) ▶ Site information ▶ Drawing/document Management ▶ Construction management ▶ Headquarter Work management ▶ Resource management ▶ Quality/Safety/Environment ▶ Community

Drawing/Document Management system

Architect

Integrated DB

PMIS(Construction) Site information

Drawings/ documents

Construstion management

Headquarter processes

▶ Construction Overview ▶ Bird’s eye view ▶ Organization Chart ▶ Site Monitoring

▶ Drawing management ▶ Specification management ▶ Received/ Sent document management ▶ Conference Records

▶ Process photos ▶ Schedule management ▶ Quality management ▶ Constructio status

▶ Construction status report ▶ Business performance report ▶ Bill collection report ▶ Withdrawal project reports

Headquarters

Community

- Drawing distribution - Sent/Received documents - Work report

▶ Board ▶ Headquarter mail ▶ Site mail ▶ Electronic approval Site Data management with integrated DB

Internet Supervisor

EKP

- Completion result - Drawings/Documents (Sent/Received) - Basic project information

Headquarter Personnel

Finance/ Accounting

Rentals

ERP manager

Site report

PMIS is ideal system for all companies which intend to implement business management system prior to introduction of ERP as well as the construction company who needs comprehensive management of information and outputs within the entire lifecycle from beginning to end of the construction site and a business management system enabled by IT prior to ERP implementation.

Business Management

HR/Payroll

Electronic Approval

Affiliates

▶ Provide optimized function for each site: - Personalization of site tasks

E-mail Knowledge management

Headquarters

PMIS

Construction site

Affiliates Additional functions ▶ SMS ▶ Mail ▶ System Management

System Menu (Headquarters) Customer

Project Management Information System

▶ Cooperation & Community - Sending/Receiving ocument - Schedule management - Document/Drawing management - Process photography management

▶ Affiliates management - Daily work report - Work instructions - e-Contracting - Achievement management

Features & Benefits ▶ Information sharing and real-time business available among customer, supervisor, affiliate and architect by using single Web-based interface ▶ Drawings and documents available in site (Same as headquarters) ▶ Knowledge Management of field accumulated data (Defect cases/Safety management cases/new construction methods)

▶ Site monitoring for process status by business unit (Individual site or Grouping of construction sites classified by types) ▶ Flexible interface with other systems (ERP etc) ▶ Empower each business division for its business

Management Information

Site Information

Contract Information

▶ Site Overview ▶ Organization Chart ▶ Report Issues ▶ Construction status ▶ Shortcoming Reasong Overcome plans

▶ Contract status ▶ Subcontracting status ▶ Affiliates information

Sales/Profit Status ▶ Sales summary ▶ Profit / Loss summary

Bill collection / Receivables

Budget / Performance status

Resource Status

▶ Deposit / Withdrawal status ▶ Receivables status ▶ Receivables management

▶ Budget planning ▶ Performance summary ▶ Budget / Performance status

▶ HR status ▶ Outsourcing status ▶ Material status

Architecture site

Machine site

Electricity site

Overseas site

Options ▶ e - Contracting ▶ Electronic tax invoices ▶ Work personnel management ▶ Web camera,CCTV ▶ Videoconferencing

Drawing/Document Management ▶ By project ▶ File Search

System Menu (Site) Construction Management System

Site Information

Drawing/Document Management

Construction Management

Headquarter

Resource Management

Quality/Safety /Environment

System Management

▶ Business Overview ▶ Organization Chart - Headquarter, Site - Customer - Affliates ▶ Bird’s eye view ▶ Real-time site monitoring ▶ Emergency Communication netwoork

▶ Architectural drawings ▶ Construction drawings ▶ Specifications ▶ Received documents ▶ Sent documents ▶ Conference records management ▶ Document folder

▶ Site photograph management ▶ Schedule management ▶ Process status ▶ Shortcomings and remedies ▶ Schedule management ▶ Process management ▶ Process photographs

▶ Site status - Contract details - Achievements - Plan / Performance ▶ Business performance ▶ Bill Collection report ▶ Cancellations estimation (within 3 months) ▶ Business report data

▶ HR management - Plan/Status ▶ Material management - Plan/status ▶ Equipment management - Plan/status

▶ Quality training/inspection ▶ Safety training/inspection ▶ Environmental training/inspection ▶ Safety cost management ▶ Safety organizations ▶ Disaster status

