Fundamentals of Project Management: Part 1b

1
Fundamentals of Project Management Part 1b

• APEGGA Annual Conference April 24 25, 2003
• Dr. George F. Jergeas PEng.
• University of Calgary

2
Schedule

• Day 1a
• Introduction
• 5-Step PM
• Planning and definition
• Day 1b
• Estimating cost and time
• Video
• Organize project team
• Selecting PM and team
• Effective teams

• Day 2 c
• Project procurement
• Bidding process
• Building sustaining project team
• Contract administration
• Day 2 d
• Schedule control
• Cost control
• Project Close-out
• Claims and disputes

3
5-Step Project Management PLANNING
IMPLEMENTATION
CONTROL

ORGANIZE
DEFINE
PLAN
CLOSE
Identify project activities
State the Problem
Determine Personnel Needs
Define Management Style
Obtain Client Acceptance Install Deliverables
and Commissioning Document the Project Issue
Final Report Conduct Post- Implementation Audit
Identify Project Goal
Estimate time and cost
Recruit Project Manger
Establish Control Tools
List the Objectives
Prepare Status Reports Review
Project Schedule, cost, team report Issue
Change Orders
Recruit Project Team
Quality and Communication management
Determine Preliminary Resources
Organize Project Team Bidding
Identify Risks and stakeholders Success
criteria
Assign Work Packages
Write Project Proposal
Decision
Project charter WBS
Recruit Criteria
Variance Reports Final Report
Project network
Define Work packages Status Reports
Audit Reports
Project proposal Assign Work
Packages
4
Project Charter Project Name
- PM Conference Project
Manager
Problem/Opportunity Membership in PM
Association has declined in the past four years
and attendance at conference has declined in
past three years. The viability and financial
stability of the organization depends on
maintaining membership and successful annual
conference.
Goal Reverse the downward trend in membership
and annual conference attendance
Objectives 1. Develop the Program 2. Set the
Conference Site and Date 3. Design and Implement
the Marketing Plan
Success Criteria 1. At least 50 of previous
years conferences attendees will attend 2. At
least 150 of 450 members will attend 3. At
least 1.5 of the non-members receiving
conference brochure will attend 4. At least 5
of the non-member attendees will join PM
Assumptions and Risks 1. Interest in PM can be
renewed through the annual conference 2. A
quality professional program will attract members
and non-members 3. Key speaker(s) fail to show
up or submit written paper.
Stakeholders Attendees,
Speakers, Hotel, PM Association, Organizing team
5
Risk Quantification Technique High, Medium, Low
(HML)

• H
• HH
• M Impact
• L
• L M H
• Probability

6
Stakeholder Analysis
STAKEHOLDER
Objective
Potential Impact
How They Operate
Where they gain Support
How to Manage them and plan for mitigation
Fundamentals of Project Management
Tool Kit
7
Hierarchical Representation
CONFERENCE PLANNING
SITE
MARKETING
PROGRAM
DATE
PLACE
THEME
MATERIALS
SPEAKERS
LISTS
BROCHURE
REGISTER
OBTAIN MATERIALS
PREPARE KITS
DESIGN BROCHURE
MAIL BROCHURE
8
Estimating Time and Cost

• Once the WBS is completed then time and cost
  estimates for each activity can be started.
• With experience this becomes an easier task.

9
Time Management
KA2

• Purpose Create a realistic schedule with the
  team
• Identify the activities (tasks)
• Use the WBS and scope statement
• Develop activity lists and revise the WBS
• Sequence activities
• Consider dependencies

10
Time Management

• Estimate durations (time)
• Top down, bottom up estimates, Monte Carlo
  simulations
• Estimating formulae (PERT estimates)
• Expert opinion
• Consider resource capabilities
• Look at similar projects
• Develop the schedule (Gantt chart)
• Document assumptions and decisions
• Use project management scheduling software e.g.
  MS Project

11
Estimating formulae

• PERT Estimate (weighted average)
• Pessimistic (4 x Likely) Optimistic/6
• Pessimistic time to get to work 30 min
• Optimistic time to get to work 10 min
• Likely time to get to work 15 minutes
• PERT Estimate 30 (4x15) 10/6
• 100/616.6 17 min
• Quick and dirty formula
• Worst best most likely/3
• 55/318.3 min

