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Managing ProjectsLevel 1 Level 2 Level 3 Level 4 Level 5 Level 6
1. Introduction
What is a project
A complex, non-routine, set of activities, undertaken by an individual or group with the purpose of producing a defined and unique, non-repetitious result.
A project has a defined scope, with a finite life span, an agreed cost and quality.
The result or product can be both tangible or intangible.
Usually involves several departments or professionals and always involves a level of risk.
What is project management?
What is the role of a project manager?
What is the typical project life-cycle?
2. Organisational Strategy, Structure and Culture
Strategic Management Process
Review and Define the Organisations Mission
Create mission statement
Communicate mission statement throughout organisation
Must be company specific
Set Long-Range goals and objectives
Set at all levels of organisation
Outline direction of organisation
Objective must be SMART
Specific
Measurable
Assignable
Realistic
Time Related
Analyse and formulate strategies to reach objectives
Answers questions on 'what' needs to be done
Evaluate alternatives
Customers perspective is important
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Implement these strategies through specific projects
Answers question of 'how' it will be done
Includes the allocation of resources
Requires organisational structure that complements strategy
Include planning, control and measurement tools
Organisational Structure
Functional
Advantages
No change
Flexibility
In-depth expertise
Easy post project transition
Disadvantages
Lack of focus
Poor integration
Slow
Lack of ownership
Coordinated Matrix
Matrix
Advantages
Efficient
Flexible
Strong project focus
Relativly easy post project transition
Disadvantages
Dysfunctional conflict
Infighting
Stressful
Slow
Seconded Matrix
Pure Project - Integrated Project Teams
Advantages
Simple
Fast
Cohesive
Cross functional integration
Disadvanteges
Expensive
Internal strife
Limited technological expertise
Difficult post-project transition
Interface Management
Critical To Effective Project Management
Interface result whenever work is divided and allocate to teams or individuals
Types of Interface
Personal
Organisational
System
Interfaces and Communications
Main issue is ensuring effective communication
Be aware of both formal and informal channels
External interfaces usually managed formally in the form of reporting
Interface Management Tools
Specifically Designed Forms
Reports
Faxes
Change Control
Equipment Lists
Meeting Minutes
Information Management Systems
Responsibility Matrices
The Project Manager
PM The Role
Plan the project
Organise to carry out the plan
Implement the plan
Control to follow the plan
Lead the project team
Motivate staff
Keep perspective
Encourage group decision making
Maintain group behaviour
Aim for win-win outcomes
PM The Person
Provides integration
Varying level of authority depending on org structure
Always has responsibility for project
Does not need to be technical hot-shot but requires understanding for decision making
PM The Traits
Intelligence
Energy and Drive
Self-assuredness
Perspective
Communications ability
Ability to persuade and negotiate
Management skill and specialist knowledge (HR, Legal, Resource Management)
PM The Styles
Democratic
Autocratic
Bureaucratic
Laissez Faire
See Managing People Map, Leadership Section
3. Defining the Project
Define the Project Scope
Purpose of Scope Statement
To clarify the deliverables
To focus the project on these goals
Used by the project owner and planner a tool for measuring progress and success
Scope Statement
Project Objective
Deliverables
Milestones
Checkpoints in the project
Describes what the project should achieve, not how
Activities are carried to achieve milestones
Milestone plan
Develop from project objectives
Agree with customer
Identify dependencies
Form logical network
Identify results path
Technical Requirements
Limits and Exclusions
Reviews with Customer
Terms and Definitions
Scope Statement
Project Charter
Project Creep
Establish Project Priorities
Causes Project Trade-offs
Managing Priority Trade-offs
ConstrainThe parameter is a fixed requirement
Will affect performance
EnhanceOptimising a parameter over others
Will affect time
AcceptReducing (or not meeting) a parameter requirement
Will affect cost
Create Work Breakdown Structure (WBS)
Hierarchal
Hierarchal outline (map) that identifies the work elements of the project
Defines the relationships of the final deliverables to the sub-deliverable and their work packages
Best suited for design and build projects with tangible outcomes
Process of Defining
Identify products
Identify work needed for products
Identify work needed to integrate products
Identify any management or testing work
Construct Hierarchy
Work Package
Lowest Level of WBS
Provides dictionary of work involved
Used to measure Progress
A Good Work Package has:
WBS Element name and number
Work definition
Inputs / predecessors
Responsible groups
Explicit spec of outputs
Budgets, schedules and cost estimate
Labour and Resource Requirements
Example
Integrating WBS with the Organization Organisational Breakdown Structure (OBS)
Provides framework to summarise organization work unit performance
Identifies organizational units responsible for work packages
Ties organizational units to cost control accounts
Coding the WBS for the information system Subtopic
4. Managing Project Time and Costs
Introduction
There is inherent uncertainty in all project costs
Estimating the cost of a project is required for tender application
Estimating costs money, the more accurate the estimation the more expensive it will be
Items to Consider when Making Estimates
Elements for cost estimation
Labour
Subcontractors & Consultants
Materials
Travel
Equipment
Facilities Rental
Other items specific to type of project
Factors that influence quality of estimation
Planning Horizon
Project duration
People
Project structure & organisation
Padding
Organisational culture
Methods
Material Take-Offs (MTO)Involves high detail
Obtaining quotes for specific work
Factoring
Based on historical data and existing projects
Less detail and accuracy than MTO
Each industry has documented factors
List of factors
Time Factor
Scale Factor
Complexity Factor
Location Factor
Exchange Rates
Contingencies
Estimate Types
Screening Estimate
Purpose Project initiation, earliest economic appraisal, used for ranking of project and selecting which projects should be done.