▶ WBS management ▶ OBS management ▶ Material code management ▶ Equipment code management ▶ Job code management ▶ Position code management ▶ Graphs ▶ Hardcopies

MENG 344 Work Analysis and Design Method Study

Lotfi K. Gaafar Based on Introduction to work study. 3rd ed. International Labor Office, Geneva, 1992. October 03

Lotfi K. Gaafar

1

Work Study

Work Study is the systematic examination of the methods of carrying on activities so as to improve the effective use of resources and to set up standards of performance for the activities being carried out. October 03

Lotfi K. Gaafar

2

1

Method Study Method study examines the way a task (changing the clutch on a car, preparing a flower bed for planting, cleaning a hotel room) is done. The industrial engineer has an eye on operational efficiencies and costs, quality of processes, service reliability, staff safety etc. Method study techniques are applicable from factory/workshop manufacturing to cabin crew activities on an international flight and office clerical work.

A collection of techniques used to examine work - what is done and how it is done - so that there is systematic analysis of all the elements, factors, resources and relationships affecting the efficiency and effectiveness of the work being studied. Lotfi K. Gaafar

October 03

3

The Human Factor in The Application of Work Study Management

Work Study Specialist

Supervisor

October 03

Workers

Lotfi K. Gaafar

4

2

Lotfi K. Gaafar

October 03

5

Work study and the Management § Importance of management. § How to gain the management support: l

Make them feel that it is not their fault.

l

Make them understand the purpose and techniques of work study.

October 03

Lotfi K. Gaafar

6

3

Work Study and the Supervisor The importance of the supervisor: l

Mostly affected by work study.

l

A personal challenge.

l

Responsibilities are taken away.

Lotfi K. Gaafar

October 03

7

Work Study and the Supervisor Do’s and Don’ts l

Never give a direct order to a worker.

l

Always refer worker’s questions to the supervisor.

l

Never express opinions to workers.

l

Don’t allow worker’s to get you to alter decisions made by the supervisor.

October 03

l

Seek the supervisor advice whenever possible.

l

Always be introduced to workers by the supervisor.

Lotfi K. Gaafar

8

4

Work Study and the Worker § Work study improves industrial relations: l

l

l l

Workers feel that the management cares for them. Workers discover that there are managers who highly understand their job. Improving the feeling of confidence. Workers are more able to carry out their jobs.

Lotfi K. Gaafar

October 03

9

Work study and the Worker § Why workers resist the work study:

October 03

l

It will change their familiar work methods.

l

Many workers resent being timed.

l

Fear of being fired.

Lotfi K. Gaafar

10

5

Problem Solving § Problem definition l l l l

statement of purpose, goal, objective criteria of judging successful solution output requirements completion date

§ Analysis of problem l l l

constraints or specifications description of the present method review problem definition and criteria Lotfi K. Gaafar

October 03

11

Problem Solving § Search for possible solutions l l l l l

identify the basic cause that creates problem; eliminate all unnecessary work combine operations or elements change sequence of operations simplify the necessary operations

§ Evaluation of alternatives l

October 03

in terms of criteria and original specification

Lotfi K. Gaafar

12

6

Problem Solving § Recommendation for action l l

l

written reports to senior managers presentations to senior managers and shop floor employees development of soft skills, listening, negotiating,

§ Marketing recommendations l

October 03

target relevant groups Lotfi K. Gaafar

13

How do we measure performance? § § § §

October 03

Profit Financial measures Productivity – output/input ratios Cycle time

Lotfi K. Gaafar

14

7

Possible Performance Measures § Quality expressed as % scrap value, % returns, % downtime § Costs expressed as inventory turnover, value added to incoming material § Delivery expressed as % on time delivery, cycle time § Flexibility as Average number of setups /day, % of common parts/product § Innovation as % sales from products introduced in last 3 years

October 03

Lotfi K. Gaafar

15

Method Study To Simplify the job and develop more economical methods of doing it

Select Record

by collecting data or by direct observation

Examine

by Challenging purpose, place, sequence, and method of work

Develop

new methods drawing on contributions of those concerned

Evaluate

results of different alternative solutions

Define

new method and present it

Install

new method and train persons in applying it

Maintain October 03

the job to be studied

Lotfi K. Gaafar

and establish control procedures 16

8

Select – Where to Look § § § § § § § October 03

Poor use of resources Bad layout Bottlenecks Inconsistent quality High fatiguing work Excessive overtime Employee’s complaints

Select Record Examine Develop Evaluate Define Install Maintain

Lotfi K. Gaafar

17

Select – Economic Considerations Will it pay to begin, or continue, a method study of this job?