12
Estimating Activity Time

• Optimistic Completion Time - is the time the
  activity will take if everything goes right
• Pessimistic Completion Time - is the time the
  activity will take if everything that can go
  wrong does go wrong but the project is still
  completed
• Most Likely Completion Time - is the time
  required under normal circumstances. It can also
  be the completion time that has occurred most
  frequently in similar circumstances

13
Estimating Activity Time

• Time to complete a task is uncertain
• Skill levels and knowledge of the individuals
• equipment variations
• Material availability
• Unexpected events
• Illness
• Employee turnover and accidents

14
Estimating Activity Time

• We know unexpected events and occurrences will
  happen but are unable to predict the likelihood
  with any confidence
• We must however account for the possibility of
  the occurrence of these events

15
Estimated times for conference planning

• ACTIVITY TIME IN WEEKS
• (O) (M) (P) (E)
• A Set conference date
• 1.0 2.0 3.0 2.0
• B Establish theme program
• 2.0 5.0 8.0 5.0
• C Select conference site
• 4.0 5.0 6.0 5.0
• D Obtain mailing labels
• 4.0 6.0 8.0 6.0
• E Develop brochure
• 3.0 10.0 11.0 9.0

16
Estimated Times for Conference Planning

• ACTIVITY TIME IN WEEKS
• (O) (M) (P) (E)
• F Obtain mailing labels
• 3.0 4.5 9.0 5.0
• G Mail brochure
• 1.0 2.0 3.0 2.0
• H Obtain speaker materials
• 3.0 3.5 7.0 4.0
• I Receive registrations
• 4.0 6.0 8.0 6.0
• J Confirm arrangements
• 0.5 1.0 1.5 1.0
• K Prepare conference kits
• 1.0 2.0 3.0 2.0

17
Scheduling Activities

• Bar chart and RACI
• Produce a Logical Network
• Critical Path Method
• Arrow Diagrams
• Precedence Diagrams
• Identify Critical Activities
• Locate the Critical Path
• Floats

18
Bar Charts/Gantt Chart

• Most projects, however complex, start by being
  depicted on a bar chart. The principles are very
  simple
• Prepare list of project activities
• Estimate the time and resources needed
• Represent each activity by a bar
• Decide logical sequence
• Plot activities on a chart with horizontal time
  scale showing start and end

19
Project Schedule - Sample
Project ____________________
Project Manager ____________________
Date _____________
Sample
20
RACI Charts

• Responsible - Accountable - Consulted - Informed
• Identify the roles of participants in each
  element of a project
• Effective communications road map
• 4 to 8 weeks look ahead

21
RACI Charts

• Update weekly to
• Reset expectations
• Ensure right people involved in detailed planning
• Ensure everyone knows what needs to be done by
  whom

22
RACI Chart
23
RACI Charts (F. T. Hartman, 2000)
2.4.5 Major Element Amelia
Drover Fred 2-5
Deliverable_____________________
Manager___________________ Project_________
DATES
A C G C F M J W B D M H F W L
S W E
Budget Actual Budget Actual W/Hrs.
W/Hrs. Cost Cost
ACTION
Activity Another activity Build something
R A A C I I - I C 120
400 - R C I A A I
A - 50
50 R - A C I I - C -
345 1,500 - R C I A
A I A - 127
- R A A C I I - I C
90 9,000 R - A C I
I - C - 55
1,700
Another Item Yet another Design a bit
Design more Sneeze Gesundheit
- A R I C C A I I 455
875 R C A A I C I
- - 200
7,785 - R I I C - - - -
65 -
Another thing Wait for item More stuff Finish
A C R - C I C - - 20
100,000 - I C A A R
I A I 655
- R A - I C I A A A 80
- A I C I I A A
A R 12 100
24
CPM Critical Path Method

• Graphic network based scheduling technique
• Arrow Diagrams
• Precedence Diagrams
• Use activities created by the WBS process
• Analysis of timing and sequencing logic
• Aids in identifying complex interrelationship of
  activities

25
CPM Critical Path Method

• Allows for easy revision of schedule and
  simulation and evaluation of the impact of
  changes
• Also used as a control tool during execution of
  the project

26
Producing a Logical Network

• The sequencing identifies activities that must be
  completed before another activity can start and
  which activities can occur simultaneously.
  Different methods
• 1. Low-tech approach use post-it labels
• Each label has one activity written on it
• Through iterative process the labels can be
  arranged and rearranged

27
Producing a Logical Network

• 2. Ask yourself the following
• Which activities must be completed before this
  activity starts?
• Which activity cannot start until this activity
  is completed?
• Which activities have no logical relationship
  with this activity and therefore take place at
  the same time (concurrent activities)?

