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Title: Project Management


1
PROJECT MANAGEMENT

Dr. ANANDA KUMAR Professor Department of Mgt.
Studies Christ College of Engg.
Tech. Puducherry, India. Mobile 91 99443
42433 E-mail searchanandu_at_gmail.com
2
  • Unit 1
  • Project Meaning classification importance
    of project management An Integrated Approach
    Project Portfolio Management System The Need
    Choosing the appropriate Project Management
    structure Organizational considerations and
    project considerations steps in defining the
    project project Rollup Process breakdown
    structure Responsibility Matrices External
    causes of delay and internal constraints.

3
Project
  • A project is a one-shot, time-limited,
    goal-directed, major undertaking, requiring the
    commitment of varied skills and resources.
  • A project is temporary in that there is a defined
    start (the decision to proceed) and a defined end
    (the achievement of the goals and objectives).

4
Project Management
  • PM is the application of knowledge, skills, tools
    and techniques to a broad range of activities in
    order to meet the requirements of the particular
    project.
  • Project Management knowledge and practices are
    best described in terms of their component
    processes.
  • These processes can be placed into five Process
    Groups Initiating, Planning, Executing,
    Controlling and Closing.

5
Project Management Constraints
Time Cost Scope
Manage these or they will manage you!
6
Project Management Activities
  • 1. Planning the work
  • 2. Assessing and justifying risk
  • 3. Estimating resources
  • 4. Organizing the work
  • 5. Acquiring human and material resources
  • 6. Assigning tasks
  • 7. Directing activities
  • 8. Controlling project execution
  • 9. Reporting progress
  • 10.Analyzing the results based on the facts
    achieved

7
Project Life Cycle
Executing
Level of effort
Planning
Delivering
Defining
Start Time
End
Defining 1.Goal 2.Specifications 3.Tasks 4.Respons
ibilities
Planning 1.Schedules 2.Budgets 3.Resources 4.Risks
5.Staffing
Executing 1.Status reports 2.Changes 3.Quality 4.F
orecasts
Delivering 1.Train Customer 2.Transfer
documents 3.Release Resources 4.Lessons learned
8
Classification of Project
  • On the basis of Expansion
  • On the basis of Magnitude of the resources to be
    invested.
  • On the basis of Sector
  • On the basis of Objective
  • On the basis of productivity
  • On the basis of nature of benefits
  • On the basis of risk involved in the product
  • On the basis of Economic life of the project

9
  • On the basis of Expansion
  • Project expanding the capacity
  • Project expanding the supply of knowledge
  • On the basis of Magnitude of the resources to be
    invested
  • Giant projects affecting total economy
  • Big projects affecting at one sector of the
    economy
  • Medium size projects
  • Small size projects (depending on size,
    investment impact)

10
  • 3. On the basis of Sector
  • Industrial Project
  • Agricultural project
  • Educational project
  • Health project
  • Social project
  • 4. On the basis of Objective
  • Social Objective project
  • Economic objective project

11
  • 5. On the basis of Productivity
  • Directivity productive project
  • Interactively productive project
  • 6. On the basis of nature of benefits
  • Quantifiable project
  • Non-Quantifiable project

12
  • 7. On the basis of risk involved in the project
  • High risks project
  • Normal risks project
  • Low risks project
  • 8. On the basis of economic life of the project
  • Long term project
  • Medium term project
  • Short term project

13
Importance of Project Management
  • Compression of the Product Life Cycle
  • Global Competition
  • Knowledge Explosion
  • Corporate Downsizing
  • Increased Customer Focus
  • Rapid Development of Third world and Closed
    Economies
  • Small Projects Represent Big Problems

14
Project Management Today An Integrative Approach
  1. Integration of Projects with the Strategic Plan
  2. Integration within the Process of Managing Actual
    Projects
  3. Implement Strategies through Projects

15
Customer
Integrated Management of Project
Environmental Analysis External
Internal Firm Mission, Goals, Strategies Prioriti
es
Projects
System
Environment Culture
Project Implementation
16
The Technical Sociocultural Dimensions of the
Project Management Process
Socio Cultural Leadership Problem
Solving Teamwork Negotiation Politics Customer
Expectations
Technical Scope WBS Schedules Resource
Allocation Baseline Budgets Status reports
17
Project Portfolio Management
Vision Mission Strategy Resource
Allocation Project Prioritization Performance
Tracking Needs Assessment Project
Proposals Project Deliverables
Enterprise Management
Portfolio Management
Project Portfolio
Executives Teams
Management
Project Management
18
Project Portfolio Management PPM
  • A collection of projects or programs and other
    work that are grouped together to facilitate
    effective management of that work to meet
    strategic business objectives.
  • Portfolio Management is the middleware between
    Strategic Planning and Project Delivery.
  • It means a systematic process of selecting,
    supporting, and managing the firms collection of
    projects.
  • Portfolio management ensures projects are
    aligned with strategic goals appropriately.
  • It provides information to make better business
    decisions.