Select Record

§ § § § § October 03

Key profit- generating operations Key costly operations Repetitive work Long travels Excessive overtime Lotfi K. Gaafar

Examine Develop Evaluate Define Install Maintain

18

9

Select – Technical Considerations Desire to acquire more advanced technology Select Record

§ § § §

Extensive paperwork Repetitive work (automation) Hazardous work Inconsistent quality

Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

19

Select – Human Considerations Workers satisfaction/resentment Select Record

§ Satisfaction level § Start with non-controversial jobs § HSE

Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

20

10

Select – Limiting the Scope Setting boundaries and determining content Select Record

§ One operation or a sequence § The whole operation or part § Which aspect: worker, materials, equipment, … etc.

Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

21

Select – Possible Results § § § § § § § October 03

Increased production rate Reduced cost Less labor, materials, or equipment Improved quality Improved safety Reduced scrap Improved standards of cleanliness Lotfi K. Gaafar

Select Record Examine Develop Evaluate Define Install Maintain

22

11

Select – Pareto Analysis Select Record Examine Develop Evaluate Define Install Maintain

Lotfi K. Gaafar

October 03

23

Record- Symbols Operation (Make ready, Do, Put away) Select

Inspection

Record Examine

Transport

Develop Evaluate

Delay

Define Install Maintain

Storage October 03

Lotfi K. Gaafar

24

12

Record- Symbols Operation (Make ready, Do, Put away) Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

25

Record- Symbols Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

26

13

Record- Symbols Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

27

Record- Symbols Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

28

14

Record- Symbols Select Record Examine Develop Evaluate Define Install Maintain

Lotfi K. Gaafar

October 03

29

Record- Charts and Diagrams Outline Process Chart Flow Process Chart (Worker, Material, Equipment) Two-Handed Process Chart Procedure Chart

Select

Simultaneous motion Cycle Chart

Record

Multiple Activity Chart

Examine Develop

Flow Diagram String Diagram Cyclegraph Chronocyclegraph Travel Chart October 03

Evaluate Define Install Maintain

Lotfi K. Gaafar

30

15

Record- Example Outline Chart Turn shank

Face both sides

Face, turn, cut

Remove chip

Drill hole

Face opposite end

Dimensions

Final check

Dimension and finish

Degreasing

Straddle mill four flats

Cadmium plating

Remove burr

Final check

Final inspection of machining

Select

Degreasing

Record

Cadmium plating Final check

Examine Develop

Assemble and drill

Evaluate Fit stop pin Define Install Maintain

October 03

Final check

Switch Rotor Lotfi K. Gaafar

31

Record- Example

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

32

16

Record- Example Outline Chart

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

33

Record- Example Flow Chart

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

34

17

Record- Example Flow Chart

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

35

Record- Example Flow Chart

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

36

18

Record- Example Flow Chart

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

37

Record- Example Flow Chart

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

38

19

Record- Example Multiple activity Chart

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

39

Record- Example String Diagram

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

40

20

Record- Example String Diagram

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

41

Record- Example Travel Chart

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

42

21

Record- Example Two- handed process Chart

Select Record Examine Develop Evaluate Define Install Maintain

Lotfi K. Gaafar

October 03

43

Examine- The Questions Purpose:

What is actually done? Why is it necessary?

Place:

Where? Why?

Sequence:

When? Why?

Select

Person:

Who? Why?

Record

Means:

How? Why?

Examine Develop

With a view to: Eliminate Combine or Rearrange Simplify

October 03

Evaluate Define Install Maintain

Lotfi K. Gaafar

44

22

Examine- Secondary Questions Purpose:

What is done? Why is it done? What else might be done? What should be done?

Select Record Examine Develop

With a view to: Eliminate Simplify

Evaluate Define Install Maintain

Lotfi K. Gaafar

October 03

45

Examine- Secondary Questions Place:

Where is it done? Why is it done there ? where else might it be done? Where should it be done?

Select Record Examine Develop

With a view to: Combine or Rearrange

Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

46

23

Examine- Secondary Questions Sequence:

When is it done? Why is it done then? when might it be done? When should it be done?