28
Producing a Logical Network

• 3. Identify immediate predecessor activities,
  which are activities that must be completed
  before another activity can begin

29
Activity Sequencing Training Example

• ACTIVITY IMMED. TIME(WEEKS)
• PREDECESSOR (E)
• A Set conference date - 2.0
• B Establish theme/program - 5.0
• C Select conference site A 5.0
• D Obtain speakers B 6.0
• E Develop brochure C,D 9.0
• F Obtain mailing labels C,D 5.0
• G Mail brochure E,F 2.0
• H Obtain speaker materials D 4.0
• I Receive registrations G 6.0
• J Confirm all arrangements H,I 1.0
• K Prepare conference kits J 2.0

30
Activity Sequencing Training Example
a
c
e
g
i
start
j
k
end
f
b
d
h
31
Activity Sequencing Training Example
0
2 7 11 20
5 9 20 22 22
28

2 6 28 29 29
31
2
a 2
c
e
4 6 6 11 11 20
g
i
Start
11 16
20 22 22 28
j1
k2
End
f5
0 5 5 11
11 15
28 29 29 31
b5
d6
h4
15 20
0 5 5 11
24 28
32
Critical Path

• The longest path is the Critical Path
• Critical path is where there is zero slack time
• If an activity takes longer than estimated on the
  critical path then the project will be delayed
• The critical path can change if there is a delay
  that make an alternative path longer

33
Float (Slack)

• Slack or float time is amount of delay that could
  be tolerated in the start or completion time
  without causing a delay in completion of the
  project
• Total float or calculations to determine how long
  each activity could be delayed without delaying
  the project
• Total float LF - ES - duration

34
Should be able to

• Develop a complete project plan
• WBS listing all activities
• Project organization and communication
• Project schedule using Post-it notes and bar
  charts
• RACI Chart(s)

35
Video

• The Power of scheduling

36
Plan the Project Basics of Cost Estimating
37
5-Step Project Management PLANNING
IMPLEMENTATION
CONTROL

ORGANIZE
DEFINE
PLAN
CLOSE
Identify project activities
State the Problem
Determine Personnel Needs
Define Management Style
Obtain Client Acceptance Install Deliverables
and Commissioning Document the Project Issue
Final Report Conduct Post- Implementation Audit
Identify Project Goal
Estimate time and cost
Recruit Project Manger
Establish Control Tools
List the Objectives
Prepare Status Reports Review
Project Schedule, cost, team report Issue
Change Orders
Recruit Project Team
Quality and Communication management
Determine Preliminary Resources
Organize Project Team Bidding
Identify Risks and stakeholders Success
criteria
Assign Work Packages
Write Project Proposal
Decision
Project charter WBS
Recruit Criteria
Variance Reports Final Report
Project network
Define Work packages Status Reports
Audit Reports
Project proposal Assign Work
Packages
38
Introduction

• Cost estimates
• Key to successfully conceived, managed and
  completed projects
• An approximation procedure
• Mistakes can be very costly!

39
What is a Cost Estimate?

• AACEI Definition
• A compilation of all the costs of the elements
  of a project or effort included within an agreed
  upon scope
• To the contractor
• To forecast cost required to complete a project
  in accordance with the contract, plans and
  specifications
• To the owner cost includes
• Administering the contract
• Contractor's charges, consultants and suppliers
  fees
• Price of land, financing and operating costs

40
What Constitutes a Good Estimate?

• A clear, sound basis
• An agreed upon realistic execution plan
• Good estimating methods and data base
• Good experienced estimator

41
Order - of - Magnitude Estimates

• A quick method of determining an approximate
  probable cost of a project due to the following
  specific situations
• Time constraints
• High cost of a detailed estimate

42
Order - of - Magnitude Estimates

• Prepared without detailed engineering data
• Square feet of floor area
• Cubic feet of volume
• Plant capacity for input and output
• Km of road surface type
• Use In feasibility studies of a project and
  screening several types of alternatives or
  proposals
• Accuracy /- 30