19
Project Portfolio Management System
  • Portfolio management requires
  • decision making
  • prioritization
  • review
  • realignment
  • reprioritization

20
PPM Essentials
21
Major Phases of PPM
  • 1. Establish
  • 2. Evaluate
  • 3. Prioritize
  • 4. Select
  • 5. Manage

22
Major Phases of PPM

  • No Revise Submit


  • No - Reject

  • yes
  • Cancelled
  • Completed

Evaluate project alignment to the corporate
strategy
Project Proposal
Establish Portfolio strategy
Postponed
Prioritize project and hold pending funding
Manage Active projects On plan Off plan In
Trouble
Select a balanced portfolio using the
prioritized projects
23
Major Phases of PPM
  • 1. Proposed
  • 2. Aligned
  • 3. Prioritized
  • 4. Selected
  • 5. Active
  • 6. Postponed
  • 7. Cancelled
  • 8. Completed

24
Need for an Effective PPM System
  • Problem 1 The Implementation Gap
  • Problem 2 Organization Polities
  • Problem 3 Resource Conflicts and Multitasking

25
  • Problem 1 The Implementation Gap
  • Conflicts frequently occur among functional
    managers and cause lack of trust.
  • Frequent meetings are called to establish or
    renegotiate priorities.
  • People frequently shift from one project
    to another, depending on current priority.
    Employees are confused about which projects are
    important.
  • People are working on multiple projects and
    feel inefficient.
  • Resources are not adequate.

26
  • Problem 2 Organization Politics
  • Politics exist in every organization and can
    have a significant influence on which projects
    receive funding and high priority. This is
    especially true when the criteria and process for
    selecting projects are illdefined and not aligned
    with the mission of the firm. Project selection
    may be based not so much on facts and sound
    reasoning, but rather on the persuasiveness and
    power of people advocating projects.

27
  • Problem 3 Resource Conflicts and Multitasking
  • Most project organizations exist in a multi
    project environment. This environment creates
    the problems of project interdependency and the
    need to share resources.
  • Resource sharing also leads to multitasking.
    Multitasking involves starting and stopping work
    on one task to go and work on another project,
    and then returning to the work on the original
    task. People working on several tasks
    concurrently are far less efficient, especially
    where conceptual or physical shutdown and startup
    are significant.

28
Choosing the Appropriate Project Mgt Structure
  1. Organization Considerations
  2. Project Considerations

29
1. Organization Considerations
  • If an organization has both standard
    products and projects, then a matrix arrangement
    would appear to be appropriate. If an
    organization has very few projects, then a less
    formal arrangement is probably all that is
    required. Temporary task forces could be created
    on an as-needed basis and the organisation could
    out-source project work.

30
1. Organization Considerations
  1. Organizing Projects within the Functional
    Organisation
  2. Organizing Projects within a Matrix Arrangement
  3. Organizing Projects within a Network organisation

31
Organizing Projects within the Functional
Organisation
Delta manufacturing, inc. President
Finance Administration
Human Resources
Marketing
Procurement
Manufacturing
Engineering
Software Engineering
Electronics Engineering
Receiving Inspection
Purchasing
Design
Mechanical Engineering
Customer service
International Sales
Domestic Sales
Production Scheduling
Testing
Assembly
Fabrication
32
Organizing Projects within a Matrix Arrangement
Zeta manufacturing inc. President
Human Resources
Finance
Director of Projects
Engineering
Manufacturing
Marketing
Project Admin.
Testing
Assembly
Mechanical engg.
Software engg.
Design Engg.
Customer Service
P A PM
1
2
1
2
1
2
P B PM
1
3
1
1
3
1
1
P C PM
2
1
2
2
33
Organizing Projects within a Network organisation
Tool Die firm
Marketing Firm
Parts Supplies
Advertising firm
Mountain Bicycle
Manufacturer
Legal firm
Project Manager
Inventor
Bicycle Company
34
2. Project Considerations
  • At the project level, the question is how
    much autonomy the project needs in order to be
    successfully completely. Hobbs and Menard
    identify seven factors that should influence the
    choice of project management structure
  • 1. Size of project
  • 2. Strategic importance
  • 3. Novelty and need for innovation

35
  1. Need for integration (number of departments
    involved)
  2. Environmental complexity (number of external
    interfaces)
  3. Budget and time constraints
  4. Stability of resource requirements

36
Defining the Project
  • One of the best ways to meet the needs of
    the customer major project stakeholders is to
    use an integrated project planning and control
    system that requires selective information.
  • Project managers who manage a single, small
    project can plan and schedule the project tasks
    without a formal planning and information system.

37
Steps in Defining the Project
  • Step 1 Defining the Project Scope
  • Step 2 Establishing Project Priorities
  • Step 3 Creating the Work Breakdown Structure
  • Step 4 Integrating the WBS with the
    Organization
  • Step 5 Coding the WBS for the Information
    System

38
Step 1 Defining the Project Scope
  • Defining the project scope sets the stage for
    developing a project plan. Project scope is a
    definition of the end result or mission of your
    project a product or service for your
    client/customer. The primary purpose is to
    define as clearly as possible the deliverable for
    the end user and to focus project plans.
  • Many research clearly shows that a poorly defined
    scope or mission is the most frequently mentioned
    barrier to project success.

39
Cont
  • Before work on the project can be started, its
    necessary to clearly define what the outcomes of
    the project will be. This involves not only what
    specifications and criteria the final project
    must meet, but when it must be completed and what
    the budget is.
  • Whats the objective?
  • What are the expected, required, and desired
    results?
  • How will success be measured?
  • Whats the timeframe?
  • What are the resource implications?

40
Step 2 Establishing Project Priorities
  • Quality and the ultimate success of a project are
    traditionally defined as meeting and/or exceeding
    the expectations of the customer and/or upper
    management in terms of cost (budget), time
    (schedule), and performance (scope) of the
    project.

Scope
Quality
Time
Cost
41
Cont
  • The interrelationship among these criteria
    varies. For example, sometimes it is necessary
    to compromise the performance and scope of the
    project to get the project done quickly or less
    expensively. Often the longer a project takes,
    the more expensive it becomes. However, a
    positive correlation between cost and schedule
    may not always be true.
  • Other times project costs can be reduced by using
    cheaper, less efficient labor or equipment that
    extends the duration of the project.