Select Record Examine Develop

With a view to: Combine or Rearrange

Evaluate Define Install Maintain

Lotfi K. Gaafar

October 03

47

Examine- Secondary Questions Person:

Who does it? Why does that person do it? Who else might do it? Who should do it?

Select Record Examine Develop

With a view to: Combine or Rearrange

Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

48

24

Examine- Secondary Questions Means:

How is it done? Why is it done that way? How else might it be done? How should it be done?

Select Record Examine Develop

With a view to: Simplify

Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

49

Develop New Designs Multidisciplinary Teams Select

Worker Involvement

Record

Quality Circles Examine

Simple Ideas ( Spring Loaded Table)

Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

50

25

Evaluate Multiple Improvement Ideas Consider costs, benefits, and drawbacks Report (ABC, Accurate, Brief, and Clear)

Select Record

Example Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

51

Define The written standard practice Prepare a written standard practice, also known as an "operative instruction sheet". This serves several purposes Select

1. It records the improved method for future reference. 2. It can be used to explain the new method to management, supervisors and operatives. It also advises all concerned, including the works engineers, of any new equipment required or of changes needed in the layout of machines or workplaces. 3. It is an aid to training or retraining operatives. 4. It forms the basis on which time studies. October 03

Lotfi K. Gaafar

Record Examine Develop Evaluate Define Install Maintain

52

26

Define The written standard practice outlines in simple terms the methods to be used by the operative. Three sorts of information will normally be required: (1) The tools and equipment to be used and the general operating conditions. (2) A description of the method. The amount of detail required will depend on the nature of the job and the probable volume of production. For a job which will occupy several operatives for several months, the written standard practice may have to be very detailed, going into finger movements.

Select Record Examine Develop Evaluate Define Install

(3) A diagram of the workplace layout and, possibly, sketches of special tools, jigs or fixtures. October 03

Maintain

Lotfi K. Gaafar

53

Define

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

54

27

Install Installation can be divided into five stages, namely: (1) Gaining acceptance of the change by management. (2) Gaining acceptance of departmental supervision.

the

change

by

the

There is no point in trying to go any further if this approval and acceptance have not been obtained. (3) Gaining acceptance of the change by the workers and their representatives.

Select Record Examine Develop Evaluate Define

(4) Preparing to make the changes. (5) Controlling the changeover. October 03

Install Maintain

Lotfi K. Gaafar

55

Install Training May use films to demonstrate the old and the new methods. Films are particularly valuable when retraining. Develop the habit of doing the job in the correct way.

Select

Train to follow a numbered sequence illustrated on a chart.

Record Examine

Learning curves

Develop

In the first stages of learning, rests between periods of practice should be longer than the periods of practice themselves.

Evaluate Define

When the operative has begun to grasp the new method and to pick up speed, rest periods can be very much shorter.

Install Maintain

Nursing the new method. October 03

Lotfi K. Gaafar

56

28

Install

Select Record Examine Develop Evaluate Define Install Maintain

October 03

Lotfi K. Gaafar

57

Maintain

workers should not be permitted to slip back into old methods, or introduce elements not allowed for, unless there is very good reason for doing so.

Select Record Examine

To be maintained, a method must first be very clearly defined and specified.

Develop Evaluate

Assign a specialists permanently. Formal review.

Define Install Maintain

October 03

Lotfi K. Gaafar

58

29

Method Study in the Office Offices use resources, must be used efficiently. Percentage of workers in offices continues to increase. Administrative costs (overheads) must be controlled. Introduction of advanced technology (machinery). In most offices, most of the work is routine. Look for areas or activities that: Account for a significant proportion of office labor costs. Are producing large numbers of errors or serious errors. Are creating high levels of dissatisfaction. Need to change in response to some external change. Quality circle. October 03

Lotfi K. Gaafar

59

Method Study in the Office Most office work can be placed on a hierarchy which includes systems, procedures, activities and methods.

October 03

Lotfi K. Gaafar

60

30

Method Study in the Office Use the columnar chart form in which each column represents one department or section of the organization (figure 60).

