PROJECT FINANCE-PROJECT PLANNING

8/12/2019 PROJECT FINANCE-PROJECT PLANNING

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Project Planning

By

Prof. Anirban Dutta


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Introduction

The key to a successful project is in planning Planning is the first thing you do when

undertaking a project

Often project planning is ignored to rush in forthe work

The value of project planning

saving money saving time

saving many problems

Remember: I f you fai l to plan, you plan to fai l


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Essential Elements for Project

Planning

Aim of project what do we want to

produce? Business case

Outputs what do we actually need to get

there?; need to be clearly defined

Resources include staff time, particular

knowledge or skill sets, money, time


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Planning

Quality criteria what quality the outputs

need to be of?; we need the completed output

to be of certain quality and we need to define

what that quality is (define using the SMART

principle: specific, measurable, achievable,

realistic, timely); inputs from customer and

stakeholders are critical here


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Planning

SMART Goals:

Once you have planned your project, turn your

attention to developing several goals that will

enable you to be successful.

Goals should be SMART - specific,

measurable, agreed upon, realistic and time-

based.


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Planning

SMART Goals

Specific

Well defined Clear to anyone that has a basic knowledge of the

project

Measurable

Know if the goal is obtainable and how far away

completion is

Know when it has been achieved


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Planning

SMART Goals

Agreed Upon

Agreement with all the stakeholders what the goals

should be

Realistic

Within the availability of resources, knowledge and time

Time Based

Enough time to achieve the goal

Not too much time, which can affect project performance


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Planning

Management structure how are we going

to manage the work?; decision makers?; how

to share project progress and to whom?

Milestones how to break up the project?;

break up the project into discrete chunks

(WBS); a defined milestone will help to

identify when each section is completed


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Planning

Tolerances how far can you let the project

stray from the defined targets before sounding

the alarm; will help manage the project

without continually seeking guidance from the

top executives as to whether you should carry

on


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Planning

Dependencies what need to happen before

something else? Understanding dependencies

will help understand the impact of changes in

any part of the project; internal (within your

control); external (outside of your control)

Risks what could go wrong?; what could

happen that may affect your ability to deliverthe project on time?; what can you do to avoid

them?


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Planning

Scheduling there is something you need to

understand about the schedule: it will be

wrong; there is no perfect schedule; get your

executives to know that the schedule is not

engraved on stone; they should expect changes


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Project Planning A Step by Step

Guide

Step 1Project goals

Identify the stakeholders of the project

Stakeholder is any body impacted directly or

indirectly by the project

Establish their needs by interviewing or having

consolidated meetings

Prioritize stakeholders needs


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Guide

Create a set of goals that can be easily

measured (you may use the SMART technique

for this)

S specific

M measurable

Aachievable

R realistic

Ttimely


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Guide

Step 2Project Deliverables

Create a list of things that need to be delivered

to meet the defined goals

Specify when and how each item must be

delivered

Add deliverables to the project plan with anestimated delivery date


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Guide

Step 3Project Schedule

Create a list of tasks that need to be carried out

for each deliverable identified previously

Identify the amount of effort needed (hours or

days)

Identify resource that will do the task

Organize all the above information using a

scheduling software or template


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Guide

You may find that the project estimated

deadline is not aligned with the imposed

project deadlineby the sponsor

Renegotiate the deadline (project delay)

Employ additional resources (additional money)

Reduce the scope of the project (less deliverables)

Be firm and do not make commitments other than

what your schedule and budget dictate


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Guide

Step 4Supporting plans

Human resource plan

Identify by name the individuals with a leading

role in the project and describe roles and

responsibilities

Describe the number and type of people needed to

carryout the project Include SMEs (subject matter experts) and

specific trades of the market


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Guide


Human resource plan

Create a single sheet with the aboveinformation

The above will help establishing the project

budget


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Guide


Communications plan

Who needs to be informed about the projectHow will they receive the information

Weekly/monthly progress reports to include

performance, status, milestones achieved, workplanned for next periods, etc.


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Project Planning A Step by Step Guide

Step 4

Supporting plans Risk Management Plan

Identify as many risks to your project as possible

Be prepared if something bad happens Common project risks

Time and costs estimates too optimistic

Unexpected budget cuts

Scope changes

Atmospheric events

Write down a mitigation plan for every risk; how

to address each risk


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How to Develop A Risk

Management Plan

There are different types of Risk Management

and different uses that include:

calculating credit-worthiness,

planning for adverse events (i.e. disasters),

determining how long the warranty on a product

should last,

calculating insurance rates, and many more.


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How to Develop A Risk

Management Plan

Understand how Risk Management works.

Risk is the effect (positive or negative) of an

event or series of events that take place in one

or several locations.

It is computed from the probability of the

event becoming an issue and the impact it

would have (Risk = Probability X Impact).


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How to Develop A Risk Management Plan

Various factors should be identified in order toanalyze risk, including:

Event: What could happen?

Probability: How likely is it to happen?

Impact: How bad will it be if it happens?

Mitigation: How can you reduce the Probability (and by

how much)?

Contingency: How can you reduce the Impact (and byhow much)?

Reduction = Mitigation x Contingency

Exposure = Risk Reduction


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How to Develop A Risk Management Plan

After you identify the above, the result will be whatscalled Exposurethatsthe amount of risk you simply

cantavoid. Exposuremay also be referred to as Threat,

Liability, Severity or other names but they pretty much

mean the same thing. It will be used to help determine if the planned activity

should take place.

Often this is a simple cost vs. benefi ts formula. You

might use these elements to determine if the risk of

implementing the change is higher, or lower, than the

risk of not implementing the change.


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Guide

The Plan is a livingdocument There will be changes along the project

execution phase, therefore

Update your plan as project progresses and

measure progress against the plan


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Guide

Real life experience Installation ofProduction equipment in a Chemical

Plant

Facts Imposed dateline due to production demands

Rush in to the project works without enough

planning Executives did not allow for development or

conceptual design


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Guide

Budget done by experience and guesstimateDesign lack of details due to lack of time

Bidding done based on available design


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Guide

Results Many change orders impact in budget and

schedule

Schedule impact Budget impact

Missing requirements from other stakeholders

Require additional contractor resources, therefore,additional time and money


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Guide

Results

Lessons learned

Planning can not be ignored

Start executing after a robust plan is

prepared

Planning is critical to design


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THANK YOU

End of Session

Documents

PROJECT FINANCE-PROJECT PLANNING