Accuracy Around 40%
Estimate Method Factoring
Feasibility Study
Purpose More detailed techno-economic analysis of preferred alternative project schemes
Accuracy Around 25%
Estimate Method Factoring
Budget Estimate
Purpose Preparation of project development plan; approval of budget for further front-end engineering
Accuracy Around 15%
Estimate Method Factoring and some MTO
Control Estimate
Purpose For use in project implementation plan, checking bids, cost control and reporting, performance appraisal, trend analysis, forecasting and budget revisions
Accuracy Between 8% and 10%
Estimate Method Full MTO
Estimate Problems
Ommision of scope
Misinterpretation of scope
Poorly defined or over optimistic schedule
Over optimistic estimating
Risk and uncertainty not adequately condidered
Escalation not considered
5. Developing a Project Plan
Introduction Project Networks
Used for planning, scheduling and monitoring project progress
Developed from the WBS
Shows the logical sequence, and interdependencies of the tasks
Gives the task durations, longest path is known as the 'critical path'
Gives a good overview of the project that the PM uses for decisions in cost, time, quality
Gantt Charts Limitations
Do not show relationships and dependencies well
Do not indicate slack well
Do not show resource requirements well
Network Diagrams Limitations
Show relationships and dependencies well
Show slack well
Provide Analysis information
Do not show time graphically
Do not show resource requirements
Can be very large and complex
Critical Path
One of the most useful tools
Any event with zero float is critical
Any
Summary
Project Network is very useful tool
Easily understood by others
Can provide estimate of project duration
It provides the basis for budgeting and cash flow
It identifies the critical path and critical activities
6. Managing Risk
Introduction
Due to the unique nature of a project, there is an inherent level of risk.
In project environment risk is an uncertain event
No amount of planning can remove risk entirely, but only manage it
DefinitionsRisk Management: The culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects.
Risk: The chance of something happening that will have an impact on the objectives. Measured in terms of consequence and likelihood
Risk Management Plan
The Risk Management Process
Risk Identification
Analyse the project and identify the possible risks
Create a list as comprehensive as possible, be creative and imaginative. These are filtered at the next stage
A useful tool is the WBS, as a guide for the cause of a risk to the project
Some professionals may be needed depending on the technical nature of the project, or particular area of expertise
Risk Assessment
The list created in the previous stage is assessed by the project manager. A useful methods are Scenario Analysis and Risk Response Matrix
Scenario Analysis
Severity and outcome
Likelyhood
When in the project the event may occur
The effect on other aspects of the project
Risk Response Matrix
Risks are listed in a table
Likelihood and Consequence are graded 1 - 5
Risk Exposure is calculated by multiplying these two measures
Detection DifficultyThird factor: Detection Difficulty can be used.
This gives the Risk Priority, and gives the order in which the risks should be handled
Ratio/Range Analysis
Probability Analysis
Scenario Analysis
Risk Response Development
Develop strategy to minimise damages
Mitigating
AvoidingImpossible to avoid all risk
Good for small problems, early in project
Transferring
Very common
Will cost more
Fixed price contracts
Suitable selection of third party is required
Communicate risk
Sharing
Retaining
Large risks with low likelihood
Contingency plan is vital
Risk should be planned in the budget so it can be absorbed if it does occur
Risk Response Control
Implement risk strategy
Monitor and adjust for new risks
Risk reporting should be part of all progress reports.
Document responsibility, of risk, 'owner' and response
Risk Process Diagram
Contingency Planning
Alternative plan to be used if a risk become a reality, the best alternative plan
Should answer questions of what, where, when, and how much action should be taken
The conditions under which the contingency plan must be clearly documented. As well as the source of funding
7. Scheduling Resources
Introduction
Project Constraints
Technical or Logic ConstraintsCommon
Unavoidable
Resource Constraints
Parallel tasks
Add more resources
Take priority over technical constraints but do not violate them
Physical Constraints Rare
Types of Resource
People
Materials
Equipment
Working Capital
Rules for Resource Levelling
1. Minimum Slack
2. Minimum Duration
3. Task ID
Summary
Resource availability is huge problem for PMs
Resource bottlenecks must be identified as early as possible.
Resource levelling ALWAYS reduced total slack, increasing risk!!
