Microsoft PowerPoint - Project and Time Management

ELEC5701 - Arek Yapoudjian 2009 1

Project Cost & Time Management

9 September 2009


What is a Project?

A project involves several people/groups performing interrelated activitiesA project has a defined objectiveA project has a beginning and an endA project requires resourcesA project has a sponsorA project involves uncertainty


Overview of Project LifecycleA Project lifecycle can be divided into five

phases (groups of processes):1. Initiation: Idea or business need created

due to new opportunity. 2. Planning: Devise and maintain a plan to

accomplish the plan. Very critical in success of projects.

3. Execution: Actions taken to complete the project on time/within budget.


Overview of Project Lifecycle (Cont.)

4. Control: Continuous process of measuring project progress to the meet the three performance constraints: Time, Cost and Quality.

5. Closing: Project delivery and formal acceptance by customer. Project audit and debrief sessions.


Overview of Project Lifecycle (Cont.)

Source: Schwalbe


How to create a successful Project?

Scope:What is the project trying to achieve?

Time:How long should it take to complete the project?

Cost:How much will it cost to complete the project?


What is Project Management?

Procurement

Risk

Team

Quality

Cost

Time

Communication

Scope

ProjectManagement


9 Project Management Knowledge Areas

Knowledge areas describe the key competencies that project managers must develop

4 core knowledge areas lead to specific project objectives (scope, time, cost, and quality)4 facilitating knowledge areas are the means through which the project objectives are achieved (human resources, communication, risk, and procurement management)1 knowledge area (project integration management) affects and is affected by all of the other knowledge areas


Project Management determines:

The outcomes that need to be accomplishedThe approach that will be adopted to accomplish these outcomesThe tasks that need to be completed to reach the desired goalsThe resources that are required to complete the project


Project Integration Management

Integration management is the key to overall project success:Coordinate the people, the plan and work required to complete the projectFocus on the big picture of the projectMake strategic decisions during critical timesCommunicate key project information to senior management


What is a Project Scope?

The scope of a project is broadly defined by: The aimThe end resultsThe parameters that confine itExclusions


What is Scope Management?

Project Scope Management includes all the processes involved in defining and controlling what is and also what is NOT included in a projectScope Management ensures that the project team and stakeholders have the same understanding of what is expected from the project


Scope Management

A scope statement should define the following:Project JustificationProject Objectives Project DeliverablesProject AssumptionsProject Constraints


Scope Management

Project JustificationThe importance and priority of the project need to be emphasised.This will depend on the business needs, which have been developed in consultation with the Stakeholders.


Scope Management

Project ObjectivesThe project objectives are the quantifiable criteria that must be met for the project to be considered successfully completed.To obtain achievable project objectives, they should be SMART objectives.Specific, Measurable, Achievable, Realistic, Time related


Scope Management

Project DeliverablesThe project deliverables are the physical outcomes that need to be provided by the project team.The successful delivery of these elements will mark the satisfactory completion of the project.


Scope Management

Project AssumptionsThe project assumptions are factors that are taken into consideration in the planning process. Members of each project management team form their own assumptions regarding the project scope.


Scope Management

Project ConstraintsThe constraints on any project are factors that will limit the options of the project management team.


Project Constraints

Typical constraints are:Financial - Project budgetLegal - Contractual provisionsTechnical –Technological advancementsPolitical – Regulatory and EnvironmentalDeadlines – Tight deadlines


Scope Management

Scope DefinitionA scope definition clarifies the details of the project. Scope definition is the process whereby the overall project deliverables are subdivided into smaller more manageable elements.


Scope Management

Each element will have its own in-process deliverables and scope statement in order to:More accurately estimate costs, time and resourcesIdentify a basis for performance measurement and controlClearly define responsibilities

Often a Work Breakdown Structure is used to detail each in-process deliverable.


Work Breakdown Structure

A WBS is a logical sequence of all the project activities that need to be completed to achieve the project objective. Each activity should be achievable by an individual or small team.


The WBS allows you to:

Plan activities (WHAT?)Develop schedules (WHEN?)Allocate responsibilities (WHO?)Estimate costs (HOW MUCH?)