42
Step 3 Creating the WBS
  • Once the scope and deliverables have been
    identified, the work of the project can be
    successively subdivided into smaller and smaller
    work elements. The outcome of this hierarchical
    process is called the work breakdown structure
    (WBS). The WBS is a map of the project.
  • Use of WBS helps to assure project managers that
    all projects and work elements are identified, to
    integrate the project with the current
    organization, and to establish a basis for
    control. Basically, the WBS is an outline of the
    project with different levels of details.

43
Hierarchical Breakdown of the WBS
Level Hierarchical
breakdown Description 1

Complete project 2

Major deliverable
3
Supporting deliverable
4
Lowest Mgt


responsibility level

Grouping of work
5
packages for


monitoring progress

and responsibility


Project
Deliverable
Sub deliverable
Lowest subdeliverable
Cost Account
Work package
44
Step 4 Integrating the WBS with the
Organization
  • An integral part of the WBS is to define the
    organizational units responsible for performing
    the work. In practice, the outcome of this
    process is the organization breakdown structure
    (OBS). The OBS depicts how the firm has
    organized to discharge work responsibility. The
    purpose of the OBS are to provide a framework to
    summarize organization unit work performance,
    identify organization units responsible for work
    packages, and tie the organizational unit to cost
    control accounts.

45
Integration of WBS and OBS




  • Internal Memory BIOS

Personal Computer prototype
Vendor, software, application
Disk storage units
Mouse, keyboard, voice
Microprocessor unit
External USB
Hard
Optical
ROM
Utilities
File
I/O
RAM
Read/write head
Chassis frame
Circuit board
Motor
46
Step 5 Coding the WBS for the Information
System
  • Gaining the maximum usefulness of a breakdown
    structure depends on a coding system. The codes
    are used to define levels and elements in the
    WBS, organization elements, work packages, and
    budget and cost information. The codes allow
    reports to be consolidated at any level in the
    structure. The most commonly used scheme in
    practice is numeric indention.

47
Project Rollup
  • The work packages and cost accounts serve as a
    database from which all other planning,
    scheduling, and controlling processes are
    coordinated. Cost accounts include one or more
    work packages. Each work package has time,
    budget, resource, responsibility, and control
    points that can be used to track project progress.

48
Work Package Estimates
  • WP Description Final Version
    Page 1 of 1
  • WP ID 1.1.3.2
    Project
    PC proto
  • Deliverable Circuit Board
    Date 9/29/xx
  • Original Unit Software
    Estimator RMG
  • WP Duration 3 work weeks
    Total Budget 265

49
Project Planning
  • Once the outcome of the project has been defined,
    its important to develop a plan of what work
    needs to be done, what resources are needed, who
    will do it, and when. The level of detail needed
    in the plan will be determined by the complexity
    of the project and the number of people involved.
    The plan will probably not be followed exactly
    things will happen that lead to adjustments and
    modifications.

50
Steps for Project Planning
Identify Parameters / Constraints
Identify Hot Spots
Break the project into hunks, chunks, and bites
Write down the tasks in sequence
Identify who is responsible for each item
Determine when each task will be done
Determine the projected cost
51
Planning Steps Answer
1. Identify parameters/constraints What are the requirements for quality /specifications, cost/budget/other resources, and time/schedule? Which of the three is highest priority?
2. Identify hot spots Where are the potential problems? How could these problems be addressed?
3. Break the project into hunks, chunks, and bites What are the major pieces of the project, the minor pieces that make up the major pieces, and the individual tasks within the minor pieces?
4. Write down the tasks in sequence What tasks can be done concurrently, or in parallel? What tasks cannot be done until others are completed?

52
5. Identify who is responsible for each item Do the project manager and team have the resources needed?
6. Determine when each task will be done Which tasks are required, and which may be just nice to have? How long will each task take? What are the start and finish dates, based on sequence and time to complete?
7. Determine the projected cost Based on the schedule, what will be the final cost?
53
Process Breakdown Structure
  • The WBS is best suited for design and build
    projects that have tangible outcomes such as an
    off-shore mining facility or a new car prototype.
    The project can be decomposed or broken down
    into major deliverables, subdeliverables, and
    ultimately to work packages.
  • It is more difficult to apply WBS to less
    tangible, process-oriented projects in which the
    final outcome is a product of a series of steps
    or phases. Here, the big difference is that the
    project evolves over time with each phase
    affecting the next phase.

54
PBS for Software Development Project
  • 1 Level
  • Major phases
  • 2 Level
  • Activities
  • 3 Level
  • Activities

Software Development Project
Rollout
Analysis
Design
Construct
Test
Define user interface
Develop detailed design
Establish quality requirements
Develop technical design
Define application architecture
Design system interfaces
Design logical database structure
Define processing flow
55
Responsibility Matrices
  • In many cases, the size and scope of the project
    do not warrant an elaborate WBS or OBS. One tool
    that is widely used by project managers and task
    force leaders of small projects is the
    responsibility matrix (RM).
  • The RM (sometimes called a linear responsibility
    chart) summarizes the tasks to be accomplished
    and who is responsible for what on a project. In
    its simplest form an RM consists of a chart
    listing all the project activities and the
    participants responsible for each activity.