October 03

Lotfi K. Gaafar

61

Method Study in the Office Design of forms Naturally, a document or form should be examined together with the procedure in which it is used. Changing a system or procedure may have automatic implications for forms used. Forms themselves should be examined when the procedure itself has been examined and improved or validated. Examination of a form follows the basic critical examination process, asking: Why is the form necessary? What information does it convey? Who uses it? When do they use it? Where is it used? How is it used? (Is the form produced by a computer, are entries typed on to the form, is it filled in manually, etc.?) Then examining and evaluating alternatives. October 03

Lotfi K. Gaafar

62

31

Method Study in the Office Design of forms When designing forms we are trying to make the form: compatible with its intended use easy to complete easy to use Consideration must be given to: paper size; paper weight; shape; color; maintaining any house style or corporate identity; and balancing these with the cost involved. October 03

Lotfi K. Gaafar

63

Method Study in the Office Details that affect design are: the filing/retrieval process; the routing of the form throughout the organization the degree to which additional entries are made on the form at subsequent stages); the nature of data entered on the form and the degree to which they can be grouped.

October 03

Lotfi K. Gaafar

64

32

Method Study in the Office Control of forms The most important part of controlling forms is to undertake regular audits to discover if each form is still necessary to serve a particular business function (MAINTAIN). Where the purpose of the form is still valid, questions must be asked about the environment in which the form operates and whether changes here, for example, in technology or filing methods require changes to be made to the form.

October 03

Lotfi K. Gaafar

65

Method Study in the Office Control of forms Other items to be considered are: The production method: How is the form produced and are there now better or cheaper ways? How much stock of each form is held, and where is it held? Is this appropriate to the use of the form? How are supplies to users reordered? How is stock issued to users? How is issued stock tracked?

October 03

Lotfi K. Gaafar

66

33

Method Study in the Office Control of forms What is the useful life of information on the form? Are there any legal constraints on disposal? How do we ensure that forms are disposed of, after their useful life is ended (to release valuable space)? Are there security restrictions on disposal (should forms be shredded or burnt)?

Lotfi K. Gaafar

October 03

67

Office Layout Office layout study should consist of the following steps: Record details of the major systems in use in the office. Record details of the clerical procedures that support those systems. Examine the working methods of those procedures and carry out a basic method study of each one. Carry out a capacity assessment of each part of the procedure Analyze volumes of output and question the senior managers to discover likely future trends. Identify communication and contact paths and frequencies. Design individual workstations ( ergonomics) From volume and capacity data, calculate total workstation requirements. Decide on basic type of layout. Identify any "external" constraints. Draw up a schematic layout Investigate available hardware solutions Discuss the provisional layout with both the users Modify the layout in accordance with the results of discussions and prepare the proposed layout. October 03

Lotfi K. Gaafar

68

34

Top 10 Sources of Project Failure

Page 1 of 3

Events

Almost Daily Web Log

Services

Strategy & Alignment

Operational Problem Solving

Project Management

Miscellany

Implementation & Change Management

Top 10 Sources of Project Failure Do any of these conditions exist in your organization? Do you see the possible linkages between them and poor project performance? Think about whether you are doing anything to address these potential roots of problems. If not, then you might be stuck at current performance levels 1) Failure to appreciate the impact of a multi-project environment on single project success. (More...) 1 a) Trying to put 10 pounds of projects through a 5-pound pipeline in a multiproject environment. 1 b) Wasting of resources through dedication to projects, making them unavailable to support other projects. 1 c) Failure of management to provide real guidance on priority of projects before they are planned and promised. 1 c1) As well as the flip side, ignoring rational plans and promises for perceived, but questionable, priorities. As an explanation of this, IMHO, project priorities are part of the initiation phase. Once promised and launched, all project have equal priority -to complete when and how promised -- and deserve attention only proportionate to the threats to that promise. 1 c2) Another flip side regarding priorities -- failure of management to kill projects when their reason for existence goes away. 2) Irrational promises made due to a failure to take into account the variable nature of task performance. (More...)

http://www.focusedperformance.com/toptenpm.html

What's new? Questions? Comments?

I don't like the sound of all those lists he's making - it's like taking too many notes at school; you feel you've achieved something when you haven't. -Dodie Smith, I Capture the Castle, 1948 Discuss Critical Chain An email-based discussion group Frequently Asked Questions about Critical Chain-based project Management Related links: Check Out the Following Links for More About the TOC Approach to Project Management: Critical Chain and Risk Management Protecting Project Value from Uncertainty -- Project management is the practice of turning uncertain events into certain promises. If so, then project management is an extended excersie in risk management. The core concepts underlying Critical Chain-based project management directly support risk management and are described in this paper, expanded from one presented at PMI's 2001 National Symposium. Getting Out From Between Parkinson's Rock and Murphy's Hard Place -This first link will bring up a paper based on a poster presentation originally given at the 1998 New Jersey PMI Chapter's annual symposium, honored with a "best of the show" award by attendees, and later turned into an article published in PMI's PM Network magazine.

