CHAPTER 4
PROJECT MANAGEMENT PHASES
PHASE I: DEFINING THE PROJECT 1
INITIATING AND DEFINING PROJECTS
IN THE PROJECT DEFINITION PHASE, A PROJECT IS CONCEIVED OUT OF AN IDEA, SUGGESTION OR REQUEST BY AN INTERNAL OR EXTERNAL CUSTOMER AND IS SPECIFIED IN CLOSE CONSULTATION WITH THE KEY STAKEHOLDERS INVOLVED.
THE KNOWN ORGANIZATIONAL AND ENVIRONMENTAL FACTORS ARE CONSIDERED WHICH MAY OR WILL ULTIMATELY IMPACT ON THE PROJECT AT SOME FUTURE POINT OF TIME DURING ITS LIFE CYCLE.
IN PROJECT MANAGEMENT, THIS IS KNOWN AS “SCOPING THE PROJECT” AND IS A PREREQUISITE BEFORE THE PROJECT ENTERS THE (DETAILED) PLANNING PHASE, WHERE THE SCOPE MAY BE MODIFIED.
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•
Information
•
Funding
•
Equipment
•
Manpower, Expertise, Knowledge
•
Core Competencies
•
Risk
•
Planning and Control Systems
•
Motivating Factors
•
Formal and Informal Organization Structures
•
Priority System / Multiproject Environment
Some Considerations for Project Selection
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Simple Project Scoring Matrix Criteria (0-10)
Strategic Fit
Core Competencies
Urgency
ROI
Weighted Total
Weight (1-3)
3
2
2
3
Project A
8
7
5
6
66
Project B
2
3
1
5
29
Project C
5
5
9
6
61
Project N
...
...
...
...
...
4
Technical Feasibility (how easy is it?)
High
Project Portfolio Assessment
BREAD & BUTTER
OYSTERS
Low
WHITE ELEPHANTS
PEARLS
Low
High Net Present Value Given Sucess (commercial potential)
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THE PROJECT SCOPE STATEMENT
Project Objectives
Project Deliverables
Initial Project Organization
Project Scope Statement
Initial Defined Risks
Cost Estimate Schedule Milestones
Technical Requirements Project Limitations & Exclusions
The Project Scope Statement is the definition of the project – its primary purpose is to define as clearly as possible the deliverables for the end user and to focus project plans.
Approval Requirements
Review with Customer
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THE TYPICAL COMPONENTS OF A PROJECT SCOPE STATEMENT 1. PROJECT OBJECTIVES:
PROJECT OBJECTIVES FOCUSES ON THE PROJECT’S GOALS. SOME PROJECTS MAY HAVE MULTIPLE GOALS. THE PROJECT’S GOALS ALSO INDICATE PROJECT’S REQUIRED TIME AND BUDGET FOR COMPLETION i.e.
“TO CONSTRUCT A HIGH QUALITY CUSTOM HOME WITHIN 5 MONTHS AT A COST NOT TO EXCEED RS. 50 LACS”.
2. PROJECT DELIVERABLES & FEATURES:
AFTER SETTING PROJECT OBJECTIVE THE NEXT STEP IS TO DEFINE MAJOR DELIVERABLES-THE EXPECTED OUTPUTS OVER THE LIFE OF A PROJECT i.e.
•
A 2,200-SQUARE-FOOT, 2 ½ -BATH, 3 BEDROOM FINISHED HOME
•
A FINISHED AND INSULATED GARAGE
•
KITCHEN APPLIANCES INCLUDING OVEN, MICROWAVE AND DISHWASHER
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3. PROJECT MILESTONES: A MILESTONE IS A SIGNIFICANT EVENT IN A PROJECT THAT OCCURS AT A POINT IN TIME. EXAMPLE i. PERMITS APPROVED – MARCH 5 ii. FOUNDATIONS POURED – MARCH 14
iii. FRAMING, SHEATHING, PLUMBING INSPECTIONS PASSED – MAY 25 iv. FINAL INSPECTION – JUNE 7
4. TECHNICAL REQUIREMENTS: TECHNICAL REQUIREMENTS MUST BE MENTIONED HERE i.e. •
HOME MUST MEET LOCAL BUILDING STANDARDS
•
ALL WINDOWS SHOULD HAVE GRADE 25 STEEL
•
DOORS WOULD BE MADE OF DIAR WOOD
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5. PROJECT LIMITATIONS & EXCLUSIONS: PROJECT LIMITATIONS AND EXCLUSIONS EXPLICITLY DEFINES WHAT IS INCLUDED IN THE PROJECT AND WHAT IS NOT. FAILURE TO DEFINE BOUNDARIES COULD LEAD TO FALSE EXPECTATIONS AND UNNECESSARILY EXPENDING TIME AND OTHER RESOURCES i.e. •
LANDSCAPING WOULD BE DONE BY OWNER
•
REFRIGERATOR IS NOT INCLUDED AMONG KITCHEN APPLIANCES
6. INITIAL PROJECT ORGANIZATION:
THE ORGANIZATION OF THE PROJECT AND IDENTIFICATION OF THE PROJECT MANAGER, KEY TEAM MEMBERS AND KEY STAKEHOLDERS IS DONE.