56
Responsibility Matrices
  • Project Team

Task Richard Dan Dave Linda Elizabeth
Identify target customers R S S
Develop draft questionnaire R S S
Pilot-test questionnaire R S
Finalize questionnaire R S S S
Print questionnaire R
Prepare mailing labels R
Mail questionnaires R
Receive monitor returned questionnaires R S
Input response data R
Analyze results R S S
Prepare final report R S
57
External causes of delay
  • There are several reasons, including
    socio-political, economic, technological, macro
    and micro-global reasons, for the delay of
    several projects according to the response of
    several project managers.
  • Professional project managers need to identify
    the real reasons in order to prevent such delays
    in future.
  • The external constraints arise due to the
    following reasons

58
External causes of delay
  • global macro-level government policies
    influenced by social, economic, political,
    regional or global pressures affecting currency
    fluctuations, trade relations, foreign aid, etc.
    Typical examples are India-china confrontation,
    India-Pakistan disputes, Arab-Israel crises,
    Iran-Iraq war etc.
  • Indian government policies
  • import regulations
  • panic taxation
  • defense expenditure

59
External causes of delay
  • political situation
  • inflation
  • law and order problems
  • natural disasters, like earthquakes, floods,
    etc.

60
Internal Contraints
  • The internal constraints, which can be
    anticipated, planned and controlled relate to the
    programmes and policies of the company. Some of
    the important causes for such restraints are
    listed below. These can be broadly classified
    into people, funds, and organisation.
  • The corporate culture and the style of leadership
    are the key areas, as the project manager is not
    appointed at the conception of the project and
    is, therefore, not totally involved in the
    formulation of objectives. The other internal
    constraints may be listed as under

61
Internal Constraints
  • inappropriate choice of site
  • disputes with local agencies
  • inadequacy of foreign collaboration agreements
  • lack of skilled workers
  • technical incompetence
  • inadequate project planning preparation
  • change of scope because of government
    regulations
  • lack of infrastructure of water and
    electricity
  • poor monitoring and control etc.

62
Project Management
63
  • Unit 3
  • Project Evaluation under certainty Net Present
    Value (Problems Case Study), Benefit Cost
    Ratio, Internal Rate of Return, Urgency, Payback
    Period, ARR Project Evaluation under
    uncertainty Methodology for project evaluation
    Commercial vs. National Profitability Social
    Cost Benefit Analysis, Commercial or National
    Profitability, social or national profitability.
  •  

64
Payback Period Method (PB)
  • Payback period is defined as the length of time
    required for the stream of cash proceeds produced
    by an investment to equal the original cash
    outlay required by the investment.
  • FORMULA
  • Initial Investment in projects
  • Payback period ------------------------
    ---

  • Annual cash inflow
  • It is the number of years required to recover the
    investment. Incase of unequal cash inflow, it can
    be found out by adding up the annual cash inflow
    till the total is equal to the investment. Many
    firms use the payback period as a decision
    criterion because it is easy to calculate. Cash
    inflow is the sum of net profit after tax and
    depreciation which is a non-cash expense.

65
Accounting Rate of Return or Average Rate of
Return ARR
  • This method take into account the total earnings
    expected from an investment proposal its full
    life time. The method is called accounting rate
    of return method, because it uses the accounting
    concept of profit i.e., income after deprecation
    and tax as criterion for calculation of return.

66
Accounting Rate of Return or Average Rate of
Return
  • Computation of A.R.R
  • a.) Total income method
  • Net Profit after dep Tax
  • Accounting Rate of Return
    --------------------------- x 100

  • Original investment scrap value
  • b.) Average investment method
  • Net Profit after dep Tax
  • Accounting Rate of Return
    --------------------------- x 100
  • Average investment

67
  • Average investment is again a dispute term. The
    following four alternatives used
  • Original investment
  • (i) Average investment
    --------------------------- or
  • 2
  • Original investment scrap value
  • (ii)Average investment
    --------------------------- or
  • 2
  • Original investment scrap value
  • (iii)Average investment
    --------------------------- or
  • 2
  • Original investment scrap value
  • (iv)Average investment --------------------
    ------- Additional W.C scrap
  • 2

68
Net Present Value NPV
  • This method follows the DCF Technique and
    recognizes the time value of money. It is an
    index used to ascertain the economic worthiness
    of the investment proposals. If the investment
    i.e. cash outflow is made in the initial year,
    then it is present value will be equal to the
    amount of cash actually spent. If the cash
    outflow is made in the second and subsequent year
    also, its present value also should be found out
    by applying the appropriate rate of interest
    which is the firms cost of capital. It is the
    minimum rate of return expected to be earned by
    the firm on the investment proposals.

69
Net Present Value NPV
  • Similarly all the cash inflows (i.e. Net profit
    after tax Depreciation) are also to be
    discounted at the above rate in order to find out
    the present value of cash inflows occurring in
    the future periods. Then the net present value is
    to be found out by subtracting the present value
    of cash outflows from the present value of cash
    inflows. It is defined as the difference between
    the present value of cash outflow and present
    value of cash inflows occurring in the future
    periods over the entire life of the project.

70
Net Present Value NPV
  • ACCEPTANCE RULE
  • If the NPV is positive or at least equal to zero,
    the project can be accepted
  • NPV gt 0, the project is accepted
  • NPV lt 0, the project is rejected
  • NPV 0, the project is accepted or rejected on
    non-economic considerations.

