Project

https://www.youtube.com/watch?v=F6KxWU4HRrQ

Defining and organizing projects

Earned value management

Network planning model

Implementation

Project management

• A project may be defined as a series of related jobs usually directed toward some major output and requiring a significant period of time to perform.
• Project management can be defined as planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of the project.
• Although most companies deal with projects individually—pushing each through the pipeline as quickly and cost-effectively as possible, The vital big-picture decision is what mix of projects is best for the organization. A firm should have the right mix of projects that best supports a company’s strategy.

Types of projects

• Projects can be of following types
• derivative (incremental changes such as new product packaging or no-frills versions),
• breakthrough (major changes that create entirely new markets), and
• platform (fundamental improvements to existing products).
• Projects can be categorized in four major areas:
• product change,
• process change,
• research and development, and
• alliance and partnership

​

Organizing the project

• Before the project starts, senior management must decide which of three organizational structures will be used to tie the project to the parent firm: pure project, functional project, or matrix project.
• Pure project: A self-contained team works full time on the project.
• Advantages
• The project manager has full authority over the project.
• Team members report to one boss. They do not have to worry about dividing loyalty between functional-area managers.
• Lines of communication are shortened. Decisions are made quickly.
• Team pride, motivation, and commitment are high.
• Disadvantages
• Duplication of resources. Equipment and people are not shared across projects.
• Organizational goals and policies are ignored, as team members are often both physically and psychologically removed from headquarters.
• The organization falls behind in its knowledge of new technology due to weakened functional divisions.
• Because team members have no functional-area home, they often worry about “life after the project,” and so project termination is frequently delayed.

Organizing the project

• Functional projects: Team members are assigned from the functional units of the organization. The team members remain a part of their functional units and typically are not dedicated to the project.
• Advantages
• A team member can work on several projects.
• Technical expertise is maintained within the functional area even if individuals leave the project or organization.
• The functional area is a home after the project is completed. Functional specialists can advance vertically.
• A critical mass of specialized functional-area experts creates synergistic solutions to a project’s technical problems.
• Disadvantages
• Aspects of the project that are not directly related to the functional area get shortchanged.
• The motivation of team members is often weak.
• The needs of the client are secondary and are responded to slowly.

Organizing the project

• Matrix project : Blends the functional and pure project structures. Each project uses people from different functional areas. A dedicated project manager decides what tasks need to be performed and when, but the functional managers control which people to use.
• Advantages
• Communication between functional divisions is enhanced.
• A project manager is held responsible for successful completion of the project.
• The duplication of resources is minimized.
• Team members have a functional “home” after project completion, so they have fewer life-after-project concerns than if they were a pure project organization.
• Policies of the parent organization are followed. This increases support for the project.
• Disadvantages
• There are two bosses. Often, the functional manager will be listened to before the project manager. After all, who can promote you or give you a raise?
• It is doomed to failure unless the PM has strong negotiating skills.
• Suboptimization is a danger, as PMs hoard resources for their own project, thus harming other projects.

Organizing project tasks

• Statement of work (SOW). The SOW may be a written description of the objectives to be achieved, with a brief statement of the work to be done and a proposed schedule specifying the start and completion dates. It also could contain performance measures in terms of budget and completion steps (milestones) and the written reports to be supplied.
• A task is a further subdivision of a project. It is usually not longer than several months in duration and is performed by one group or organization. A subtask may be used if needed to further subdivide the project into more meaningful pieces.
• A work package is a group of activities combined to be assignable to a single organizational unit. It still falls into the format of all project management; the package provides a description of what is to be done, when it is to be started and completed, the budget, measures of performance, and specific events to be reached at points in time.
• These specific events are called project milestones. Typical milestones might be the completion of the design, the production of a prototype, the completed testing of the prototype, and the approval of a pilot run.

Work break down structure

The work breakdown structure (WBS) defines the hierarchy of project tasks, sub-tasks, and work packages. Completion of one or more work packages results in the completion of a subtask; completion of one or more subtasks results in the completion of a task; and, finally, the completion of all tasks is required to complete the project.

​

Project management (monitoring)

Project management (monitoring)

Earned value management

EVM is a technique that combines measures of scope, schedule, and cost for evaluating project progress.

Essential features of any EVM implementation include the following:

• A project plan that identifies the activities to be accomplished.
• A valuation of each activity. In the case of a project that generates revenue, this is called the Planned Value (PV) of the activity. In the case where a project is evaluated based on cost, this is called the Budgeted Cost of Work Scheduled (BCWS) for the activity.
• The predefined “earning or costing rules” (also called “metrics”) to quantify the accomplishment of work, called Earned Value (EV) or Budgeted Cost of Work Performed (BCWP).

Earned value management charts

EVM Exercise

Based on the figure presented here determine the Budgeted Cost of Work Scheduled at the end of period X and The Budgeted Cost of Work Performed (shown in red shading).