7. INITIALLY DEFINED RISKS: THE KNOWN RISKS WHICH CAN HAVE AN ADVERSE IMPACT ON THE PROJECT. AS
THE PLANNING OF THE PROJECT PROGRESSES, THIS ASPECT CAN BE REFINED AND MORE, INITIALLY UNKNOWN RISKS, IDENTIFIED AND THEIR POTENTIAL ADVERSE CONSEQUENCES ASSESSED.
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8.
COST ESTIMATE:
ASSESSING THE PROJECT’S COSTS WITH SOME DEGREE OF ACCURACY.
9.
APPROVAL REQUIREMENTS FROM AUTHORITIES: DEALS WITH APPROVAL REQUIREMENTS THAT MAY BE MANDATED BY ANY STAKEHOLDER, AND WHICH CAN BE APPLIED TO PROJECT OBJECTIVES,
DELIVERABLES AND WORK PACKAGES.
10. REVIEW WITH CUSTOMER: COMMUNICATION OF THE SCOPE STATEMENT TO THE CUSTOMER AND SEEKING HIS/HER APPROVAL OR WHO ARE THE PERSPECTIVE CUSTOMERS AND THEIR
FEEDBACK.
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THE PROJECT FEASIBILITY STUDY A FEASIBILITY STUDY EXAMINES THE TECHNICAL , ECONOMIC AND IN SOME INSTANCES LEGAL VIABILITY OF A PROJECT. TECHNICAL ASPECTS WHICH MIGHT BE THOUGHT OVER INCLUDE •
Availability of inputs or raw materials and their quality and prices.
•
Determination of tools and equipment needed for the project . Technical feasibility would vary from project to project, in a construction project it might include
•
Land surveys
•
Laboratory tests
•
Possibility of building with concrete blocks only
•
Acceptance of a particular design by authorities etc.
ECONOMIC AND FINANCIAL ASPECTS INCLUDED IN THE STUDY ARE •
Financing of the project in terms of its capital structure, debt to equity ratio and Promoter's share of total cost
•
Existing investment by the promoter in any other business
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•
Projected cash flow and profitability including payback period and Net Present Value etc.
•
Rate of conversion of assets used to cash-liquidity.
•
Project's funding potential and repayment terms.
•
Sensitivity in the repayments capability.
•
Market research studies etc.
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Net Present Value Analysis
$943.39
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NPV Example for a Project Spanning 4 Years Multiply by the discount factor each year, then take cum. benefits – costs to get NPV
FEASIBILITY
REPORT
SHOULD
IDENTIFY
ALTERNATIVE
PROJECT SOLUTIONS, ASSESS THEIR RESPECTIVE ADVANTAGES AND DISADVANTAGES, AND RANK THE SOLUTIONS.
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SECURING APPROVAL FOR PROJECT AND THE PROJECT CHARTER ONCE A PROJECT HAS BEEN SCOPED AND, IF REQUIRED, ANALYZED BY FEASIBILITY REPORT, THE NEXT STEP IS TO ACQUIRE APPROVAL FOR UNDERTAKING A DETAILED PROJECT PLAN. THE STAKEHOLDERS INVOLVED IN THE APPROVAL PROCESS ARE USUALLY SENIOR MANAGEMENT AND CUSTOMERS. AFTER THE APPROVAL THE PROJECT CHARTER IS SIGNED WHICH ACCORDING TO PROJECT MANAGEMENT INSTITUTE IS THE “DOCUMENT THAT FORMALLY AUTHORIZES A PROJECT”. THE PROJECT CHARTER PROVIDES THE PROJECT MANAGER WITH THE AUTHORITY TO APPLY ORGANIZATIONAL RESOURCES TO PROJECT ACTIVITIES.
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