71
Net Present Value NPV
  • CALCULATION OF NPV
  • NPV
  • Where NPV Net present value
  • R Cash inflows
  • K Cost of capital
  • I Cash out flows

72
Internal Rate of Return IRR
  • Internal rate of return is the rate of which is
    the sum of discounted cash inflows equals the sum
    of discounted cash outflows. In other words it is
    the rate at which equals the aggregate discounted
    cash inflow with the aggregate discounted cash
    outflows. It is the rate of discount which
    reduces the net present value of an investment to
    zero. It can be stated in the form of a ratio

73
Internal Rate of Return IRR
  • Cash inflows
  • IRR --------------------------- 1
  • Cash out flows
  • a) Where cash inflows are uniform the internal
    rate of return can be calculated by locating the
    factor in annuity table. The factor is calculated
    as follows.
  • F I / C
  • Where
  • F factor to be located in annuity table
  • I Investment or cash outflow
  • C Cash inflows per year

74
Project Evaluation under Uncertainty
  • Investment decisions have to be based on the
    knowledge of future expectations, and hence are
    spun around forecasts, estimates and projections.
    Generally, there is an irresistible urge in the
    estimator or planner to invest the projections
    with a certain degree of definiteness which is
    most unlikely in a dynamic business setting. It
    should be appreciated that even the defined
    estimates and defined return analysis call for
    continuous and close review for revisions, if
    necessary.

75
Convert Uncertainties into Calculated Risks
  • Future always holds surprises. Informed
    decisions based on comprehensive study of
    relevant data and trends are sound starts for
    successful projects, but even these considered
    assumptions and anticipations have to be
    constantly reviewed and revalidated or modified,
    as the case may be, to enable prompt corrective
    actions during the project implementation and
    operation phases.
  • Assumptions about political and economic
    conditions that are likely to prevail, about the
    market prospects and competitors strategies,
    about customer preferences and technology
    developments.

76
Analysing Uncertainty
  1. Break-even analysis
  2. Sensitivity analysis
  3. Probability analysis

77
1. Break-even Analysis
  • Break-even point (BEP) of production and/or sale
    is that level at which there is neither profit
    nor loss. Break-even analysis helps to determine
    the lowest production and/or sales level at which
    the project has to operate in order to keep out
    of financial trouble.
  • The break-even point can get defined in terms of
    the percentage of capacity utilization resulting
    in given output quantity, or as a volume or sales
    revenue. It can be further interpreted in terms
    of the maximum purchase price for inputs or
    minimum selling price for outputs.

78
2. Sensitivity Analysis
  • Sensitivity analysis can be employed to examine
    how the net present value or the value of any
    other efficiency criterion changes with
    variations in the value of any variable, such as
    sales volume, selling price, unit variable cost.
    The impact can be expressed in terms of the
    absolute change in the efficiency criterion
    divided by a given percentage, or absolute change
    in a given variable or a given set of variables.
  • If it is observed that reduction in selling price
    will have serious effect on contribution or on
    the value added, price emerges as a sensitive
    factor and great care needs to be taken in
    arriving at pricing decisions in regard to the
    products of the project.

79
3. Probability Analysis
  • In analysing probability, we are looking at the
    frequency of occurrence of an event. The number
    of different ways that the specific event can
    occur is expressed as a ratio of the total number
    of possible outcomes. Probability analysis is
    based on the identification of the possible range
    of each variable, and attaching a probability of
    occurrence for each possible value of the
    variables within this range.

80
Causes of Uncertainty
  1. Inflation
  2. Changes in technology
  3. Problems in attaining rated capacity
  4. Under-estimation of investment cost and time
    factors.

81
Project Appraisal Process
  • Small projects get assistance from a single
    institution, and in the case of larger projects,
    the institutions extend assistance jointly
    through syndication.
  • - Single Institution Assistance
  • - Loan Syndication

82
1. Single Institution Assistance
  • Application is received from the promoter
  • The institution deputes a financial expert and
    a technical expert to carry out the project
    appraisal
  • After a preliminary review, the team submits
    its report to the management, recommending
    acceptance or rejection.

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Project Management UNIT 4
84
UNIT 4
Developing a project plan Developing the project
network constructing a project network
(Problems) PERT CPM crashing of project
network (Problems - Case Study) resource
leveling and resource allocation how to avoid
cost and time overruns Steps in Project
Appraisal Process Project Control Process
control issues project audits the project
audit process project closure team, team
member and project manager evaluations.
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Steps to Creating a Project Plan
  1. Explain the project plan to key stakeholders and
    discuss its key components.
  2. Define roles and responsibilities
  3. Hold a kickoff meeting
  4. Develop a Scope Statement
  5. Develop scope baseline
  6. Develop the schedule and cost baselines
  7. Create baseline management plans
  8. Develop the staffing plan
  9. Analyze project quality and risks
  10. Communicate

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1. Explain the project plan to key
stakeholders One of the most misunderstood terms
in project management, the project plan is a set
of living documents that can be expected to
change over the life of the project. Like a
roadmap, it provides the direction for the
project. And like the traveller, the project
manager needs to set the course of the project,
which in project management terms means creating
the project plan.
87
  • 2. Define roles and responsibilities.
  • Not all key stakeholders will review all
    documents, so it is necessary to determine who on
    the project needs to approve which parts of the
    plan.
  • Hold a kickoff meeting.
  • The kickoff meeting is an effective way to
    bring stakeholders together to discuss the
    project. It is an effective way to initiate the
    planning process. It can be used to start
    building trust among the team members and ensure
    that everyones idea are taken into account.
    Kickoff meetings also demonstrate commitment from
    the sponsor for the project.