43
Definitive Estimates

• Prepared from very defined engineering data
• Requires as a minimum
• Plans and elevations
• Piping and instrument diagrams
• Single line electrical diagrams
• Equipment data sheets and quotations
• Architectural and structural details
• Soil data and sketches of major foundations
• A complete set of specifications
• Accuracy /- 5

44
Components of a Cost Estimate

• Direct Cost
• Labour actual amount paid to field personnel
• Materials essential to constructing and
  operating a facility including equipment
  installed permanently
• Equipment used to perform a contract
• Subcontracts

45
Components of a Cost Estimate

• Indirect Costs
• Overhead
• Home office overhead
• Site overhead
• Taxes
• Risks
• Contingency
• Profit
• Escalation

46
Profit

• Is the amount of money included by the contractor
  in its price as compensation for risk, effort and
  endeavor in undertaking a project.
• It is the money left after a contractor has met
  all costs (both indirect and direct).
• Profit amount included is very subjective and
  depends on
• Size of project
• Extent of risk involved
• Need for work
• Extent of competition

47
Contingency

• An amount added to cover any additional costs
  that may occur.
• To determine the amount of contingencies
  desirable, an estimator should rely on
• Personal judgment, or
• Through statistical analysis of past project costs

48
Training Example Estimated Conference Planning
Budget
CONFERENCE PLANNING 243,325
Site 170,425
Program 41,100
Marketing 31,800
Theme 600
Materials 13,300
Speakers 27,200
Date 1,000
Location 169,425
Lists 2,000
Brochure 29,800
Registration
3 conf calls with pgm comm
Travel/expenses for 16 speakers _at_ 500 per speaker
3 site visits _at_ 800/visit food _at_50 per
person/day for 3 days for 1100 meeting rooms _at_
225/day/room for 3 days for 3 rooms
Deposit
25,000 labels _at_ 80/1000
Obtain Speaker Materials 800
Prepare Conference Notebook 12,500
Design Brochure 12,800
Mail Brochure 17,000
Layout 16 pages _at_ 50/page Printing 30,000
copies _at_ 0.40/copy
25,000 pieces _at_ 0.68/piece
1100 binders _at_ 5/binder photocopy materials
350,000 pages _at_ 0.02/page
Edit/format _at_ 50/speaker
49
Writing a Project Proposal
50
5-Step Project Management PLANNING
IMPLEMENTATION
CONTROL

ORGANIZE
DEFINE
PLAN
CLOSE
Identify project activities
State the Problem
Determine Personnel Needs
Define Management Style
Obtain Client Acceptance Install Deliverables
and Commissioning Document the Project Issue
Final Report Conduct Post- Implementation Audit
Identify Project Goal
Estimate time and cost
Recruit Project Manger
Establish Control Tools
List the Objectives
Prepare Status Reports Review
Project Schedule, cost, team report Issue
Change Orders
Recruit Project Team
Quality and Communication management
Determine Preliminary Resources
Organize Project Team Bidding
Identify Risks and stakeholders Success
criteria
Assign Work Packages
Write Project Proposal
Decision
Project charter WBS
Recruit Criteria
Variance Reports Final Report
Project network
Define Work packages Status Reports
Audit Reports
Project proposal Assign Work
Packages
51
Writing a Project Proposal

• Represents the transition from the planning
  (define, plan) to implementation (organising,
  control, close)
• Used as an information source to decide whether
  the project should proceed to the implementation
  phase
• Different terminology used
• DBM, Brief, Scope Definition Statement

52
Purpose

• The project proposal provides
• A statement of the need, the approach being taken
  and the expected benefits
• Description of project activities, timelines and
  resources required
• Project costs
• Documentation for project control
• Briefing document for new team members and others
  in the organisation

53
Purpose

• Tool for decision making, managing, controlling,
  training and reporting
• Written for
• Senior management
• Project team
• Other managers who are indirectly involved
• Consultants

54
Step 3. Organising the Project Team

• Projects are only as successful as the project
  manager and team who implements them
• Building an effective team takes a lot of work
• Must consider more than just a persons technical
  skills

55
Organising the Project Team

• The selection of team members is based on skills,
  availability and personality
• There needs to be a commitment and chemistry
  among the team members
• Team building is not a perfect art, there is
  always the risk of conflict

56
Organising the Project Team

• Organized and located to facilitates open
  continuous communication
• This does not mean they have to be physically
  located together
• Team members may be reallocated for the duration
  of the project or remain in their function areas