Determining the major phases then breaking each phase down into activities and tasksThis approach is called Top Down Analysis


Sample WBS


WBS in Tabular Form1.0 Concept

1.1 Evaluate current systems1.2 Define Requirements

1.2.1 Define user requirements1.2.2 Define content requirements1.2.3 Define system requirements1.2.4 Define server owner requirements

1.3 Define specific functionality1.4 Define risks and risk management approach1.5 Develop project plan1.6 Brief web development team

2.0 Web Site Design3.0 Web Site Development4.0 Roll Out5.0 Support



The role of the WBS is to:Partition the major project deliverables into smaller components to improve the accuracy of cost estimates Provide a mechanism for collecting and organising actual costs Provide a mechanism for performance measurement and control



Note:The WBS provides a simple map of what is to be produced. It does not deal with schedules and therefore has no time dimension. It is however used as entry criteria for schedule development.


Cost Management

The project needs a budget to determine the capital required to complete the project.The Project Manager creates estimates and predicts the total cost of the project. The project budget will be utilised to justify the cost of the project.


Cost Management

Project Cost Management involves:Resource Planning: Determine what resources (people, equipment and materials) are required to complete the project.Cost Estimating: Estimate the cost of the resources required to complete the project.


Cost Management

Project Cost Management involves:Cost Budgeting: Allocate the overall cost estimate to individual work items to establish baseline for measuring performance.Cost Control: Control changes to budget, revise cost estimates, take corrective actions.


Resource Planning

Resources such as personnel, equipment and materials, need to be costed for each activity. Personnel costs may be either on a time basis (hourly/daily/weekly), fixed or at a cost per use. It is important that cost figures for your project are:

Obtained from reliable sourcesConstantly monitored and updated with the latest changes


Cost Estimating

Estimating project costs involves developing an approximation of the costs of the resources for each of the activities identified in the WBS.In order to determine the costs of a project the following need to be estimated:

Equipment costLabour CostOther Cost


Cost Estimating1.0 Concept

1.1 Evaluate current systems $2k1.2 Define Requirements $2k

1.2.1 Define user requirements $0.5k1.2.2 Define content requirements $0.5k1.2.3 Define system requirements $0.5k1.2.4 Define server owner requirements $0.5k

1.3 Define specific functionality $1k1.4 Define risks and risk management approach $3k1.5 Develop project plan $5k1.6 Brief web development team

2.0 Web Site Design $10k3.0 Web Site Development $50k4.0 Roll Out $100k

Total: $173k


Cost EstimatingAs estimates are made, a range of details

should be documented. These details allow estimates to be reviewed and revised. The following details should be documented for each estimate:Assumptions usedEstimating method(s) usedName of estimator(s)Dependencies of the estimate


Cost Budgeting

An efficient way is to establish budgetary controls over the project is to utilise the bottom-up budgeting processThe bottom-up budgeting involves creating cost estimates for each of the tasks identified in the WBS. These costs are then aggregated into an overall project budget.The bottom-up budgeting method is :

ObjectiveAccurate


Cost Control

Once the project has commenced, the Project Manager needs to focus on monitoring the progress of the project. This ensures the project is moving forward as planned. The Project Manager needs to regularly monitor and control the estimated costs compared to the actual cost expenditures to detect any variances.


Cost Control1.0 Concept Budget Actual

1.1 Evaluate current systems $2k $1.9k1.2 Define Requirements $2k $2.1k

1.2.1 Define user requirements1.2.2 Define content requirements1.2.3 Define system requirements1.2.4 Define server requirements

1.3 Define specific functionality $1k $1.2k1.4 Define risks and risk management $3k $4k1.5 Develop project plan $5k $3.9k1.6 Brief web development team

2.0 Web Site Design $10k $12k3.0 Web Site Development $50k $54k4.0 Roll Out $100k $98k

Total: $173k $177.1k


Cost Control

The Project Manager will need to follow the following process:Determine the 'actual' (how much was spent) costs for labour, equipment and other expenses.Compare the actual spending with the budget forecastAnalyse the variances and report as part of your regular status reportsInitiate and monitor corrective action


Variances

A variance occurs when the project costs are more (negative variance), or less (positive variance), than the budget estimates.A project manager must agree on a tolerance level for the project’s budget to be a percentage variance from the predicted cost.


Time Management

Project Time Management involves the processes required to ensure the timely completion of a project.