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4. Develop a Scope Statement The Scope Statement
is arguably the most important document in the
project plan. Its the foundation for the rest
of the project. It describes the project and is
used to get common agreement among the
stakeholders about the scope. The scope
statement clearly describes what the outcome of
the project will be. It is the basis for getting
the buy-in and agreement from the sponsor and
other stakeholders and decreases the chances of
miscommunication.
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  • 5. Develop Scope Baseline
  • Once the deliverables are confirmed in the scope
    statement, they need to be developed into a work
    breakdown structure (WBS), which is a
    decomposition of all the deliverables in the
    project.
  • Develop the schedule and cost baselines.
  • Identify activities and tasks needed to produce
    each of the work packages, creating a WBS of
    tasks, identify resources for each task, estimate
    how long it will take to complete each task,
    estimate cost of each task using an average
    hourly rate for each resource.

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7. Create baseline management plans. Once the
scope, schedule, and cost baselines have been
established, you can create the steps the team
will take to manage variances to these plans.
All these management plans usually include a
review and approval process for modifying the
baselines. 8. Develop the
staffing plan. The staffing plan is a chart that
shows the time periods, usually month, quarter,
year, that each resource will come onto and leave
the project. It is similar to other project
management charts, like a Gantt chart, but does
not show tasks, estimates, begin and end dates,
or the critical path.
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  • Analyze project quality and risks.
  • - project quality
  • - project risks
  • 10. Communicate.
  • Once the project plan is complete, it is
    important not just to communicate the importance
    of the project plan to the sponsor, but also to
    communicate its contents once its created.

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Developing a Project Network
  1. Project Network is a tool used for planning,
    scheduling and monitoring project progress.
  2. It is a graphical flow chart of the project job
    plan.
  3. Critical path should be identified.
  4. It is used to take decision concerning project
    time, cost and performance.
  5. The network depicts the project activities that
    must be completed, logical sequences and their
    inter dependencies.

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From Work Packages to Network
  • An activity include one or more work packages.
  • These activities are placed in a sequence that
    provides for orderly completion of the project.
  • Network are built using nodes and arrows.
  • Nodes Activity
  • Arrow Project flow
  • This network depicts the actual project flow.

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Difficulties in Network Process
  • Integrating work packages and the network
    represents a point where the management often
    fails.
  • 1. Different groups are used to define work
    packages.
  • 2. WBS is poorly constructed.

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Constructing a Project Network
  • 1. Activity An activity is an element of the
    project. It usually represents one or more tasks
    from a work package.
  • Merge Activity An activity that has more than
    one activity immediately preceding it.
  • 3. Parallel Activity Activities that can take
    place at the same time

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  • Burst Activity An Activity that has more one
    activity immediately following it
  • Path Sequence of connected, dependent
    activities.
  • Critical Path Longest path through the network.
  • Event It is a point in time when an activity is
    started or completed.

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Activity-On-Node (AON)
  • In activity-on-node (AON) network, the node
    depicts an activity of a project.
  • The AON network can be computed using
  • 1. Forward Pass - earliest time
  • 2. Backward Pass - latest time

A
C
B
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Activity-On-Node (AON)
  • 1. Forward Pass
  • It starts with the first project activity, trace
    through all the activities and end with the last
    project activity.
  • Backward Pass
  • It starts with the last project activity, trace
    backward on each path to find late start and late
    finish of each activity.

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Activity-On-Arrow (AOA)
  • In AOA network, the arrow depicts the activity of
    the project and which is connected by start event
    node and end event node.
    A

  • Here dummy activities are introduced in case of
    activities that are parallel and have same start
    and end node.


  • X
    D


  • C
  • A

  • B

1
2
3
5
1
2
4
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Difference in PERT CPM
  1. PERT is appropriate where time estimate arte
    uncertain in the duration of activities as
    measured by optimistic time, most likely time,
    and pessimistic time, where as CPM is good when
    time estimates are found with certainty. CPM
    assumes that he duration of every is constant and
    therefore every activity is critical or not.
  2. PERT is concerned with events, which are the
    beginning or ending points of operation while CPM
    is concerned with activities.

101
  1. PERT is suitable for non-repetitive projects
    while CPM is designed for repetitive projects.
  2. PERT can be analyzed statistically whereas CPM
    not.
  3. PERT is not concerned with the relationship
    between time and cost, whereas CPM established a
    relationship between time and cost is
    proportionate to time.

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Resource Allocation Leveling through Network
Resources allocation means how much resources be
diverted to the project concerned day after day
as the project progresses.
103
Days B C D E F G H I Total Labour Needs
1 3 3
2 3 3
3 3 3
4 3 3
5 3 3
6 3 3
7 3 3
8 3 3
9 5 2 7 5 19
10 5 7 5 17
11 3 7 5 15
12 2 5 4 11
13 5 4 9
14 3 3
15 3 2 5
Total Labour days activity 24 10 2 3 21 8 25 10 103
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Project Control Process
Control is the process of comparing actual
performance against plan to identify deviations,
evaluate possible alternative course of actions,
and take appropriate corrective action.
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Steps in Project Control Process
  1. Setting a baseline plan
  2. Measuring Progress and Performance
  3. Comparing plan against actual
  4. Taking action

106
Project Audit
Professional management of project needs a
methodology to carry out a regular check as to
whether the project is progressing as scheduled,
in scope and in time. In other words, a good
system of project audit will go a long way in
facilitating prompt and effective project
implementation. Project audit as a formal and
systematic examination of the performance of an
ongoing project as compared to its requirements.
It involves measurement against predefined and
relevant standards.
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Objectives of Project Audit
  • Creating awareness among the project staff of
    the types and magnitude of the problems that are
    likely to be encountered in completing the
    project and producing quality products, in
    planned volume and at competitive costs.
  • Providing a clean picture, from time to time,
    of the actual status of the project.
  • Prompt identification of the factors that
    might cause product quality problems or lead to
    time and/or cost overruns.
  • Timely spotting of a variety of generic
    problems that are associated with execution of
    projects.