27/07/2009

Top 10 Sources of Project Failure

3) Irrational promises made due to a failure to take into account the statistical nature of project networks. (More...) 4) Insufficient identification of dependencies necessary to deliver the project. (More...) 5) Focus on (and active management of) only a portion of what should be the full project -- a true bottom-line value adding outcome for the sponsoring organization. (More coming...) 6) Reliance on due-date, train-schedule, and actualagainst-budget-to-date performance to drive project performance, resulting in the wasting of any safety included in the project (to account for 2 and 3 above) and in the effects of Parkinson's Law -- Work will expand to fill (and exceed) the time allowed. The whole concept of "time allowed" is a major culprit. (More...) 7) Wasting of resources through underutilization because they aren't the "best resource" for the job. (More coming...) 8) Wasting of the "best" resources through overutilization, multi-tasking, and burn-out. (More coming...) 9) Delivering original scope when conditions/needs change. Flip-side: accepting changes to scope without sufficient analysis of impact on the project (or on other projects). (More coming...) 10) Multi-tasking, multi-tasking, multi-tasking, multitasking, and multi-tasking. Commonly thought of as a key problem in multi-project environments, where resources are expected to address tasks from different projects in a coincident time-frame, multi-tasking also impacts single project durations (and wastes safety) when dedicated resources are expected to wear several hats. (More... and more... and more...)

Page 2 of 3

Program Management -Turning Many Projects into Few Priorities with TOC -This link will lead to a paper on the key attributes of a TOC MultiProject Management environment. (Most projects are performed by resources shared with other projects. It can be deadly to ignore the resulting interactions, no matter how well you manage single projects.) This paper was originally presented at PMI's Global Symposium in Philadelphia in October of 1999 and is included in the proceedings of that conference. Audio tapes of the presentation are also available from PMI. Project Portfolio Management - The First Cut is the Kindest Cut One of the common problems faced by projectoriented organizations is having too many projects relative to their capacity. Therefore, one of the first things that needs to be done is to determine what can be done is to determine what should be done . . . and what should not be done . . . Consumption of Effort and Conservation of Energy for Project Success -- This link will lead to an essay on the necessity for managing protective capacity in multi-project environments to get the most organizational throughput from the efforts of project resources.

"Quick and Dirty" Commentary . . . Critical Chain Basics A Critical Chain Schedule The Sooner You Start, The Later You Finish Multitasking Multiplies Lead Time

http://www.focusedperformance.com/toptenpm.html

27/07/2009

Top 10 Sources of Project Failure

Page 3 of 3

Discuss Critical Chain An email-based discussion group

Who is FP?

Web Log

Miscellany

You can reach Focused Performance at: 601 Route 206, Suite 26-451, Hillsborough, NJ 08844 Voice: 908-874-8664 Contact Focused Performance

http://www.focusedperformance.com/toptenpm.html

27/07/2009

Fundamentals of Project Management CASE STUDY

Improper Project Scheduling Background ABC Company is a private firm with a good track record in water resource management. Most of the projects completed by ABC were finished by their respective contracted completion dates. The success of ABC is based upon the firm’s philosophy of recruiting good personnel and ensuring complete support from the firm’s head office administration to its on-site operations. An economic boom and associated demand for energy have resulted in the firm getting more works than it had ever experienced before. Consequently, an adequacy in the firm’s human resources has resulted which in itself is a major problem. To try to solve this problem, ABC has started to recruit many young inexperienced Engineers having potentials of becoming project Engineers for many of the firm’s projects.

Organizational Practices of ABC A project Engineer is completely responsible for on-site operations. Completing a project within the established schedule and with the desired quality are the major tasks of a project Engineer. Furthermore, a project Engineer has to direct foremen and coordinate sub-contractors to ensure the smoothness of onsite operations. No formal organizational procedures for quality or schedule control exist. Mostly, all onsite planning and control procedures or systems depend upon the project Engineer in charge. Cost control is centralized. On site management (Project Engineer) is not responsible for material and equipment cost. Only labor budget costs are transferred to the site for control purposes. Material and equipment procurement too is centralized. The Project Engineer has to place an order to the head- office procurement department with specified material and equipment amounts and quantities and their required delivery dates.