8. Reducing Project Duration
Introduction
Crashing projects increases risk
The amount a project can be crashed depends on the sensitivity
A sensitive network has many critical paths
Reasons for reducing project duration
Changed duration times
Time to market considerations
Incentive contract
Key resource needs
High overhead costs
Unforeseen delays
Indirect Costs
Overheads such as administration, consultants and loan interest
Can not be associated with any work package or activity
Vary directly with time
Are a large part of total project cost
Changing duration can have a big effect
Direct Costs
Costs related to work, materials, equipment
Assigned to specific work packages
Vary indirectly with time
Relationship Between Costs Graph
Options for Accelerating Project Completion
Adding resources
Most common method for shortening project time
Doubling resources will not halve duration
Depends on the complexity of the task
Training may be needed
Outsourcing project work
Another common method
Contractors may be more experienced
Also frees the resource for something else
Costs more
Scheduling overtime
Easiest way to add more resources
Avoids additional costs of coordination
Intangible costs to staff lifestyle
Motivational problems
Establishing a core project teamAssigning specialists full-time deduces the
They will devote all their attention
Do it twice - fast and correctlyShort term solutions to critical paths
Can re-visit later when pressure is on
Fast-trackingRe-arrange the project network so that critical activities are done in parallel
Change relationships to start-start
Critical-chain
Method of management to reduce project duration
Critical chain is the longest sting of dependencies that run through the project.
Depends on resources and technical constraints
See stand alone topic
Brainstorming time saversUse entire team for ideas
Tap different experience and skills
Reduce project scope
Another widely used method
Leads to a reduction in the functionality of the project
Required careful consideration and communication with client
Phase project delivery
Split the deliverables into smaller items
Something useful is achieved earlier
Some value has already been recovered
As long as the client wants it
Compromise qualityLast option
Use on tasks that are on critical path
Summary
There is always the need to reduce project duration
Time spent on during the definition and planning
Contingency plans and alternatives are valuable
9. Leadership: Being an Effective Project Manager
10. Project Management Contract Law
Contracts
Legally enforceable document
Either betweenPrinciple and Contractor
Contractor and Subcontractor
Provides
Risk sharing
Responsibility assignment
Objectives
Administrative procedures
Rewards
Penalties
Types of Contract
Lump Sum
Schedule of Rates
Cost plus Fixed Fee
Cost plus Percentage Fee
Percentage Fee
Special Forms of Contract
Novated ContractsAssigned to specialists in initial stages
Then transfers to other contractors during later stages
Design and Construction Turnkey'
Partnering and Alliance
Involves setting up dispute resolution procedures
Parties undertake work cooperatively
Long term partnering contracts
Elements of a Contract
Agreement
A meeting of the minds
Usually a response to tender documents
Acceptance must be without qualification
ConsiderationGives the value of the transaction
Usually financial reward on completion
IntentionParties mus be intent on filling the agreement
Including the rights and responsibilities
Other Legal Elements
Genuine Consent
Action must be taken in 6 years
Unless 'under seal', which then increases to 12 years
Waiver and EstoppelWaiver Describes the circumstances where one party indicates that the contract is no longer valid
Estoppel Arises from the conduct of a party and usually results in a waiver
Practical Completion
Stage in the contract when the product can taken over by the principle and used safely
The defect liability period will still apply
Final payment, less security is released
Ownership is formally transferred
Responsibility for insurance is transferred
Final certificate is issued once defect removed and remedial work is complete
Tort Law
The 'duty of care' of an organisation
Ingredients to per sue action in a Tort case
Breach of duty of care
Injury or damage following from the act
A reasonable connection between act and injury
Injured party must not have contributed to the loss
The injured pary has the duty to mitigate the loss
Tort in Contracting
Job Changes
Variations
Different methods used
Different equipment used
Changes to planned layout
Contractor must show that additional costs were incurred even though the final result is the same
Extras
Changing quantity of work
Wrongly rejecting work, increasing cost
Changing quality of work
Having to demolish or re-do work
Usually more identifiable than variations
Program Changes
Changes to sequence of work
Acceleration of contract prgram
Prolongation of contract program
Usually increases the cost of contract
Extension of Time
Most common job change
Depend on situation and type of contract
Events resulting in extensions usually listed in contract
Formal extensions are required
Good Practise Legal Tips
Keep al forms
Correspondence files
Daily diaries
Progress reports
Photographs
Records of meetings
Emails
11 Project Audit and Closure
Finishing the Work
Checklists of remaining work
Planning and Controlling at low levels of WBS
Planned run-down of project team
Use task forces
Changing the PM
Closing contracts with suppliers
Transferring the Product
Planning the transition
Ensureing the user acceptance
Training the user
Recording the 'as-built' design
Ensuring the maintenance is planned
Obtaining the Benefits
Setting a measure
Monitoring performance against measure
Calculate variancies
Taking action to correct large variances
Disbanding the Team
Must maintain motivation
Returning resources to line managers
Hold a wrap party - success or failure
Hold debriefings
Rewarding achievement
Disciplining under-achievement
Counselling staff
Post-Completion Review
Record 'as built' design
Compare achievement to plan
Record technical data
Learn successes and failures for future
Critical Chain Project Management
PERT: Program Evaluation and Review Technique
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