Project Time Management Processes

Processes include:Activity definitionActivity sequencingActivity duration estimatingSchedule developmentSchedule control


Activity DefinitionProject schedules grow out of the basic document that initiate a project

Project charter includes start and end dates and budget informationScope statement and WBS help define what will be done

Activity definition involves developing a more detailed WBS and supporting explanations to understand all the work to be done so you can develop realistic duration estimates


Activity SequencingInvolves reviewing activities and determining dependencies

Mandatory dependencies: inherent in the nature of the work;Discretionary dependencies: defined by the project team;External dependencies: involve relationships between project and non-project activities


Project Network Diagrams

Project network diagrams are the preferred technique for showing activity sequencingA project network diagram is a schematic display of the logical relationships among project activities


Sample Activity-on-Arrow Network Diagram


Arrow Diagramming Method (ADM)

Activities are represented by arrowsNodes or circles are the starting and ending points of activitiesCan only show finish-to-start dependencies


Precedence Diagramming Method (PDM)

Activities are represented by boxesArrows show relationships between activitiesMore popular than ADM method and used by project management softwareBetter at showing different types of dependencies


Task Dependency Types


Activity Duration Estimating

Next step after defining activities and determining their sequenceDuration includes the actual amount of time worked on an activity plus elapsed timePeople doing the work should help create estimates, and an expert should review them


Schedule DevelopmentSchedule development uses results of the other time management processes to determine the start and end date of the project and its activitiesUltimate goal is to create a realistic project schedule that provides a basis for monitoring project progress Important tools and techniques include Gantt charts, PERT analysis, and Critical Path analysis


Gantt Charts

Developed by a Mechanical Engineer Henry Laurence Gantt early last centuryList project activities and their corresponding start and finish dates in a timeline format


Intranet WBS and Gantt Chart


Milestones

Milestones are significant events on a project that normally have zero durationMilestones indicate that a certain phase of the project has been completed


Sample Tracking Gantt Chart


Critical Path Method (CPM)A project network analysis technique used to predict total project durationThe critical path is a sequence of tasks that defines the longest path through a project It determines the earliest possible completion date of the work If the critical path tasks slip, the entire project is delayed


Finding the Critical Path

First develop a good project network diagramAdd the durations for all activities on each path through the project network diagramThe longest path is the critical path


Determining the Critical Path for Project X


More on the Critical Path

If one or more activities on the critical path takes longer than planned, the whole project schedule will slip unless corrective action is taken


Misconceptions about Critical Path

The critical path is not the one with all the critical activities; it only accounts for time. There can be more than one critical path if the lengths of two or more paths are the sameThe critical path can change as the project progresses


Techniques for Shortening a Project Schedule

Shorten durations of critical tasks by adding more resources or changing their scopeCrashing tasks by obtaining the greatest amount of schedule compression for the least incremental costFast tracking tasks by doing them in parallel or overlapping them


Crashing and Fast Tracking

OverlappedTasks or fasttracking

Shortenedduration thrucrashing

Original schedule


Program Evaluation and Review Technique (PERT)

PERT is a network analysis technique used to estimate project duration when there is a high degree of uncertainty about the individual activity duration estimatesPERT uses probabilistic time estimates based on using optimistic, most likely, and pessimistic estimates of activity durations


PERT Formula and Example

PERT weighted average formula:optimistic time + 4X most likely time + pessimistic time

6

Example:PERT weighted average =8 workdays + 4 X 10 workdays + 24 workdays = 12 days

6where 8 = optimistic time, 10 = most likely time, and 24 =

pessimistic time


Controlling Changes to the Project Schedule

Perform reality checks on schedulesAllow for contingenciesDon’t plan for everyone to work at 100% capacity all the timeHold progress meetings with stakeholders and be clear and honest in communicating schedule issues


How to manage YOUR time?

UrgencyLow High

Low

High

Importance

• Junk Mail

• Escape Activities

• Phone Calls

• Preparation

• Planning

• Analysis

• Crises

• Pressing problems

• Customer complaints

• Mail

• Ringing telephone

• Interruptions


Recommended Reading

IT Project Management - Author: Kathie SchwalbeChapters 5, 6, 7


Individual Assignment #1

6 Multiple Choice Questions (1 Mark each)2 Short Answer Questions (2 Marks each)To be returned during next week lectureIf not delivered on time – 50% mark reductionQuestions are under Assessment linkOnly hard copies accepted

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Microsoft PowerPoint - Project and Time Management