Project Information John is a new Project Engineer with ABC and is in charge of a Flood Water Conservation (High Dam) project. Before coming to work with ABC, he worked for three years with a good management consultant firm as an on-site Engineer for high dam construction. John’s previous experience is more on the technical engineering for dam construction such as concrete placing procedures, soil mechanics etc. He knows his weaknesses in the construction management aspects of this project and makes an effort to talk to ABC’s experienced Project Engineers and learn more from them as often as he can. Project is a turnkey type with contract duration of 2 years. Hydrological study, geo-technical study, surveying, design, drawing and detail costing are over. Site (excavation, piling, etc.), structural and concreting works are now to execute by ABC. Other work items may be subcontracted either for labor only or all costs depending upon the nature of these works. John has seven foremen and one engineer working with him. Of the eight foremen, Bob, Neil and Peter are highly experienced senior foremen with ABC. Scott, Tom and Michel are new foremen with no experiences. Carl is an experienced senior foreman that John had brought along from his former company. Dave, the Engineer, is a fresh graduate who has been sent by ABC to work with John.

Question Based on the provided information, what do you think about the likelihood of the project being completed on time? Please provide four good reasons to support your thinking.

Fundamentals of Project Management

Home Assignment 1. Choose a project of your own convenience. Develop a Work Breakdown Structure (WBS) for the project. Note that the WBS should have minimum three distinct levels. 2. A project consists of 16 activities having their predecessor relationship as follows: (a) A is the first activity of the project. (b) B, C and D follow A and can be done concurrently. (c) E and G can not begin until C is completed and can be performed simultaneously.. (d) F is the immediate successor to activities B and E. (e) H and K run in parallel, and both succeed G. (f) L succeeds F and H. (g) I and J are immediate successor activities to activity D. (h) M and N are immediate successor to I and K. However, both M and N can be performed concurrently. (i) Activities O and P are the last activities. Activity O is the immediate successor to N and L. activity P is the immediate successor to M and J. Draw the AOA network and number the events. 3. A project consists of following activities with their durations and precedence relationship as presented in tabular form below. Activity Precedence Duration A 3 B A 15 C 5 D C 20 E A 5 F A 1 G F 25 H G 10 I H, K 3 J B 5 K J 10 L B 1 M L 10 N D, E 10 O I, M, N 10 Draw AON diagram indicating ES, EF, LS, LF and earliest finish time of the project. Also find out the Critical Path and calculate the total and free floats of each activity. 4. Briefly discuss the status and difficulties of Project Planning and Implementation in Nepal. What are your suggestions for improvement?

Fundamentals of Project Management

Assignment 1 1. Why do projects fail in Nepal? Give your suggestions for improvement. 2. What do you mean by Project Environment? Describe the different types of project environments and explain how they influence the project.

Assignment 2 1. What do you mean by Project Monitoring and Evaluation? What are the status and practices of Project M& E in Nepal? 2. What is Project control? Discuss the Project Control Cycle.

Assignment 3 1.

Define ‘Optimistic time estimate’, ‘Pessimistic time estimate’ and ‘Most likely time estimate’. Differentiate clearly between most likely time estimate (tL), mean time (tm) and expected time (tE). 2. What is a Gantt Bar Chart? A project consists of 8 activities A, B, C, D, E, F, G and H with their times of completion as follows: Activities Duration (weeks) A 2 B 4 C 2 D 4 E 6 F 4 G 5 H 4 The precedence relationship is as follows: • A and B can be performed in parallel • C and D cannot start until A is complete. • E can not start until half the work of activity C is complete • F can start only after activity D is complete. • G succeeds C. • H is the last activity, which should succeed E. Draw the bar chart. What is the total time of completion of the project? If there is increase of 2 weeks in time of completion of activity A, what will be the corresponding increase in the total time of the completion of the project. 3.

What are different types of Project Organizations? Give a brief description of the advantages and disadvantages of each.

Assignment 4 1. What is Monitoring and Evaluation of Project? Give a brief description of Project M& E system of HMG, Nepal.