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  • Enabling the creation of a good information
    base for a proper estimation and costing of the
    project.
  • Assisting in the establishment of appropriate
    standards and system and recommending suitable
    work techniques
  • Identifying the specific training needs with
    references to the project tasks

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Process of Project Audit
1. Initiation and Staffing 2. Data Collection
and Analysis 3. Reporting a. Classification
of project b. Analysis of information
gathered c. Recommendations d. Lessons
Learned e. Appendix f. Summary Booklet 4.
Project Closure 5. Closure Decision
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Project Closure
The project manager is kept extremely busy near a
projects end, monitoring its progress and
preparing for shutdown. When walking about and
visiting the workstations, he or she must
re-emphasize the need for good communication
among task leaders encourage the give and take
that supports the internal customer principle be
attentive to the project timetable actively help
task leaders get their tasks started and
completed on time monitor the Gantt chart and
ass some original estimates overrun , alert
downstream task leaders to the scheduling changes.
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Steps in Closing a Project
  1. Getting client acceptance of deliverables
  2. Ensuring that all deliverables are installed
  3. Ensuring that the documentation is in place
  4. Getting client sign-off on final report
  5. Conducting the post-implementation audit
  6. Celebrating the success

112
Project Team
The project team comprises of section heads of
production, electrical and mechanical who are
looking after the activities of their respective
wings. The project team is like cricket team
where we could find players adept in bowling,
batting and fielding with the result all the
players would put their accomplishing the
objective of the team. For any project, success
could be attributed to the able support of all
the players and the project manager would done
the role of a captain of the cricket team or of a
captain of ship.
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Promoting Teamwork Through Planning
A Primary rule of planning is that those
individuals who must implement the plan should
participate in preparing it. Yet leaders often
plan projects by themselves, then wonder why
their team members seem to have no commitment to
the plans. All planning requires some estimating
for example, how long a task will take, given
certain resources.
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Team Issues
  • Clarifying the Teams Mission, Goals and
    Objectives
  • Defining roles and responsibilities
  • Working out procedures
  • Managing interpersonal relationships

115
Project Evaluation
Project Evaluation appraises the progress and
performance of a job and compares it to what was
originally planned. That evaluation provides the
basis for management decisions on how to proceed
with the project. The evaluation must be
credible in the eyes of everyone affected or
decisions based on it will not be considered
valid.
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Project Management UNIT 5
117
  • Unit 5
  • Managing versus leading a project - managing
    project stakeholders social network building
    (Including management by wandering around)
    qualities of an effective project manager
    managing project teams Five Stage Team
    Development Model Situational factors affecting
    team development project team pitfalls.

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MANAGING VS LEADING PROJECT
  • HOW TO MANAGE A LEADING PROJECT
  • 1. Define the scope.
  • What is it you are supposed to accomplish by
    managing this project.
  • What is the project objective.
  • 2. Determine available resources.
  • what people, equipment, and money will de
    available to you to achieve the project objective.

119
  • 3. Check the timeline.
  • When does the project have to be completed. If
    you decide to use overtime hours to meet the
    schedule, you must weight that against the
    limitations of your budget.
  • 4. Assemble your project team.
  • Get the people on your team together and start a
    dialog. They are the technical experts.

120
  • 5. List the big steps.
  • What are the major pieces of the project. If you
    dont know, start by asking your team.
  • 6. List the smaller steps.
  • List the smaller steps in each of the larger
    steps.
    Again, it usually helps you
    remember all the steps if you list them in
    chronological order.

121
  • 7. Develop a Preliminary Plan.
  • Assemble all your steps into a plan.
  • 8. Create your baseline plan.
  • Get feedback on your preliminary plan from your
    team and from any other stakeholders. Make
    any necessary adjustment to the preliminary plan
    to produce a baseline plan.

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  • 9. Document Everything.
  • Every time you change from your baseline plan,
    write down what the change was and why it was
    necessary. Every time a new requirement is added
    to the project write down.
  • 10. Keep everyone inform.
  • Keep all the project stakeholders inform of
    progress all along. Let them know of your success
    as you complete each milestone, but also inform
    of problem as soon as they come up. If also keep
    you team informed.

123
PROJECT MANAGEMENT STAKEHOLDER
  • A stakeholder (in Project Management terms) is
    anyone who's affected and who can affect, in one
    way or another, the project.
  • Stakeholder (corporate), a person, group,
    organization, or system who affects or can be
    affected by an organization's actions 
  • A person, group or organization that has interest
    or concern in an organization.
  • Some example of key stakeholder are creditors,
    directors, employees, government (and its
    agencies),owner (shareholders), suppliers, unions
    and the community from which the business draws
    its resources.

124
Managing Stakeholders 6 Steps to Success
  • - Identify
  • - Nominate
  • - Feel
  • - Observe
  • - Review
  • - Manage

125
  • Identify
  • A stakeholder is anyone who has a vested interest
    in the project someone who wants it to succeed
    but equally someone who doesnt.  You cant start
    managing stakeholders until you know who they
    are.  Who are the main groups or departments
    affected by your project?  Stakeholders can also
    be external to your organisation like the
    government and third party providers as well. 
    The identification exercise shouldnt be done in
    a vacuum you wont be able to complete the list
    yourself, so get your project team involved too.