57
Organising the Project Team

• Large projects
• Dedicated core team
• Structured
• More defined roles
• Need for open and continuous communication lines
• Self contained

58
Organising the Project Team

• Small projects
• Part-time commitment from team members
• Team members remain in their functional units
• Conflicting priorities/demands exist
• Conflicts may arise from having more than one
  boss or more than one team involvement

59
Organising the Project Team

• Be sure all parties understand the need to
• Build the team
• What the priorities are within in the
  organisation and
• Their assistance is appreciated
• Project manager to ensure that the cross
  functional relationships are maintained and
  supported

60
Opening a Project

• Owner schedule a kick-off meeting
• Meet contractor and other key personnel
• Identify areas of responsibility
• Establish job philosophy (set the ground rules)
• Set up requirements for on-or off-site meetings
  and set the frequency of such meetings, who
  should attend
• Discuss problems anticipated in execution
• Discuss special sequence of operations or
  scheduling limitations
• Issue written Notice to Proceed
• Set precise start date - good practice

61
Characteristics of an Effective Project Manager

• Understands purpose of the project
• Has the necessary background and experience
• Effective leader with proven managerial ability

62
Characteristics of an Effective Project Manager

• Communication skills
• Consistent behaviour
• Has credibility with team and client
• Sensitive to project and corporate politics
• Excellent Facilitator rather than a dictator

63
Selection of Project Manager

• Key position on the project
• Selection of appropriate individual is essential
  to success of the project
• Selection criteria should be established based on
  the skills required to carry out project

64
Project Manager Selection Criteria

• 1. Background and Experience
• Should be consistent with the nature and needs of
  the project
• Education should be compatible with nature and
  expectations of the project
• Look for a individual with a mix of conceptual,
  analytical, operational and practical experience

65
Project Manager Selection Criteria

• 2. Leadership
• Ability to design, co-ordinate, control and
  implement project plan
• Stay the course until completion
• Ability to see the big picture and understand the
  details

66
Project Manager Selection Criteria

• 3. Technical expertise
• Ability to direct, evaluate, and make decisions
  on technical alternatives
• Does not and cant be an expert in all areas of
  the project
• Should have expertise in project management, team
  management and training

67
Project Manager Selection Criteria

• 4. Interpersonal skills
• Should be able to
• Motivate, inspire, and coach
• Actively listen, give and receive feedback
• Empathise, relate feelings, needs and concerns in
  a positive manner
• Prevent and resolve conflicts, negotiate
• Keep team, senior management and stakeholders
  informed through effective communication channels

68
Project Manager Selection Criteria

• 5. Proven Managerial Ability
• Good track record, excellent indicator of the
  future
• Knowledge of the organisation and its operation
• Ability to effectively interface with all levels
  of the organisation
• Ability to link project goals to corporate
  mission and goals

69
Selecting the Team

• Selection of team members depends on a number of
  factors
• Nature of the technical work to be done
• Level and type of expertise required at each
  phase of the project
• Availability of staff in the organisation and
  reporting relationships
• Sometimes you cannot always choose

70
Team Selection Criteria

• Similar to those of the project manager
• More emphasis on the technical skills
• Interpersonal skills essential
• Ability to function as a team member with shared
  goals and objectives (us instead of me)

71
Effective Team Characteristics

• Commitment to the project goals and completion
• Ability to communicate, share responsibility and
  power
• Flexible willing to change or try some new
  methods
• Technically competent
• Willing to
• Admit mistakes
• Admit not have all the answers
• Accept feedback

72
Effective Team Characteristics

• Politically astute
• Team players
• Creative and open to suggestions
• High self esteem, can do attitude
• Willing to work for more than one boss, across
  formal structure and authority system
• Results oriented

73
What Makes Teams Work

• Successful Projects
• The team has fun
• Have the support of senior management
• Everyone understands the reason for the project
• Conflicts are addressed and dealt with
• The entire organisation is committed

74
What Makes Teams Work

• Successful projects
• Team understands the organisations mission and
  how the project fits within that mission
• Team understands what is to be achieved and when
  it is achieved
• Trust and communication

75
Human Resources Management Tips

• Listen to understand
• Be responsive
• Provide positive feedback
• Act on problems in a timely manner
• Deal with problems
• They wont go away, but will get BIGGER
• Provide constructive criticism
• Document appropriately
• Take time to have FUN