Actual cost = 45K

MID Syllabus

Till here

Network planning model

• The two best-known network-planning models were developed in the 1950s.
• The critical path method (CPM) was developed for scheduling maintenance shutdowns at chemical processing plants owned by DuPont. CPM is based on the assumptions that project activity times can be estimated accurately and that they do not vary.
• The Program Evaluation and Review Technique (PERT) was developed for the U.S. Navy’s Polaris missile project. This was a massive project involving over 3,000 contractors. Because most of the activities had never been done before, PERT was developed to handle uncertain time estimates.
• In a sense, the CPM techniques are development from the Gantt chart. Although the Gantt chart is able to relate activities to time in a usable fashion for small projects, the interrelationship of activities, when displayed in this form, becomes extremely difficult to visualize and to work with for projects that include more than about 25 activities.
• The critical path of activities in a project is the sequence of activities that form the longest chain in terms of their time to complete.
• If any one of the activities in the critical path is delayed, then the entire project is delayed.
• Determining scheduling information about each activity in the project is the major goal of CPM techniques. The techniques calculate when an activity must start and end, together with whether the activity is part of the critical path.

FINAL Syllabus

STARTS here

CPM example

• Your group of four people decides that the project can be divided into four activities.
• You decide that all the team members should be involved in selecting the company and that it should take one week to complete this activity.
• You will meet at the end of the week to decide what company the group will consider.
• During this meeting, you will split your group in half: Two people will be responsible for the annual report and ratio analysis, and the other two will collect the technical data and construct the charts. Your group expects it to take two weeks to get the annual report and perform the ratio analysis, and a week to collect the stock price data and generate the charts. You agree that the two groups can work independently.
• Finally, you agree to meet as a team to make the purchase decision. Before you meet, you want to allow one week for each team member to review all the data.

Network diagram

CPM Exercise

Three time estimates (PERT)

Three estimates for an activity time are:

a = Optimistic time: the minimum reasonable period of time in which the activity can be completed. (There is only a small probability, typically assumed to be 1 percent, that the activity can be completed in less time.)

m = Most likely time: the best guess of the time required. Since m would be the time thought most likely to appear, it is also the mode of the beta distribution discussed in step 4.

b = Pessimistic time: the maximum reasonable period of time the activity would take to be completed. (There is only a small probability, typically assumed to be 1 percent, that it would take longer.)

Calculate expected time (ET) and variance of activity time

​

​

​

Determine the probability of completing the project on a given date

​

​

​

Three time estimates (PERT) example

Determine the probability of completing the project in 35 weeks.

Cost time trade-off

• There is a relationship between activity completion time and the cost of a project.
• Crashing refers to the compression or shortening of the time to complete the project. It costs money (e.g. over time, extra worker, additional equipment and support etc) to expedite an activity, and these costs are termed direct costs..
• The costs associated with sustaining the project are termed project indirect costs: overhead, facilities, and resource opportunity costs, and, under certain contractual situations, penalty costs or lost incentive payments.
• Because direct costs and indirect costs are opposing costs dependent on time, the scheduling problem is essentially one of finding the project duration that minimizes their sum, or in other words, finding the optimum point in a time–cost trade-off.

Time cost trade-off example

Assume that the indirect costs remain constant at $10 per day if the project takes eight days or less and then increases at the rate of $5 per day.

Cost time trade-off

Cost time trade-off

Project Management Information System

• Project Management Software (www.pmi.org)
• Microsoft Project, and Oracle, with Oracle’s Primavera Project Planner.
• MS Project is compatible with the Microsoft Office Suite.
• The program includes features for scheduling, allocating and leveling resources, and controlling costs and producing presentation-quality graphics and reports.
• Mid- to high-level project management information systems (PMIS) software can also resolve over-allocations through a “leveling” feature.
• A tracking Gantt chart superimposes the current schedule onto a baseline plan so deviations are easily noticed. If you prefer, a spreadsheet view of the same information can be output.
• Deviations between planned start/finish and newly scheduled start/finish also appear, and a “slipping filter” can be applied to highlight or output only those tasks that are scheduled to finish at a later date than the planned baseline.
• Management by exception also can be applied to find deviations between budgeted costs and actual costs.

​

​

​

Practice Exercise

Calculate cost performance index of the project using earned value management techniques. It is currently day 20 of the project and the following table summarizes the current status of the project.

Practice Exercise

Practice Exercise

Practice Exercise

Here are the precedence requirements, normal and crash activity times, and normal and crash costs for a construction project:

What are the critical path and the estimated completion time?

To shorten the project by three weeks, which tasks would be shortened and what would the final total project cost be?

​

​

Project Management Exercise

Annual EMBA meet!

​

Project description

Objective

​

Team and sub-teams and team structure, delegation of responsibilities

Activities

Activity of Time line (gantt chart)

Resources needed

Activity wise budget

​