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  • Nominate
  • In each groups you have identified pick someone
    to be the key individual. Choose carefully!  You
    may find that key people nominate themselves,
    which makes your role easier it is better to
    work with people who want to be involved than
    those who you have to drag into the project. 
    Your key, nominated stakeholders should ideally
    be people who are directly affected, with enough
    authority to make decisions about things that
    touch their departments.  They are the person who
    you will use to channel communication back to
    their group.

127
  • Feel
  • Begin to analyse the attitudes of the people who
    have been identified as your key stakeholders 
    those named individuals who represent each
    stakeholder group.  Contact them and explain
    about the project.  Get them onboard and coming
    to project meetings if necessary.  All this will
    help you understand how they feel about the work
    you are doing.  Do they support the project?  Or
    would they rather it was stopped now?  Are they
    ambivalent?  This group can often be the hardest
    to manage effectively.  Your initial stakeholder
    analysis is now complete.

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  • Observe
  • Having established where your key stakeholders
    sit in relation to the project you can start to
    influence their attitudes.  The aim is to watch
    people over time, and help them move towards a
    positive way of thinking a way that will help
    you achieve your aims.  Keep a close eye on
    people as their opinions will swing between
    positive and negative over the life of a
    project.  A one-off analysis exercise is never
    enough you have to continually monitor how
    people are reacting and manage accordingly.

129
  • Review
  • People and job roles change.  So do projects. 
    The person who put themselves forward to
    represent the marketing team six months ago may
    not be the right person today.  If you notice
    that their influence is slipping away, or they
    are less inclined to come to meetings or respond
    to emails, then ask them if they still want to be
    involved.  If they say no, they could suggest
    someone else who would be a relevant addition to
    the team.  Make sure you brief any new
    stakeholder representative on their roles and
    responsibilities, decisions in the pipeline and
    what decisions you will expect of them in future.

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  • Manage
  • The last step is to monitor and manage your
    stakeholders and their expectations as the
    project progresses not just at the outset and
    when you need something from them.  Put a note in
    your diary to give your key stakeholder
    representatives a quick call every now and then
    just to keep them up to date.  This will help
    promote the project and also ensure the
    stakeholder concerned is mindful of the work
    being done.  It can also help build your
    reputation as an excellent project manager!  At
    the end of the project, thank them and manage
    them out of the team. 

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Social Network Building
  • Social network is to provide a way for people to
    communicate and share information with others
    based on different types of networks. The
    networks are typically centered on some sort of
    relationship type. LinkedIn, for example,
    focuses on building a professional network of
    colleagues, former co-workers, and other
    work-related relationships. Face book, on the
    other hand, is more open and allows for a variety
    of networks, such as families, schools,
    businesses, causes, groups, cities, or some other
  • category of relationship.

132
How does Social Network have to do with project
management?
  • Well, to start with, projects require project
    teams and teams are a form of relationship.
  • In the same way that Face book organizes
    networks on a common cause, a project organizes a
    team on a common cause e.g. to complete the
    project on time and under budget.
  • The same people that use Face book or Twitter
    at home are the same team members that come to
    work every day, want the same thing that a social
    networking site provides.
  • They want to be recognized for their
    accomplishments, feel like their contributing to
    the cause, and be able to collaborate with their
    work buddies.

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How social network helps to manageprojects
  • Networks could be organized around projects and
    status updates and photos could be related to the
    project.
  • Time could be easily entered, project status
    quickly reported, and everything automatically
    submitted to update the project schedule,
    executive reports, and account for the resources
    needed to complete the project.
  • Project and team collaboration would be simpler
    and would focus on the completing the tasks at
    hand.
  • Conversational information would provide
    additional insight into the true status of the
    project and team members would be recognized by
    their peers for a job well done.

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LIMITATIONS
  • Face book, LinkedIn, Twitter, and other social
    networking sites, as great as they are, dont
    provide the tools needed to effectively manage
    projects.
  • Executives cant use Face book to organize
    multiple projects, identify potential risks, and
    manage resources.
  • Project managers cant simply post an update or
    send out a Friend Request to keep projects on
    time and under budget.
  • Managers need a robust tool that allows them to
    plan projects, identify tasks, monitor schedules,
    allocate resources, manage documents, improve
    processes, collaborate with co-workers, and
    manage the thousands of other little tasks needed
    to successfully complete a project.

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Project quality management
  • Project quality management includes the process
    required to ensure that the project satisfies the
    needs for which it is undertaken.
  • PQM includes all the activities of the overall
    management function that determine the quality
    policy, objectives, and responsibilities and
    implement them within the quality system.

136
Means of Implementation of PQM
  • Quality Planning
  • Quality Assurance
  • Quality Control
  • These processes interact with each other as
    well as with the processes of other knowledge
    areas
  • Each process involves an effort of one or more
    individual or group of individuals based on the
    need of the project.
  • Each process occurs at least once in every
    project phase during the project life cycle.

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  • Quality Planning
  • Quality Planning is identifying which quality
    standards are relevant to the project and
    determining how to satisfy them.
  • Quality Assurance
  • Quality assurance is evaluating the overall
    project performance on a regular basis to provide
    a confidence that the project will satisfy the
    relevant quality standards.

138
  • Quality Control
  • Quality Control is the monitoring of specific
    project results to determine if they comply with
    the relevant quality standards and identifying
    ways to eliminate causes of unsatisfactory
    performance.

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  • 1- INPUTS
  • -work results
  • -quality management plan
  • Operational definitions
  • checklists
  • 2- TOOLS AND TECH.
  • inspection
  • Control charts
  • Pareto diagrams
  • Statistical sampling
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